Institute of War & Peace Reporting
May 30 2009
RUSSIA-GEORGIA TENSIONS HARM ARMENIA
Continued closure of Russian-Georgian border crossing leaves Armenia
cut off from its most important market.
By Naira Melkumian in Yerevan
The Armenian economy, already reeling from the global financial
crisis, has suffered a new blow from Georgia’s refusal to re-open a
frontier crossing with Russia ` Armenia’s only link with its major
ally.
The Upper Lars border post, where the road between Tbilisi and
Vladikavkaz crosses the central Caucasus, was closed unexpectedly by
Russia in 2006, a major setback to Armenian exporters.
Now, Russia has re-opened its side of the frontier but Georgia has
declined to allow goods to pass through. Georgia, which fought a brief
war with Russia last year, says it wants Swiss mediation before it
will trust its northern neighbour.
That leaves Armenia, which currently has to use a lengthy export route
via Bulgaria to reach Russia, cut off from its most important market.
`We are desperately keen that this road should operate. Russia has
assured us that on its side all work has been completed. They gave a
high priority to Upper Lars functioning, especially since they have
provided the customs points with all modern facilities,’ said Armenian
prime minister Tigran Sarksian.
The complex geopolitics of the South Caucasus leave Armenia uniquely
dependent on this crossing point. The rest of the Georgian border with
Russia is closed, either being too mountainous, or controlled by
Abkhazia or South Ossetia, which have had their independence
recognised by Russia but not by Georgia.
Armenia and Azerbaijan meanwhile, have not signed a formal treaty to
end their war over the breakaway region of Karabakh, leaving the other
half of Russia’s southern border closed to Armenian exporters. At the
same time, Armenia lacks diplomatic ties with its other main neighbour
Turkey, although relations are thawing and may prove a way out of the
impasse.
`Now the question is one of a political decision, and the problem is
Russian-Georgian relations. I hope that soon relations between Georgia
and Russian normalise and thaw, which will be good for all countries
in the region,’ said Armenian transport and communications minister
Gurgen Sarksian.
The Russians blame the Georgians for the crossing point being closed,
but the Georgians say they cannot trust the Russians to behave
honourably.
`All negotiations in connection with the opening of the crossing point
must take place in the presence of the Swiss, in as far as we cannot
rule out provocations from the Russians,’ said Georgian foreign
minister Grigol Vashadze.
That position, and the inevitable delays that will accompany it, is
not likely to please Armenia, which has already seen its economy slump
disastrously this year and has had to call on funding from the
International Monetary Fund. The country’s central bank has predicted
the economy will contract by 5.8 per cent this year, following a 6.1
per cent decline in the first quarter.
The mining sector has been particularly hard-hit, and several
companies have been forced to shed labourers.
The stand-off has reminded Armenians that their country’s economy is
too dependent on Georgia for its own good. Only in August last year,
when the war interrupted Armenia’s export trade, the country lost
600-700 million US dollars.
At the moment, 70-80 per cent of Armenian exports travel to Russia,
leaving the Georgian port of Poti for Bulgaria, then shipped to
Novorossiisk on Russia’s southern coast. The whole journey can take
eight or ten days, whereas the road through the mountains and Upper
Lars is relatively quick.
`If for a long time our goods go only via ship from Poti, then it will
create financial problems, increase the cost of our exports, and if
you add the economic crisis to this, then you create a situation that
is disadvantageous to Armenia,’ said Vardan Aivazian, head of the
economic committee of the Armenian parliament.
The stand-off has also added impetus to talks to open the Armenian
border with Turkey. The two countries lack diplomatic relations, and
have major differences over whether the Ottoman Empire’s slaughter of
Armenians in the First World War constituted genocide, but the two
sides agreed a so-called road map last month which could kick-start a
normalisation of relations.
Turkish-Armenian unofficial trade via Georgia almost doubled in 2008
to 270 million dollars, although almost all of this consisted of
Turkish textiles, building materials and domestic goods. If the border
was opened, these goods could travel directly into Armenia.
`The opening of the border would legalise the trade, which currently
goes on between the two countries via Georgia, and would reduce the
high transit fees. Currently, Turkish goods are widely used in
Armenia, including foodstuffs and products of light industry,’ said
Aivazian.
However, the idea of opening the border between Armenia and Turkey has
serious opponents, particularly the nationalist Armenian party
Dashnaktsutiun, which fears Turkey could dump its products in Armenia
and swamp domestic producers.
`We have studied the economic policies of Turkey and Armenia, and the
protectionist policies which Turkey conducts in defence of its own
producers clearly bear witness to the fact that we, with our liberal
policy, will not benefit from this,’ said Ara Nranian, a member of
parliament from the party.
Naira Melkumian is a freelance journalist.