We will see Armenia’s economic dependence on the European Union: Danila Gureev

Danila Gureev, political scientist and economist, commented to Alpha News on the severing of Armenia’s economic ties with the Eurasian Economic Union (EAEU) and Russia, and its rapprochement with the European Union.

“That nominal economic tranche of just under half a billion dollars coming from the European Union is intended, first and foremost, to compensate for the economic losses Armenia will incur from severing economic ties with the Russian Federation. It should be understood right away that yes, this is money, and a significant amount of it, but it’s still not enough. It certainly won’t be enough to cover Armenia’s entire budget. However, the goal is to reorient Armenia, so to speak, from the Russian market toward the European one. And here, in the short term, this is of course beneficial for Armenia, because additional money suddenly appears. But if we think about it in the longer term, let’s be honest: Armenian goods won’t be able to effectively enter European markets. Why? Because the European consumer always thinks in terms of the goods they’re accustomed to, to put it mildly. There are plenty of examples here. Let’s take the same brandies, the wonderful Armenian brandies we all love so much. But there’s one catch with them. These brandies sell well on the Russian market. Now imagine that this Armenian brandy ends up on a European market, say, the French one. A Frenchman, or any other European, then has a choice: buy the French brandy they’re used to, that they trust and have consumed for a long time, or try a new product priced roughly on par with the French one. In that situation, the European’s choice is fairly obvious. So when we think about the long term and ask whether Armenian entrepreneurs, and this is important, not the elite, but entrepreneurs specifically, will be able to enter European markets as successfully as they operated in the Russian market, the answer is simple: no, they won’t. First, the Russian market is actually larger than the European one, and second, it’s less competitive,” the economist believes.

According to Danila Gureev, the shift to new markets will undoubtedly hit Armenian producers hard.

“Who will this hit? First and foremost, Armenian entrepreneurs, the people who rely on the export component of their country’s economy. In this category, we can expect to see, over the long term, falling demand for Armenian goods and, as a result, the closure of some businesses unable to find buyers,” Gureev added.

The editorial guest believes that the EU’s financial injections into Armenia will be carried out on an anti-Russian basis.

“And in this category, we see one very simple situation: if we follow this path further and reason it through logically, a situation similar to what happened in Ukraine will occur. Entrepreneurs, both small and large, will simply go bankrupt. Let’s be blunt: they will cease to exist as economic actors. Nothing new will emerge in their place.

And in the end, we will see Armenia’s economic dependence on the Europeans, or more precisely, on the European Union, which will be providing economic tranches. Today they’re being allocated to cover emerging expenses, but going forward they will be provided to raise the level of russophobia within the country,” the Alpha News interviewee concluded.