Will Armenia's Western Gambit Pay Off?

Note: I wrote this article in August 2024 while working at a think tank in Yerevan, and have published it here untouched. Inevitably, it is no longer as topical or relevant as it was two years ago, as events have continued to unfold. However, I believe the core of this perspective remains accurate. I no longer agree with it entirely, due to changes both in circumstances and in my own convictions, but I believe it still holds enough insight to warrant cataloguing here.

Armenia’s dramatic pivot away from Moscow in the past five years has shown no signs of slowing down lately, but how far will that pivot go, and can the isolated state successfully cultivate a strong partnership with the West? While the outlook now appears precarious, in the longer term there are signs that Armenia will be able to navigate the challenges of the region and arrive at a more secure future.

This is not to say those challenges will be easy. Armenia has lost Nagorno-Karabakh, leaving it in a vulnerable position vis-a-vis Azerbaijan, while recent domestic political challenges such as the widespread protest movement led by Galstanyan will be a factor restricting Pashinyan’s policy playbook for dealing with Aliyev’s government. Azerbaijani demands have been bolstered not only by their strengthened bilateral position, but also by Moscow’s reduction in support for Armenia – which directly contributed to Azerbaijan’s military victories in 2020 and 2023. This has left Armenia fragile and in dire need of allies, and there is a growing sense in both Yerevan and Moscow that Russia may no longer fulfil that role. But geography is an indomitable fact for landlocked Armenia, and that precarious geography, as well as the legacy of centuries of Russian rule over the South Caucasus, will make successfully navigating out of the Russian orbit a daunting task.

Pashinyan will be risking a lot if this fails, considering the volatile state of Russian politics and the possibility of a direct move against his government (although an invasion or other forms of military intervention remain unlikely, Armenia’s current reliance on Russian trade and infrastructure gives Putin a wide array of other options to retaliate). Armenia cannot count on the support of allies abroad in the same way that Ukraine can, and as the catastrophic week-long ‘special military operation’ drags on well into its third year, Putin may seek to prove that Russia’s status as a global power with an unquestionable sphere of influence has not been lost by taking action against what he sees as a rebellious government trying to bring the West to his doorstep.

However, despite the stated risks, the risk involved in doing nothing and remaining under Russia's wings is equally great, and realistically – given the events of the last few years – even less of a viable option. Attempting to venture away from Armenia's Colossus of the North and towards new partners is uncertain and risky, but not doing so is even moreso. Fortunately, there is reason to believe that Armenia can pull this off – there are currently a few favourable conditions, and some of the challenges will either fade away or can be played to Armenia's benefit.

For example, Georgia has seemingly turned its back on the EU and once more shifted towards Russia. Their momentum towards Western cooperation and integration has been vastly slowed due to governmental rhetoric increasingly turning against the West, with accusations that Georgia is being dragged against its will into a Western war against Russia, and general denouncements of foreign influence in the country. This is reflected in governmental policies as well, with the highly controversial ‘foreign agents’ law being the focal point of a breakdown in Georgian-European relations – as well being the reason for unprecedented American sanctions on dozens of Georgian officials in June. This is despite an overwhelming majority of Georgians supporting EU and NATO membership, with major pro-EU protests breaking out against the government since 2023. Thus, despite only recently offering Georgia candidacy status, the EU has lost its poster child in the Caucasus.

This may seem like a bad thing for Armenia, but with European attention newly focussed on the Caucasus as a result of the developments in Georgia – as well as due to the war in Ukraine directing much greater attention towards Russia's Eurasian periphery – now is the best time for Armenia to make use of this, and to become Europe's new premier partner in the region. The loss of Nagorno-Karabakh has also put Armenia directly in the spotlight, garnering sympathy from Western audiences. While sympathy did nothing to prevent the events of 2023, when combined with the ongoing break from Russia and the aforementioned Georgia factor, it may give Armenia enough diplomatic strength for the EU to begin treating them as a serious partner.

However, one limiting factor here is the vastly increased economic link between the EU and Azerbaijan as a result of the EU seeking out alternative sources for gas that do not involve Russia. The EU have embraced Azerbaijan as part of this vital new trade route, with Ursula Von Der Leyen visiting Baku in 2022 to agree on a new deal. Such a reliance could weaken the European appetite and ability to support Armenia. With Azerbaijan taking such a bullish rhetorical stance towards Armenia – including discussion of constitutional change for Armenia and an Azeri-controlled corridor running through Armenian territory – there is a risk of Aliyev using newfound leverage on the EU to limit European cooperation with Armenia.

However, Europe’s long term energy goals remain a move towards renewables and a diversification of energy sources. Renewable energy sources have been getting steadily cheaper and more readily available in the EU, and if this trend continues then Europe’s reliance on fossil fuel imports will be lessened. Despite her visit to Baku, the Green Deal remains near the top of Von Der Leyen’s policy agenda. Setting aside environmental reasons, this is in line with the geopolitical goal of energy independence. Reliance on petrostates such as Russia, Azerbaijan, or the Gulf states which have values and geopolitical interests very different to Europe’s carries a strong degree of political risk. Europe has seen this now in the case of Russia, and will likely attempt to continue to diversify their energy sources in the future as a result.

Therefore, while in the medium term Azerbaijan can count on a strong economic partnership with the EU regardless of the political dimension of the relationship, in the long term things could be much less favourable for Azerbaijan. This is compounded by growing European concerns that Azerbaijan simply acts as a sanctions-busting conduit for Russian gas to flow into the EU uninhibited – a perception which will not be helped by the growing bonds between the governments of Aliyev and Putin. There are also no signs that the current economic relationship between Brussels and Baku will develop into any sort of a meaningful political one, given the deep disapproval that the capture of Nagorno-Karabakh was met with. Azerbaijan’s political system and actions are fundamentally at odds with the values the EU espouses, whereas the EU is increasingly seeing those values reflected in Armenia.

While values hardly count for everything when resources are in the picture, in the midst of a bitter struggle against Russia framed in the values of democracy and self-determination, the EU would find Armenia to be a natural and compatible partner in a way they could simply never do with Azerbaijan – all while helping to erode Russia’s influence in a key region of Eurasia. Ultimately, the current European trading relationship with Azerbaijan will likely do little to prevent a strengthening EU-Armenia partnership.

Nor should remaining political ties to Russia stand in the way of a strengthened Western orientation. The question in Yerevan seems not to be whether or not to continue on this new course, but how to do so most effectively. Relations with Russia are as distant as they have ever been and Pashinyan has been making no efforts to change that – less than a month ago Russian border guards left Yerevan’s airport for good, where they had been stationed for almost the entire duration of Armenia’s post-Soviet history. In June, Armenia announced it would be making a full withdrawal from the CSTO, which in some de facto respects has already occurred.

However, much like the EU and Azerbaijan, the Yerevan-Moscow relationship is an entirely different creature in the economic realm. Trade with Russia has increased significantly since the war in Ukraine, contributing to a huge boost to Armenia’s GDP. Much of Armenia’s infrastructure remains Russian-owned, such as the railways, most telecommunications and electricity networks, and the entirety of the gas supply infrastructure. Russia is Armenia’s largest trading partner for both imports and exports, and is particularly reliant on grain imports from Russia. There are no signs of Armenia leaving the Eurasian Economic Union – which it currently holds the presidency of – with Pashinyan leading a summit in Moscow in May with the heads of the other four member states. However, this economic relationship is being disentangled from the political one to the best of Armenia’s ability, and so far this seems to be working. Despite the clear trajectory away from Russia, Moscow has not done much to try to reverse this or destabilise Pashinyan’s government other than making cautionary statements.

Armenia’s gradual approach certainly helps here, for example retaining the Russian military base in Gyumri for the foreseeable future, and so far the West seems to have been understanding of Armenia’s geopolitical constraints and has not demanded too much too quickly. Pashinyan unequivocally dismissed rumours of holding a referendum on joining the EU, and rightfully so. Other than risking a volatile and dangerous inflammation of tensions with Russia, Armenia is far too closely locked into the Russian economy to consider joining the EU in anything but the very long term. Yerevan’s ambitions will thus be more modest, and not centred around joining the EU or NATO, which will mean they are not only achievable but also relatively unlikely to result in Russian intervention.

Despite this modesty, it is clear that Russia’s role as Armenia’s sole security guarantor is dead and buried, and given not only the raw emotion behind the events of 2020 and 2023 but also the newfound warmth between Baku and Moscow and the wider entrenchment of Armenia’s reformist path domestically, there can be no going back.

When considering Armenia’s domestic situation, it would seem as if the government is stuck between a rock and a hard power neighbour. With massive protests breaking out against perceived concessions to Azerbaijan and the possible terms of a peace treaty, negotiating such a peace on conditions that would have been unthinkable just five years ago appears almost impossible to accept for a domestic audience. However, as can be seen in the failure of the protest movement to manifest into a serious political alternative, there may not be any other option.

While a peace treaty with Azerbaijan would be seen as submission and inevitably spark a significant wave of backlash on the streets, if no other solution can be found to cool tensions and prevent further territorial losses, then it is doubtful that this backlash would turn into a political threat capable of bringing down the government. Even if it did, the new government would likely find themselves in the same position and unless they wanted to risk sparking a new war, then the policies would not be much different. Despite the anguish, Armenia’s domestic situation seems relatively stable; held together by the omnipresent threat of further conflict with Azerbaijan. That stability also makes Armenia an attractive partner for the West. With Georgia and Turkey both straining their ties with the Euroatlantic community and becoming increasingly authoritarian, Armenia is now a beacon of stability, democracy, and European values – especially considering that the only other states present in the region are Russia, Azerbaijan and Iran.

Thus, despite its marginal position, Armenia could become an important outpost in the region with some skilled statesmanship. While any bilateral peace treaty would hardly be a concrete guarantee of lasting peace, if Armenia can successfully cultivate a stronger relationship with new partners, then a treaty in combination with the support of powerful allies willing to assist Armenia in upholding it would act as a genuinely powerful bulwark. After all, it was Armenia’s diplomatic isolation which contributed so much to the catastrophes of 2020 and 2023.

Outside of the West, Armenia is already receiving military equipment from ‘safer’ sources such as India. Such a diversification of Armenia’s security partners can only be a good thing. Despite the heavy emphasis here on strictly the Western and Russian factors, other states could also play important roles in Armenia’s political, military, and economic security and would likely do so without attracting nearly as much unwanted attention from Russia. This is another area in which a peace treaty could be helpful, as that may eventually lead to normalisation of relations with Turkey. This would create a vitally important link to the EU and Mediterranean and open another avenue of trade for Armenia, rather than having to rely on the borders with Georgia (which could be risky as Tbilisi draws closer to Moscow) and Iran (who remain one of Armenia’s closest regional partners, but are no happier than Russia about Yerevan’s overtures to the West).

Ultimately, it is clear that Armenia’s political future no longer rests with Russia. The search for new partners is already underway, and the West seems the clearest choice. While the challenges of negotiating this will be immense, Armenia is in a much stronger position than it appears. Russia remains distracted with Ukraine, unwilling or unable to cause a change in Yerevan’s policy, and seemingly happy for the moment to keep the economic and political relationships decoupled. The EU and US are newly focussed on the Caucasus, eager to find a new ally there to replace Georgia, and willing to assist in anything that may weaken Russia. Armenia remains more democratic than all of its neighbours and more internally stable than most, and with values clearly compatible with the West. While the EU has increased its reliance on Azerbaijani gas imports, this is unlikely to be a decisive factor in the relationship with Armenia. Despite the challenges, Armenia is well poised to outperform expectations and succeed in its bid for a new set of partners.