Since a controversial decision to sacrifice an Association Agreement with the European Union (EU) in favor of joining the then-Customs Union (which later became the Eurasian Economic Union, or EEU), Armenia has gradually comes to terms with its new, more limited position. But that one, abrupt and unilateral decision by the Armenian president in September 2013 had far-reaching ramifications. By sacrificing over three years of difficult negotiations with the EU over its planned Association Agreement, Armenia suffered a significant loss of trust and confidence.
And from a broader perspective, that “strategic u-turn” in policy also magnified a narrower set of strategic options for the country, which ended in an only tighter embrace of Russia. Yet in the wake of that reality, Armenia’s so-called “Eurasian choice” has become a new reality, imposing new challenges and serious constraints on the future trajectory of both economic development and the democratization of the country.
Armenia’s Strategic Setback
Looking back, it is now even clearer that the shift in Armenian policy to turn away from the European Union and to join the Eurasian Economic Union represented a serious strategic setback. Moscow’s apparent ease in pressuring Yerevan to back down from its stated policy of forging deeper ties with the EU was largely a result of pressure and coercion. While the pressure was rooted in Armenian insecurity, as Russia hinting at a “reconsideration” of the long-standing security partnership if Armenia signed an Association Agreement with the EU, the broader context reveals three deeper problems.
First, Russian pressure and coercion on Armenia were seen as unnecessarily heavy-handed and not the actions of an ally or partner. Moreover, despite the generally pro-Russian stance among the majority of Armenians, Moscow’s pressure tended to spark a new sense of resentment and outrage at Russia’s disregard for Armenian statehood and independence.
Second, the abrupt shift in Armenian policy came at a high price. It clearly imposed a significant loss of confidence and credibility in the West and damaged the deeper course of reform in the country, undermining several years of difficult negotiations and reform. In return, the stated commitment to join the then-Customs Union (which later became the Eurasian Economic Union) only deepened an already serious degree of over-dependence on Russia. In purely economic terms, the move offered little real benefits, especially as Armenian tariffs would have to be significantly raised to confirm to the Eurasian Union standards, thereby decreasing competitiveness and further dissuading foreign investment.
A third problem was rooted in the handling of such a sudden and unilateral policy shift by the president, which only demonstrated a deeper deficiency in the Armenian government’s decision-making process. In this way, the decision only exacerbated the country’s already closed and opaque public policy process and revealed the pronounced absence of adequate strategic planning.
The move to join the Eurasian Union is also negative for Armenia for another reason: due to its missed opportunity to move closer to the European Union. More specifically, in the wake of Moscow’s seemingly effortless success in forcing Yerevan to backtrack on its intention to finalize pending agreements with the EU, the country clearly has missed an opportunity for overcoming the challenges of geographic isolation, marked by the closure of two of its four borders, and of economic insignificance, where its small size, marginal market and entrenched corruption have impeded its longer term development. In the short-term, the Armenian government remains hard pressed to regain confidence and restore credibility after retreating and reneging on its planned “initialing” of an Association Agreement and related Deep and Comprehensive Free Trade Area (DCFTA).
Moreover, the retreat also sacrificed years of difficult negotiations and imperiled reform, with its decision to join the Eurasian Union actually offering meager, if any, trade or economic benefits. And when Armenia actually becomes a member of the Eurasian Union, the net result will be even more damaging, as it would constrain Armenia even more firmly within the Russian orbit and limit its future to little more than a captive of Russia.
And despite the pronounced optimism of senior Armenian officials, the outlook for Armenian as a member of the Eurasian Union is neither as simple nor as secure as the Armenian government now seems to believe, for two main reasons. First, there are serious obstacles that hinder the country’s ability to leverage its membership in the Eurasian Union, ranging from the lack of a common border with Russia, or with Belarus and Kazakhstan, the two other Union members. The lack of any coherent economic advantage is also an important additional factor.
In fact, the structural impediments to the Armenian candidacy were clearly articulated by the Armenian government itself throughout its earlier negotiations with the EU. At that time, even then-Prime Minister Tigran Sarkisian stressed that “the structure of the Armenian economy is very different from that of the Eurasian Union’s countries that pursue a policy of supporting domestic manufacturers through quite high Eurasian duties.” The premier further noted at the time that “on the whole, the level of such duties in the (then) Eurasian Union is twice higher than those levied in Armenia,” adding that entering the Eurasian Union would be “very complicated, if not impossible.”
The Broader Context
But in a broader context, and especially in the wake of the Russian invasion of Ukraine and annexation of Crimea, there is now a clear trend of a new Russian policy toward “pushing back” and “pushing out” EU engagement in the “post-Soviet space,” or as what Moscow defines as its so-called “near abroad” or natural sphere of influence. More specifically, it is now clear that there was a belated shift or “U-turn” in policy in Moscow, with a new, much more assertive Russian reaction to the EU’s Eastern Partnership (EaP) and the Association Agreements that were negotiated with several EaP member states.
The case of Armenia’s unexpected last minute decision to forego the planned initialing of its Association Agreement with the EU also confirms such a belated shift in Russian policy, evident by the absence of any opposition from Moscow throughout Yerevan’s nearly four-year process of negotiations with Brussels. It would also seem that Moscow seriously underestimated the EU, both in terms of its “seductive appeal” attracting former Soviet states and regarding its resolve to forge significant ties with the Eastern partnership countries.
In this way, Russia tended to mistakenly perceive the EU as an insignificant geopolitical actor incapable of becoming a serious rival within Moscow’s “sphere of influence.” And this shift was further demonstrated by the imposition of coercive measures and trade sanctions against Ukraine and Moldova, with Armenia relegated to serving as little more than a “sacrificial pawn,” whose surrender and submission was designed to send a more important message of Russian strength and deterrence against European aspirations elsewhere.
In the aftermath of Russia’s military annexation of Crimea and ongoing war in eastern Ukraine, it seems likely that Moscow will renew its focus on consolidating its “sphere of influence” through the use of the coercive economic and restricted trade measures of the Eurasian Union, as a foundation for a revamped “Eurasian Union” project of “reintegration” within the former Soviet space. Although such a move can be seen as a natural expansion of existing Russian-led projects of reintegration, based on the Commonwealth of Independent States (CIS) and the Russian-dominated Eurasian Union, the concept of the Eurasian Union is both incoherent and undefined, marked more by its lack of practical benefits and absence of substance. Moreover, even the potential economic incentives are fairly weak, with membership offering rather meager and marginal economic benefits, while gains would mostly accrue to Russia. But in many ways most significant, the “loss” of Ukraine, adds a perhaps insurmountable obstacle to the viability of the Eurasian Union, as well as seriously questioning the utility of the Eurasian Union.
The Outlook for Armenia
At the same time, Armenia’s “strategic partnership” with Russia has been largely one-sided, limited by its inherent lack of parity, as Armenia has most often received insufficient dividends from its “partnership” with Russia. Over time, the gradual expansion of Russian power and influence has only enhanced Armenia’s over-dependence on Russia. Although close relations with Russia is essential for Armenia over the longer term, the asymmetry of the bilateral relationship has become increasingly evident.
But there is a new sense of opportunity, in what is now a “second chance” for Armenia to salvage its relationship with the EU. More specifically, for its part, the EU has demonstrated that it is still interested in forging a new relationship with Armenia. But clearly, in light of recent developments, the EU needs to now explore alternative measures to engage and empower embattled Armenia, but based on a more realistic recognition of the limits and liabilities of Armenia as a partner. And the challenge for Yerevan will center on the country’s capacity and its leaders’ determination to withstand a possible fresh onslaught of Russian pressure and coercion.
Thus, for both Armenia and the EU, the imperative is driven by a daunting combination of the fragility and vulnerability of the Eastern Partnership countries with a resurgent Russia intent on pursuing confrontation over cooperation, and provoking conflict over consensus.
- Public Lecture "Armenia's Eurasian Choice: How Democracy Should Develop Further?" by Richard Giragosyan
 For more on this, see: Giragosian, Richard, “The South Caucasus: The Limits of a Resurgent Russia,” Heinrich Boell Foundation, Tbilisi, Georgia, 6 February 2014.
 The Eastern Partnership (EaP) was initiated in 2008 seeking closer relations with six former Soviet states (Armenia, Azerbaijan, Georgia, Belarus, Moldova and Ukraine), as part of the earlier European Neighborhood Policy (ENP).