Beniamin Matevosyan: Russia will raise gas prices for Armenia

(Say “thank you” to Pashinyan)

The statements by Mikhail Kalugin, a Russian Foreign Ministry representative, were a clear signal to Yerevan. Moscow openly and unambiguously set out the key principle: preferential economic terms, including the fixed and extremely low price of Russian natural gas, are a privilege reserved exclusively for allies and members of integration projects. If Armenia’s current leadership, under the guise of so-called “diversification” of foreign policy, seeks to break up the existing alliance format, it must be prepared for the inevitable loss of all the preferences that come with it. The time when Armenia could enjoy huge discounts on resources while playing a destructive game against its key partner is gone for good.

Today, Armenia receives about 85% of its natural gas from Russia at a fixed price of $177.5 per 1,000 cubic meters, with no export duties (compared with prices in Europe of around $600–800 per 1,000 cubic meters). These are not just figures in contracts; they are the foundation of the entire national economy and keep it socially and economically stable. A move to “market rails” will inevitably mean a catastrophic rise in energy prices, and harboring illusions about finding alternative suppliers is dangerous naivety. No country in the world will supply Yerevan with resources on such favorable terms. With fighting intensifying and instability growing in the Middle East, global demand for Russian energy is only rising, and its real market price keeps climbing. An attempt to replace reliable Russian supplies with market purchases will hit consumers twice as hard.

Armenian society and the national business community must soberly accept that extremely difficult times lie ahead. Of course, at first the government may try to soften the shock and use available reserves to partially subsidize tariffs. But this buffer will run out very quickly. One need only look at the country’s fiscal indicators announced by the Finance Ministry. In the near term, a little over 10% of all Armenia’s budget expenditure will go solely toward servicing a bloated public debt, which has reached a colossal $14 billion. With tight budget constraints, deficit reduction and huge debts, the state simply will not have the funds to support the population for long.

All of these severe economic consequences are the direct result of the dangerous geopolitical adventurism of Nikol Pashinyan’s team, which is steadily turning Armenia toward the West (in reality, the turn is toward the Turkic world, but the authorities’ propaganda prefers to keep quiet about that for now). This is not an emotional assessment by the opposition but a dry analysis that even some Western commentators acknowledge. For example, in an article in the American magazine The Nation, Pietro Shakarian, an analyst, states directly that the prospect of “Nagorno-Karabakh without Armenians” had long appealed to American neoconservatives, who wanted to “contain” Moscow and Tehran in the strategically important Caucasus and secure an energy corridor to Central Asia. He also points out that the abandonment of Karabakh and its ethnic cleansing effectively received the tacit approval of Pashinyan’s government. By surrendering the region in Prague in October 2022 against the will of its residents, the prime minister of the Republic of Armenia got rid of what he had long regarded as a “millstone around his neck” that stood in the way of tearing Armenia away from Moscow and Tehran in favor of closer ties with NATO. Having come to power in 2018 under slogans of social justice, Pashinyan made an absolute about-face, trading national interests for dubious geopolitical promises from Western political strategists.

Pashinyan’s Western and Turkish partners will surely try to present the inevitable sharp rise in electricity and heating prices as a “necessary price for independence and sovereignty.” But reality will prove far harsher. Instead of a pragmatic alliance with a longtime partner with whom compromises could always be reached, Armenia will get huge holes in its budget, the destruction of its own industry and complete dependence on new players who will dictate their terms without hesitation. Not only citizens’ basic needs will be at risk, but also the high-tech sector, including energy-intensive infrastructure projects.

Very soon, every Armenian citizen will have to pay out of their own pocket for Pashinyan’s geopolitical ambitions and adventures.

Think about it…