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Experts Warn Of Price Hikes After Armenian Entry Into Russian Bloc


Armenia -- Shoppers in a food supermarket in Yerevan.

Armenia -- Shoppers in a food supermarket in Yerevan.

Membership in the customs union of Russia, Belarus and Kazakhstan will push up the cost of key products imported to Armenia, analysts in Yerevan warned on Monday.

They pointed to considerably higher common customs duties set in the three former Soviet states in line with their more protectionist policies. Armenia, which has long had a liberal trade regime, will have to impose the same import tax rates if it joins the Russian-led trade bloc.

“The import duties, which will be mandatory for Armenia, are adapted to the economic interests of Russia, Kazakhstan and Belarus,” Samvel Avagian, an economist writing for several Armenian media outlets, told RFE/RL’s Armenian service (Azatutyun.am).

Avagian estimated that the prices of imported foodstuffs as well as cars will rise by up to 15 percent. He argued that the bulk of those imports come from countries other than Russia, Belarus or Kazakhstan.

“Russia has a car industry and levies quite high duties from imported cars,” he said. “They are much higher than the ones which are set in Armenia. The same is true for dairy and meat products and sugar. The import duty for sugar is three time what we have in Armenia now.”

Armenak Chatinian, an economic commentator for the Civilnet.am online television, echoed these warnings, saying that Yerevan will hardly be in a position to have the customs union tariffs lowered. He said this, coupled with the absence of common borders with any of the union’s three member states, means that Armenia has little to gain from joining a bloc which Russian President Vladimir Putin plans to turn into a Eurasian Economic Union of ex-Soviet states.

“We won’t be able to benefit from a free movement of goods within that customs union,” said Chatinian.

Armenian officials and Prime Minister Tigran Sarkisian in particular repeatedly cited the absence of common borders in their objections to Armenia’s entry into the customs union that were voiced until recently. In a Russian newspaper interview early this year, Sarkisian argued that his country would not fit into the union also because it does not have vast natural resources unlike Russia and Kazakhstan.

The Armenian premier has made no public statements on the issue and avoided any contact with journalists since President Serzh Sarkisian’s unexpected September 3 pledge to join the union. Serzh Sarkisian too has not addressed the nation since then.

Sarkisian’s dramatic policy U-turn was welcomed last week by several wealthy pro-government members of Armenia’s parliament whose companies export brandy and agricultural products to Russia. They said that those exports will now rise significantly.

Chatinian questioned those assertions, arguing that Armenia already has free trade regimes with most ex-Soviet republics, including Russia. He said the most significant benefit of joining the Russian-led union is that Russia will not close its market to Armenian exporters on dubious sanitary grounds.

Russia has already threatened to impose such trade sanctions on Ukraine over the latter’s plans to sign an Association Agreement with the European Union and snub the Kremlin’s Eurasian project. The Ukrainian government has balked at those threats, saying that it will go ahead with the historic deal with the EU.

According to government data, Russia accounted for just under 20 percent of Armenia’s exports last year.
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