Armenia’s recently appointed Prime Minister Karen Karapetian believes it was the right decision for the country to join a Russian-led trade bloc despite what critics see as the absence of immediate economic gains from the move.
“Did we need to accede to the Eurasian Economic Union (EEU)?... I think we did, because thus we become a member of a club where the market is growing and can realize our potential as much as possible,” said the former Gazprom executive in an interview with four leading television channels over the weekend.
Armenia decided to join the Russian-led economic grouping that currently also includes Belarus, Kazakhstan and Kyrgyzstan in September 2013, less than three months before it was to have initialed an ambitious association and free trade area agreement with the European Union that would presumably have opened up prospects for a greater political and economic integration with the 28-nation bloc.
Since then Armenia’s successive governments have defended the policy as economically sound amid arguments from opposition groups and some business circles that it actually hampered the economic growth of the country that unlike most of its former Soviet partners did not possess vast natural resources and, therefore, was effectively put, by the trade and customs agreements, in less beneficial conditions in terms of its ability to export goods.
In the October 22 interview Karapetian, in fact, agreed that Armenia has so far failed to make the most of its membership in the EEU. At the same time, he argued that the country may have been worse off without it.
“We haven’t yet made any analysis as to what would be the situation if we hadn’t acceded [to the EEU] in conditions of an ongoing crisis,” he said. “Imagine what would happen to our products if we had not joined the EEU. There is not any accurate analysis made so far.”
At the same time, the head of the Armenian government stressed that membership in the EEU did not stop Armenia from working in other markets. “We have a great potential to get to new sales markets, while the EEU is not an impediment at all. Therefore, we can take advantage of our membership in the EEU. Success largely depends on us. If we do not use that much, we at least should not put the blame on others. After all, we do not make friends against others, do we?” the Armenian premier said.
Karapetian acknowledged that some of the products made in Armenia may not be competitive in the EEU market due to higher taxes, energy and transportation costs, but suggested that “it is up to businesses to determine which products might be competitive based on our complex logistics and objective situation.”
The new Armenian prime minister used much of the interview to talk about plans of his cabinet to encourage more investments in Armenia’s economy and fight against corruption, which are part of the new government program overwhelmingly approved by the country’s legislature last week.
Representatives of a number of opposition groups have been skeptical about the ability of the new cabinet to curb government corruption that they believe is largely underpinned by oligarchy and monopolies.
Pledging to create a level-playing field for all entrepreneurs in Armenia, Karapetian, at the same time, stopped short of excluding the presence of monopolies in certain sectors of the country’s economy. “A small market will sooner or later lead to monopolies in certain sectors. We may have dominant businessmen in specific areas, because they work more effectively and so on. The question is how they become dominant. If administrative leverages are used for that purpose, then we will have a case of injustice,” said Karapetian, adding that anti-trust services should not necessarily put pressure on businesses that manage to gain some dominance in the market in a “natural competitive field.”
In the matter of attracting foreign investors Karapetian said that while his government will still want to encourage Diaspora Armenians to invest in Armenia, “the rules of the game are going to be the same for everyone – Armenians, Chinese or others.”
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