France’s Hollande Calls For EU-Armenia ‘Association’

The European Union should upgrade its relationship with Armenia to political “association” despite Yerevan’s plans to join the Russian-led Customs Union, French President Francois Hollande said at the start of an official visit to the country on Monday.

Hollande arrived in the Armenian capital on the second leg of his tour of the three South Caucasus states which he began in Baku on Sunday. He and his Armenian counterpart, Serzh Sarkisian, opened a French-Armenian business forum immediately after a welcoming ceremony held at the Zvartnots international airport.

“We are not forcing Armenia to make a choice that runs counter to Armenia’s interests. I spoke with Serzh Sarkisian about that during his visit to France [last autumn,]” Hollande told the forum attended by several dozen French businesspeople.

“We need to devise a Europe-Armenia association that would not constrain you with regard to the Customs Union plans that you have with Russia,” he said. The EU and Armenia can work out a model for such association, he added.

Armenia was on track to sign a far-reaching Association Agreement with the EU until Sarkisian unexpectedly decided last August, under apparent Russian pressure, to join the Russian-dominated trade bloc. The EU abandoned the planned agreement in response, saying that its dominant component -- the creation of a Deep and Comprehensive Freed Trade Area (DCFTA) -- is “not compatible” with membership in the Customs Union.

Yerevan has since been seeking to sign a watered-down version of the Association Agreement that would exclude the DCFTA-related provisions. The EU’s executive body, the European Commission, and key member states have rejected such a compromise arrangement until now.

Hollande’s remarks suggest that the Armenian government might now count on French support for the idea. Sarkisian insisted on it in a speech at an EU summit in Dublin held late last month. He said his country must not be made to “pay a price” for moving even closer to Russia.

France has traditionally been a key EU backer of Armenia, owing, in large measure, to the existence of a large and influential French-Armenian community. Hollande underscored the community’s clout later on Monday when he attended with Sarkisian a concert of French-Armenian singer Charles Aznavour. The two presidents will inaugurate on Tuesday a small park in Yerevan renamed after Missak Manouchian, a prominent member of the French Resistance movement executed by the Nazis in 1944.

They are also due visit the site of the first supermarket in Armenia which is due to be opened by the French retail group Carrefour later this year. Speaking at the business forum, Hollande urged more French firms to set up shop in the South Caucasus country. But he said they need a friendly business environment for doing that.

In his speech at the gathering, Sarkisian argued that several major French companies such as the mobile phone operator Orange, the Credit Agricole bank and the liquor giant Pernod Ricard already have subsidiaries in Armenia. He also said that French investments in the Armenian economy have risen dramatically, totaling over $1 billion in the last six years. France is now Armenia’s number one EU investor, he stressed.

The volume of trade between the countries remains very modest, however. Both presidents said they will strive to boost it.

A French businessman participating in the forum asked Sarkisian to comment on investment-related implications of Armenia’s upcoming entry into the Customs Union of Russia, Belarus and Kazakhstan. “I think that possible membership in the Customs Union is making Armenia more attracting to investors,” replied the Armenian leader.

Sarkisian said foreign investors not only will have easy access the big Russian market but could also capitalize on the EU’s preferential trade regime for Armenia that exempts most goods from EU import duties. “That means we enable companies operating in Armenia to cash in on 700-million-strong markets,” he added.