A scandal for two: Armenia is trying to talk to Russia from a position of strength

Relations between Armenia and Russia continue to deteriorate. Yerevan stated that due to problems with Armenian exports, the EAEU association may cease to exist. Prime Minister Nikol Pashinyan also added that he could initiate international arbitration over the operation of the railway line operated by Russian Railways. Details can be found in the Izvestia article.

The EAEU and the referendum

The conflict between Moscow and Yerevan is gaining momentum. At the end of July, Russian President Vladimir Putin and Armenian Prime Minister Nikol Pashinyan met in person for the first time in recent months. According to reports, there was no discharge. It is known that Pashinyan did not receive congratulations from Moscow on his victory in the parliamentary elections that took place in the Transcaucasian republic in June.

According to the Russian side, Putin stressed during the conversation that Yerevan should hold a referendum as soon as possible. According to its results, the republic must decide on a foreign policy choice — whether the country goes to the European Union or remains part of the EAEU.

In turn, Pashinyan's press service reported that he expressed outrage over the restrictions on Armenian exports. According to Pashinyan, the measures taken recently contradict both the rules of the EAEU and the contractual legal framework of the two countries.

Further, after the dialogue, the Armenian leader stated that he considered the talks about the referendum inappropriate. He noted that no one can insist on carrying out the procedure, because it is the exclusive competence and sovereign right of the Armenian state.

Pashinyan also added that the problems with Armenian exports concern not only Yerevan, but the entire EEA, which in the current situation has become "paralyzed and does not work." "If this issue is not resolved quickly, let me predict that this will be the beginning of the end of unification," he stressed.

Investment fees

The problems didn't end there. During a briefing for journalists, Pashinyan said that Armenia may demand an annual fee of $2 billion from Russian Railways for the use of the South Caucasus Railway (SCR) if the company does not give up the concession.

He stressed that he wants to resolve the issue with Moscow in a friendly manner, but if disagreements arise, an appeal to international arbitration will follow. "I am not referring to the railway, I am saying directly that it is the property of the Republic of Armenia and there is no other option," he said.

Moscow reacted to these statements. Oleg Belozerov, the head of Russian Railways, said that the company was surprised to learn from the media about a possible charge. According to him, if Yerevan decides to change the terms of the concession agreement, the Russian side will demand a return on investments, which have amounted to $396.3 million since 2008.

The head of the Ministry of Economic Development of the Russian Federation, Maxim Reshetnikov, also confirmed that Moscow will demand compensation if Yerevan renegotiates its obligations under the Southern Railway. "This is not a "free" asset of a Russian company, but an enterprise in which we have already invested more than 30 billion rubles, purchased new rolling stock and are developing infrastructure based on contractual obligations," he said.

In addition, the minister recalled the advantages that Armenia receives from cooperation with the EAEU. In particular, during the period of participation in the association, Yerevan increased its exports to the Union countries 13 times, from $240 million to $3.2 billion. More than 80% of traditional Armenian exports — food, agricultural products and alcohol — are supplied to the EAEU countries. But Armenia's share in the total trade turnover of the Union countries is only 3.4%.

Reshetnikov added that the EAEU is not only the main sales market, but also the main source of energy resources for Yerevan. Russia supplies gas to Armenia at a price of $177.5 per thousand cubic meters, while in the European market the price reaches $ 600. "It cannot be called anything other than subsidizing. The total amount is about $1 billion per year. It is unlikely that anyone outside the Union will be able to offer Armenia such conditions," the head of the ministry noted.

Import on pause

Relations between Russia and Armenia have been steadily deteriorating over the past few years. At first, Yerevan criticized the work of the CSTO defense union and Russian peacekeepers in Karabakh. Recently, cooperation within the framework of the EAEU economic union has also begun to be questioned.

Discussions were particularly heated during the election campaign in Armenia this spring. Then the current authorities, led by Prime Minister Pashinyan, began talking about the republic's desire to join the European Union. In April, the country even adopted a corresponding law, which refers to the "beginning of the membership process" in the EU.

In May, the summit of the European Political Community was held in Yerevan on a large scale. Representatives of the European bureaucracy talked a lot about the fight against disinformation and "hybrid threats", hinting at Russia in these matters. Vladimir Zelensky also attended the event.

At the same time, the Russian side made it clear that it would not work to sit on two chairs — they would have to make a choice between membership in the EAEU or the EU. As a result, Moscow has recently imposed numerous restrictions on the import of a wide variety of Armenian goods, including vegetables, fruits, fish, dairy products, mineral water, cognac, wine, and flowers.

Several protest actions were held in Armenia in this regard. Agricultural producers in the Ararat region blocked the key highway leading to the border with Iran. Fish farmers went out with a rally to the government building in Yerevan. At the same time, the Armenian authorities began to impose retaliatory restrictions, for example, since the end of July, a ban has been imposed on the import of tomato paste from the EAEU countries.

What the experts say

Relations between Russia and Armenia will continue to deteriorate, political analyst Tigran Kocharyan believes. According to him, Moscow has not imposed all possible restrictions, it has a lot of additional measures up its sleeve.

— Pashinyan and his advisers thought that after the parliamentary elections they would easily settle relations with Russia, but this is not happening. They still did not understand that the key issue for Moscow is not the outcome of the vote, but the geopolitical choice of Armenia. Therefore, Vladimir Putin is now insisting on holding a referendum — he wants to know the opinion of the Armenian people on this key issue," the expert explains.

In turn, the Caucasian scholar Artur Atayev says that Pashinyan is trying to behave in the foreign arena the way he is used to in domestic politics. He regularly threatens the Armenian opposition, promising to "trample and destroy them." Now, according to the source, the prime minister is trying to repeat something similar in relations with Russia.

— In such circumstances, we cannot expect anything other than a further deterioration of bilateral relations. I think Pashinyan is deliberately provoking confrontation at the suggestion of the European bureaucracy," he argues.