IN WAKE OF GEORGIA WAR, ARMENIA FACES HOBSON’S CHOICE
Gayane Abrahamyan

EurasiaNet
Sept 10 2008
NY

The Georgia-Russia war has placed Armenia in a bind. Officials in
Yerevan are feeling pressure to take sides, either supporting its
strategic partner, Russia, or its neighbor, Georgia, through which
70 percent of Armenian exports flow. For now, Yerevan is trying to
postpone its decision.

Economic issues have so far driven Yerevan’s response. But a factor
looming in the background of any geopolitical discussion is Russia’s
decision to recognize Abkhazia’s and South Ossetia’s independence. [For
background see the Eurasia Insight archive]. This has upped the stakes
for Yerevan, as Armenian officials do not want to do anything that
could impede the realization of their desires to see the enclave of
Nagorno-Karabakh break free from Azerbaijan.

Currently, economics dictate that Armenia pay attention to its
relations with Georgia. Under blockade by Turkey and Azerbaijan,
Armenia’s only reliable outlet for exports and imports is via
Georgia. The war, and its complicated aftermath, has thus inflicted
a considerable amount of damage on the Armenian economy.

Much of the harm can be traced to Russian efforts to close Georgia’s
Black Sea ports, as well as a major railway. [For background see the
Eurasia Insight archive]. One of the consequences of this action
was that some 107 train cars of wheat, 10 fuel containers and 50
additional train cars with miscellaneous goods were left in limbo,
Gagik Martirosyan, an advisor to Prime Minister Tigran Sargsyan,
said in an official statement. The unloading of ships with goods
meant for Armenia reportedly resumed only on September 1, according
to the government.

The delays are stoking concern about a possible wheat shortage in
Yerevan. Repairs on the railway were due to be finished by September
10, according to the Georgian government. An alternative railway line
can only handle much smaller loads, Martirosyan claimed.

The owner of one flour processing company told EurasiaNet on September
6 that Armenia would face a continuing shortage of flour if repair
of the railway experienced delays. "[P]eople buy 50 sacks of flour
instead of the 10-20 they used to get before," said Vanik Musoian,
owner of the Mancho Group, which also imports wheat. "Many villagers
try not to sell their wheat." Two thousand and five hundred tons of
wheat imported by the Mancho Group remain in Batumi, while another
7,000 tons are still in Russia. The company is attempting to import
the wheat via Iran.

Gasoline has been another problem. Until late August, many gas stations
country-wide posted "No gas" notices. Although the government declared
that gas reserves were sufficient to withstand a temporary shortfall,
drivers who were forced to wait in long lines to buy gas scoffed at
the assurances.

Gagik Torosian, the executive director of Yerevan’s Center for Economic
Development and Research, believes that if the war had lasted longer,
"Armenian citizens would once again have experienced the hardships
of the 90s, when people stood in line for both gas and bread."

While the importance of Armenia’s relationship with Georgia has been
highlighted in recent weeks, there are powerful factors favoring
Russia. Russian companies control the country’s telecommunications
sectors, are responsible for management of its railway network,
and have sizeable interests in its energy industry. Russia in 2007
accounted for just over 37 percent of Armenia’s foreign investment
or $500 million, according to government figures.

For many Armenians, the present situation underscores a need to
enhance Yerevan’s long-time policy of complementarity — trying to
maintain good ties with both the United States and Russia. Diversity
in foreign relations could provide a hedge against any given
geopolitical development in the future becoming a major source
of domestic distress. "We will develop and enlarge our bilateral
strategic partnership with Russia in every way and plan to enhance
and strengthen our partnership with the United States," said President
Serzh Sargsyan at a September 3 meeting with diplomats.

For now, Armenia is striving to avoid a choice and remain on friendly
terms with both Russia and Georgia. On August 13, President Sargsyan
called Russian President Dmitry Medvedev to express sympathy, and
then a day later sent a letter of condolence to Georgia’s President
Mikheil Saakashvili.

Russia seems willing to allow Armenia and other formerly Soviet states
to remain neutral. On September 3, for example Russian Security
Council Secretary Nikolai Patrushev issued a statement saying that
"Russia will not impose pressure on any country to recognize the
sovereignty of Abkhazia and South Ossetia."

For one analyst, the true test of Russia’s partnership with Armenia
will be whether Moscow stays true to its pledge concerning Abkhazia and
South Ossetia. "Armenia is in Russia’s hands," said Stepan Grigorian,
chairman of Yerevan’s Analytical Center for Globalization and Regional
Cooperation. "But if Russia considers us partners, then it will not
impose pressure."

Other Armenian analysts and politicians believe that, sooner or later,
the Kremlin will indeed expect Yerevan to provide political support for
Moscow’s actions. If this happens, it will be the Karabakh issue that
weighs most heavily in the minds of Yerevan policy makers. Armenia
can’t ignore Abkhazia and South Ossetia, and then expect diplomatic
help in any effort to win potential recognition of Karabakh, analysts
say. "The fates of these two countries are much like the one of"
Nagorno-Karabakh, analyst Levon Melik-Shahnazarian said. "If we
don’t say that now, we will lose the moral and the political right to
blame any other country, which does not recognize the independence of
[Karabakh] because of its own interests."

Opposition parliamentarian Larisa Alaverdian, a member of the Heritage
Party, is advocating a way to recognize Abkhazia and South Ossetia,
while still potentially preventing a diplomatic falling out with
Tbilisi: only the Armenian parliament should recognize the independence
of Georgia’s separatist territories. "The risks are high that relations
with Georgia may be damaged. That is the reason I suggest that only
the National Assembly recognizes them, which is just an expression of
popular will and can’t have consequences for the executive branch,"
commented Alaverdian.

In his September 3 comments, Sargsyan set recognition of Karabakh
as the precondition for any recognition of the independence of South
Ossetia and Abkhazia. "Having the Nagorno-Karabakh conflict, Armenia
can’t recognize another formation in the same situation until it
recognizes the Nagorno-Karabakh Republic," he said.

Editor’s Note: Gayane Abrahamyan is a reporter for the ArmeniaNow.com
weekly in Yerevan.