Western automakers pulled out of the Russian market following the start of the war in Ukraine, pushing up the prices of new cars and forcing many Russians to switch to cheaper used models. Car traders from other nations, including Armenia, rushed to take advantage of the market opportunity.
According to the State Revenue Committee (SRC), the number of cars imported to Armenia jumped nearly six-fold to almost 45,300 last year. The sharp increase is continuing unabated as evidenced by long lines of mainly second-hand cars formed outside the country’s main customs terminal processing imported vehicles.
The owners and drivers of car carrier trailers lined up near the facility close to Gyumri complain that they spend days waiting to pay import duties and complete the customs clearance process.
“More than 200 customs clearances a day are carried out here right now,” Rustam Badasian, the head of the SRC, told reporters when he visited the Gyumri terminal at the weekend. “There is a huge influx [of imported cars] which we haven’t seen before.”
Badasian acknowledged that most of the vehicles brought to Armenia these are re-exported to Russia. Armenia’s membership in the Russian-led Eurasian Economic Union (EEU) means that they are exempt from import duties in Russia and other EEU member states.
One Armenian car trader, who did not want to be identified, said the import boom began “in the middle of last year.”
“My guess is that 70-80 percent of the cars are then exported to the Russian Federation,” he told RFE/RL’s Armenian Service.
Other goods manufactured in third countries are also re-exported from Armenia to Russia due to the Western sanctions. This explains why Armenian exports to Russia nearly tripled, to $2.4 billion, in 2022.
Official Armenian statistics also shows that individual cash remittances from Russia to Armenia quadrupled to almost $3.2 billion in January-November 2022. The soaring trade with and cash flows from Russia are the main reason why the Armenian economy grew by 12.6 percent last year.
“We are not violating any international obligations or legal norms,” Badasian said when asked about suggestions that Armenia is one of the countries that are helping the Russians evade the crippling sanctions.
Earlier this month, the U.S. departments of Justice, Treasury and Commerce issued a joint “compliance note” warning companies about the risk of violating U.S. sanctions on Moscow. The notice said that third-party intermediaries have commonly used China, Armenia, Turkey and Uzbekistan as “transshipment points” to Russia as well as Belarus.