Executive Summary

This report examines Armenia’s shifting foreign policy orientation, using recent remarks made by the President of the Armenian Business Association Samvel Karapetyan at a Moscow business forum as an entry point for broader analysis.

Karapetyan’s public concerns about the economic fallout of exiting the Eurasian Economic Union (EAEU) come at a critical moment in Yerevan’s recalibration of its strategic posture, with ongoing efforts to align more closely with the European Union (EU).

The report assesses the economic, political, and geopolitical implications of this pivot, as well as Moscow’s ongoing pressure on Yerevan through economic and cultural means. The focus is on understanding the strategic options available to Armenia within the short-, medium-, and long-term horizons.

Key Takeaways

• Samvel Karapetyan warned Armenia risks significant economic destabilisation should it sever ties with the EAEU.
• Despite legislative motions towards EU alignment, Armenia remains far from accession, with multiple structural, political, and economic barriers impeding progress.
• Russia’s response and internal dissent threaten Armenia if it rapidly shifts West.

Background Information

On April 12, 2025, during a Moscow-based business forum, Samvel Karapetyan, a leading Armenian industrialist and President of the Armenian Businessmen Association (ABA), made pointed remarks on the economic consequences Armenia may face if it distances itself from the EAEU.

Karapetyan, speaking from his position as head of the Tashir Group, a company deeply involved in both Armenian and Russian markets, emphasised the unequal trade volumes and strategic dependence on Russian energy.

His statements reflect broader concerns among Armenia’s economic elite about the government’s pro-Western trajectory under Prime Minister Nikol Pashinyan. Since the 2020 and 2023 crises in Nagorno-Karabakh, Yerevan has grown increasingly disillusioned with Russia’s commitment as a security guarantor. That disillusionment has translated into a gradual realignment, including legislative efforts aimed at EU convergence.

Yet Armenia remains economically intertwined with the EAEU. The organization offers regulatory alignment, duty-free trade with Russia, Belarus, and Kazakhstan, plus subsidised energy—benefits Armenia would lose if it withdrew. EU membership, however, is a long-term prospect requiring extensive reforms, full compliance with existing EU laws, and the agreement of every member state.

Public opinion shows internal divisions. Although some groups support the government’s pro-Western policies, others, especially those with strong economic ties to Russia, believe this approach is too soon and dangerous. The government is also under pressure from refugees and displaced persons following the loss of Nagorno-Karabakh, many of whom feel abandoned and economically marginalised.

Geopolitical Scenario

Karapetyan’s argument hinges on hard economic realities. In 2024, Armenia’s trade with EAEU partners reached 12.7 billion USD, whereas trade with the EU stood at just 2 billion USD, having declined 14% from the previous year. The disparity is not merely numerical, but structural. Armenia’s exports to the EAEU consist primarily of low-to-mid-value, price-sensitive products requiring minimal logistical effort. In contrast, EU markets require products to meet higher regulatory and competitive standards.

Leaving the EAEU would mean bringing back customs barriers, stopping regulatory alignment, and probably ending Russian energy subsidies. This would drive up industrial and household energy costs, reduce competitiveness, and destabilise the small business sector.

Russia continues to regard the South Caucasus as a strategic buffer zone. The South Caucasus republic is part of Moscow’s blizhnee zarubezhe (near abroad) and lebensraum (vital space), so the Kremlin cannot allow any increasing foreign presence in the region, especially from the European Union.

Moscow would interpret Yerevan’s departure from the EAEU as a hostile shift, likely retaliating. Precedent suggests a range of potential responses: trade embargoes, barriers to financial transactions, restrictions on Armenian migrants in Russia, or even coordinated disinformation campaigns targeting domestic cohesion.

Yerevan can also expect less cooperation from the Collective Security Treaty Organization (CSTO), especially given the Armenian government’s repeated accusations of CSTO inaction and failure to shield Armenia from Azerbaijani aggression. Russia’s reluctance to intervene during the Nagorno-Karabakh conflict has already undermined the organisation’s credibility. Yet a formal rupture could see Armenia excluded altogether, further exposing it to regional threats without a credible military substitute.

The EU has signalled readiness to deepen relations, but this stops well short of membership guarantees. While Armenia could gain from temporary measures like regulatory assistance, collaborations with institutions, and visa liberalisation, these provide limited protection against the immediate financial consequences of leaving the EAEU. Western governments remain cautious, particularly regarding whether Europe would intervene militarily to support Yerevan if Baku launched an attack.

The Pashinyan administration is walking a narrow political line. Displaced populations from Nagorno-Karabakh continue to protest over perceived state neglect. If economic conditions deteriorate because of the loss of EAEU ties, these grievances may coalesce with broader dissatisfaction among working-class constituencies and rural regions.

The political space could fragment, allowing for the rise of nationalist or pro-Russian opposition forces. The real danger is not electoral loss, but the crippling political stalemate and weakening governance that could jeopardise any major strategic shift.

Risk Assessment

Economic Risks – High (Short to Medium Term)

• If Russia suddenly stops giving energy discounts, prices will rise for businesses and consumers.
• The EAEU’s trade logistics would be more complicated and costly, disrupting supply chains.
• Reduced Russian capital inflow and the withdrawal of direct investments may negatively affect the banking and infrastructure sectors.

Geopolitical Risks – Medium to High

• Moscow’s strained relations risk spilling over into security and defence, damaging diplomatic and reputational standing.
• Threats to diaspora communities and remittance networks in Russia, destabilising household incomes in Armenia.
• Shifting regional dynamics may embolden Azerbaijan and Turkey, especially if they perceive Armenia as isolated or destabilised.

Domestic Political Risks – Medium (Short to Medium Term)

• Increased mobilisation of protest movements rooted in economic dislocation or nationalist sentiment.
• If the opposition exploits crises, it could lead to legislative gridlock.
• State institutions face immense pressure as they grapple with reform, economic transition, and social stability concurrently.

Conclusion

Armenia navigates a narrow corridor between necessity and aspiration. The government’s shift towards Brussels shows a deliberate effort to move away from Moscow’s influence, in terms of politics and economics. However, as Karapetyan’s warnings make clear, the costs of doing so prematurely, or without adequate preparation, could be severe.

Considering Moscow’s interests in the South Caucasus, Russia will continue to pressure the Armenian government by increasing its cultural diplomacy to address and affect local population and Nagorno-Karabakh refugees. Furthermore, Moscow, and pro-Kremlin Armenians, could pressure Yerevan economically if Armenia distances itself from the EAEU and strengthens ties with the West.

The logical course is neither abrupt decoupling from the EAEU nor naïve optimism about EU accession. Realistically, the only viable path forward is a dual-vector strategy: harnessing EAEU economic tools and progressively aligning with Western political and institutional norms. This demands diplomatic subtlety, internal consensus-building, and a credible domestic reform agenda.

SpecialEurasia OSINT Team

*Cover image: Samvel Karapetyan, the President of the Armenian Business Association (Credits: ABA Telegram Channel) 

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