Opposition demands “Armexit” from Eurasian Economic Union

Opposition demands “Armexit” from Eurasian Economic Union
Armenian President Serzh Sargsyan at a meeting of the Supreme Eurasian Economic Council in 2016.
By Clare Nuttall in Bucharest September 14, 2017

Armenian politicians have been debating whether the country’s future lies within the Eurasian Economic Union (EEU) ever since the small opposition Yelq party published a proposal that Armenia exit the bloc. 

Yelq announced on September 8 that it was planning to submit a bill to the assembly on Armenia’s exit from the EEU. In its draft bill, the party claimed that Armenia’s GDP has fallen in real terms, as has employment and FDI, while public debt has increased. 

It also slammed Russia for selling arms to Azerbaijan, with which Armenia has been locked in a frozen conflict over the Nagorno Karabakh enclave for decades, and argued that membership of the EEU was stifling Armenia’s economic relations with its neighbours Georgia and Iran.

Yelq is a relative newcomer on Armenia’s political scene, formed in late 2016 by three existing opposition parties, two of which are strongly pro-western. They want Armenia to rethink its membership of the EEU in favour of ties with other powers in particular the EU. 

The party has only nine seats in the parliament, where President Serzh Sargsyan's Republican Party (HHK) and its coalition partner the ARF hold a majority, and is therefore unlikely to gain sufficient votes to secure an "Armexit". 

However, its arguments may well strike a chord among ordinary people in a country that has always been ambiguous about the benefits of EEU membership. Plans for Armenia’s accession to the Customs Union — which was later transformed into the EEU — came as a shock to many within the country when it was announced by Sargsyan back in September 2013. At the time, Armenia had appeared to be moving away from the Russian sphere of influence, and was pursuing an EU Association Agreement. Sargsyan’s move was widely attributed to pressure from Russia, which controls much of Armenia’s energy sector as well as being its key backer over Nagorno Karabakh. 

The economic arguments for entry have never been particularly strong. Armenia does not share a border with Russia or any other EEU country, and joining the bloc meant giving up the benefits of being a small, open economy, and complicating its position as a World Trade Organisation (WTO) member. 

Yet officials have continued to defend Armenia’s membership of the bloc. Shortly before Yelq submitted its proposal, Eduard Sharmazanov, a spokesperson for Sargsyan's HHK said membership had benefitted the country. 

“If we did not join the Eurasian Economic Union, would we sell Armenian cognac, which is called brandy in Europe, in France or Great Britain?” Sharmazanov told journalists, according to Azatutyun. “After all, we joined a 180mn market which gives us big opportunities for development.”

The head of Armenia’s junior ruling Armenian Revolutionary Federation (ARF), Armen Rustamyan, also weighed into the debate on September 12, saying there are no alternatives to Armenia’s membership in the bloc. 

"The ARF endorsed Armenia’s accession to the EEU, and the party's position remains unchanged," Rustamyan said, Arka reported. 

Yet Rustamyan seemed to acknowledge that membership had not been altogether beneficial to Armenia. "We are to blame for not being able to bring our country's economy into line with the new situation, and we need to take steps in this direction," he commented. 

Another leading politician, Gagik Tsarukyan, who heads the Tsarukyan bloc in the parliament, also spoke out against Yelq’s proposal, saying that withdrawal would not result in new investments or a better quality of life for Armenians. 

Surprisingly, however, Armenia’s exports to countries outside the EEU have been going strong recently. Armenia’s exports to the US increased by 66% y/y in the first seven months of 2017, Minister of Economic Development and Investments Garegin Melkonyan said on September 13. Speaking at a conference on September 13, Melkonyan said Armenian exports to the US had reached $35mn, while overall trade between the two countries amounted to $91mn, an increase of 38% y/y, Arka reported. On the same day, Prime Minister Karen Karapetyan acknowledged that Armenian exports to European countries were rising faster than those to its fellow EEU members.