Balancer for Minsk and Astana: What good will Tigran Sargsyan do for Russia?

Armenia’s capital city Yerevan will host a regular meeting of the Eurasian Intergovernmental Council in early April. About two dozens of documents will be discussed to reveal and remove all possible barriers, restrictions and limitations in the domestic market of the Eurasian Economic Union (EEU). As head of the Eurasian Economic Commission (EEC) Tigran Sargsyan, the former prime minister of Armenia, previously Armenia’s ambassador to the United States, will be chairing such a large-scale event for the first time.

Sargsyan was appointed as the EEC chairperson in October 2015 and replaced Viktor Khristenko on that post. Sargsyan took up his duties on February 1 2016. Since then, within quite a short period of time, he showed his determination to intensify the commission’s efforts towards removing objective and artificially created obstacles. Ahead of the meeting of the Intergovernmental Council, Sargsyan held substantial discussions with the presidents of Belarus, Kazakhstan, and Kyrgyzstan, as well as with the Russian prime minister. Simultaneously, he launched “a systematic dialogue” with both Russian and foreign business communities, meeting with the leaderships of the Russian Union of Industrialists and Entrepreneurs (RUIE) and the U.S.-Russian Business Council (USRBC) President and CEO Dan Russell.

During both the meetings, Tigran Sargsyan showed interest in enhancing the role of business in the economy of the EEU countries. In his words, the commission among others seeks to make the EEU domestic market “more transparent and clearer for businesspersons and investors”. He is sure that the Eurasian integration is able to become the key source of “diversification and growth” for the EEU countries, amid slackening global economic growth. Business is the key beneficiary of economic integration and, simultaneously, liberalization of the EEU trade with third countries.

It is noteworthy that Tigran Sargsyan’s appointment as the EEC chairperson evoked quite mixed response. The EEC chairs are rotated based on the alphabetical order, and Khristenko was to be replaced by the representative of Belarus. However, by that moment Armenia had already become a full member of the EEU and “stole” the rotating chair from Belarus. Alexander Lukashenko was not happy with that fact, indeed, but he did not express his discontent openly. Instead, at the meeting of the Supreme Eurasian Economic Council, he pretended not knowing the name and surname of the new chairperson of the EEC (though he had met with Sargsyan when the latter was prime minister of Armenia), asked for ‘a hint’ from Armenia’s president, and said that Vladimir Putin “lobbied” for Sargsyan’s candidature. “The Russian president supported him. He worked with Sargsyan. He is said to be an experienced, leading specialist,” Lukashenko said.

Afterwards, one of the Russian media outlets published rather a critical article about the new head of the Eurasian Economic Commission. “What good will Tigran Sargsyan do to Russia?” the author asked describing Sargsyan as a pro-European politician who was skeptical about Armenia’s involvement in the Customs Union. In this light, the above question could seem rhetorical, but it has a specific answer. You will find it below.

It was widely rumored that the reason why Sargsyan was appointed to that position was his close ties Gazprom CEO Alexey Miller. Miller was Sargsyan’s fellow student at the Leningrad Institute of Finance and Economics named after Voznesenskiy, which he graduated from with honors in 1983. Yet, such arguments are not good at all. There are quite different reasons why the Eurasian Economic Union needs Tigran Sargsyan. Prime Minister Dmitry Medvedev has recently mentioned some of those reasons saying that the new head of the EEC “headed the governments of other countries” and did it quite successfully. It should be recalled that Tigran Sargsyan was appointed as prime minister of Armenia in 2008 and had held that post for six quite uneasy years. It was then that the world faced financial and economic crisis, and Armenia plunged into post-election domestic political tensions. That small Caucasian republic found itself in rather a heavy situation that was stabilized certainly after Tigran Sargsyan took anti-recessionary measures through direct support to the real sector of economy and its diversification, infrastructure development and social support. The country shifted to an e-government system and the tele-communications and air-communication sectors were de-monopolized. Although Sargsyan pursued rapprochement with the European Union, he did much for Armenia’s Eurasian integration, in particular, he insistently championed the idea of single currency. As for the difficulties connected with Yerevan joining the Customs Union, he talked about logistic problems, as Armenia has no common border with the Union’s countries.

Actually, there is no doubt that the head of the Eurasian Economic Commission is a highly qualified specialist and an experienced financier (he had headed the Central Bank of Armenia for several years). Nevertheless, there is also a political component of his appointment, which explains Vladimir Putin’s “patronage.”

It is no secret that the major goal of the Eurasian Economic Union is to form a single market of goods, services, and labor force. However, the leaders of Belarus and Kazakhstan are rather cool to some of Russia’s steps on the foreign policy arena. For instance, yet 8 years ago, Minsk did not support Moscow when it recognized the independence of Abkhazia and South Ossetia. Quite the contrary, Lukashenko maintained contacts with the ex-president of Georgia Mikheil Saakashvili. Belarus has not supported its allied state in this issue yet.

In addition, Alexander Lukashenko and Nursultan Nazarbayev were not happy when Crimea reunited with Russia and Moscow supported the Donbass movement for reunification with Russia that sparked the West’s sanctions against Russia and retaliatory measures. In Belarus, they did not even think to support Russia in what they called “Klondike” in view of the opportunities to increase their role of a transit country and organize illegal re-export. Needless to say that this directly affected Russia’s sanctions against the EU. It is obvious that Minsk avoids supporting Russia in the conflict with Turkey either. Minsk is trying to benefit from it by organizing trips to Turkey for Russians through Belarusian travel agencies. As for the Kazakh president who championed the idea of the post- Soviet economic integration, he has been mentioning the benefits of the EEU very rarely recently. Furthermore, vexed at the transit “wars” and embargos, the business community in Kazakhstan is calling for withdrawal from the Eurasian Economic Union. Local experts say this discontent has increased dramatically since the beginning of the Russia-Ukraine crisis. They say, allegedly, the new union “has brought nothing but trouble.”

Actually, the alliance of convenience of Belarus and Kazakhstan is taking shape in the EEU. Considering the aggregate economic capacities of the two countries, this union poses certain risks to Russia. The cooperation of Lukashenko and Nazarbayev has put Russia at a disadvantage.

In this light, Tigran Sargsyan’s nomination for the position of the EEC chairperson was a good option for Moscow. For instance, Viktor Yakubyan, an expert in South Caucasus, says the Russian leader supported Tigran Sargsyan’s appointment to balance the growing united pressure by Minsk and Astana. Although Armenia’s economic weight in the Union is not significant, the country is turning into “a balancer, an honest broker, and an impartial arbiter inside the EEU – so that everyone could benefit from it and there are no alliances of convenience.” This is the true answer to the question about the reason of Sargsyan’s appointment.

This is not the only question about it. What will Armenia’s ex-PM focus on in his new position? We have already mentioned that he seeks to use business opportunities to overcome the current negative tendencies in economy. What will ensure the confidence of the business circles in the EEC is Sargsyan’s good name – he is known to have rather liberal approaches to the roles of the government and business in economy. Having a rich experience in the monetary policy, Sargsyan will perhaps exert genuine efforts to establish a single currency market, paving the way for the future shift to the single currency, and promoting ties in the banking system. This will bring the advantages that are so far expected from the integration. The common market will become reality. Undoubtedly, he will make steps to integrate production facilities, which will increase the employment rate too. Simultaneously, as Dmitry Medvedev says, we will be in constant search for “solutions to various, sometimes very complicated, situations that emerge in the economic life of the Eurasian Union,” – this is the major task for the moment.

It is worth mentioning that within the four years of his EEC chairmanship, Tigran Sargsyan will inevitably gain a political weight incomparable to the one he had before. Meantime, much will change in the politics of Armenia, as the country is due to shift to the parliamentary system of government from the current semi-presidential one. It appears that the public will demand new persons and new political figures, and Tigran Sargsyan may well meet that demand, given his good reputation and long absence from the country.

Guy Borisov, EADaily’s political analyst