Page 66 - bne IntelliNews monthly magazine October 2024

66 Opinion bne October 2024
Armenia has split with Russia politically, but the realities on the ground mean that Russia continues to be a major trade partner. / bne IntelliNews COMMENT
How Armenia helps Russia bypass
Western sanctions Seymur Mammadov in Baku
Armenia must adhere to a multi-vector foreign policy while effectively managing risks, as Prime Minister Nikol Pashinyan stated two years ago during a lecture in the Netherlands. But that includes the necessity of trading with Russia despite the extreme sanctions imposed only days after the war in Ukraine started two years ago, for the sake of keeping the economy afloat.
In April this year, Yerevan again stated the need for diversification, stressing that this strategy has become not just theoretical but a reality for the country. Pashinyan has repeatedly claimed that Armenia follows a consistent multi-vector foreign economic policy. However, upon deeper analysis, it becomes clear that the proclaimed multi-vector approach does not reflect the actual situation. Yerevan’s real policy resembles a forced choice between the interests of major players rather than a fully balanced multi- vector strategy implying equal relations with various partners.
Today, Armenia is slowly but steadily moving toward the West while simultaneously benefiting significantly from trade with
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Russia. Despite Yerevan’s official statements, relations with Moscow are not as strained as they may appear at first glance. This is evident from Armenia’s economic indicators, which are growing due to the re-export of Russian products that have come under sanctions.
Since the start of the Russia-Ukraine war in 2022, Armenia, the country with the smallest foreign trade volume in the South Caucasus, has faced a sharp increase in both imports and exports, a surge that seems disproportionate to its economic potential. The expansion of sanctions imposed by the European Union and the US against Russia has led to reports indicating a significant rise in trade between Armenia and Russia.
Changes in the structure of goods flows and trade destinations between 2021 and 2023 are largely linked to circumventing Western sanctions against Russia. In 2021, Armenia’s foreign trade turnover with Russia increased
by 24.2% compared to 2020, reaching $2.6bn. In 2022, it skyrocketed by 93.4%, amounting to $5bn, and in 2023, the