Western sanctions on Russia are a blessing for Armenia, but for how long?

Western sanctions on Russia are a blessing for Armenia, but for how long?
Russian importer Igor at the car market in Yerevan

Noos News

  • Iris de Graaf and Chiem Baldock

    Russia correspondent and foreign affairs editor

  • Iris de Graaf and Chiem Baldock

    Russia correspondent and foreign affairs editor

Egor inspects a new car. He kicks the tires and checks the bumper paint with a special device. “This will go to Russia,” says the car importer firmly. In Moscow, he can sell a Western car for twice the price.

Car trade is booming in Armenia. In this open field on the outskirts of the capital, Yerevan, German BMWs, American Fords and Czech Skodas stand in endless rows, waiting for a new owner. Russian owner, because almost all cars are imported from the West and exported to Russia.

These car dealers talk about their successful business:

Armenians earn a lot from reselling cars from the West to Russia

Therefore, Russian sanctions are a blessing for Armenia. Since direct car trade between the West and Russia has stopped, traders use countries such as Armenia, Georgia or Kazakhstan as intermediaries. Sanctions are circumvented through so-called re-export, without being punished.

Exports from Western countries to Armenia have increased tremendously. In 2022 rose Imports from the Netherlands have already increased by 60 percent and this growth continues this year Complete. Research conducted by NOS previously showed that the Netherlands, in particular, has significantly increased exports of air pumps and compressors to Armenia.

Other countries that stand out are Greece and Cyprus, which increased their exports to Armenia 15 and 19 times, respectively, in 2022.

The automobile business has also grown tremendously. These graphs show how Armenia’s automobile imports increased while exports rose:

  • Nous / Sjoerd Moyse

    Armenia’s automobile imports have grown significantly, especially from Western countries.
  • Nous / Sjoerd Moyse

    Automotive exports from Armenia have witnessed tremendous growth, especially to Russia.

In Yerevan’s car market, dealers don’t care that they are opening Used for punishments. “We’re not worried about those sanctions,” says Mike, resting in the shade with some fellow traders. “We have to earn money for our families. Everyone here has children to feed.”

hypocrite

Moreover, the merchants did not violate any Armenian law. The country does not participate in the sanctions imposed on Russia. On the contrary: Armenia and Russia form an economic union. “So it’s very easy for a Russian to come here and set up a business,” says financial analyst Hovhannes Avetisyan in the Yerevan mall.

“This is the way it works. People see a way to circumvent sanctions and make a lot of money from it,” the economist says matter-of-factly. “This is how the economy works. Russia needs something and the merchants make sure they get it.” According to him, the Russians are not the only ones who benefit from this circumvention of sanctions. “It is European companies that have decided to use this route.”

Therefore, he believes that criticisms directed at Armenia benefiting from the war are hypocritical. He added, “Europe itself also concludes gas deals with Azerbaijan, while this country is a dictatorship in which human rights are violated, but now a blind eye is being turned away because there is a great need for gas.”

Avetisyan believes that there is little chance that Western countries will impose sanctions on Armenia. “Companies may be required to verify exports to Armenia for possible resale to Russia, but no more than that.”

The fact is that re-export does not cause any harm to Armenia. last year I slept the Armenian economy by 12.6 percent; Further growth of 5.5 percent is expected this year. However, economist Avetisyan remains calm: “It is not sustainable economic growth. When the war ends, this trade will evaporate again.”

A spanner in the works

The booming car business may be coming to an end. Neighboring country Georgia, which lies between Russia and Armenia, has already taken action. As of today, almost all European cars will be banned from being re-exported to Russia. Big drop for car dealers. “I haven’t sold a car in a month,” says a puzzled dealer.

He continues, “It is possible that Europe has agreed with Georgia to take this step.” “And we, ordinary people, suffer the consequences.”

However, the traders will not give up. We hear that rules exist and must be circumvented. “We could transport the cars via Iran, or by air. It would be more expensive, so the Russians would probably be less interested.”

Russian car dealer Igor isn’t worried either. “My Russian customers are willing to pay. I will find a way to get the car to my customer. I will think of something.”

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