Eurasian
Economic Union (EAEU) of Russia, Belarus and Kazakhstan is an emerging union
that is gaining more actuality and relevance in the post-Soviet territory with
joining of additional countries as Armenia and Kyrgyz Republic. While it was
seen as another not effective project of post-Soviet Union, it appeared to be a
new-style project bringing tangible gain to its members and becoming a center of attention in the neighborhood and a viable alternative to the EU (Dragneva and Wolczuk, 2015). While some Central Asian countries as Kazakhstan
and Kyrgyz Republic have been analyzing their costs and benefits by joining the
EAEU, Caucasian countries (Armenia, Azerbaijan and Georgia) have been planning
to join the EU.
Armenia
is a small landlocked former Soviet Union country with population of around 3
million people. With an estimated per-capita GDP of US$ 3,619,
Armenia is a lower middle-income country. After the dissolution of the Soviet
Union, Armenia experienced a difficult transition period. Armenia’s economic difficulties were due to the collapse of the
Soviet Union and the situation worsened by the war in Nagorno-Karabakh and the
subsequent closure of its borders with Azerbaijan and Turkey. Furthermore,
Armenia's closed borders led to increased transport costs (WTO TPR, 2010).
Armenia’s
geopolitical and economic situation is a challenge for its leaders. Armenia
stands in the cross road of Russia on one side and European Union on the other.
On the eve of signing an Association Agreement (AA) with EU, it declined to do
so and instead, joined the Russian-led Eurasian Economic Union. Why did it do
so? The Nagorno-Karabakh conflict keeps Azerbaijan and Armenia in a state of de
jure war and challenges regional security. The EU had to keep neutrality over
the conflict due to its interest on cooperation both with Armenia and
Azerbaijan. Since Azerbaijan, Turkey and Georgia have taken steps to strengthen
political, economic and security cooperation, Armenia has become further
isolated and more dependent on Russia (Paul, 2015).
The geopolitical landscape of South
Caucasus remains a region of significant tensions. The issues with Nagorno-Karabakh,
Armenia’s relations with Azerbaijan and Turkey, and Georgia along with economic
slowdown of Armenia’s partner – Russia, as well as slow growth in emerging
partners China and Europe, are not optimistic. Russian - Armenian relations
suggest that these tensions affect interest and investment in the region.
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