YEREVAN, ARMENIA — When Armenia broke ranks last year with other former Soviet states marching toward Europe and pledged to join Russia’s new customs union instead, the goal of keeping a foothold in both the East and the West didn’t seem all that challenging.
It wasn’t the first time the country had pulled off such a high-stakes balancing act: For years, Armenia has been the only full member of the Collective Security Treaty Organization, the Russian-led military alliance, to also participate in NATO peacekeeping missions. And with the United States and European Union promising to continue economic development efforts, there seemed little to lose by joining Russia.
But that was before the Ukraine crisis, before Western-Russian relations sank to their lowest point since the Cold War, and before the ruble started plummeting erratically — pulling down currencies such as the Armenian dram along with it.
Now, as Armenia settles into its role as the smallest member of Russia’s new Eurasian Economic Union (EEU), the country is bracing for what even government officials acknowledge could be a rough ride.
“I never heard of a situation where turmoil in a partner country was a helpful thing,” said Vache Gabrielyan, deputy prime minister and head of a new government ministry for international economic integration.
“The situation, of course, has changed,” he added. “But I don’t yet see any change that fundamentally alters the choice we made.”
Armenia’s decision to scrap negotiations with Europe over an association agreement — the sort that the E.U. recently signed with Ukraine, Georgia and Moldova — and join Russia’s nascent trade bloc was announced abruptly after a September 2013 meeting between the president, Serge Sarkisian, and Russian President Vladimir Putin in Moscow. Western diplomats said they were surprised, and some members of the opposition said the deal was the result of Russian blackmail.
Members of the Armenian government justified the decision as one that will give Armenia the opportunity to improve economic ties with both the E.U. and the EEU.
“In the framework of our humble abilities, we strive to serve as a bridge for these two organizations,” said deputy foreign minister Shavarsh Kocharyan, one of the key negotiators of the deal to bring Armenia into the EEU. Picking a side was simply a necessity, he added, because “nowadays, every state needs to be in an economic cooperation bloc. Germany, France — are they on their own? Heh.”
The idea that Armenia could help build E.U.-EEU economic ties appears to have some support in the Kremlin. Last week, Russia’s E.U. ambassador told the EU Observer, a news Web site, that Armenia is one of several countries that could facilitate trade between Russia’s new customs union and Europe.
What few in the Armenian government will acknowledge, however, is that in choosing to side with Russia, they didn’t have much choice.
Armenia declared its independence from the Soviet Union 23 years ago. But Russia remains the tiny country’s most vital link to the outside world.
Russia hosts the largest population of Armenians outside Armenia and is the largest source of remittances, which accounted for more than a fifth of Armenia’s national income last year. Russia has a monopoly on selling Armenia cheap gas through 2043, and state-funded Russian television broadcasts are how many Armenians get news and information.
While Europe remains Armenia’s largest export market, Russia is the key destination for non-raw-material goods, which Gabrielyan says will help Armenia diversify its economy — especially, he said, because Armenia is not yet ready to compete in Europe.
Few public officials, even those who have criticized the president, discount those ties. Last month, Armenia’s parliament voted overwhelmingly to approve joining the EEU.
The EEU dealmaking process “was misguided and should have been done differently,” said Vartan Oskanian, Armenia’s former foreign minister and a member of Prosperous Armenia, parliament’s second-largest party. But lawmakers backed EEU membership “given the importance we attach to Armenia’s relations with Russia.”
Yet the most important factor driving Armenia’s participation in Russia’s new economic union isn’t economic.
“We have a security issue which demands us to take faster steps,” Kocharyan said, explaining that benefits of European association would take longer to realize than joining the EEU. “Such long-term projects are very important, but we can never exclude the possibility that the day after tomorrow, we may have to impose peace on our neighbors.”
Russia is Armenia’s chief supplier of arms, at discounted prices, and maintains a military base in the country. Armenians consider that a vital asset in their two-decade-long, frozen conflict over the status of Nagorno-Karabakh, an ethnic Armenian enclave within Azerbaijan that declared independence as the Soviet Union was coming apart.
There is fear of endangering the Russian military support especially because there is no real Western alternative. Although Armenia is recipient of one of the highest levels of U.S. aid per capita, that money isn’t for buying weapons.
But some opposition members worry that joining the EEU may undermine the economic and strategic security Armenia seeks to preserve through closer association.
“Many Armenians think that Russia can only solicit Azerbaijan to join the EEU by bargaining on Karabakh,” said Nikol Pashinyan, an opposition member of parliament who spent a few years as a political prisoner under Sarkisian’s presidency.
In recent years, Russia began selling arms to Azerbaijan — a shift Armenia believes fueled a spike in cross-border skirmishes last summer. And Armenia only narrowly avoided having trade with Nagorno-Karabakh subjected to customs tariffs in EEU negotiations.
Pashinyan said EEU membership could also hurt deals between Armenia and other neighbors, such as Iran, where a rollback of sanctions could present lucrative opportunities to transport oil to Europe. Through the EEU, Russia could stymie such plans.
Such concerns are why some government opponents maintain that joining the EEU is tantamount to “surrendering by our own signature . . . the independence we gained 23 years ago,” said Raffi Hovannisian, the U.S.-born leader of Armenia’s Heritage Party who ran for the presidency last year and made accusations of fraud after losing.
When asked about such scenarios, government officials said Armenia will not shy away from vetoing EEU decisions it doesn’t like, even under Russian pressure — and stressed that Armenia will still seek closer ties with Iran, the West and others as an EEU member.
But even if Armenia is able to walk that geopolitical tightrope, some believe that by moving toward Russia, the country lost something it can’t replace.
“You know, yesterday, we were not Europeans, yesterday we were not a democratic country. But yesterday we had the hope of becoming a democratic country, with European standards,” said Stepan Safaryan, a political analyst and former Heritage Party leader. “Tomorrow, we will not have this hope. And that is the problem.”
Marianna Grigoryan contributed to this report.