Wednesday, 11 December 2013

"Russia Will Not Abandon the Caucasus," Putin Tells Armenia

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By Haroutiun Khachatrian (the 11/12/2013 issue of the CACI Analyst)

Russia's President Vladimir Putin visited Armenia on December 3, for the third time since he took office in 2000. The visit was strategically scheduled immediately after the EU's Eastern Partnership summit in Vilnius.

While Armenia participated in Vilnius at the highest level, Armenia's President Serzh Sargsyan rejected to initial the Association Agreement (AA) with the EU negotiated earlier. The Vilnius summit can be considered a success for Putin as Ukraine, a key country for Russia, also declined to sign an AA with the EU, opting instead to retain and deepen its trade with Russia. Hence, Putin's visit to Armenia was Russia's first possibility to announce its policy after the Vilnius summit.

The visit did not start in Armenia's capital Yerevan but in Gyumri, the location of the Russian military base no. 102. Both presidents visited the military base, which was recently reinforced with a number of heavy helicopters and new anti-aircraft missiles. This was a clear signal to the neighboring countries; Georgia, Turkey, Azerbaijan, Iran, and even Syria, that Russia does not intend to reduce its military presence in the region, and that protecting Armenia’s borders with Turkey and Iran is one key pretext for staying deployed.

Moreover, Russia's president made clear that, as one of the countries co-chairing the OSCE Minsk Group, it will support efforts to reach a peaceful settlement of the Nagorno-Karabakh conflict. This means that Russia will continue to encourage meetings and negotiations between the Presidents of Armenia and Azerbaijan without giving preference to either party, while continuing to sell weapons to both sides. ”Russia will not abandon the Caucasus,” Putin said in one of his speeches in Yerevan.

In addition, he visited the Memorial of the 1915 Genocide in Yerevan, indicating that his country continues to support Armenia in its dispute with Turkey over the terrible events of that year.

Perspectives in the economic sphere are less clear as much depends on the future steps of the Armenian side, although most of the twelve documents signed during the state visit were of an economic nature. In particular, Armenia expects to receive cheap raw diamonds, which will create many jobs in the local diamond-cutting industry as was the case in early 2000s. Also, Russia will supply Armenia, and possibly the South Caucasus in general, with cheap motor fuels, a commodity that Armenia currently imports primarily from Romania.

In particular, Russia plans to build a new oil refinery on its Black Sea coast and Armenia plans to participate in it. The Russian state-owned oil company Rosneft will eventually buy shares in the Armenian rubber producer Nairit, thus allowing it to continue operating. Finally, Russian will provide Armenia with natural gas at a price of US$ 189 per 1,000 cubic meters, down from the previous price US$ 270 since April 2012. This price will remain in place at least until 2018, and will serve to boost the popularity of Sargsyan's ruling Republican Party.

Retail gas prices will nevertheless remain unchanged in Armenia, since the government subsidized gas during the election season in 2012-2013 (except for a revision on July 7, 2013). To compensate Gazprom for the reduced gas price, the Russian state company will take over the Armenian government's 20 percent stake in Armrosgazprom, Gazprom's local subsidiary.

In educational cooperation, the parties signed an agreement to open a branch of the Moscow Lomonosov university in Yerevan in the near future.

Some opposition leaders find the obtained compensation inadequate and plan to challenge it in court. Also, this deal and several other events reinforced perceptions that Putin treats Armenia like a Russian region, not a foreign country and some activists claim that Armenia is losing its independence. For this reason, the day of Putin’s arrival saw an event unprecedented in the history of the Armenian-Russian relations; a rally protesting the Russian President’s arrival. The rally was small, gathering approximately 1,000 people, and was closely watched by police. About 100 protestors were taken into custody but were released after several hours.

In summary, Putin's visit to Armenia demonstrated that, after Armenia's rejection of the AA with the European Union, the country will continue to enjoy military and economic protection from Russia, that Armenia is the only country in the South Caucasus that needs Russian protection, and that Russia also needs Armenia.

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The Central Asia-Caucasus Analyst is a biweekly publication of the Central Asia-Caucasus Institute & Silk Road Studies Program, a Joint Transatlantic Research and Policy Center affiliated with the American Foreign Policy Council, Washington DC., and the Institute for Security and Development Policy, Stockholm. For 15 years, the Analyst has brought cutting edge analysis of the region geared toward a practitioner audience.

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