Russia accelerates Armenia's path towards Customs Union

By bne IntelliNews March 6, 2014

bne -

Armenia's path towards the Moscow-led Customs Union and the wider Eurasian Economic Council is to be accelerated, Russian President Vladimir Putin announced on March 5. However, Kyrgyzstan - which has been in talks over membership for several years - is lagging.

At a meeting of the Higher Eurasian Economic Council (EEU) in Moscow on March 5, Putin said it was time to start drawing up an agreement on Armenia's accession. The EEU is being set up by the three Customs Union founders (and thus far only members), Russia, Belarus and Kazakhstan, and will increase economic integration. The body is due to be launched next year.

"The Armenian side has adopted and is successfully implementing the measures needed to adapt its economy to the norms and standards of the Customs Union and the Common Economic Space," Putin said, according to ARKA. Therefore, we consider it possible to launch preparations for a treaty on Armenia's accession to the future Eurasian Economic Union."

On March 1, Armenian Deputy Foreign Minister Shavarsh Kocharian said Yerevan will complete all the necessary steps to join the Customs Union by mid-April. That will be less than eight months after President Serzh Sargsyan announced his country would join the bloc.

Surprise candidate

The revelation followed a meeting with Putin in September, and surprised both Armenians and Brussels. EU officials were at the time in the final stages of negotiating an Association Agreement with Yerevan.

The pact was set to be initialed at a summit in Lithuania last November, alongside EU deals with several other former Soviet states, including Ukraine. However, leveraging trade restrictions and other measures, Moscow applied strong pressure to pull them away from Brussels and towards the Customs Union, which is envisaged as a similar bloc.

That saw all but Georgia and Moldova fail to carry through with the EU agreements. While Moscow appears to have taken the loss of that pair on the chin, ongoing events in Ukraine - by far the largest economy in the region apart from Russia - illustrate that it cannot afford to allow Kyiv to escape.

Meanwhile, it continues to push on with building its club. Following the Yerevan decision, Armenia has already received economic concessions, including a substantial discount on gas prices, while Russian companies have expanded their reach into the Armenian market. Gazprom has taken full ownership of ArmRusGazprom, the monopoly gas supplier, and Rosneft is planning a $500m investment at the Nairit rubber plant near Yerevan.


However, although not on the same dramatic level as in Ukraine, not everyone is convinced. Kyrgyzstan, which like Armenia is at an advanced stage of negotiations over entry to the Customs Union, failed to send a delegation to the council.

Putin sounded lukewarm on its prospects. "Of course, it is necessary to weigh all minuses and pluses and for all participants of the process," the Russian president told the council, according to "It is important to continue assisting Kyrgyzstan to accede."

The country has been moving steadily back into Russia's sphere of influence since the revolution in 2010, and was expected to become the fourth member of the Customs Union. However, it has taken longer than expected to agree on conditions.

In December, President Almazbek Atambaev indicated Bishkek is unhappy with the accession roadmap. He told journalists Kyrgyzstan will not join the bloc using a roadmap that "someone else has laid out," and insisted his country will join "only if all the requirements of Kyrgyzstan are taken account."

First Deputy Prime Minister Djoomart Otorbaev had earlier described the roadmap as "unacceptable," but hinted in February that it's more a matter of negotiating terms than an intention by Bishkek to wriggle out of accession. He said Kyrgyzstan still expects to join the Customs Union by the end of the year, bu that Bishkek hopes to gain various concessions, including relaxation of Moscow's recent hard-line immigration policy and the creation of a support fund.

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