Unemployment remains a problem and many salaries remain low. Corruption is a problem and levels of poverty are still high with an increase from 23.5 percent to 31.5 percent in 2010 due to a reduction in remittances. The country was hit hard by the global financial crisis and to top it off there has been a big slump in Armenia’s important apricot harvest, which is down around 40 percent from last year’s yield of 85,000 tons.However, Armenia is a nation of fighters and the country continues to survive. Its economy has been kept afloat by remittances from the Armenian diaspora, foreign aid and investments from Russia with 5.5 percent GDP growth in the first quarter of 2010. Yerevan is also changing and is evolving from a small, rundown soviet-style city to an increasingly modern, dynamic, green capital full of attractive open-air cafes and friendly people.
With its western and eastern frontiers closed, Armenia has been left dependent on Russia and Iran, which it has traditionally viewed as counterweights to its traditional foes, Turkey and Azerbaijan. Russia has an increasingly strong grip on Armenia (energy, security, economy) with a military base at Gyumri and Russian soldiers manning the Turkish and Iranian borders. Georgia is also important, with 85 percent of Armenia’s trade passing through Georgia. However, as was proven during the Russia-Georgia war, this route leaves Armenia vulnerable to foreign policy disputes between its neighbors. Armenia has been one of the most enthusiastic supporters of the EU’s Eastern Partnership and Yerevan is excited about negotiations that will begin on July 19 for an association agreement. This is not surprising given it offers the opportunity to become less dependent on Russia. However, Armenia would like to see concrete results from the EU side as a result of the reforms it will carry out to obtain a free trade agreement and visa liberalization. Both of these are valuable because the trade agreement would give Armenia access to the EU market in a number of areas while the visa liberalization regime should make it easier to travel to the EU.
Although the rapprochement with Turkey is stalled, most Armenians still favor the normalization of relations and opening of the border. Turkey is only 30 kilometers away from Yerevan but presently those businessmen wishing to get around the trade embargo and closed border need to take the “scenic route” through Georgia, with goods officially exchanging hands in Georgia through middlemen or companies established by Turkish exporters. Indeed one of the biggest losers from an open border would be Georgia. While prospects for progress in the near future look grim, it is important to keep momentum even if it be a track-two type approach giving particular focus to confidence-building measures that could be worked on during this “pause.”
Armenia is increasingly concerned about a renewed war. Armenia’s massive Ministry of Defense, which sits on a hilltop outside of Yerevan, is testimony to the importance placed on security. While Armenia believes Azerbaijan is preparing for a new war to reclaim its territories Yerevan feels confident it could defeat Baku with many claiming Azerbaijan’s military -- even though billions have been spent -- is weak and unpredictable, divided, corrupt, out of control and in certain areas inadequately or under-equipped. While this is likely an exaggeration, nobody should want to find out. But with every passing day the likelihood of war increases. Making progress on the ongoing peace talks keeps the situation calm and usually results in less talk from Baku of military intervention being its legal right (under Article 51 of the UN Charter). A renewed war would be disastrous for the region. While it would probably not be the intention of either side to be the one to start a war, one cannot rule out “war by accident.”
Turkey’s decision to link rapprochement to progress on Karabakh has shifted the balance and now even a tiny compromise by Armenia would be viewed as a payoff to Turkey to open the border. The international community needs to be tough and Turkey needs to be told to keep out of the talks else they risk remaining in deadlock, which may result in further frustration and an increase in ceasefire violations. Both sides need to commit to the “Basic Principles” and prepare their populations for compromise. Armenia needs to inform its population that the occupied territories will be returned and convince Azerbaijan that their intentions are genuine. Azerbaijan should restrain itself from talk of war. The international community needs to put an end to its apparent ”indifference” and begin to prepare not only for a post-conflict settlement but also for war, including a rapid-reaction response if the worst case scenarios turn into reality.
Armenia will only fully prosper when it has reconciled with its neighbors. It cannot, however, do this alone. Putting the ghosts of the past to rest is never easy but for the future of the peoples of the region all three leaderships needs to find the political will and vision to take courageous steps forward.
