The sanctions imposed by the European Union (EU) against Russia have brought about serious changes in the world economy. Many countries, especially Western ones, are trying to exert economic pressure on Russia by applying these sanctions. Against this background, the role of trade relations with the countries of Central Asia and the Caucasus is increasing in the Russian economy. In this context, the trade turnover with Armenia is particularly striking.
In this article, the “Report” discusses the increase in trade between Armenia and Russia, its causes and the fact that European countries still ignore the sanctions imposed by them.
There is a significant increase in Armenia’s trade turnover with Russia. This increase in trade turnover is observed after the European Union initiated sanctions against Russia in 2022. An interesting point is that Armenia sells the goods it buys from the European Union to Russia, which is at the root of this growth. This is practically equivalent to ignoring European sanctions. As proof of all this, you can pay attention to the posts of Robin Brooks, a leading specialist at the Brookings Institute, on social networks. The charts of these actions also reflect the sharp increase in trade turnover between Armenia and the countries of the European Union.
According to official statistics announced by Armenia, the trade turnover between Armenia and Russia in January-July 2024 reached 9 billion US dollars, 2.4 times more than in the corresponding period last year. This shows that Armenia chose not to comply with sanctions by sending the goods it purchased in the EU to Russia. This fact overshadows the effectiveness of the EU’s economic pressures. The following chart shows Armenia’s overall and foreign trade relations with Russia.
The above-mentioned graph shows the decline in exports between Armenia and Russia, which is another way of going unnoticed. Thus, while Armenia has reduced its exports to Russia, it has significantly increased its exports to other countries. If we take into account Armenia’s production potential, we will see that these exported products are products purchased in Europe and sent to Russia via third countries.
Yet, despite all this, Armenia is directly involved in export operations. Robin Brooks describes this process as a trade mechanism that Armenia has directly established to reduce the impact of sanctions and gain economic benefits.
Russian Deputy Prime Minister Alexei Overchuk also stated at the meeting of the co-chairs of the intergovernmental commission on economic cooperation between Russia and Armenia that in 2024 the trade turnover between the two countries will range from 14 to 16 billion US dollars. This figure is an indicator that Armenia ignores sanctions and continues its repeated export operations with Russia. As a result, according to this year’s expectations, the trade turnover between Armenia and Russia is projected to increase sixfold from 2.6 billion US dollars by 2022. Moreover, export transactions increased from 841 million US dollars to 3.4 billion US dollars in 2023.
Armenia no longer delivers these products to Russia via indirect routes, but directly. One of these routes is the United Arab Emirates. As a result, exports between Armenia and Russia decreased by 22.4% to 1.6 billion US dollars in the seventh month of 2024.
However, during this period, Armenia exported 3.95 billion US dollars to the UAE, which is 7.7 times more than in the same period of the previous year. Last year, Armenia’s exports to this country increased 4.2 times, and in 2022 – 7.2 times. Thus, since the beginning of the war between Ukraine and Russia, Armenia’s exports to the UAE have increased 53 times.
A. Overchuk assesses this behavior of Armenia as a strategic and economic alliance and stresses that the relations between the two countries will deepen.
In conclusion, it should be noted that Armenia is trying to strengthen the country’s economic position by playing such a transit role. Although this manifests itself in the form of an increase in statistical figures, it drives the economy of a country with very weak production into the abyss. Such a strong dependence on geopolitical situations is a threat to the economy of all countries, and Armenia has chosen this path.
