As international sanctions pile up against Russia, Armenia, a country literally powered by the Russian economy, expects to get hit, too.
Armenian officials and economy-wonks are not certain about the size and scope of the impact, but they are positive there is going to be one. Russia is Armenia’s single largest investor, export-outlet and energy supplier, so the lateral effects of the sanctions could be potentially felt in all those directions. “At this stage it is hard to make expert conclusions. Even the Russian experts do not yet have precise calculations,” Economy Minister Karen Chshmatirian was quoted as saying by Regnum news agency.
The latest round of US sanctions targeted, among others, Russia’s VTB Bank, which happens to be the largest private lender in Armenia. “The measures taken by the US Government to restrict VTB’s access to the capital market do not impact the bank’s operational performance and creditworthiness,” asserted VTB, which is majority-owned by the Russian government. Bloomberg, however, reported that major international lenders to the VTB Group already have put on hold a $1.5-billion loan to the bank.
Another target of the sanctions, Gazprombank, also has a presence in Armenia. It is owned by Russia’s state energy giant Gazprom, which essentially is the sole supplier of natural gas to Armenia.
Armenia was also pinning investment hopes on the Russian state oil corporation Rosneft, another sanctions-target which had plans to purchase Armenia’s Nairit, a large rubber-manufacturer. Armenian Prime Minister Hovik Abrahamian did not rule out that these plans may fall through, though, since the sanctions may put Rosneft out of the investment mood.
Vaagn Khachatrian, an expert on the Armenian economy and member of the opposition Armenian National Congress, said in comments to 1in.am news service that he expects Russian investment to become scarce and lending more expensive.
The assessments vary about the depth of the impact, but, for now, no official word on cold feet about the Customs Union; a membership-move that would further tie Armenia to Russia’s economy.