World Markets Research Center
Global Inisght
April 29 2010

Armenia Will Not Join Troika Customs Union

BYLINE: Lilit Gevorgyan

Armenia’s prime minister Tigran Sargsyan stated to media on 27 April
that his country is not planning to join the Russia-led Customs Union.
Sargsyan added that from Armenia’s perspective it would be pointless
to join the tripartite union launched on 1 January between Belarus,
Kazakhstan and Russia, as it does not share common borders with its
members. The Union is designed to simplify customs registration
procedures; but Armenia will not be able to reap the benefits of union
membership as it has still to go through customs of third countries.
Sargsyan highlighted that his government is more interested in turning
Armenia into an attractive investment destination that will be a
special economic zone in the Near East.

Significance:Since the launch of the Customs Union Russia has been
keen to include new members especially from the former Soviet
republics. The question of Armenia’s participation is only natural
given the South Caucasian republic’s close political ties with the
Kremlin. However the geographical constrains are a key factor in
Armenia’s decision to remain outside the union. Moreover, Armenia,
unlike Russia, is a member of the World Trade Organization (WTO), and
will be reluctant to go through a harmonisation process of customs
with the Customs Union countries. Geopolitically, Armenia is unlikely
to have a common border with the Customs Union in the foreseeable
future since Georgia–another WTO member–has no intention of joining
the common economic space even though it has a common border with
Russia. Meanwhile, Azerbaijan, which has not joined the WTO yet, is
not likely to join the union given its political and economic
interests. Even if it did the lingering Nagorno-Karabakh conflict
between Armenia and Azerbaijan is set to keep their common border
sealed.