Armenian President Serzh Sarkisian says his country will join the Russia-led Customs Union.
Sarkisian made the surprise announcement after talks with his Russian counterpart, Vladimir Putin, in Moscow on September 3.
He said Armenia is also ready to take part in the establishment of the Eurasian economic union.
"I confirmed Armenia's intention to join the Customs Union and the process of the formation of the Eurasian Union," he told reporters. "It is a rational decision stemming from the national interests of Armenia. This decision does not constitute a refusal to continue our dialogue with European structures. We intend to continue these reforms in the future."
In remarks posted on his website, as part of the logic behind his decision, Sarkisian pointed to Armenia’s membership of the Collective Security Treaty Organization, a Russian-led military alliance.
"When you are part of one system of military security it is impossible and ineffective to isolate yourself from a corresponding economic space," he said.
Sarkisian also vowed to continue communicating with "European structures," adding that his government remains committed to institutional reforms sought by those bodies.
Sarkisian made no mention of a planned Association Agreement with the European Union.
Putin hailed Sarkisian’s announcement, saying Yerevan's decision to join the "Eurasian integration process" will boost bilateral and mutually profitable ties between the two countries.
"We will be doing our utmost to facilitate this process," he said. "I am confident that Yerevan's membership in the structures of Eurasian integration will become a powerful impulse for mutually beneficial economic cooperation."
Yerevan's membership of the Customs Union still must be approved by the other union members -- Belarus and Kazakhstan.
Armenia is heavily economically dependent upon Russia, which is home to a million-strong Armenian diaspora. Moscow is Yerevan's largest trading partner and Russia is the biggest foreign investor in Armenia.
Armenian opposition deputy Alexander Arzumanian, who is also a former foreign minister, called Sarkisian’s announcement a "totally unacceptable development."
He told RFE/RL’s Armenian Service that any cooperation with the Customs Union must be consistent with Armenia's path toward European integration.
Armenia had been poised to initiate an association and free trade agreement with the EU at a November summit in Vilnius.
But EU officials have repeatedly made it clear that the agreement is "not compatible" with possible Armenian membership of the Russian-led trade bloc.
Meanwhile, the prospect of such a deal has triggered growing Russian pressure on Yerevan over the past year.
Reacting to Sarkisian’s announcement, EU Enlargement Commissioner Stefan Fuele's spokesman Peter Stano told RFE/RL that he was "currently consulting our Armenian partners on the latest developments" and that the "potential implications" would be examined when "all the necessary details" were to hand.
Russia, Belarus, and Kazakhstan founded the Customs Union in 2010 as a counterweight to the EU's economic sphere.
Its three member-states launched the so-called Common Economic Space last year.
They said the goal is to set up a Eurasian economic union modeled after the EU by 2015.
Moscow has been pushing several former Soviet republics to join the process.
By RFE/RL's Armenian Service, with reporting by Interfax, ITAR-TASS, AFP, dpa, and Reuters.