PATH TO THE ABYSS

Despite the traditional summer inactivity, with only just over five months to go before presidential elections in Armenia emotions are gradually coming to the boil both inside and outside the country. 

Armenia is going to the polls weighed down by economic, social and demographic problems. A shortage of resources, a destroyed infrastructure, a policy of aggression and problems with all its neighbours, except, perhaps, Iran, are isolating the country and slowing down its development, despite subsidies from outside.

As former Armenian Prime Minister Grant Bagratyan said, its foreign debt, despite what official statistics say, is not 40, but 70% of the country's GDP. Armenia will  find itself pretty much in a position like that of Greece next year, and even if it acquires the credit of $800m-$1bn, which the country is asking alternately from the EU and Russia, this may only postpone bankruptcy for a couple of years. 

Speaking of the factors that only make the already grave economic situation in the country even worse, one has to point out the increase in corruption and the growth of the shadow economy, which is linked to semi-criminal circles. Hundreds of thousands of ordinary Armenian citizens abandon the country every year in search of a slice of bread, whilst the country's former president, Robert Kocharyan, according to the Armenian media, recently bought an island off Cyprus and is building a huge villa there. Since Kocharyan's closest circle has not issued a denial, one has to accept the veracity of this report.

In the run-up to the elections the Armenian leadership will not risk taking such unpopular steps as implementing economic reforms and a policy of belt-tightening and fighting corruption and the shadow economy. Instead, it is seeking new credits. Because of a tendency to waste money for unauthorized purposes and wholesale plunder, charity aid from the Armenian diaspora has been reduced considerably. As the celebrated French singer of Armenian descent, Charles Aznavour, said, "in a situation where the current government is committing real genocide against the Armenian people", such sacrifices are also inadvisable for the diaspora.

Road to the West is closed

All this has now forced the Armenian leaders to turn to European financial institutions for help. First a "preliminary bombardment" began in the Armenian press and also in official statements saying that Armenia had never rejected the path of integration into Europe. But the country's president, Sargsyan, surpassed everyone when he spoke about Armenia's firm intentions to soon become a member of the European family.

Naturally, behind these statements lies a desire to obtain credit, which will help to subsidize and stabilize the economy at least until the elections. However, Armenia's official request was met with a refusal. Europe, which has enough of a crisis of its own, is not very keen on taking on any more "excess baggage" such as Armenia. Besides this, corruption in all branches of the state apparatus, a lack of ethnic and religious tolerance and problems with relations with neighbouring countries are closing Europe's doors to Armenia.

Another factor which may hinder the development of relations between Armenia and Europe and the United States is the cooperation between Tehran and Yerevan in the energy, nuclear and banking spheres, despite the imposition of sanctions against Iran. A report of the Reuters agency which gives the results of the monitoring by a group of UN experts of the implementation of the sanctions against Iran could be seen as evidence of this. The report speaks about the development of cooperation in the banking sphere between Iran and Armenia, whilst Tehran's international isolation by the western countries and special services is increasing with the purpose of "stifling the IRI's nuclear programme".

Despite the fact that the Armenian leaders deny illegal banking links with Iran, American officials are warning them about increasing financial control. The Reuters report points out that cooperation between Yerevan and Tehran was also discussed during a meeting between US State Secretary Clinton and President Sargsyan. By all accounts, Clinton left Yerevan not very satisfied because she had not received a categorical "no" on the question of cooperation with Iran. Furthermore, the US leadership is worried by the fact that trade between Iran and Armenia also includes an oil pipeline, due to be built in 2014, which demands a certain type of trans-border banking activity. Armenian politicians are treating this report as a warning to Armenia about caution in its relations with Iran and not to display any excessive activity.

Taking all these factors into account, experts believe that the "western vector" of Armenia's foreign policy is doomed to failure. The West is only interested in Armenia and the problems of the Armenian people when it feels the need to influence Turkey with the use of the so-called "Armenian question". It is significant that, without waiting for a positive response from Europe to the request for credit, articles began appearing in the Armenian media saying that Russia was trying to conduct a "slave-owning policy" in relation to Armenia. Armenian MPs, as well as socio-political figures, began to speak out against Russia's policy in order to ingratiate themselves with the West and present an allegedly independent foreign policy before the people.

Failing to get support they expected from Europe, the Armenian leaders have once again driven themselves into a corner. The fact that the country's second largest party "Prosperous Armenia", of whom former President Kocharyan is the undisputed political leader, will most likely nominate its own candidate at the coming elections                                      also adds piquancy to the situation. And everyone is aware of the pro-Russian views of both this party's official leader, Gagik Tsarukyan, and of Kocharyan. As far as the main opposition political force ANC (Armenian National Congress), headed by Armenia's first president, Levon Ter-Petrosyan, is concerned, this party comes out for Armenia's European integration and rapprochement with the West. In other words, at the elections the incumbent Armenian president, Sargsyan, could find himself face to face with pro-Russian and pro-Western forces, in which case his chances of success could amount to zero. Because a unique feature of the elections in Armenia is the fact that their outcome is not decided within the country. Having come to power at the previous elections by the most controversial means, brutally suppressing protests, President Sargsyan during his years of rule has lost the already meagre support he had among the population. So, all he could do is to wait until the Kremlin "called him to account". When he received this "invitation" on 7 August Sargsyan cut short his holiday and hastened to Moscow.

"More harm than good"

According to official reports, during their meeting Putin and Sargsyan discussed questions of regional and bilateral cooperation. However, the Armenian media itself has been ambiguously hinting at something extraordinary that is happening in the country. To back up this version they refer to Putin's visit to Armenia planned for this September and coinciding with Collective Security Treaty Organization exercises. If everything is fine in relations between Moscow and Yerevan why was it necessary for Sargsyan to cut short his holiday and go to the Kremlin? The Armenian media is ambiguously laying stress on dissatisfaction in the Russian hierarchy, which allegedly supports a return to the policy of former president Robert Kocharyan and the variance of their plans on this question with the opinion of the Armenian authorities. It is no secret to anyone that the voice of the Kremlin with regard to the elections in Armenia will be decisive. Owning more than half of the country's economy, Russia also controls all Armenia's strategic industries from energy supplies to railways and the security bodies to protection of the borders.

Another lever of pressure is the fact that there are over a million labour migrants from Armenia in Russia who are not always engaged in legal business. As Putin remarked during his meeting with Sargsyan, the annual amount of money they earn is over a billion dollars, which also makes a significant contribution to the Armenian economy.

Taking all these facts into account, Russia wants to see Armenia in the Eurasian Union and this arouses anger among some Armenian politicians. Indeed, unlike Belarus and Kazakhstan, Armenia has no common borders with Russia, which makes the country's participation in this alliance economically inexpedient, and entry on such unequal conditions will lead to a loss of Armenia's already brittle sovereignty as a state. In fact, Russia gains no economic benefit from Armenia's joining the Eurasian Economic Union. Almost all Russian companies which have invested in the Armenian economy are suffering considerable losses. Armenia's participation in the Eurasian Union project is more of political and geo-strategic significance to Russia. In the South Caucasus Armenia is the only country that is under Russia's total control. Armenia therefore ensures Russia's presence in Transcaucasia, because neither Georgia, which has almost antagonistic relations with Russia, nor Azerbaijan, which conducts an independent foreign policy, is suited to such a role.

Recent events in the region, which is situated in close proximity to the Caucasus, may explain Russia's aspirations. That is why the prospect that the Syrian "fire" could spread to Lebanon draws the attention of the world powers to this country, where inter-religious differences could at any moment again lead to a civil war.

There is a sizeable Armenian diaspora in Lebanon, among whom the ideas of the "Dashnaktsutyun" party and the ASALA terrorist organization are very popular. In addition, the Lebanese Armenians maintain close ties with the pro-Iranian "Hezbollah" terrorist organization. Another significant factor is that storm clouds are gathering over Iran, which has common borders with Armenia. Although Russia does not have much need for Armenia in its relations with Iran, in the event of the situation in the region getting out of control, Russia needs a vassal which would carry out its orders without question.

These suppositions are strengthened by the "Kavkaz-2012" Armenian exercises in Russia's Southern Military District, the biggest in recent years, which are planned for 17-23 September. In the exercises, in which 8,000 troops, including Russian Military Base No 102 which is deployed in Armenia, will be taking part, it is mainly airborne troops who will be involved.

The leadership sees the presence of a Russian military base in Armenia close to the Turkish border as a guarantee of its security. Experts also stress the fact that its capability remains doubtful. The main reason for this is difficulties with supplying the base with ammunition and fuel. Deliveries are a problem because of the closure of Georgian air space to Russian military aircraft. Supplies via Iran are also scarcely possible in the light of the present situation. Thus, the existence of the Russian military base in Armenia, experts believe, serves mainly as yet another lever of influence on Armenia.

In connection with this, another important factor is the cost of gas marketed by Russia to Armenia, as well as Russian credit, which Armenia needs. If there is no agreement in political questions the price of Russian gas for Armenia will increase from 1 October from the present $180 to $280, and from 1 January 2013 to $320. In the winter period this could deal a fatal blow to the Armenian economy, push up inflation and also increase the balance of payments deficit. A sharp price hike for domestic gas could lead to unrest inside the country and thus influence the outcome of the elections.

Bearing in mind that Russia, in relation to Armenia, very frequently adopts the "carrot and stick" approach, then the stick in this case could be the threat of an increase in the price of gas and the carrot the offer of credit, which the Armenian economy needs. However, the carrot in this case could be poisonous, because two years ago Russia already offered Armenia commercial credit to the sum of $500 million. Bearing in mind the incapacity of the economy, it is more than likely that Armenia, having received such credit, will pay for it with political concessions, which at the end of the day will be much more expensive.

The appearance in the Armenian and Russian press of articles and statements about the "inexpedience of Armenia's joining the Eurasian Union" following the meeting between Sargsyan and Putin, as well as the lack of any precise information about the future price of Russian gas, lead one to think that Armenia has already made concessions. And even if the Armenian leadership can put an increase in the cost of gas on hold, sooner or later she will have to make even greater concessions for the sake of her sovereignty. But how much further can she go?! That, as they say, is another question…

Armenia's aggression against its neighbours has led the country to an economic crisis, and the economic crisis in turn has engendered a social and systemic crisis, which could lead to a complete loss of the country's sovereignty. This situation is rather succinctly described by the former Armenian prime minister and MP, Grant Bagratyan: "I would very much like to see a revolution in Armenia. This is what we need. We have failed to show the world that we are a civilized society capable of developing by evolutionary means. Armenia needs a revolution to ensure that it can move forward. If we reject the path of revolution, giving preference to evolution, which will never happen, this is the path to the abyss."