Moscow Threatens Economic Fallout if Armenia Pursues EU Membership; Russian Deputy PM Warns of Consequences

Armenia will lose tariff-free access to the Russian market and other economic benefits granted by Moscow if it pursues European Union (EU) membership, warned Russia’s Deputy Prime Minister Alexei Overchuk on Tuesday. This warning came just days after the Armenian government revived discussions about joining the EU, amidst worsening Russian-Armenian relations.

Overchuk made these remarks at an international expert forum in Moscow, following statements by Armenian pro-government lawmaker Arman Yeghoyan. Yeghoyan revealed that Prime Minister Nikol Pashinyan and his political team are seriously considering applying for EU membership, believing it would benefit the Armenian economy. Yeghoyan made these comments while chairing a parliamentary hearing initiated by pro-Western groups who support Pashinyan and are urging the government to hold a referendum on EU membership within three months.

Overchuk pointed out Pashinyan’s previous remarks on joining the EU, highlighting that discussions are ongoing about holding a referendum. He emphasized that Armenia's current political direction is increasingly leaning towards the West, and warned that the EU and the Eurasian Economic Union (EEU) are incompatible. Overchuk stressed that the benefits Armenia receives from its proximity to Russia should be seen as essential for its security and strategic depth, implying that any shift towards the EU would have serious consequences.

Overchuk, who co-heads a Russian-Armenian commission on economic cooperation, stated, “We don't do gifts here,” emphasizing that Armenia would face repercussions if it further aligns with the EU. Russian Deputy Foreign Minister Mikhail Galuzin also warned of the economic costs of Armenia’s drift towards the West. He claimed that Pashinyan’s government, under Western pressure, has frozen its membership in the Collective Security Treaty Organization (CSTO), and suggested that Western powers would push for Armenia’s withdrawal from the EEU, which would significantly impact Armenian exports.

Russia accounted for over 35% of Armenia’s foreign trade in the previous year, in contrast to the EU's 13% share. Russia absorbed 40% of Armenian exports, valued at $8.4 billion. Armenian exports to Russia surged since 2022, as local businesses took advantage of Western sanctions on Moscow to re-export Western goods to Russia. These exports and other cash inflows from Russia have been a significant driver of Armenia’s GDP growth in 2022 and 2023.

Russia is also Armenia’s main supplier of natural gas, providing it at prices below international market levels. Overchuk noted Russia's assistance in repairing a railway in northern Armenia damaged by floods, as evidence of the mutually beneficial relationship between the two countries.

In March, the European Parliament adopted a nonbinding resolution that seemed to encourage Armenia to apply for EU membership. Despite this, none of the EU’s 27 member states has publicly supported Armenia’s bid. Armenian Prime Minister Pashinyan welcomed the resolution, calling for public debate in Armenia, recognizing that closer ties with the EU would strain relations with Moscow.

Overchuk reiterated that Russia is interested in a stable Armenia with good trade and brotherly relations. The EU announced plans to establish a €270 million Resilience and Growth Plan for Armenia for 2024-2027, signaling increased alignment between EU and Armenian values and interests. European Commission President Ursula von der Leyen stated that the EU and Armenia would discuss a new and ambitious Partnership Agreement.