What should Armenia expect from new anti-Russian sanctions

What should Armenia expect from new anti-Russian sanctions

The issue of the US law imposing new sanctions against Russia and their possible impact on Armenia is being actively discussed in Yerevan. Experts are convinced that the sanctions will have an extremely negative impact on Armenia, which economy is closely linked to Russia's economy. Operating in Armenia, Russian companies produce 17% of GDP.

According to political scientist Gevorg Melikyan, due to extremely strong trade and economic ties, sanctions against Russia will inevitably entail problems for the Armenian economy. The political scientist believes that the decline in the Russian economy will lead to a reduction in transfers from Russia to Armenia and an increase in prices for goods imported from Russia. "Our country needs a higher level of diversification of political and economic ties," Melikyan says.

The economist Vilen Khachatryan believes that a new package of anti-Russian sanctions will have both positive and negative impact on Armenia. According to him, sanctions can be considered as an opportunity to focus attention on exports: "It's about exporting agricultural products to Russia, because this country accounts for most of these exports." On the other hand, according to the economist, the new package of sanctions is fraught with problems for Armenian migrants: "When sanctions are applied, migrants are dismissed in the first place. This is a common world practice in the face of economic upheavals. Many out citizens work in Russia and these processes can affect them as well," Khachatryan believes, according to which, all this will lead to a reduction in the amount of transfers, sent by Armenian migrants from Russia to their homeland.

Another part of experts, expressing concern over anti-Russian sanctions, nevertheless believe that the new package will not have such a profound impact on the Armenian economy, as it was in 2014. Then, the volume of transfers from Russia to Armenia decreased by almost 40%, purchasing power declined sharply, and the growth of the Armenian economy approached zero, amounting to 0.2%.

According to the head of the Caucasus Research Resource Centers Egine Manasyan, it is unlikely that the situation of 2014-2015 will be repeated in Armenia. The expert, however, does not exclude that if the US introduces another package of sanctions against Russia, Armenia's economic growth will be lower than expected in the medium term.

"I do not think that the new sanctions will lead to significant shocks in Russia's economy, which, in turn, can affect Armenia in terms of transfers, demand for our exports, etc. I do not think that we will have significant shocks in these areas. Why? Because Russia's economy has already learned to live in the conditions of such sanctions," the Finance Minister Vardan Aramyan, who nevertheless did not rule out the negative impact of sanctions on Armenia, said. According to him, first of all, it may affect fluctuations in the ratio of exchange rates.

Adherents of this point of view believe that the sanctions will affect only a small percentage of Russia's trade balance. In addition, the sanctions will not affect such Armenia's advantage, provided by its membership in the Eurasian Economic Union, as an opportunity to purchase cheap energy from Russia. The sanctions will also not affect the customs privileges established within the framework of the EEU, including imported diamonds, which is also very important for Armenia.