(MENAFN- AzerNews)
Akbar Novruz
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The geopolitical landscape of the South Caucasus is undergoing
significant changes, particularly in light of the ongoing conflict
in Ukraine and the West's subsequent sanctions on Russia. While
some countries in the region, like Azerbaijan and Georgia, have
shown more restrained trade relations with Russia, Armenia has seen
a dramatic surge in its economic ties with Moscow, particularly
during the tenure of Prime Minister Nikol Pashinyan. This fact was
once again highlighted in recently held Eurasian Economic Forum in
Armenian capital Yerevan on Tuesday.
Minister of Economic Development of Russia, Maxim Reshetnikov,
highlighted the significant impact of Eurasian integration on
Armenia's trade relations during an interview with Armenian media
prior to the forum in Yerevan. Reshetnikov noted that since Armenia
joined the Eurasian Economic Union (EAEU), its trade turnover with
member countries has increased sixfold, while exports have surged
by an impressive fifteen times. He emphasised that this growth is
largely attributed to the strengthening of Armenia's economic ties
with Russia. Additionally, he pointed out that remittances from the
Russian Federation account for approximately 5% of Armenia's GDP.
Currently, around 60 major Russian business projects are underway
in Armenia across various sectors, including IT, high technologies,
mining, and manufacturing, indicating a deepening economic
partnership between the two nations. As we can see, although there
are opinions about the integration of Armenia into the West, the
economic indicators show the opposite. In order to understand the
changes in economic relations with Russia in the last three years,
let's consider the dynamics of the trade relations of each of the
South Caucasus countries with Russia and conduct a comparative
analysis of these dynamics.
While Western countries have imposed sanctions against Russia,
they have largely refrained from extending similar measures towards
Armenia. This inconsistency raises questions about the sincerity of
the West's position, as they portray Armenia as a nation moving
away from Russian influence .
In contrast to the stagnation in trade relations between
Azerbaijan and Georgia with Russia, Armenia's engagement has
intensified. Azerbaijan's trade turnover with Russia increased by
only 1.45 times, with a gradual and modest rise in its foreign
trade relations. Meanwhile, Georgia's trade turnover with Russia,
although initially increased in 2022, has since shown a decline.
This trend not only underscores Armenia's growing economic
dependency on Russia but also raises pertinent questions about the
future trajectory of its foreign policy. How will Armenia navigate
its relationships with Western nations while deepening its ties
with Moscow?
To exhibit the exact numbers:
Azerbaijan's trade relations with Russia have been steady, with
a 1.45-fold increase in total trade turnover between 2021 and 2023,
amounting to $4.36 billion . During the same
period, exports rose by 1.3 times , reaching
$1.12 billion , while imports grew by 1.52
times to $3.16 billion . However, in the
first half of 2024, total trade reached $2.17
billion , with imports increasing by 4.4% ,
while exports declined by 10% , totaling
$557 million .
From 2021 to 2023, Russia's share in Azerbaijan's foreign trade
saw minimal change, with exports dropping slightly from
4.15% to 3.53% , and imports increasing marginally
from 17.7% to 18.3% . By mid-2024, exports
to Russia accounted for 4.31% , while imports stood
at 18.17% . This indicates that while trade volumes between
Azerbaijan and Russia have grown, the overall share of Russia in
Azerbaijan's trade has remained relatively stable. (Source: State
Customs Committee of Azerbaijan)
The most striking shifts occurred in Armenia's trade with
Russia. From 2021 to 2023, Armenia's trade turnover with Russia
surged 2.6 times , reaching $7.4
billion . Imports from Russia doubled during this period,
while exports quadrupled. This sharp rise is unprecedented in the
region and reflects Armenia's growing economic dependency on
Russia. In fact, by 2023, 5% of Armenia's GDP was
derived from remittances from Russia. The upward trajectory
continued into 2024. During this period, imports from Russia
doubled, while exports to Russia quadrupled. This growth trend
continued into 2024 , where, in the first five
months, Armenia's trade turnover with Russia was $190
million higher than the total for 2023 .
In just the first five months of the year, Armenia's trade turnover
with Russia surpassed the total trade for 2023. Unlike previous
years, where export growth dominated, import growth played
a key role in the 2024 increase . This suggests a deeper
economic entanglement with Russia, despite Western narratives
portraying Armenia as distancing itself from Moscow.
Notably, the sharp increase in the volume of imports played a
crucial role in this growth in 2024 . Specifically,
imports soared by five times compared to the same
period in the previous year, while exports saw a decline of
20.5% . This is a stark contrast to the previous
years, where rapid growth in export volumes to Russia was the
norm.[FOR STATS ]. Changes in trade dynamics have also impacted
Russia's share in Armenia's foreign trade . Russia's share of
Armenian exports climbed from 28% to 45% in
2022 , then fell to 40% in 2023
and 17% in the first five months of
2024 . Meanwhile, Russia's share of Armenian
imports decreased from 37.3% to 32.5% over the
2021-2023 period, but saw a dramatic rise to 69%
in early 2024 .
However, a notable shift occurred in 2024. While Armenia's
exports to Russia began to decline, imports saw a significant
increase. This shift might suggest a reduced role in re-exporting,
but this interpretation oversimplifies Armenia's ongoing engagement
in trade. In fact, Armenia has resumed participation in exporting
products from Russia to third countries, particularly evident in
the diamond trade. In 2023, Armenia imported approximately 3.5
million carats of diamonds, 48% of which originated from Russia. A
staggering 96.2% of the diamonds exported by Armenia were
re-exported, predominantly to the UAE and Russia.
Moreover, with the European Union imposing sanctions on Alrosa,
Russia's largest diamond mining company, it is likely that Russia
will increasingly rely on Armenia and similar countries to navigate
these sanctions. Thus, while Armenia's exports to Russia may have
decreased, the country continues to facilitate trade for Russia,
adapting its role in the supply chain.
As a result, Armenia's trade relations with Russia are not only
expanding but evolving. In 2024, it is anticipated that Russia's
share in Armenia's foreign trade turnover will exceed 46%. The
ongoing dynamics indicate that Armenia remains a critical player in
helping Russia circumvent sanctions, transforming from a primary
exporter to Russia into a facilitator of Russian products to global
markets.
Overall, we can observe, Armenia's trade relations with Russia
have flourished significantly during Pashinyan's tenure, revealing
a complex interplay between regional politics and economic
realities. While Pashinyan advocates for Western integration and
presents himself as a peace-oriented leader, the stark increase in
trade turnover with Russia signals a deepening dependence that
contradicts his narrative.
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