Armenia will benefit economically from joining Customs Union: experts say

YEREVAN, September 11. / ARKA /. Armenia will benefit economically from joining the Customs Union of Russia, Belarus and Kazakhstan, concluded a team of Armenian experts who studied this issue  for several months.

Presenting the findings of their study to a news conference today, a team member, Aram Safarian, who is head of an NGO called Integration and Development, said the study was initiated by the Eurasian Development Bank ’to clarify the prospects and possibilities of  the Eurasian integration.’

Ashot Tavadyan, the leader of the team, said President Serzh Sargsyan’s decision to join the Customs Union was not a surprise to experts.

"Back in 2011, heads of CIS countries signed in Russian St. Petersburg the agreement on free trade zone, which Armenian parliament ratified unanimously in 2012 September. President Sargsyan’s announcement  was a logical continuation of this process,” Tavadyan said.

According to him, the accession agreement includes issues of economic security and cover key areas such as energy and transport and provides for unprecedented investments in the Armenian economy which will boost its employment.

"The transport component (of the agreement) implies a $470 million investment in upgrading Armenia’s railways. This is a direct investment. For us it is very important to have additional communication facilities. The EU would not do it, given its strained relations with Iran,"  said Tavadyan.

According to him, the Eurasian Development Bank has already pledged to invest about $100 million in Armenia, which will increase the economic expansion rate by 0.4 %.

The second most important component, he said, is energy; namely, continued operation of the Armenian nuclear power plant and construction of a new facility to replace it, as well as ‘automatic’ reduction in gas prices by 30 % (from $270 to about 1$80  per one thousand cubic meters) after Armenia’s formal accession to the Customs Union. He said the price cut is expected to increase the GDP by about 1 %. In addition, the membership will also secure Armenia lower prices of oil products.

"The third component is production: more precisely, resumption of Nairit chemical plant and construction of an oil pipeline," Tavadyan said.

There is also the fourth component that will contribute a 0.25 percent increase to economic growth- it is migration. 

"Russia will ease procedures for Armenian labor migrants, eliminate administrative obstacles which will result in increased money remittances to Armenia,"  he said.

He argued that Armenia’s accession to the Customs Union will translate in a short-term perspective into a 4 percent GDP growth.

Speaking about absence of common borders with a Customs Union member country, Tavadyan noted this will be offset by cheaper energy products.

"From the economic point of view, we are winning. Life will improve and become safer with increasing GDP," said Tavadyan.

He then added that the membership will not affect Armenia’s exports to EU  because they are mainly raw materials.

Speaking of the prospects of European economic integration, Tavadyan said that it promises Armenia 2.3 % rise in GDP in the long term, without considering the risks.

These risks are problems with Turkey, excessive dependence on raw materials and corruption. "But corruption is the problem that we must ourselves address it.” The most serious risk in his opinion, given Armenia’s  European integration, would be Russia-imposed restrictions that would zero out all growth forecasts,’ he said. -0-