CAN ARMENIA KEEP A FOOT IN BOTH CAMPS?

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Geography and history are political tyrants and nowhere more so than for in Armenia. For all the emphasis, nowadays, on the potential of regional trade, Armenia is boxed into a situation that offers little or no openings. History, distant and none too distant, rules our alliances with Turkey or Azerbaijan and Russia’s brutal show of force in Georgia, in 2008, casts a sombre shadow on Tbilisi’s room for manoeuvre.

The collapse of the Soviet Union raised the profile of its European nemesis, the European Union (EU). The liberated Baltic States found sanctuary and hope in membership of the EU as did Soviet satellites such as Poland and Hungary. Putin has since stabilised Russia, though we may disapprove of his methods, and this has prevented any other former Soviet Union states following the Baltics. The EU’s ham-fisted and naive attempts to draw the whole of the Ukraine into its orbit have proven catastrophic, leaving other aspiring candidates for EU membership apprehensive.

With no contingent border with any EU state, Armenia has observed this still-unravelling drama with a mixture of optimism, pessimism and above all resigned realism.

Looking westwards from Armenia has been useful, practically, but of limited practicability. The countries of Central and Eastern Europe, formerly in the Soviet sphere, have had a rocky road of integration with the EU. The earliest pilgrims, the Czech Republic, Poland and Hungary set the pattern when their political elite used the incentive of membership of the EU to push through domestic economic reforms. The cold shower therapy brought immediate collapses but was mitigated by the promise of the warmer waters of the EU market. Subsequent disillusionment has led to the rise of nationalist populism in Poland and Hungary.

Armenia realised early enough that “membership” was some distant grail and better kept as such, membership — given geography alone — simply wasn’t and isn’t on any immediate agenda. But, and here the Armenian elite have been canny, using the EU’s templates for economic reform have proved extremely useful in reforming parts of the Armenian economy, particularly in areas such as food safety and the potential reform of state aid legislation. This certainly helps Armenia’s export potential to the EU, the country’s largest market.

Armenia’s autocratic governments have no difficulty ramming through reforms with little fear of effective opposition. Going further and deepening relations with the EU, as was once seen as possible and is certainly logical, towards a Free Trade Agreement (FTA) with the EU, would have obvious benefits. However, and it is a very large however, the EU offers no safety net as the pro-EU factions in Ukraine have found to their bitter cost. As an economic model, Russia has little attraction for Armenia, but in a convoluted way Russia does offer security, in the sense of offering not to become a threat.

This is the background to Armenia’s volte-face when it joined the Eurasian Economic Union (EEU) in 2014, under Russian duress. The attractions of the Belarus, Kyrgyz and Kazakh markets are scarcely tempting and certainly not in comparison to the EU. However, offending Russia in order to further a dream, rather than a promise, from the EU simply wasn’t worth the risk.

The question now is can Armenia keep a foot in both camps? Certainly the EU has deep reservations, because membership of the EEU is incompatible with membership of the EU and probably incompatible with any enhanced trading relations with the EU which Armenia had wanted, prior to 2014.

With its unfortunate experience of over-enthusiasm towards Ukraine, the EU has retrenched and decided that, for the time being, a “Comprehensive and Enhanced Partnership Agreement” with Armenia is enough to keep things warming on the back-burner.

The EU is popular in Armenia and the Armenian elite, who benefit from technical and law framing guidance and financial aid from the EU. Armenia also wishes to expand its exports to the world largest single market and needs technical aid to meet EU market regulations.

Both the EU and Armenia realise that “membership” offers can indeed be counter-productive. In Hungary and Poland, the previous reformist governments have got too far ahead of the population and have provoked populist backlashes. On the other hand, for Armenia the EEU is a realistic, though limited, scenario. In the unlikely event of the EEU being economically successful, then Armenia gains; and anyway joining keeps Russia happy.

A revived EU/Armenia Agreement has been initialled at ministerial level, but needs approval. This is no problem in authoritarian Armenia, where the political process has been compliant to the demands of its elite, even when it involves a volte face on the EEU in 2014.

On the EU side, the deal has to be ratified by the Strasbourg Parliament, which can be a tricky matter. Justified concerns will be expressed about human and democratic rights in Armenia and there will be a vocal anti-Putin caucus that is distrustful of the EEU. But for how long Armenia’s tightrope walk of external trade and internal economic reform ŕ la Berlaymont (EU HQ) and external security ŕ la Kremlin lasts, remains to be seen. Certainly luck and good judgement will be needed in great measure.



Source: emerging europe 


© Nick Kalikajaros 2017