Political Risk Analysis - New EU Deal No Game Changer - NOV 2017

BMI View: Armenia ' s new political agreement with the European Union will not fundamentally change relations between the two, following Yerevan ' s decision to abandon deeper ties with Brussels in 2013 and join ing the Russian-led Eurasian Economic Union instead .

A new deal between Armenia and the European Union (EU) will not fundamentally change relations between the two. The 'Comprehensive and Enhanced Partnership Agreement' was approved by both sides in June and is expected to be signed into law in November. Although the agreement aims at deepening political ties between Brussels and Yerevan, it comes nearly four years after the Armenian government abandoned talks with the EU when it decided not to pursue the more comprehensive 'Association Agreement'. The new deal aims to upgrade political relations and creates a wider scope for cooperation, and is meant to update the current 'Partnership and Cooperation' agreement, which has been in place since 1999.

The new deal is far less ambitious than the agreement that was abandoned in 2013 and crucially lacks the free trade and investment components. Instead of deepening ties with the EU, Armenia joined the Moscow-led Eurasian Economic Union (EEU) in 2015, after Russia persuaded Armenian President Serzh Sargsyan to abandon the EU deal. The EEU is a looser economic and customs union between Russia, Belarus, Kazakhstan, Kyrgyzstan, and Armenia. Armenian membership in the EEU cemented the country's position in Russia's sphere of influence, and de facto ended Yerevan's previous ambition to integrate with Europe. We note that Russia is expected to accept the new deal between Armenia and the EU, as it does not involve deeper security or trade ties, which became the focus point of opposition in 2013.

Armenia Unlikely To Join EU Any Time Soon
Europe - Map Of EU Enlargement Prospects
Source: European Commission, BMI

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