Economy

Armenia to Receive Substantial Financial Assistance From the EU

Feature 12 July 2021
Armenia to Receive Substantial Financial Assistance From the EU

After the second Karabakh war and early parliamentary elections, the European Union decided to allocate financial assistance to Armenia in the amount of 1.6 billion euros for the implementation of five specific projects aimed at developing the country.

The EU is ready to allocate another billion euros to overcome economic difficulties. Experts are confident that in this way Brussels denotes its role and place in the region and makes it clear to Moscow that it is not ready to put up with the post-war configuration of forces in the South Caucasus.

The European Union intends to contribute to the formation of a strong economy in Armenia, the creation of new jobs, in particular, in the field of information technologies.

Moreover, a significant part of the EU financial assistance will be directed to the development of communications, the construction of the North-South transport corridor – the largest transport project in independent Armenia. According to preliminary estimates, the 490-kilometer highway was estimated at more than $2 billion.

From the north, the highway will connect Armenia with Georgia and through it will provide access to the Black Sea and European countries. From the south, the highway will connect the country with Iran. Thanks to this project, Armenia can become a transit country.

A special place in the EU program is occupied by the development of the Syunik region – the southern border of Armenia, which was at the epicenter of events after the second Karabakh war.

What does the EU provide assistance for?

The document published by the European Union attracted the attention of experts not only in terms of the scale of the allocated funds but also by the choice of specific projects, where the money will be directed, and the formulations of goals.

Thus, the second paragraph of the document states that the EU is ready to provide 600 million euros to Armenia for the construction of the most difficult sections of the North-South transport corridor. Specifically, the funds will be directed to the construction of bridges and tunnels in the mountain ranges of the southern region of Armenia – Syunik.

This decision of the EU gives Armenia real chances not only to revive this large project, but also to complete the construction of a transport corridor that is too heavy for Armenia.

Construction of the North-South corridor in Armenia began in 2012. In 2019, the road was planned to be fully completed and commissioned. However, about 20% of the highway has been built so far. Moreover, according to experts, these are the lightest sections of the road.

Meanwhile, the highway is extremely important for Armenia, which continues to be blockaded by Turkey and Azerbaijan.

It is designed to significantly facilitate the transit of goods from Iran to the Georgian ports of the Black Sea and enable Armenia to become the main transit country in the region.

The revival around the construction of this road began to be observed immediately after the second Karabakh war and talks about Armenia’s provision of a corridor through the south of the country to Azerbaijan. Especially in Yerevan they listen to the statements that are being heard in Iran. Tehran noted that it is going to promote a large transport project, of which the North-South is just a part. This is the Persian Gulf – Black Sea corridor.

“The process of liberalization of economic relations with Iran is underway and the new US administration is more supportive of this state. The implementation of this project will allow us in the long term to have a more reliable transport connection with Iran, which contributes to the improvement of economic ties with Iran.

In the future, if the sanctions against Iran are lifted, in the southern direction we will have access to the port of Bandar Abbas [located in the south of Iran, on the Persian Gulf coast], which will also provide new opportunities for our economy”, economist Haykaz Fanian said.

Why the EU is interested in the development of Syunik

600 million euros for the North-South project is not the only EU initiative that concerns the Syunik region. For the development of this region, Brussels has provided another 80 million euros. These funds will be used to support small and medium-sized businesses.

The EU document notes as a goal “increasing the resistance of the southern regions of Armenia”.

Syunik region borders with Azerbaijan. It was Syunik that served as a base during the Karabakh war, from where the army was supplied. After the signing of a statement on the cessation of hostilities in Karabakh in November 2020, the border of Armenia with Azerbaijan expanded significantly, and this concerns, first of all, Syunik.

It was in this area that the disputed sections of the border between the two countries appeared. However, the most problematic issue on Syunik now is the so-called “Zangezur corridor” running through Meghri.

Azerbaijan insists that Yerevan should provide Baku with a corridor through its territory, which will allow direct communication with its exclave Nakhichevan and Turkey. In Armenia, at the highest level, they declare that they are not going to do this, and the talk should only be about unblocking all communications in the region.

“The European Union sends a message to other countries that think they can encroach on the territory of Armenia. And this, of course, is also a political message. This huge amount will allow completing the construction of the highway, which will change the appearance of both the region and the transport appearance of the country as a whole”, says MP Arman Yegoyan.

EU can give Armenia even more

Immediately after the publication of the document on financial assistance to the member countries of the Eastern Partnership project, a delegation headed by the European Commissioner for Enlargement and Neighborhood Policy Oliver Varcheli visited the region.

In Armenia, he met with the country’s political leadership and said that the European Union is ready to help Armenia overcome economic difficulties and allocate another billion euros for this:

“We want to participate in the development of democratic institutions and the restoration of the Armenian economy. We are ready, in cooperation with the Armenian government, sparing no effort, to contribute to the unprecedented economic and social recovery of your country”.

The European Commissioner also announced his intention to work with the Armenian side on large-scale economic and investment projects within the framework of the priorities of the Armenian government.

According to him, the EU is ready to help Armenia in overcoming regional challenges, to contribute to the recovery of areas affected by the 44-day war, the fight against coronavirus, including by providing vaccines.

This interest of the European Union in Armenia is as unprecedented as the promised amounts.

Moreover, Brussels turned its gaze to Yerevan precisely after the change in the geopolitical situation in the region, when after the war the strengthening of the positions of Turkey and Russia became obvious.

The latest decisions of the EU indicate one thing – Brussels is not going to come to terms with the new realities and intends to stay in the region, says political observer Hakob Badalyan:

“The EU has been very clear about its intentions. This program is an essential mechanism in this role, which needs to be promoted, since it is based on our interests”.

The fact that after the war the attention of the European Union to Armenia has increased is also understood by the political leadership of Armenia. MP Arman Yegoyan, a member of the ruling Civil Contract party, believes that this is due to the “unfair outcome of the war”:

“I have the impression that all international players, primarily the European Union, have an understanding that the new ‘status quo’ is unfair and therefore unstable. I think that in terms of the perception of the Karabakh issue, the scales are now tipping in our direction”.

Russia’s position

Traditionally, Moscow has not publicly commented on the steps of the European Union. In Armenia, in such cases, they always looked back at Russia to understand whether they had offended a strategic partner and Moscow in recent years has become more and more offended by Yerevan.

Russian federal publications still cannot forgive Nikol Pashinyan for his statements about leaving the military bloc of the CSTO and the Eurasian Economic Union when he was an opposition politician. Nearly all Kremlin circles every now and then talk about Armenia’s intention to move towards the EU and the United States, although Yerevan has always been considered one of the most loyal to the Kremlin.

The revitalization of the European Union in Armenia, especially against the background of public discontent with Russia, will cause caution and even some resistance from Moscow, Hakob Badalyan is sure:

“The allocated money is a huge amount for Armenia, given the scale of the country’s economy. This can significantly raise the level of Armenia’s economic sovereignty. All this will affect the political behavior of Armenia. And, of course, some countries will do a lot to prevent the implementation of these projects and the strengthening of the EU’s role in the region. These are, first of all, Azerbaijan and Turkey, as well as Russia”.

However, Armenia cannot refuse EUs assistance. In this situation, it is necessary to explain to Russian colleagues that all this will not be done at the expense of Moscow’s interests, the expert is sure.

Be that as it may, the assistance of the European Union for Armenia, which survived the war amid a pandemic, is a breath of fresh air and a chance to get out of the crisis. Time will tell whether the country will be able to take advantage of new opportunities and at the same time mitigate numerous risks.

This article was republished from Jam News.

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