Armenia’s trade with Russia, its longtime ally and main trading partner, doubled last year and in the first four months of this year amid a barrage of sanctions imposed on Moscow by the United States and the European Union. This is the main reason why the Armenian economy grew by over 12 percent in 2022.
According to Armenian government data, Armenia’s exports to Russia almost tripled in 2022 and nearly quadrupled in January-April 2023. Goods manufactured in third countries and re-exported by Armenian firms are believed to have accounted for most of that gain.
They include consumer electronics as well as other hi-tech goods and components which the Western powers believe could be used by the Russian defense industry. The New York Times reported last fall that Armenian imports of processors and microchips from the U.S. and the EU rose sharply in January-September 2022. As much as 97 percent of those items were re-exported to Russia, it said.
Also, Armenian companies shipped some 53,000 smartphones to Russia in the first half of 2022, up from only 745 in the year-earlier period.
U.S. - U.S. Deputy Treasury Secretary Wally Adeyemo mees Armenian Deputy Prime Minister Mher Grigorian, Washington, April 11, 2023.
These re-exports appear to have prompted serious concern from EU and especially U.S. officials. The latter pressed the Armenian government to comply with the sanctions during a series of meetings held earlier this year.
Prime Minister Nikol Pashinian said on May 22 that despite its “strategic” relations with Russia Armenia “cannot afford to be placed under Western sanctions.” “Therefore, in our relations with Russia we will act on a scale that allows us to avoid Western sanctions,” he told a news conference.
A few days later, Pashinian’s government announced that local exporters will now need government permission to deliver microchips, transformers, video cameras, antennas and other electronic equipment to Russia. The Armenian Ministry of Economy, which proposed the measure, cited the need to prevent the use of such items by foreign defense industries.
The Moscow daily Kommersant reported on Wednesday that for the last two weeks commercial banks in Armenia as well as Kazakhstan and Hong Kong have frequently blocked payments for such supplies wired by Russian buyers.
The Armenian Central Bank essentially confirmed this, saying that the “terms for foreign transactions set by all regional banks are being significantly tightened.” It claimed that Armenian banks are doing that “on their own.”
“As part of that process, the number of refusals to carry out a certain type of transactions may increase if commercial banks … assess those transactions as risky,” the Central Bank said in a statement to RFE/RL’s Armenian Service.
Russia - Russian Prime Ministers Mikhail Mishustin meets his Armenian counterpart Nikol Pashinian in Sochi, June 7, 2023.
Pashinian and his Russian counterpart Mikhail Mishustin made no mention of these restrictions in their opening remarks at a meeting held in Sochi on Wednesday. They praised the soaring Russian-Armenian trade.
“It is important to maintain this positive momentum and achieve new record levels in mutual trade,” Mishustin told Pashinian.
“And this, by the way, helps the Armenian economy a lot because we are having a very good economic activity,” Pashinian said for his part.