09/05/2013 07:35 pm ET Updated Nov 05, 2013

Put Armenia's Choice of Economic Cooperation to Vote

It is unfortunate that decisions of such tremendous importance for the Armenian nation's future, as whether this former Soviet republic should apply for membership in the Customs Union (CU), are prepared and made without asking the Armenian public's opinion.

The decision -- that Armenian President Serzh Sargsyan has announced when hosted by his Russian counterpart Vladimir Putin in Moscow earlier this week -- had been prepared in such secrecy that, apparently, even some of the senior officials in the Armenian government and parliament had not been briefed in advance, to say less of the general public.

One would have thought that this momentous decision would have merited a comprehensive explanation, especially, given that the Armenian president's hand-picked Prime Minister Tigran Sargsyan (no relation to the president) was sceptical about Armenia's membership in CU as recently as last year. At that time the premier's public position was that countries don't participate in customs unions with which they don't have common borders. Rather than explain exactly what caused the Armenian government to become more optimistic about CU membership, the president merely stated that "it is a rational decision stemming from the national interests of Armenia." "This decision does not constitute a refusal to continue our dialogue with European structures," he added.

Continued dialogue with the European Union (EU) might indeed be what Sargsyan has hoped for. However, that didn't stop senior EU officials from expressing surprise and asserting that the Association Agreement and the Deep and Comprehensive Free Trade Area (DCFTA) that Armenia has planned to sign with the European Union in November -- is "not compatible" with membership in the Customs Union. Swedish Foreign Minister Carl Bildt - who is known to have no love lost for Russia - described Sargsyan's decision as a "U-turn."

We don't know whether Sargsyan has given any of EU's top dogs a heads up on his decision to have Armenia join CU, but it is clear that the Armenian leader has certainly failed to ask his own nation before making a choice that will have a tremendous impact on the lives of his compatriots. 

Why is it that Ukraine's Viktor Yanukovych -- who is not exactly a beacon of participatory democracy -- has recently announced that the Ukrainians would get a chance to vote to choose between DCFTA with EU and membership in CU, but Armenia's Serzh Sargsyan has decided that consulting his nation on the same choice is not necessary? I don't the exact answer to that question. But I do know a national leader increases probability of making a fateful mistake every time he confines process of formulating a momentous decision to a narrow circle of confidants.
It is not that I harbor illusions that the package deal with EU would miraculously transform Armenia into a prosperous country with effective public administration overnight. Nor do I want to imply that I believe that Armenia's membership in the Customs Union would be a mistake. Rather my point is that there is no sufficient information on this issue available to even someone -- who regularly monitors the news out of Armenian as I do -- to understand which of the two options the best for the Armenian nation is. And I suspect that many residents of Armenia are also in the dark because there has been no publicly available detailed comparison of costs and benefits associated with Armenia's membership in CU versus DCFTA.

On a personal level, as a Russian citizen of Armenian descent, I can only welcome a strong relationship between Russia and Armenia and I am sure majority of Armenians living in Armenia hold the same view. But as a scholar of government decision making, I cannot help wondering whether the Armenian authorities have thoroughly weighed all pro's and con's of Armenia's membership in CU and association with EU, and, if so why the results of this analysis has not been shared with the Armenian public.

Off the top of my head I can give you half a dozen of good reasons why Armenia should be in the Customs Union, including the fact that Russia is Armenia's largest trading partner among individual countries, supplier of affordable weapons, which Armenia needs to deter Azerbaijan, and a major source of foreign investment and remittances sent by Armenian diaspora. One should also factor in potential costs of alienating Russia, which is keen to see CU expand. Russia's potential as a spoiler vis-à-vis Armenia is unmatched, given the role it plays as a guarantor for Armenia's security, Armenia's dependence on Russian gas and other levers that Moscow has vis-à-vis Yerevan. A Russia alienated by Armenia can also aid Armenia's arch-foe -- Azerbaijan. (Even being Armenia's ally, Russia has sold Azerbaijan 4 billion dollars worth of weapons, as Azeri president Ilham Aliev revealed when hosting his Russian counterpart Putin who visited Baku in August in what some political analysts in Armenia interpreted as a warning to the Armenian leadership which at that time was signaling readiness to sign the EU association agreement.)

But association with EU through DCFTA is not without merit either, especially given that EU's 27 member countries are collectively Armenia's largest trading partner and the know-how in modernization of economy and public administration that Yerevan can glean from Brussels.
Exactly why Armenia's government and research community had not researched and publicly presented comparative analysis of the two options before Sargsyan unveiled his choice on September 3rd is unclear. (That such indigenous comparison was lacking as late as this summer became clear to me when leadership of one of Armenia's premier think-tanks asked me whether I could refer them to any study on costs and benefits of Armenia's membership in either CU or EU, albeit there have been external assessments on benefits of association with EU for Armenia, such as this one) Perhaps, one reason could be that the Armenian leadership is reluctant to admit that Russia's importance as a security partner trumps any economic benefits of deeper cooperation with EU. It might be also the case that preserving the Kremlin's support is instrumental for Armenia's ruling elite as it seeks to preserve the political stability in the republic.

Whether it is security or political considerations or simple lack of foresight that have prevented a meaningful discussion of Armenia's economic cooperation options, lack of such a debate is still regretful. Encouraging a public debate of such options and then putting these options to a vote is the least that a leader could have done for the people who have elected him to steer their nation state toward not only security, but also prosperity.