EEU Has No Economic Prospects for Armenia
10.07.2015
13:00
Armenia-Russia trade turnover is down though Armenia has been a member of the Eurasian Economic Union (EEU) for over half a year. The National Statistical Service fixes the trade turnover between the two countries during the first half of 2015 plunged twice from 535 million US dollars to 242 million US dollars.

The combination of low oil prices and international economic sanctions has thrown Russia's oil industry into chaos. Another major challenge is the red tape which Armenian exporters have to overcome on the Russian border. “Nothing has changed for exporters since Armenia’s joining the EEU. The export documentation costs Armenian suppliers exactly the same sum of money. Only one document – product origin certificate - is not required,” said Raffi Mkhchyan, Head of the Union of Armenian Exporters.

Maria Ilyina, senior research fellow at the Institute for Economics and Forecasting of NAS, Russia, believes Armenia may take advantage of the current situation in the Russian market to strengthen its position. “Following Russia’s counter-sanctions Armenia may increase the export volume to fulfill the market demand,” Ilyina said.

Head of the Scientific Board at EurAsEC Institute Vladimir Lepyokhin links the excessive bureaucratic regulations with the Western sanctions against Russia because presently, a number of products are imported into Russia through a third country, namely Belarus. “It causes problems, naturally, but the issue is on the agenda of the presidents of EEU member states and the EEU committee. I believe it will get solved, simply it will take some time,” said Lepyokhin.

Artyom Pilin, senior research fellow at the Institute for Economics and Forecasting of NAS, spoke on what might cause the trade turnover between the countries to decrease. During the first half of the current year the Armenian export to Russia sloped down 30 times from 106 million US dollars to 3 million US dollars.

The reduced export is a result of the declining Russian economy and devaluated rubble, Pilin believes.

Economist Vahagn Khachatryan agreed with Pilin and said, “The devaluation of the Russian rubble has spurred the import of products with cheaper prices than the local manufacturers offer. In the end, local businesses have to suffer hard times,” Khachatryan said.

The economist calls these issues expected since Armenia’s opting for the EEU was a geopolitical choice rather than an economic one. “Now it is useless to speak about big economic dividends. It is necessary to create the required conditions for carrying cargos to Russia easily,” Khachatryan said.

The EEU, Head of the Union of Armenian Employees Gagik Makaryan said, does not interest Armenia as an economic union. “Armenia has always had and still has Russia out of EEU states as its major trading partner after the European Union. Armenia has a trade turnover of 0.2 and 0.8 percent with Kazakhstan and Belarus respectively. A large part of agricultural products manufactured in Armenia is exported to Russia. The same was with the CIS and, thus, the Eurasian Economic Union does not give great benefits,” Makaryan said.

The devaluation of the Russian rubble has forced Armenian manufacturers to purchase the raw material or other items for their production in Russia. “The Armenian economy cannot absorb the tremendous amount of Russian rubble. Therefore, manufacturers will have to buy some needed supplies for the production, for example, bottles, in Russia, whilst there are relevant businesses in Armenia that now suffer,” Makaryan said.

Makaryan believes fixing quotas may enhance Russia-Armenia trade turnover. “Armenia can produce certain items and Russia will purchase the agreed amount,” Makaryan said.

 

Arshaluys Mghdesyan, Editor-Coordinator

Please contact the author at arshaluysmghdesyan@pjc.am.

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