Armenia Should Strengthen Ties with the EU and Iran

Constrained for years by a challenging regional environment and more recently by the standoff between Russia and the West, Armenia now has two potential opportunities to broaden its foreign policy: a reboot with the European Union and a reopening with Iran. But the government in Yerevan will need to act more boldly in its international engagements in order to seize them.

The EU reboot

Armenia and the EU reopened negotiations in December 2015 on a new bilateral legal framework to make up for the Association Agreement which was abandoned after Armenia decided in September 2013 to join the Russian-led Eurasian Economic Union (EEU). On 1 March EU foreign policy chief Federica Mogherini visited Armenia amidst upbeat rhetoric from both sides that a new partnership can now be forged despite Armenia’s place in the EEU and strained relations between the EU and Russia.

There are limits to the new agreement. Although it is supposed to partially cover trade and investment, it will fall short of being a free trade agreement – which would clash with Armenia’s EEU commitments. These limits are painful at a time when Armenia’s economy and trade with Russia and other EEU partners are declining due to Western sanctions against Russia, the collapse of the oil price and a weak rouble. Instead, democracy, rule of law and human rights are expected to be at the forefront.

While the economic and institutional support the EU offers can make a real impact in a small country like Armenia, political will remains key. The agreement could be a working tool, used to bolster Armenia’s potential from within if the country’s coalition government is truly ready to curb monopolies and pursue democratic reform – in particular a new electoral code. But it could also end up as an empty declaration of good intentions that does nothing for either side. The Armenian government’s promise to ‘build a European-model state in the Eurasian Union’ needs be backed by action if it is to prove the sceptics wrong.

The link to democracy is also a test case for the EU, often criticized by Armenia’s civil society for turning a blind eye to the government’s deficiencies in this area. Brussels should be held to account, too.

Iran reopening

Armenia’s second opportunity is with the opening of Iran after sanctions. Armenia and Iran have overlapping strategic interests on a range of issues – not least shared antagonism with Turkey and Azerbaijan.

However, for much of the past two decades, Armenia-Iran ties were curbed by Western sanctions against Iran and by Russian obstruction. Now, Armenia may regain an important outlet with which it can ease the blockade imposed by the closed Azeri and Turkish borders and, in the best case scenario, become a transit country for Iranian gas and goods to the rest of Europe, effectively connecting the Persian Gulf to the Black Sea. However, Iran won’t wait if Armenia doesn’t capitalize. Azerbaijan is also trying to patch up differences with Tehran and adopt the same bridging role to the West (not least so as not to cede an advantage to Armenia). But if played prudently, Iran could finally bring balance to Armenia’s foreign policy − especially if some of the proposed joint energy and infrastructure projects are realized.

The Russia factor

But Armenia will need to address the fundamental flaws in its ‘alliance’ with Russia if it wants to benefit from these geopolitical shifts. ‘Strategic partner’, ostensible ally and ‘security guarantor’, Russia is widely seen as the main reason for the failure of Armenia to get closer to the EU, having reportedly threatened to withdraw its security guarantee for Armenia if it were to choose any bloc other than the EEU. In 2005, Moscow intervened to ensure that the Iran-Armenia gas pipeline’s diameter was halved to prevent a significant challenge to its own supplies to the West. Even that capacity has not been reached, as Moscow only wants its own hydrocarbons in the Armenian gas market. Iranian diplomats have been hinting that Tehran can offer lower gas prices than Moscow, but Armenia is bound by Gazprom’s control of the Armenian gas distribution network.

Rather than expanding Armenia’s foreign policy options, successive administrations have pleaded real-world constraints – locked borders and lack of alternative (Western) security solutions – as a convenient excuse, which has shrunk the country’s options further. Scepticism about a breakthrough prevails, in Armenia and beyond, but alleging there is no way out may be a self-fulfilling prophecy. The government needs to be more resolute in balancing its Moscow partnership with other alliances, increasing security by reforming its army and beefing up resilience by taking democratization and market liberalization seriously. Armenia will need to overcome the fear of taking its fate into its own hands – it may find that boldness attracts more allies.

Anahit Shirinyan, Academy Fellow, Russia and Eurasia Programme (Chatham House).

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