Armenia, Russia To Expand And Develop Bilateral Trade & Investment

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Meetings held on Tuesday (April 19) between Nikol Pashinyan, the Armenian Prime Minister, and Vladimir Putin have resulted in a joint trade statement being made in which both parties expressed needs to develop bilateral trade and do so in a sustainable manner.

Both countries are members of the Eurasian Economic Union (EAEU), which also includes Belarus, Kazakhstan, and Kyrgyzstan. It was recognised that further diversification of trade categories of trade, progressive growth of volumes, cooperation in mutual production, and the active implementation of the mechanisms of the EAEU were stressed.

Agreement was reached to encourage business development between the business circles of the two countries, including through interregional and local self-government platforms, and through co-hosting business missions, while the Economic Cooperation Program between the two countries for 2022-25 was also assessed.

These will manifest themselves by holding permanent Russian industrial exhibitions in Armenia, including an emphasis on high technologies. Increases of Russian investments to Armenia were discussed, and it was noted that Russian investors are among the main taxpayers in Armenia.

The sides reaffirmed their readiness to expand cooperation in the field of use of nuclear energy for peaceful purposes, welcomed the extension of the term of operation of the Armenian NPP, expressed their intention to work out the construction of new power units. The effective joint work aimed at the consistent establishment of common market of energy resources within the Eurasian Economic Union was emphasized.

Armenia is a member of both the Commonwealth of Independent States (CIS) and the Eurasian Economic Union (EAEU). The difference is that the CIS grouping operates on a bilateral trade agreement basis between members whereas the EAEU is a free trade bloc with FTA commonality.

Armenia-Russia trade volumes reached US$2.1 billion in 2020, with Russia exporting energy, wheat and logistics related services, and Armenia exporting mainly agricultural based products, including large quantities of Armenian Brandy, a sought-after premium liquor in Russia.

Armenia’s position in 2020 changed as a result of an ill-advised conflict with neighboring Azerbaijan concerning the long-disputed region of Nagorno-Karabakh, which resulted in casualties of about 8,000 killed. Russia, along with Turkey and Iran, helped broker a peace deal although the situation remains flammable yet is slowly settling down. However, Armenia has a role to play in China’s Belt And Road Initiative and can function as a corridor in cooperation with Azerbaijan, a geographical opportunity now being reluctantly accepted.

To this end, Armenia is a partner with Azerbaijan in the creation of the Trans-Nakhchivan railway spur from the International North-South Transport Corridor with links through to Iran and transit access to both the Persian Gulf and South Asia in addition to Turkey and Southern Europe. To bolster that cooperation, both Armenia and Azerbaijan are to be considered for observer partner status at the Shanghai Cooperation Organisation which should add another dispute prevention layer as well as hasten Caucasian transportation supply chains as part of the southern supply chains via the INSTC as an alternative to the Suez Canal and the currently sanctioned Northern Russian and Belarussian Ports to Europe

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Russia Briefing is written by Dezan Shira & Associates. The firm has 28 offices throughout Eurasia, including China, Russia, India, and the ASEAN nations, assisting foreign investors into the Eurasian region. Please contact Maria Kotova at russia@dezshira.com for Russian investment advisory or assistance with market intelligence, legal, tax and compliance issues throughout Asia.

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