by Annette Aharonian
If Armenia wants to gain prominence as a regional player, it needs to strengthen collaboration with the West. The recent establishment of the U.S.-Armenian Council on Trade and Investment is a positive step forward in the right direction, but there remains much room for improvement.
On May 7, Armenian Foreign Minister Edward Nalbandian and Assistant U.S. Trade Representative Daniel Mullaney signed a framework establishing the United States-Armenia Council on Trade and Investment. The agreement, a major step forward in U.S.-Armenian economic relations, was put in place to promote tangible economic development in the region. An important aspect of this framework would address regional trade issues and explore ways to deepen future trade and investment between the United States and Armenia.
If Armenia wants to gain prominence as a regional player and diversify the country’s economic profile, it needs to deepen its integration with the West and play a larger role internationally. At present, the country’s geographic isolation, limited export base, and permeating monopolies in the economic sector have rendered it a nonexistent, negligible ‘non-player’ regionally.
Armenia is located in Southwestern Asia, surrounded by Georgia, Azerbaijan, and Turkey. For the most part, autonomy is a fairly new concept to the region as it was under the control of the Byzantine, Persian, Mongol, and Turkish empires throughout its history. After its independence from the Soviet Union in 1991, Armenia was still in conflict with Azerbaijan over the highly disputed Nagorno-Karabakh (NK) territory from 1988 until the ceasefire in 1994. To this day, NK is a coveted region. Sporadic violence, border clashes, and rejection of the Armenian genocide remain deterrents to any potential relationships between the two countries as exemplified by the long-held economic blockade imposed by Azerbaijan and Turkey. As a result, its regional trading prospects are limited as the only neighbors that trade with Armenia are Georgia and Iran.
Despite failed talks between Armenia and Turkey, moderated by Western states like France and the United States, international mediation and engagement should be encouraged. A crucial incentive for dialogue could be a discussion on the economic development between the countries as a means to creating a mutually beneficial relationship and sustaining the peace process, a more desirable option as opposed to full-out war.
Armenia’s other main foreign export partner is the European Union (EU); however, its economy is also strongly tied to Russia as its largest foreign investor. It is particularly dependent on Russian commercial and governmental support, with most key Armenian infrastructure being owned by Russia, especially in the energy sector that includes electricity and natural gas. This deep-rooted dependency, in addition to Russia’s unstable relationship with the West over Ukraine, may make it difficult to build trust. For instance, Armenia abandoned the signing of the Deep and Comprehensive Free Trade Area (DCFTA) with the EU despite the potential for vast economic development and the modernization of trade relations. If signed in 2013, a 15.2 percent increase in Armenian total exports and an 8.2 percent increase in total imports in the long run would provide stability in the region. Instead, President Serge Sargysan announced the country’s interest in joining the Russia-led Customs Union. Russia responded by guaranteeing Armenia the military presence and support it needs to feel safe.
Lastly, there is a lot of interest in Armenia eventually joining the EU, but it must first create a stable democracy, construct a functioning and competitive market economy, and carry out its membership obligations. Although Armenia is a member of the Eurasian Economic Union (EEU) with Belarus, Kazakhstan, Russia, and Kyrgyzstan, the head of the EU delegation to Armenia, Traian Hristea, recently confirmed that its membership to the EEU is not a deterrent to continue and deepen the cooperation with the EU.
Armenia can help itself by looking West, but so too should the West assist in initiating a stronger relationship with Armenia. For this reason, the Council on US-Armenia Trade and Investment is a perfect example of the kind of engagement needed to guarantee its steady progression into the world economy. This could potentially open the doorway to modernizing Armenia and pulling it out of its status as a Third World country and as a satellite state of Russia. Furthermore, Armenia may seek to establish new relationships with China, India, and strengthen existing partnerships with Iran and the Arab world.
Photo: Armenian Presidential Press Service
Annette Aharonian is a staff writer for Charged Affairs.