Armenia must trade both with West and East - economist

ArmInfo. Further development of the Armenian economy is possible only if the republic has good ties with both Russia and the West. Only with good relations  with both poles can Armenia become a mediating bridge. This was  stated in an interview with an ArmInfo correspondent by the head of  the  economist Suren Parsyan.

On January 9, the RA government approved the draft law "On the  beginning of the process of joining the European Union", and on  January 14, the Charter on Strategic Partnership between Armenia and  the United States was signed in Washington.

Both documents caused a sharply negative reaction from Moscow.  Russian Deputy Prime Minister Alexei Overchuk directly stated the  incompatibility of Yerevan's participation in the EU and the EAEU. He  also hinted at Armenia's dependence on Russian energy resources and  the further development of the country's economy.

As Suren Parsyan noted, the establishment of relations with both  poles began in 2022, as a result of which Armenia has become an  exporting country for both the West and Russia, the results of which  are used by Armenian companies that earn good money from this. A  clear proof of this is that, according to data for 11 months of last  year, Armenia's trade turnover with foreign countries amounted to $  28.5 billion, 42.2% of which falls on the Eurasian Economic Union,  7.5% - on the countries of the European Union and only 1.4% - on the  United States. More than a significant increase in trade turnover is  largely due to mutual exports. In particular, cars, machinery,  equipment come to Armenia from the United States and Europe, which  are then shipped to Russia, and vice versa, gold and diamonds are  exported from Russia to the republic, from where they are shipped to  the same Europe, the UAE, China and India. "Thus, Armenia has become  a service country for both poles, and there are bilateral interests  at work here. Armenia will maintain the above- mentioned indicators  if it can maintain relations with both economic units. Abandonment of  any of these poles may lead to unpredictable consequences for the  country's economy," the economist emphasized.

Parsyan noted that the West is a source of modern equipment,  technology and machinery for Armenia, while Russia is a source of  food and energy security. For example, the republic depends on  supplies of grain crops (99.9%) and energy resources (80%) from  Russia. Against this background, the economist continued, the country  cannot refuse supplies of machinery and technology from Europe, or  food and energy resources from Russia. "It is necessary to make  maximum use of the existing opportunities for the development of the  economy of the Armenian state. The problem is that if any of these  poles is abandoned, the entire chain of relationships will begin to  collapse, and the country's economy will become even more  uncompetitive. In this regard, it is important to make the necessary  calculations with a cool head to understand the situation and issues  related to economic benefits. It is very important to show these  benefits to partners from the West and Russia, to demonstrate the  advantages that our country has," Suren Parsyan stated.

As an example of this benefit, the economist cited the country's  banking system, through which Russian companies continue to transfer  money to the West and cash it in at the receiving locations. In the  event of sanctions against Armenian commercial banks, Russian  companies that use these schemes will also suffer.  "A mutually  beneficial process is obvious here, and against this background,  Armenia's desire to become a member of the EU is more of a political  nature than the logic of economic calculations. This process is  temporary. Moscow understands all this very well. It should also be  noted that the Russian Federation is Armenia's largest investor.  After the 44-day war in 2020, a number of Western companies wanted to  leave the country, for example, Gronimed Mining, HSBC and Credit  Agricole banks, whose places were taken by Russian companies. We  constantly talk about the need to diversify the country's economy,  but in fact, dependence on the Russian Federation is growing. It is  very important to take steps to attract Western investment to the  Armenian economy, which will make it possible to increase the level  of productivity of domestic businesses. We must actively work with  all partners to find honest and fair solutions," the economist said.

Answering a question about the actions of the authorities under  pressure from both sides, Suren Parsyan noted that when working with  partners, it is extremely important to point out the advantages that  active cooperation with both poles provides, namely, the continuation  of Western trade with Russia through Armenia. This is also very  important for Western companies, which will sooner or later return to  the Russian market. For this reason, they set themselves the task of  not losing this market completely. In addition, as the economist  noted, the West also views Armenia as a transit state, bearing in  mind the substantial funds that are invested in the development of  the republic's infrastructure. Russian companies can also take  advantage of these infrastructures. For example, the construction of  the North-South highway may be of interest to all parties. The  European side is financing the Sisian-Kajaran section of the road,  which is of great interest to Iran as well.

The economist believes that Western countries can also have a serious  impact on reducing the republic's dependence on Russia in the energy  sector, in which Russian capital is mainly present, with the  exception of the Vorotan Cascade of Hydroelectric Power Stations,  which belongs to the American side. "In a word, we must work with all  parties to solve the existing problems," Suren Parsyan stated.

According to the RA Statistical Committee, Armenia's foreign trade  turnover with the EAEU countries in January-November 2024 amounted to  $11.9 billion, which is 68.3% higher than the figure for the previous  year. At the same time, exports decreased by 10.1% to $3.1 billion,  against the backdrop of a 2.4-fold increase in imports to $8.8  billion. The EAEU accounts for 42.2% of foreign trade.

The EU countries account for 7.5% of trade turnover. In particular,  the volume of trade turnover decreased by 14.1%, amounting to $2.1  billion. At the same time, the volume of exports for the year  decreased by 18.6% - to $551.8 million, against the background of a  decline in imports by 12.4% - to $1.6 billion.