Armenia and EU Sign New Partnership Agreement

Armenia and the European Union signed a Comprehensive and Enhanced Partnership Agreement (CEPA) at the fifth Eastern Partnership summit in Brussels, on November 24 (Armradio.am, Eeas.europa.eu, November 24). CEPA, which took nearly two years of consultations and negotiations to come to fruition, replaces the Association Agreement that Armenia’s President Serzh Sargsyan failed to sign in 2013, changing his mind overnight after a visit to Moscow and meeting Russia’s President Vladimir Putin. CEPA’s principal difference from the abandoned Association Agreement is the absence of free-trade arrangements, which would not be compatible with Armenia’s commitments to the Russia-led Eurasian Economic Union (EEU).

The most likely and desirable short-term outcomes of CEPA include the possibility to start a visa liberalization dialogue, which may lead to visa-free travel for Armenian citizens in 1.5–2 years, and beginning of negotiations on the Common Aviation Area Agreement, which may ultimately open the Armenian market to European low-cost airlines. Longer-term benefits include the possibility of governance and economic reforms for which the EU offers additional financial aid and know-how support. While a full implementation of CEPA would mean a profound systemic change in the South Caucasus country, experts such as Hrant Kostanyan from the Brussels-based Center for European Policy Studies note that its implementation, which would eventually undermine the oligarchic power structure, will depend on the Armenian authorities’ political will (1in.am, November 29).

Armenian policymakers boasted that they finally managed to achieve their preferred policy of “and-and” (as opposed to “either-or”) concerning European and Russian integration projects; yet there is a strong disproportion in favor of the direction toward the EEU, which make trade arrangements with third parties essentially impossible (EU Observer, November 24; Arminfo.info, November 27). Armenian officials used to hold the EU responsible for the failure in 2013 to sign the Association Agreement, as if the reason hinged on the impossibility to sign the Association Agreement and to join the EEU at the same time (see EDM, March 25, 2015). Indeed, the government’s representatives again praised the “and-and” policy during a discussion at the National Assembly (Armenian parliament), on November 27. Opposition legislators and other participants of the hearings representing civil society objected to the government’s strategy, pointing at the economic disadvantages for Armenia of EEU membership. In contrast, the pro-government Republican Party’s representatives used another familiar argument: that the “either-or” approach resulted in territorial losses for Georgia, Moldova and Ukraine, so the refusal to join the EEU or attempting to leave now would have dire consequences for Armenia. A representative of a watchdog organization, the Union of Informed Citizens, noted in response that such judgment was fallacious (Azatutyun.am, November 27).

The recurrent argument about the danger of refusing participation in Russia-led projects suggests that even Armenian officials who ritually proclaim loyalty to the “strategic partnership” with Russia understand the real nature of bilateral relations. The director of the Yerevan-based Regional Studies Center, Richard Giragosian, declared, “For Russia’s approach toward Armenia, there has been a heavy reliance on instruments of hard power, exploiting Armenian military insecurity over the unresolved Nagorno-Karabakh conflict with Azerbaijan and manipulating the country’s economic insecurity. The Karabakh conflict remains the simplest instrument for leverage over both Armenia and Azerbaijan, with Armenia as a willing recipient of Russian security promises and cheaper weapons, and Moscow now as the number one arms provider for Azerbaijan.” In turn, Russian soft power is not attractive, he suggested (New Eastern Europe, December 1).

To date, official Moscow-based and Russian analysts have not openly confronted Armenia’s decision to sign CEPA, although until the Brussels summit it remained not fully clear whether the signing would take place or not. In that context, particularly President Sargsyan’s snap visit to Vladimir Putin, on November 15 (Kremlin.ru, November 15), caused fears that the September 2013 overnight decision not to sign the EU Association Agreement could be repeated.

Russian television’s reaction has been quite characteristic, and contradictory to the official assurances about Moscow not interfering in Armenia’s relations with the EU. On November 19, Zvezda TV, the channel of the Russian Ministry of Defense, claimed that Armenia was going to associate itself with the EU, just like Ukraine, and, like in Ukraine, “supporters of fascism are declared heroes [in Armenia].” The latter statement referred to last year’s unveiling of a statue of the leader of the resistance to the Bolshevik takeover of the first Republic of Armenia (see EDM, June 20, 2016). The Zvezda TV anchor, furthermore, compared the ruling Republican Party of Armenia to the Nazis. After official complaints from Yerevan, Zvezda TV’s president sent a letter of apology to the Armenian ambassador in Russia (Razm.info, November 21). The apologies were not mentioned in any Russian TV programs. The anchor’s defamatory statements were cut from the video available on Zvezda’s website. The above-discussed video still mentions at the start that Armenia-EU relations will be one of the discussed topics on the program, and a reference to this topic also appears at the conclusion; but the actual Armenia-EU segment was removed completely from the middle (Tvzvezda.ru, November 19). Nonetheless, the cut footage is available on other sources, such as YouTube (YouTube, November 20). After the CEPA signing ceremony, larger Russian TV channels also took on the topic in news reports and daily talk shows. Collectively, this coverage strongly resembled the Russian media’s message on Ukraine in recent years, mixing threats and insults with speculation about a larger anti-Russian conspiracy led by the United States. Such coverage could be an attempt to consolidate Putin’s electoral support before the presidential elections scheduled for March 2018 by sustaining the enemy narrative. Yet, it worries the Armenian public and may contribute to undermining the local perception of Russia’s benevolence.

Meanwhile, the temporary exemption from the EEU’s custom duties, negotiated by Armenia before joining the bloc, is about to expire. So another sharp consumer price increase is expected in January. Furthermore, smaller Armenian importers are expected to become uncompetitive. They may be forced to end direct imports from non-EEU member countries and to rely on re-exports from Russia or Kazakhstan (Armtimes.com, November 30). Diversifying the economy is thus becoming more vital.

While CEPA may be beneficial in the longer term, such an outcome depends on whether the Armenian government will be ready to implement structural reforms, which could now receive additional support from Brussels. Alternatively, the unwillingness to further disappoint Moscow and, more generally, the wish not to allow any risk to regime stability in Yerevan may result in an evasive approach to reforms with a lack of implementation.