President Serzh Sarkisian insisted on Friday that membership of the Russian-led Customs Union will be good for Armenia, dismissing as “disinformation” critics’ claims that it will sharply raise the cost of living in the country.
Meeting with officials at the Armenian Ministry of Urban Development, Sarkisian admitted that the prices of some imported goods will rise because of higher customs duties enforced by the trade bloc currently comprising Russia, Belarus and Kazakhstan. But he said “there can be no drastic inflation regardless of whether or not Armenia joins the Customs Union.”
Sarkisian said that fears of sharp price hikes are stoked by his political opponents and pro-opposition media as part of their “disinformation” campaign against the Armenian government. “In these circumstances, we have to be very active in order to be able to communicate our decisions to the public, gain public support and get feedback,” he said.
The government made similar assurances last week in the face of growing concerns expressed by economic analysts, media commentators and businesspeople. Economy Minister Vahram Avanesian said membership of the Customs Union will add only up to 1.5 percentage points to annual inflation.
The Armenian Union of Employers estimated earlier that the prices of basic foodstuffs such as meat, dairy products, wheat, cooking oil and sugar will rise by up to 15 percent. Another non-governmental group representing thousands of second-hand car dealers claimed this week that car prices will triple if Armenia adopts corresponding Custom Union duties.
The government announced in late January that it will ask the union’s member states and governing body, the Eurasian Economic Commission, to allow Armenia to continue applying existing low imports duties to as many as 850 items. Negotiations on these trade preferences are expected to start in next month.
Arsen Ghazarian, the chairman of Armenia’s largest business association, the Union of Industrialists and Entrepreneurs, said on Friday that the concessions sought by Yerevan are vital for the domestic economy and consumers. “There is no way that we will sign [a membership treaty] if the talks are not successful,” he told RFE/RL’s Armenian service (Azatutyun.am) in an interview.
Ghazarian said that many businesspeople have legitimate concerns regarding the Russian-dominated bloc because the government has still not clearly explained the economic wisdom of joining it. “For four or five years they spoke about the advantages of the Association Agreement with the European Union,” he said. “When it came to the Customs Union, there was either criticism or silence. So today people have fears.”
Ghazarian made clear at the same time that he supports Armenia’s accession to the union in principle. “It would be naïve to say that we will get only positive effects. But the strategy itself is correct,” he said, adding that Russia remains the main market for key export-oriented sectors of the Armenian economy.
According to the National Statistical Service (NSS), Russia, Belarus and Kazakhstan accounted between them for around 24 percent of Armenian exports last year worth almost $1.5 billion. The EU’s share in the total exceeded 33 percent.