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Breaking Free: Can Armenia afford a shift in foreign policy?

18 Min Read

With the onset of the Nagorno-Karabakh war, newly independent Armenia was drawn closer to Russia in search of security needs. Throughout the war, the two countries established a military alliance, which soon resulted in Armenia’s dependency on Russia and consequently led to concerns of over-dependency on a single security partner. In a bid to address this national security threat, subsequent Armenian leaders attempted to reduce this dependency by developing relations with other countries to balance Russian dominance. However, on each occasion, the country faced pressure from Russia, leading to further reliance on its sole protector and an imbalance in its foreign policy. In this article, I will analyse Armenian leaders’ attempts to balance the country’s foreign policy. I will first look at previous leaders’ policy endeavours aiming at complementarity and the outcomes of those policies, then examine the latest attempt by Nikol Pashinyan to shift the foreign policy direction and assess the feasibility of this change after the end of the Nagorno-Karabakh conflict.

Levon Ter-Petrosyan (1992-1998) – Failure of the First Attempt

The Russian influence over Armenia grew immediately after the country’s independence and the secessionist war with Azerbaijan. On 15 May 1992, Armenia signed the Collective Security Treaty, which later evolved into the Collective Security Treaty Organization (CSTO), a Russian-led military alliance. On 30 September 1992, Armenia agreed to delegate the protection of its borders with Turkey and Iran to the Border Troops of the Russian Federation. That year also marked the beginning of significant arms deliveries to Armenia, which were reported by Duma Deputy Lev Rokhlin as amounting to 1 billion US dollars between 1992 and 1996. In 1995, a Russian military base was established in Gyumri, based on the 127th Motorized Rifle Division, and in 1997 the sides signed an agreement on friendship, cooperation, and mutual assistance.

Despite his initial success as a military leader in conquering Azerbaijani territories—a success facilitated by a strong partnership with Russia—Levon Ter-Petrosyan soon realized the trap Armenia had fallen into. The conquest of neighbouring territories that could only be maintained with the support of a strong protector drew Armenia under Russian dominance. Consequently, Ter-Petrosyan, aware of the growing threat, later advocated for peace with Azerbaijan mediated by the US, hoping to open borders with Turkey and Azerbaijan. He reasoned that such a move would enable trade and relations with neighbouring countries and the West, potentially reducing dependency on Russia. However, he faced objections from Russia and opposition from his power ministries and was forced to resign under pressure. Thus, Armenia’s first attempt to reduce dependency on Russia and balance its foreign policy resulted in the overthrow of the president.

Robert Kocharian (1998-2008) – Losing Momentum

The complementarity doctrine was first adopted as a foreign policy strategy during Robert Kocharian’s presidency. This policy aimed to strengthen Armenia’s European and Western orientation by increasing economic and political relations, expanding military cooperation with the USA and NATO, and seeking normalisation with Turkey. Kocharian believed these policy changes would create greater manoeuvring space vis-à-vis Russia.

In line with the declared policy, contacts with Turkey were established, and engagement with the West increased. Kocharian attended the 50th anniversary of NATO in Washington in 1999. Additionally, Defence Minister Serzh Sargsyan visited the USA twice, in 2000 and 2002, and held meetings with high-ranking Pentagon officials. These meetings resulted in enhanced military cooperation between the two countries, with Armenia receiving $4.3 million in military assistance from the USA, including training Armenian servicemen and establishing an Armenian peacekeeping unit within the NATO Partnership for Peace programme. Furthermore, Kocharian aimed to increase Western presence in the country’s economy and thus planned to sell Armenian electricity assets to Western companies as part of Armenia’s electricity distribution sector privatisation programme. This move was preferred over selling to Russian companies, which demanded a share in the sector and were supported by the Armenian parliamentary opposition.

Kocharian’s policy change was perceived as an unfriendly move towards Russia, causing a negative reaction from the Kremlin. In response, Russia increased pressure on Armenia by gradually developing political relations with Azerbaijan and selling advanced weaponry to Baku. Moreover, Russia demanded repayment of Armenia’s debts for Russian gas and nuclear fuel, threatening to stop gas deliveries in case of payment failure. Under increasing pressure, Armenia eventually had to agree to the solution that Russia put forward—the ‘assets-for-debt’ agreement. According to the agreement, Russia would write off Armenia’s $93.7 million debt in exchange for the transfer of industrial plants—the Mars R&D Centre, the Institute of Materials Science, the Institute of Automatic Systems Management, the Institute of Mathematical Machines, and a hydroelectric power plant on the Hrazdan River—to Russian ownership.

In 2003, a new agreement transferred the Hrazdan central heating power plant, seven main power facilities, and five hydropower plants of the Sevan-Hrazdan cascade to Russian management. Additionally, the Russian company Unified Energy System acquired the financial management of the Metsamor Nuclear Power Station, which provides 40% of Armenia’s energy needs, and Gazprom’s subsidiary ITERA acquired the largest cement plant in Armenia. Furthermore, in 2005, Russia’s Unified Energy System bought the Armenian electricity distribution network. That same year, under Russian pressure, the diameter of the gas pipeline from Iran to Armenia, which was planned to diversify the Armenian gas market, was reduced from 1420 mm to 700 mm. In 2006, Russia offered Armenia an infrastructure agreement similar to the previous one in exchange for concessions in gas prices. According to the April 2006 agreement, Armenia agreed to sell Unit 5 of the Hrazdan power plant to ArmRosGasprom in exchange for a discount on the price of gas sold by Russia. Additionally, based on the agreement, ArmRosGasprom acquired the first part of the Iran-Armenia gas pipeline and the rights to construct the second part of the pipeline. Moreover, Russia obtained significant shares in Armenia’s telecommunications and banking sectors. The last property sold to Russia during Kocharian’s tenure was Armenian Railways. In 2008, Russian Railways won the tender for the operation of Armenian Railways, with the agreement set for 30 years.

Serzh Sargsyan (2008-2018) – Completion of Russian Takeover of Armenia

As president, Serzh Sargsyan inherited a nation that had become heavily dependent on Russia, both militarily and economically, under his predecessor’s administration. The national security risks posed by this dependence on Russia intensified, necessitating a more balanced foreign policy. In response, Sargsyan initiated efforts to build relations with neighbouring countries and other global powers.

In 2009, a dialogue process known as “Soccer Diplomacy” was launched between Armenia and Turkey with U.S. mediation, leading to the signing of the Zurich Protocols, which envisioned the opening of borders. Plans for new economic cooperation with Iran, including projects like the Iran-Armenia oil pipeline and a hydroelectric power station on the Aras River, were also initiated. Significantly, negotiations with the European Union began for the signing of an Association Agreement as a declaration of a European integration policy.

However, the political environment in which Armenia found itself, and the resultant economic situation, prevented the country from successfully implementing a multi-vector foreign policy once again. The dialogue with Turkey failed due to the unresolved Karabakh conflict, and the planned cooperation with Iran did not materialise due to a lack of financing and pressure from Russia. Consequently, Armenia’s one-sided relations with Russia continued to expand, as Moscow strengthened its presence in the country, becoming an irreplaceable partner.

In 2009, Russia lent $500 million to Armenia to address the challenges of the global economic crisis, with the conditions of the loan remaining undisclosed. In 2010, the two countries agreed to extend the presence of the Russian military base in Gyumri until 2044. In 2013, Armenia’s attempts at a complementarity policy ended abruptly when President Sargsyan unexpectedly signed a Eurasian Customs Union agreement with Russia, just two months before the planned signing of an Association Agreement with the EU. Following the agreement, Russia promised Armenia a discount on gas prices and a $100 million credit. In 2013, another gas agreement was reached between the two sides, with Russia gaining a 100 percent share in the gas distribution network of Armenia, ArmRosGasProm, which was subsequently rebranded as Gazprom Armenia. According to the agreement, Armenia agreed not to increase taxes or change legislation affecting Gazprom Armenia.

In 2015, Russia and Armenia agreed to establish a joint regional air defence system, and in 2016, the countries signed an agreement to form a unified military force. Russia also provided Armenia with a loan of $200 million in 2015 and another $100 million in 2017 for the purchase of Russian weapons. Additionally, in 2017, two more Iran-Armenian gas distribution networks, Megri and Agaraq, were sold to Gazprom Armenia.

Despite these developments, Armenia managed to sign a Comprehensive and Enhanced Partnership Agreement with the EU in 2017. However, this agreement was considered a lighter version of the one that was supposed to be signed in 2013, as it did not include a Free Trade zone and therefore did not threaten Russia’s interests in Armenia. Overall, Sargsyan’s presidency marked the culmination of a long process in which Russia solidified its military, economic, and political control over Armenia.

Nikol Pashinyan (2018 – A New Beginning)

The Velvet Revolution of 2018 brought Nikol Pashinyan, an anti-Russian politician, to power in Armenia. Although Pashinyan initially assured that the revolution would not lead to changes in Armenia’s foreign policy, his government’s anti-Russian actions soon emerged. These included criminal investigations against pro-Russian politicians like ex-president Robert Kocharian and CSTO head Khachaturov, as well as probes into tax evasion by Russian-owned entities such as the Southern Russian Railway and Gazprom, which raised concerns in Russia. However, relations between the two countries stabilised after a brief period of tension.

The situation changed dramatically following the end of the Nagorno-Karabakh conflict. Accusations and criticism against Russia for failing to provide security guarantees to Armenia and being an unreliable partner led to concrete steps to break allegiance with Moscow. Simultaneously, Pashinyan’s administration moved to develop closer political and military relationships with the West. In 2023, speaking in the EU parliament, Pashinyan expressed Armenia’s readiness to forge closer bonds with the EU.

As part of this renewed cooperation, the EU sent a border monitoring mission to Armenia in January to patrol border areas. Meanwhile, Russian troops left some of the border areas with Azerbaijan, and later that year, agreed to withdraw from Zvartnots airport at Yerevan’s request. Pashinyan also froze Armenia’s participation in the CSTO and replaced Russian weaponry with French and Indian arms. Additionally, this month, the EU announced a 10-million-euro military assistance package to Yerevan from its European Peace Facility programme and began negotiations on visa liberalisation for Armenia.

These developments indicate a serious breakaway from Russia and rapprochement with the West. This unprecedented change in foreign policy was made possible by two factors. First, the absence of the Nagorno-Karabakh conflict, which had always been a source of security threats and had prevented Armenia from making radical moves. Second, Russia’s constrained resources due to the war in Ukraine.

While the absence of the Nagorno-Karabakh conflict enabled Pashinyan to shift Armenia’s foreign policy direction, the legacy of this issue—over-reliance on Russia in terms of economy, energy, and trade—remains. Russia owns key infrastructure in Armenia, including gas pipelines, railways, major mining companies, and 3,500 other businesses. Additionally, 85 percent of Armenia’s gas comes from Russia, and Russia is the primary market for Armenia’s main exports. This deep reliance cannot be overcome overnight and poses a significant security risk for Armenia. Additionally, Russia supports opposition forces in Armenia that seek to replace Prime Minister Nikol Pashinyan. Russian television channels regularly provide airtime to these opposition groups, voicing their agendas. In other words, while Pashinyan has managed to establish a partnership with the West by leveraging the window of opportunity created by the war in Ukraine, this partnership can only progress to the extent that it does not threaten Russian strategic interests in Armenia. Otherwise, it could provoke a strong response, as Russian officials regularly signal by referencing the Ukrainian example.

Conclusion: Armenia’s Geopolitical Dilemma

Similarly, Serzh Sargsyan’s plans to escape this impasse—namely reconciliation efforts with Turkey and Euro-Atlantic aspirations—led to Armenia’s forced incorporation into the Eurasian Customs Union and the further expansion of military-economic relations, completing Russia’s takeover of Armenia. Remarkable success in developing military-political ties with the West occurred this year under the Pashinyan administration. The end of the Nagorno-Karabakh conflict and Russia’s involvement in the war in Ukraine presented an opportunity for Pashinyan to reclaim more sovereignty in foreign policy. However, despite growing military and political ties with the West, this policy also has its limitations and cannot lead to a complete reorientation of the policy vector. Pashinyan cannot entirely avoid Russian interests in Armenia, given Yerevan’s continued dependency on Russia in economic, energy, and trade sectors. Armenia has no chance of reducing such dependency in a short period, and Russia can use this leverage to paralyse the Armenian economy at any moment. Thus, despite achieving historic success, it is impossible to change the geopolitical orientation of Yerevan considering Russia’s past gains in Armenia.

Similarly, Serzh Sargsyan’s policy to escape this impasse—namely reconciliation efforts with Turkey and Euro-Atlantic aspirations—led to Armenia’s forced incorporation into the Eurasian Customs Union and the further expansion of military-economic relations, completing Russia’s takeover of Armenia. Remarkable success in developing military-political ties with the West occurred this year under the Pashinyan administration. The end of the Nagorno-Karabakh conflict and Russia’s involvement in the war in Ukraine presented an opportunity for Pashinyan to reclaim more sovereignty in foreign policy. However, despite growing military and political ties with the West, this policy also has its limitations. Pashinyan cannot entirely avoid Russian interests in Armenia, given Yerevan’s continued dependency on Russia in economic, energy, and trade sectors. Armenia has no chance of reducing such dependency in a short period, and Russia can use this leverage to paralyse the Armenian economy at any moment. Thus, despite achieving historic success, it is impossible to change the geopolitical orientation of Yerevan considering Russia’s past gains in Armenia.

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