A report on the economic consequences of Armenia’s possible withdrawal from the Eurasian Economic Union should be viewed primarily as a political document that presents Armenian society with the economic cost of a political choice. International trade expert Karen Nazaryan offers this assessment, drawing attention to gaps in the report’s methodology and questions surrounding its legal reasoning.
The report states that a possible suspension of Armenia’s EAEU membership could generate an additional $268.5 million in annual gas costs alone. The calculation is based on a scenario in which Russia could raise the gas price from the current $177.50 to $300. It also identifies possible consequences of trade restrictions for Armenian exports.
According to Nazaryan, however, the methodology underlying these calculations is not presented, while the possibility of a gas price increase is discussed without sufficient legal justification.
Why was the $300 scenario chosen?
Nazaryan says the document cannot be regarded as a study based on economic modeling and a clear methodology because it does not explain which method was applied, which model was used, what assumptions were considered or how the final results were obtained.
The expert explains that final figures alone are insufficient in economic calculations: the principles used to produce them must also be understood. If a particular gas price scenario is presented, the conditions, calculations and assumptions behind its selection need to be explained.
In his view, one significant weakness of the report is that it connects the possible suspension of Armenia’s membership with the price of Russian gas without adequately distinguishing their respective legal foundations.
Nazaryan recalls that gas pricing between Armenia and Russia is governed by a bilateral intergovernmental agreement. That agreement is separate from Armenia’s EAEU membership status, so the possibility of changing the price should be discussed within its framework.
“The gas agreement is one issue, while EAEU membership is another,” he says.
According to Nazaryan, the creation of a common energy market has long been discussed within the EAEU, but that market has not yet been established. Gas pricing between Armenia and Russia therefore cannot be presented as though it were already governed by the rules of an EAEU common energy market.
The existing intergovernmental agreement has two parties, each with corresponding obligations. If one party decides to breach those obligations, Nazaryan says, the other may exercise the rights provided for in the agreement.
Following this reasoning, the expert believes Armenia has instruments to respond to a possible gas price increase or to discuss terminating the agreement. Presenting a gas price increase as an inevitable consequence for Armenia therefore requires justification.
Nazaryan says the report also fails to explain the legal mechanism by which a change in Armenia’s EAEU status could lead to this particular increase in the gas price.
The legal grounds also need clarification
The second major strand of the expert’s criticism concerns the legal possibility of suspending EAEU membership.
Nazaryan notes that the EAEU’s founding treaty does not provide specific mechanisms for expelling a member state or suspending its membership. Yet the report examines a possible suspension of Armenia’s membership. He says the document refers to the Vienna Convention without identifying the specific article or provision under which such a suspension could take place.
In the expert’s assessment, the report therefore leaves two fundamental questions unanswered: which methodology produced its economic calculations, and which legal grounds underpin the suspension scenario? Without clarification, the figures and forecasts cannot be fully assessed. Nazaryan believes these gaps make it difficult to regard the document as a comprehensive economic study.
Leaving the EAEU would involve more than relations with Russia
Nazaryan identifies another problematic feature in the report’s presentation of Armenia’s economic options. He says the document creates the impression that Armenia is an isolated country that would lose its economic connections and face extreme hardship if it left the EAEU.
In his assessment, however, Armenia’s economic relations should be considered in a broader context that includes trade with other countries, existing agreements and opportunities to restructure economic ties.
He highlights the CIS Free Trade Area Treaty, which was in place before the EAEU was established. Under that agreement, Armenia benefited from the removal or reduction of customs duties in trade with Russia, subject to certain conditions and requirements.
According to Nazaryan, tariff changes within the EAEU were not substantial, although non-tariff changes did occur. Assessing the consequences of a possible withdrawal therefore requires identifying which existing trade arrangements could remain in force, which could change and what alternative mechanisms might apply.
“We need to understand what leaving the EAEU would actually mean and whether the results presented in the report are realistic. It should be clear which scenarios were considered,” he says.
From this perspective, the expert argues, Armenia’s economic prospects cannot be assessed solely on the assumption that leaving the EAEU would automatically sever all economic ties.
Growth in EAEU trade largely reflects relations with Russia
Nazaryan also questions the approach of presenting growth in Armenia’s trade with the EAEU as general evidence of the economic effectiveness of membership.
He points out that Russia accounts for the overwhelming majority of Armenia’s trade with EAEU countries. According to the expert’s estimate, around 96–97% of Armenia’s trade with the bloc’s member states involves Russia.
He considers this particularly important when assessing recent trade figures. Nazaryan notes that the report compares data for 2023 and 2024 and presents the recorded growth as an expansion of economic ties with the EAEU. Those figures, however, need to be examined in light of the economic changes resulting from the Russia–Ukraine war.
Nazaryan points to increased re-exports, sharp changes in import and export volumes, and transactions involving imports and exports of gold and diamonds. He says these factors must be isolated and analyzed to establish how much of the growth in trade reflects the development of ordinary economic ties and how much stems from the exceptional trade flows that have emerged in recent years.
“When we talk about Armenia’s trade with the EAEU, we should understand that we are mainly talking about trade with Russia. In practice, we view the EAEU through Russia,” the expert says.
In his view, the dynamics of bilateral trade with Russia must therefore be distinguished from the effectiveness of the EAEU as a multilateral economic organization. Growth in total trade alone is insufficient to establish the economic impact of membership.
Trade with other EAEU members is not comparable in scale to trade with Russia
To support his argument, Nazaryan recalls a study he conducted in 2016 examining trade between Armenia and Kyrgyzstan.
He says both countries belonged to the economic bloc, yet the bilateral trade recorded in the study was extremely small. The expert recalls that registered trade between Armenia and Kyrgyzstan amounted to just €10 over the roughly six-month period examined.
He cites this example to illustrate that membership in an economic organization does not, by itself, guarantee substantial trade between its members.
In Nazaryan’s assessment, Armenia’s economic ties with the other EAEU countries are so limited compared with trade with Russia that a possible reduction or loss of those ties would not have a significant negative impact on Armenia’s economy. He does not rule out some effect but considers it negligible.
The expert sees this as another reason to assess Armenia’s economic relations with the bloc through detailed analysis of trade with individual countries rather than aggregate indicators.