Armenia would not pay a heavy price for its possible expulsion from the Eurasian Economic Union (EEU) threatened by Russia, Economy Minister Gevorg Papoyan insisted on Wednesday.
Papoyan reacted to a report by the prime ministers of Russia and three other ex-Soviet states which effectively recommends the suspension of Armenia’s membership in the Russian-led bloc.
The extensive report released on Tuesday says Yerevan’s efforts to join the European Union run counter to the EEU’s founding treaty and rules. It says that the exit from the EEU would have severe economic consequences for the South Caucasus state such as a sharp fall in exports to Russia and a surge in the price of Russian natural gas supplied to it. The Armenian economy would shrink by 15.6 percent as a result, according to it.
Speaking to News.am, Papoyan dismissed this and other macroeconomic forecasts made in the report as “exaggerated.” He said that a joint working group set up by Armenia’s ministries of economy and finance as well as Central Bank has come up with far more conservative estimates.
“The negative impact of withdrawing from the EEU is not very significant,” he said. “It is estimated at minus 0.65 percentage points [of GDP growth.] By contrast, according to our estimates, the change in the price of gas could have a much stronger impact: 5 or 7 percentage points in one scenario, and higher in another.”
“Would that have such a consequence for our economy that we wouldn’t be able to recover from? No,” added the minister.
Armenia imports from Russia the bulk of natural gas used by its power plants, households and some sectors of the domestic economy, paying the Gazprom monopoly $177.5 million per thousand cubic meters of the fuel. By comparison, the market-based gas price in the European Union currently exceeds $1,000 per thousand cubic meters.
Also, Russia remains Armenia’s principal export market even after blocking imports of Armenian agricultural products and mineral water earlier this year. The bans were imposed as Moscow began pressuring Yerevan to quickly choose between the European Union and the EEU through a referendum.
The presidents of Russia, Belarus, Kazakhstan and Kyrgyzstan called for the referendum in a joint statement adopted in May. They also instructed their prime ministers to present a report on “possible consequences” of Armenia’s membership suspension before their next summit planned for December.
Foreign Minister Ararat Mirzoyan said on Wednesday that EEU treaties and regulations do not allow such a suspension. Mirzoyan indicated at the same time that Prime Minister Nikol Pashinian’s government is undaunted by the economic cost of leaving the bloc.
“Of course, the well-being of our citizens, trade, economic interests, and our traditional ties with the Russian Federation and other EEU member states are important to us,” he told journalists. “But there is one thing that is more important than anything else: the sovereignty and independence of Armenia.”
Armenia’s main opposition groups see Pashinian’s pro-Western foreign policy as reckless, saying that he is needlessly antagonizing Russia without having a real prospect for EU membership in the foreseeable future. Following the release of the EEU report, some opposition leaders urged Armenians to brace themselves for severe hardship.