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WHY ARMENIA CHOSE THE EURASIAN ECONOMIC UNION
By Mher Almasian on DEC 3, 2014Armenia, Nation, News Desk
On January 1, 2015, the Eurasian Economic Union (EEU) will go into
effect and alongside Kazakhstan, Belarus, and Russia will be Armenia
as one of its four founding members.
When President Serzh Sargsyan announced that Armenia would be joining
the Eurasian Customs Union more than a year ago, the decision was
met with skepticism in some circles. Now that Armenia is officially
a member of the Eurasian Economic Union, as of October 10, 2014,
that skepticism still exists.
"Why the EEU and not the European Union?" critics asked. Some
suggested that Russia used Armenia's dependence on its energy and
security to influence the decision. Others raised questions about
potential customs checkpoints being implemented at the Artsakh border.
The truth is that choosing membership in the EEU over an association
agreement with the EU is much more logical. For starters, the majority
of Armenian citizens support an EEU membership. According to a Gallup
International poll that was conducted in October of last year, 64
percent of Armenians favored membership into the union.
Populism aside, Armenia sits between two sworn enemies, one which
regularly fires upon it. When making political decisions, its
foremost concern is, and must be, security. Today, Armenia's security
fundamentally depends on its military alliance with Russia, which
was formed in 1997 and extended in 2010. As part of this agreement,
Armenia receives discounted and advanced military hardware as well
as security provided by Russian soldiers at the Turkish and Iranian
borders. In return, Russia maintains a stronghold in the strategic
South Caucasus among other regional powers like Iran and Turkey.
Armenia has become even more dependent on Russia as a result of the
extraordinary increase in military spending by Azerbaijan. Due to the
country's massive oil revenue, Azerbaijan has used its new wealth to
increase its defense budget by nearly 500 percent. According to the
Stockholm International Peace Research Institute (SIPRI,) Azerbaijan
allocated $3.44 billion for defense in 2013 while Armenia spent a
meager $427 million in comparison.
But, despite the fact that Armenia has a defense budget that's dismal
compared to its enemy's, the country has successfully maintained a
military balance, prevented a potentially devastating war, and avoided
any territorial losses. Russia often plays both sides, although, for
lack of an alternative, Armenia has put in its lot and the alliance
has proven fruitful in many regards.
Moreover, Armenia has been historically reliant on Russia to defend
against its more traditional foe: Turkey. During the Artsakh War, and
before the establishment of the Collective Security Treaty Organization
(CSTO,) a significant portion of Armenia's military resources were
kept in Armenia proper rather than Artsakh due to fear of a potential
invasion by Turkey. If not for the presence of Russian soldiers at
the Turkish-Armenian border, it's likely Turkey would have invaded
once the tide of the war turned for Azerbaijan.
It is this self-interested Russian support that Armenian authorities
are cautious not to endanger; any erosion in this relationship could
prove fatal to Armenia and to the Artsakh Republic.
By contrast, Armenia's potential path to EU membership, by way of
the European Union Association Agreement, would provide no security
guarantee and would risk alienating the country's sole security
guarantor, Russia. If the EU Association Agreement was signed, not
only would Russia decrease its level of support as a consequence,
the sacrifice would be in the name of future benefits that may never
actually materialize.
The EU's impotence in cases of international enmity is on display
in Cyprus. For all its economic might, the European Union has been
unable to apply any meaningful pressure on Turkey for the return of
occupied territories in Cyprus, one of its member states.
When it concerns Armenia, the European Commission -- the executive
body of the European Union -- has previously questioned the presence
of Russian soldiers on Armenian soil and it's been suggested that
the existence of a Russian military base in the country impedes
Westernization and reform in Armenia. But despite these critiques, the
EU has failed to suggest how Armenia can otherwise ensure its security.
Beyond its security needs, Armenia has other reasons to prefer
membership in the EEU. By opting into the EEU, Armenia will
reap notable monetary benefits, like a massive share in annual
tariff revenue. According to an International Monetary Fund (IMF)
representative in Armenia, the country's membership in the union
will bring in about $250 million a year in customs revenue. Russia is
already a big trading partner with Armenia, but entry into the EEU will
give Armenia additional opportunities to build export relationships. As
an added bonus, Armenia will secure privileges for 752 products in the
first five years, meaning that EEU taxes won't apply to the country
during this time due to its union membership.
Membership in the EEU will also help Armenians working in Russia, as
well as the families they subsequently support back in their homeland.
Today, hundreds of thousands of Armenians who work in Russia contribute
more than $1.5 billion annually to Armenia's economy in the form of
remittances. Many of these Armenians are seasonal workers who often
don't have legal status in the country and risk illegal work conditions
and deportation. Being a part of the Eurasian Economic Union will
undoubtedly help facilitate better labor conditions across member
states, which will improve the quality of life for these workers and
ensure stability for the Armenian economy dependent on their support.
Further, accession to the Eurasian Economic Union will guarantee
Armenia's stability in the energy market and secure preferential
rates for the future. This is particularly important considering
Armenia is fully reliant on Russia for its gas supply. As part of
the negotiations for membership in the EEU, Armenia has been able to
guarantee preferential gas rates that will be upheld until 2018.
This is the opposite of what Armenia can expect as a former Soviet
republic in the European Union's sphere of influence. Russia has a
history of imposing retaliatory energy policies on Eastern European
countries that have drifted toward the West. In fact, the five
countries with the highest gas rates are all former Eastern Bloc
members that are now EU members or candidates. At the moment, Armenia
receives the second-lowest rate for Russian gas in all of Europe,
after Belarus.
In spite of all these indisputable facts, there are potential
advantages that the Association Agreement could have provided. Perhaps
the most important of these is the prerequisite of better business and
government regulatory laws that are in line with EU standards. These
regulations are intended to lead to a more independent judiciary,
a freer economy, and improved civil society.
However, as attractive as all of these qualities may be, simply
agreeing to the Association Agreement will not lead to reform in a
culture that's been developed under centuries of corrupt Ottoman and
Soviet occupation. This can be seen in many former Eastern Bloc EU
members, like Bulgaria and Croatia, where corruption is rampant and
the respective economies continue to underperform.
More importantly, there is no reason to believe that any of the
potential benefits promised under the Association Agreement cannot
be achieved from within Armenian society and without external pressure.
If Armenia is to transform into a more open and just society, it will
be up to the citizenry of the republic and not a technocrat posted
in Brussels.
Another potential benefit of the Association Agreement was the
opportunity to increase trade with the European Union, as part of
the mutual and gradual tariff elimination. The European Union offers
a market of about 500 million people as well as the world's biggest
collective economy, which together trump the economic breadth of the
Eurasian Union.
But along with a highly developed economy comes a high level of
competition. Even with reduced tariffs, it's unrealistic to expect
Armenian goods to be competitive in such an aggressive market. At
the moment, most of Armenia's exports are raw materials rather than
produced goods. The low level of tariffs will not change the fact that
Armenia's economy has a long way to develop. On the other hand, the
markets of the EEU are much less developed and competitive, meaning
Armenian companies will have a better chance to create a demand for
their goods in this more realistic marketplace.
Doing business with less corrupt and more economically potent nations
will not improve Armenia simply by association any more than doing
business with the United States or Europe makes Saudi Arabia more
democratic or less misogynistic. Any potential long-term benefits
provided by the European Union are attainable by Armenia if there is
an internal understanding of the importance of such improvements.
Given Armenia's current geopolitical realities, the Eurasian Union
is a pragmatic decision with returns that will ensure the stability
of Armenia in the near future while creating new opportunities for
the country's economy.
Read more:
http://thearmenite.com/newsdesk/armenia-chose-eurasian-economic-union/#ixzz3LR9c4p7j
From: Baghdasarian
By Mher Almasian on DEC 3, 2014Armenia, Nation, News Desk
On January 1, 2015, the Eurasian Economic Union (EEU) will go into
effect and alongside Kazakhstan, Belarus, and Russia will be Armenia
as one of its four founding members.
When President Serzh Sargsyan announced that Armenia would be joining
the Eurasian Customs Union more than a year ago, the decision was
met with skepticism in some circles. Now that Armenia is officially
a member of the Eurasian Economic Union, as of October 10, 2014,
that skepticism still exists.
"Why the EEU and not the European Union?" critics asked. Some
suggested that Russia used Armenia's dependence on its energy and
security to influence the decision. Others raised questions about
potential customs checkpoints being implemented at the Artsakh border.
The truth is that choosing membership in the EEU over an association
agreement with the EU is much more logical. For starters, the majority
of Armenian citizens support an EEU membership. According to a Gallup
International poll that was conducted in October of last year, 64
percent of Armenians favored membership into the union.
Populism aside, Armenia sits between two sworn enemies, one which
regularly fires upon it. When making political decisions, its
foremost concern is, and must be, security. Today, Armenia's security
fundamentally depends on its military alliance with Russia, which
was formed in 1997 and extended in 2010. As part of this agreement,
Armenia receives discounted and advanced military hardware as well
as security provided by Russian soldiers at the Turkish and Iranian
borders. In return, Russia maintains a stronghold in the strategic
South Caucasus among other regional powers like Iran and Turkey.
Armenia has become even more dependent on Russia as a result of the
extraordinary increase in military spending by Azerbaijan. Due to the
country's massive oil revenue, Azerbaijan has used its new wealth to
increase its defense budget by nearly 500 percent. According to the
Stockholm International Peace Research Institute (SIPRI,) Azerbaijan
allocated $3.44 billion for defense in 2013 while Armenia spent a
meager $427 million in comparison.
But, despite the fact that Armenia has a defense budget that's dismal
compared to its enemy's, the country has successfully maintained a
military balance, prevented a potentially devastating war, and avoided
any territorial losses. Russia often plays both sides, although, for
lack of an alternative, Armenia has put in its lot and the alliance
has proven fruitful in many regards.
Moreover, Armenia has been historically reliant on Russia to defend
against its more traditional foe: Turkey. During the Artsakh War, and
before the establishment of the Collective Security Treaty Organization
(CSTO,) a significant portion of Armenia's military resources were
kept in Armenia proper rather than Artsakh due to fear of a potential
invasion by Turkey. If not for the presence of Russian soldiers at
the Turkish-Armenian border, it's likely Turkey would have invaded
once the tide of the war turned for Azerbaijan.
It is this self-interested Russian support that Armenian authorities
are cautious not to endanger; any erosion in this relationship could
prove fatal to Armenia and to the Artsakh Republic.
By contrast, Armenia's potential path to EU membership, by way of
the European Union Association Agreement, would provide no security
guarantee and would risk alienating the country's sole security
guarantor, Russia. If the EU Association Agreement was signed, not
only would Russia decrease its level of support as a consequence,
the sacrifice would be in the name of future benefits that may never
actually materialize.
The EU's impotence in cases of international enmity is on display
in Cyprus. For all its economic might, the European Union has been
unable to apply any meaningful pressure on Turkey for the return of
occupied territories in Cyprus, one of its member states.
When it concerns Armenia, the European Commission -- the executive
body of the European Union -- has previously questioned the presence
of Russian soldiers on Armenian soil and it's been suggested that
the existence of a Russian military base in the country impedes
Westernization and reform in Armenia. But despite these critiques, the
EU has failed to suggest how Armenia can otherwise ensure its security.
Beyond its security needs, Armenia has other reasons to prefer
membership in the EEU. By opting into the EEU, Armenia will
reap notable monetary benefits, like a massive share in annual
tariff revenue. According to an International Monetary Fund (IMF)
representative in Armenia, the country's membership in the union
will bring in about $250 million a year in customs revenue. Russia is
already a big trading partner with Armenia, but entry into the EEU will
give Armenia additional opportunities to build export relationships. As
an added bonus, Armenia will secure privileges for 752 products in the
first five years, meaning that EEU taxes won't apply to the country
during this time due to its union membership.
Membership in the EEU will also help Armenians working in Russia, as
well as the families they subsequently support back in their homeland.
Today, hundreds of thousands of Armenians who work in Russia contribute
more than $1.5 billion annually to Armenia's economy in the form of
remittances. Many of these Armenians are seasonal workers who often
don't have legal status in the country and risk illegal work conditions
and deportation. Being a part of the Eurasian Economic Union will
undoubtedly help facilitate better labor conditions across member
states, which will improve the quality of life for these workers and
ensure stability for the Armenian economy dependent on their support.
Further, accession to the Eurasian Economic Union will guarantee
Armenia's stability in the energy market and secure preferential
rates for the future. This is particularly important considering
Armenia is fully reliant on Russia for its gas supply. As part of
the negotiations for membership in the EEU, Armenia has been able to
guarantee preferential gas rates that will be upheld until 2018.
This is the opposite of what Armenia can expect as a former Soviet
republic in the European Union's sphere of influence. Russia has a
history of imposing retaliatory energy policies on Eastern European
countries that have drifted toward the West. In fact, the five
countries with the highest gas rates are all former Eastern Bloc
members that are now EU members or candidates. At the moment, Armenia
receives the second-lowest rate for Russian gas in all of Europe,
after Belarus.
In spite of all these indisputable facts, there are potential
advantages that the Association Agreement could have provided. Perhaps
the most important of these is the prerequisite of better business and
government regulatory laws that are in line with EU standards. These
regulations are intended to lead to a more independent judiciary,
a freer economy, and improved civil society.
However, as attractive as all of these qualities may be, simply
agreeing to the Association Agreement will not lead to reform in a
culture that's been developed under centuries of corrupt Ottoman and
Soviet occupation. This can be seen in many former Eastern Bloc EU
members, like Bulgaria and Croatia, where corruption is rampant and
the respective economies continue to underperform.
More importantly, there is no reason to believe that any of the
potential benefits promised under the Association Agreement cannot
be achieved from within Armenian society and without external pressure.
If Armenia is to transform into a more open and just society, it will
be up to the citizenry of the republic and not a technocrat posted
in Brussels.
Another potential benefit of the Association Agreement was the
opportunity to increase trade with the European Union, as part of
the mutual and gradual tariff elimination. The European Union offers
a market of about 500 million people as well as the world's biggest
collective economy, which together trump the economic breadth of the
Eurasian Union.
But along with a highly developed economy comes a high level of
competition. Even with reduced tariffs, it's unrealistic to expect
Armenian goods to be competitive in such an aggressive market. At
the moment, most of Armenia's exports are raw materials rather than
produced goods. The low level of tariffs will not change the fact that
Armenia's economy has a long way to develop. On the other hand, the
markets of the EEU are much less developed and competitive, meaning
Armenian companies will have a better chance to create a demand for
their goods in this more realistic marketplace.
Doing business with less corrupt and more economically potent nations
will not improve Armenia simply by association any more than doing
business with the United States or Europe makes Saudi Arabia more
democratic or less misogynistic. Any potential long-term benefits
provided by the European Union are attainable by Armenia if there is
an internal understanding of the importance of such improvements.
Given Armenia's current geopolitical realities, the Eurasian Union
is a pragmatic decision with returns that will ensure the stability
of Armenia in the near future while creating new opportunities for
the country's economy.
Read more:
http://thearmenite.com/newsdesk/armenia-chose-eurasian-economic-union/#ixzz3LR9c4p7j
From: Baghdasarian