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Armenia's Customs Union accession: Russia's gains & losses

Armenia's Customs Union accession: Russia's gains & losses

PanARMENIAN.Net - A Russian political analyst believes that Moscow will have to spend over $1 billion to cover expenses for Armenia’s accession to the Customs Union, Rosbalt reported.

“In political terms, however, the deal will come as beneficial to Russia. As to economy, it will still be on the losing side over reduction in gas price, cancellation of export duties, Iran-Armenia railway construction expenditures,” the head of the CIS strategic development center at RAS Institute of Europe Alexander Gusev said.

According to other sources, Russia’s expenditures over Armenia’s accession to the CU are expected to top $1 billion. However, Moscow will get a 100% share in joint venture ArmRosGazprom (up from current 80%), which means Russia will gain control over the entire gas distributing network and other strategic sectors in Armenia.

Even before the actual accession to the CU, Armenia got serious privileges for Russian export items: natural gas, oil products and diamonds.

According to EDB Centre for Integration Studies, for Armenia, the economic effect from Russia's export duty cancellation will amount to $140 million, with a 4,5% GDP growth predicted, Rosbalt said.

"Russia would probably be willing to offer more privileges in exchange for Armenia's accession to the CU, with the country as a medium for expanding Moscow’s presence in Caspian region and Near East and strengthening its position in South Caucasus. The simplest way to do that would be through increasing the Karabakh settlement efforts.

And it is no coincidence that the U.S. stressed the importance of the OSCE support for the Nagorno Karabakh Republic, Armenia and Ukraine right after the last two countries refused to sign the EU integration deal.

Thus, the center of gravity in Russia and West's struggle for the regional presence was shifted onto the unrecognized republic, with its increasing political weight enabling to influence Azerbaijan and Turkey, at the very least.

Meanwhile, the strengthening military cooperation between Armenia and Russia in CSTO framework is already changing the military balance in the region, stirring concerns in Azerbaijan, Turkey and the West. In December 2013, Armenia will be getting Russian weaponry at domestic prices, with all the negative consequences for Azerbaijan's national and regional security," Irina Jorbenadze said in a piece of opinion published at Rosbalt.

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