ARMENIA FACES A LOOMING CRISIS: FIRST SIGNS OF RECESSION

upa-admin 20 Ocak 2015 1.084 Okunma 0
ARMENIA FACES A LOOMING CRISIS: FIRST SIGNS OF RECESSION

2015 is expected to be difficult for Yerevan. The country’s economy is not growing. The situation was further compounded by the Russian ruble depreciation. This year Armenia is likely to be deprived of large amounts of foreign aid it has received in the past. This will have a significant impact on the financial status of the population. On the other hand, scarcity of domestic resources limits the opportunities for further development. Virtually all of the economic system depends on external factors. Non-constructive foreign policy pursued by Yerevan eliminates nation’s prospects of partaking in regional cooperation projects. In this regard, the Armenian government does not display any desire to bring about changes. This inaction could lead to the collapse of the country.

New Year: The Onset of Troubles

Experts predict that 2015 will be a considerable challenge for Armenia. Their arguments include economic and geopolitical aspects. And this is a most intriguing side of the issue. Since gaining of independence Armenia’s economic situation has always been difficult. This time around Yerevan will pay for the price for its erroneous foreign policy and geopolitical choice. Problems reportedly will deteriorate as of January. The loss of the value of the Russian ruble and the rapid decline in oil prices are regarded as two factors. According to experts, annual remittance to Armenia amounts to $2 billion, with 90 percent of the funds coming from Russia. Now this channel is closed (see: Проблемы еще впереди, и они проявятся уже в январе / Lragir. am, 30 December 2014).

In addition, Armenia’s exports to Russia fell by 7%. The reason is that Moscow is now more interested in exporting goods. Domestic market dynamics have significantly fallen. Interestingly, Kazakhstan’s business community had appealed to the President N. Nazarbayev to put on hold the agreements signed within the Eurasian Economic Union. They are rather willing to cooperate extensively with other countries on a bilateral basis.

The situation is Armenia is much worse than in Kazakhstan. The country’s economy would barely grow at 2% this year. On the other hand, Armenia’s economic relations with other countries are quite limited; although the West, led by the United States, provides economic aid. However, the current situation is unlikely to serve as the life-support for the economy. Armenia’s rejection of the association agreement with the European Union must also be taken into account. Brussels will hardly forgive Armenia for that.

In fact, the socioeconomic situation in the West is also not so encouraging. The crisis there is expected to continue in the coming years. Risk-prone processes taking place in the sphere of energy create additional difficulties. There is also little hope that Iran would back Armenia the way it has done so far. Tehran itself needs to escape isolation and conditions on a global scale compel Iran’s leadership to exercise caution.

It is no coincidence that experts describe Yerevan’s expectations of construction of Iran-Armenia-Georgia-Russia railway as absurd. It would take five years for the realization of this project at the earliest. At the same time, its implementation is uncertain – the logic of political processes unfolding in the region and the world requires caution. Furthermore, Moscow is reportedly urging Yerevan to confront the West as part of the “cold war”. The Kremlin is wary of Armenia’s possible curtsey towards the West in light of the deteriorating situation in the economy. A number of experts are suggesting that the Eurasian Economic Union is destined to failure (see: Игорь Мурадян. Что ожидается в 2015 году / Lragir.am, 31 December 2014).

Substitution of Errors: Wrong Geopolitical Maneuvers and Isolation

Due to these reasons Kremlin’s desire to keep Yerevan on a short leash is understandable. Here it has to be recognized that the South Caucasus is a sensitive geopolitical space. Moscow’s performance is also influenced by the fact that Georgia could potentially be completely lost. Under such circumstances Armenia is Russia’s final frontier of resistance. Therefore, Moscow can always place hurdles for Yerevan in finding seeking common ground with Brussels both in the economic field and in terms of geopolitics.

“Cold War” in this context is considered to be one of the effective methods. V. Putin already announced the establishment of a united defense center of the Eurasian Economic Union. At the same time, restrictions were imposed on the transit of the goods of the European origin through the territory of the member states. These two measures are aimed at isolating these countries from Europe. What is the way out for Armenia under these conditions? In reality it seems to have little chances of escaping.

Moreover, its obstructive position with regard to the resolution of the Nagorno-Karabakh conflict further complicates the matters. It is known that Azerbaijan excludes any contacts with Armenia pending the resolution of the conflict. And it is a fact that all the international projects, enabling socioeconomic development in the region can only be realized with the involvement of Azerbaijan. It turns out that a regional scale isolation of Armenia poses a threat to its existence as a whole. With the deterioration of the economic situation in Russia Yerevan’s hands are tied behind its back.

Can Yerevan hope for the deterioration of relations between Azerbaijan and Russia under such conditions? In fact, it has long been the desire of the Armenian leadership. However, Baku and Moscow have always displayed their eagerness to cooperate and have constantly proven it by their actions. In this case, there is no possibility of weakening the ties between the two countries. Russia is aware that Azerbaijan conducts an independent foreign policy and always honors its promises. Therefore, expansion of cooperation with Azerbaijan is regarded as advantageous for the Kremlin.

Apparently, Armenia was also deprived of the opportunity to influence Azerbaijan through Russia and therefore, Armenia’s participation in regional projects is not feasible. Having accepted this harsh reality the Armenian businessmen resort to other means. For instance, they are interested in creating favorable conditions for accessing Europe through Georgia. At the same time, they are trying to make a profit across the country. Nevertheless, such methods cannot improve the economic system as a whole.

Experts think that the state of affairs will lead to further depreciation of the Armenian dram. It is emphasized that this process will begin in January. It must be added that dram depreciated significantly against the Azerbaijani manat the U.S. dollar. The Armenian experts believe that against the number of processes in the background, Armenia has chosen to align itself with NATO and the European Union. They are trusting that it will scale down the extent of Russia’s influence in Eurasia, leading to collapse of integration models it has initiated. And that is why Armenia may already swaying towards the West. This is purely an Armenian nature.

The fate of the Eurasian Economic Union is still unknown. On the other hand, Armenia has only recently joined this establishment as an official member. Now it has to turn its back on Russia that it has previously demonstrated loyalty to and take steps towards Europe? In fact, as a state, Armenia is in a dire position. One after the other, steps taken in the wrong direction impel internal and external contradictions. Yerevan struggles to see the way out of these contradictions.

This situation increases the uncertainty in the region. Wary of this, Tbilisi is trying to impart some hope to Yerevan. Prospects of facilitating the access of European goods to the Armenia’s market through Georgia are being evaluated. The trouble is that the membership of the Eurasian Economic Union brings along additional taxes on over 700 types of goods. Moreover, the enduring economic hardship in Russia will be a severe setback to the Armenian population. Official Yerevan is searching for ways to assuage the situation.

Will Armenia’s efforts prove to be efficient? It’s tough to believe because under the current circumstances Yerevan stands no chance. Fron the very outset the overall choice of independent state-building course was flawed. The statehood that is centered on accusations against others is doomed.

Newtimes.az

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