Potential Economic Turmoil Looms Over Armenia Amid EAEU Treaty Suspension Fears
Aisha Mensah | AA
Armenia could experience a staggering 15.6% GDP decline if the Eurasian Economic Union treaty is suspended, as reported by fellow member states outlining economic repercussions.
Armenia stands on the brink of a significant economic challenge, with its GDP projected to shrink by 15.6% if the Eurasian Economic Union (EAEU) treaty’s application to the country is suspended. This projection comes from a report composed by the EAEU's other member states: Russia, Belarus, Kazakhstan, and Kyrgyzstan.
The document, intended for discussion at the EAEU's December summit, underscores the severe economic repercussions Armenia might face if it were to deviate from the union's parameters. Notably, the suspension is hypothesized to resurrect customs controls and taxes, inflating business costs while simultaneously impeding trade activities.
The potentially bleak economic scenario is further exacerbated by the predicted decline in Armenian-made goods exports by 30-50%, and a more than 90% decrease in the export of re-exported goods.
Impacts on Trade and Energy
The report reveals that with the suspension of the treaty, the volume of EAEU exports to Armenia could halve. Additionally, the country's total goods trade with the other member states is anticipated to plummet by 55.6%.
Armenia might also encounter a steep increase in gas prices, potentially soaring by 69%, if its EAEU participation were suspended. This scenario introduces a cascade of economic challenges, amplifying the urgency for Armenia to maintain its current economic alliances or seek new ones.
Labor Market and Domestic Concerns
The suspension of the EAEU treaty would not only affect economics and trade but could also reverberate through Armenia's labor market. Armenian citizens working in other EAEU member states might face stricter conditions, affecting labor mobility and employment opportunities abroad.
Prime Minister Nikol Pashinyan has previously articulated a defense of Armenia's evolving relationship with the European Union, suggesting that extant ties incur no conflicts with EAEU commitments. Nevertheless, Pashinyan acknowledged the improbability of simultaneous full membership in both alliances.
While the report details potential outcomes, it stresses that no concrete decisions have officially been made regarding suspending Armenia’s participation.
Strategic Implications for Armenian Policy
The prospect of suspending the EAEU treaty poses complex questions for Armenian policymakers. Balancing economic stability with geopolitical alliances becomes crucial as the nation evaluates its future role within the region. With the country's GDP at risk, Armenian leaders must weigh the benefits of sustained participation in the Eurasian bloc against the growing allure of European integration.
Strategic decisions on maintaining or altering these international agreements will hold lasting implications for Armenia's fiscal policies and international strategies, influencing everything from trade logistics to energy security. For cities and municipal governance, shifting trade dynamics could necessitate infrastructure adaptations, resource reallocation, and updated economic priority setting. As Armenia navigates these geopolitical waters, direct impacts may manifest in municipal budgeting, employment opportunities, and local economic planning.
Informed municipal governance could play a pivotal role in buffering communities against potential economic shocks, making proactive management essential in this evolving economic landscape.
Questions That Matter
What happens if EAEU treaty is suspended?
Armenia could see its GDP shrink by 15.6% if the Eurasian Economic Union (EAEU) treaty is suspended. The report predicts significant disruptions in trade and increased economic costs as a result.
What would happen to Armenian exports?
Armenian exports could face severe challenges with a potential decline of 30-50% for locally made goods and over 90% for re-exported goods, should the EAEU treaty suspension materialize.