Expert: Economic pressure on Armenia may be virtually painless for other EAEU members, but not for Armenia itself

ArmInfo. The political message of the report "on the consequences of suspending Armenia's membership in the EAEU" is quite harsh: economic pressure on Armenia could prove virtually painless for other members of the Eurasian Economic Union, while it would be a severe blow to Armenia itself. This is how political scientist Vahe Davtyan commented on the report on the consequences of suspending Armenia's membership in the EAEU, published on the Russian government website on October 20.

The expert noted that the 72-page report, prepared by representatives of four EAEU states: Russia, Belarus, Kazakhstan, and Kyrgyzstan, directly addresses the possibility of suspending Armenia's membership in the Union. According to him, this regime is proposed to be maintained until a referendum is held in Armenia on the choice between the EAEU and the EU.

"The legal dimension is interesting." The report acknowledges that the EAEU Treaty does not provide for a mechanism for suspending membership. Therefore, the authors turn to the 1969 Vienna Convention on the Law of Treaties, under which other EAEU members are said to have the right to consider a joint decision to temporarily suspend the EAEU Treaty until a referendum is held in Armenia," he noted.

As for economic calculations, Davtyan continued, the picture is quite grim. A potential contraction of Armenia's GDP is estimated at 15.6%, or approximately $4.6 billion, with an additional increase in inflation of 14.9% and a decline in consumption of 14.6%. Trade turnover with EAEU countries is projected to decline by 55.6%, including a 65.8% decline in exports. The expert added that the most serious impact could be on agriculture, the food industry, alcohol production, and light industry.

"The energy component deserves special attention. The report examines a scenario whereby the price of Russian gas increases from the current $177.5 to $300 per 1,000 cubic meters—an increase of almost 69%. Naturally, such a change will impact the cost of electricity production, industrial competitiveness, and overall inflation. However, there is a significant circumstance that the report's authors failed to take into account. Gas supply terms are regulated, among other things, by bilateral Russian-Armenian agreements. Therefore, the suspension of membership in the EAEU does not in itself imply an automatic price adjustment. Therefore, the inclusion of such a scenario in the document can be regarded as a political signal," Davtyan is confident.

According to him, the issue of labor migration also remains sensitive, as Armenian citizens working in EAEU countries may lose their current preferential treatment and face new requirements regarding work permits, social security, and taxation.

"The report also predicts a decrease in remittances from EAEU countries to Armenia from approximately $3.95 billion to $1.85 billion. The total volume of bank transfers is effectively linked to labor migration, although a significant portion of these funds may have a completely different economic origin. Therefore, this estimate also requires additional substantiation.

And, perhaps the most interesting part of the document concerns the possible losses for the remaining EAEU states. According to the calculations provided, the suspension of Armenia's membership will not create significant economic problems for them. In Russia's case, the projected decline in total exports and imports of goods and services will not exceed 1%.

Therefore, the report's political message is quite harsh: economic pressure on Armenia could prove virtually painless for other EAEU members, while it will be a severe blow to Armenia itself," the Armenian expert concluded.