Armenian-Russian relations in light of ‘Electric Yerevan’ protests

The Armenian public protests of the past weeks against government electricity tariff hikes have raised questions about the potential start of a popular movement resembling Ukraine’s Euromaidan in another post-Soviet state. What sets the capital city of Yerevan’s protests apart is the fact that there are neither political demands nor calls for a change in the country’s foreign policy. While these protests do not mark a shift in Armenian-Russian relations, they signal the maturing of civil society. Certainly, any political shift in Yerevan will be closely monitored by Moscow, since Armenia has long been Russia’s close military, economic and political ally and its last stronghold in the Caucasus. Yet, in comparison to Eastern Europe’s juggernaut Ukraine, tiny Armenia, a country of just 3 million, is highly vulnerable in its region and neither its government nor civil society is likely to part ways with Moscow in the near term.

{mosads}The “Electric Yerevan” protests are in no small part tied to the poor state of the Armenian economy, largely dominated by Russia, which itself is also experiencing an economic downturn. Protests began on June 19, a few days after the Public Services Regulatory Commission decided to increase electricity tariffs from August by approximately another 14 percent. This third price raise in two years marks a more than 60 percent total tariff increase. The request for the tariff hike was made by the local power company, Electric Networks of Armenia (ENA), wholly owned by Inter-RAO, a Russian energy company whose chairman, Igor Sechin, is a close ally of Russian President Vladimir Putin. Public discontent was fuelled by a report revealing ENA’s inept management and the exuberant lifestyle led by its Russian executives. The patience of Armenians had already been worn thin by corruption and misallocation of funds in a country where gross domestic product per capita is just about $3,500 annually.

ENA’s Russian ownership reflects the norm of the past decade, which has seen Yerevan become increasingly economically dependent on Moscow. Russia has been the leading investor in Armenia via business giants like ArmRosGasProm, Russian Railways, telecom operators MTS and Beeline, and leading Russian banks and insurance companies. Russia has also successfully leveraged Armenia’s economic and energy vulnerability for its own gain. In 2002, the two countries launched the “property-for-debt” deal, transferring Armenia’s underutilized and largely nonoperational state-owned industrial companies to the Russian state in order to cover Yerevan’s $100 million loan debt to Moscow. Since then, Armenia has been forced to cede more state-owned assets in order to pay for Russian gas imports.

Similarly to Ukraine, Armenia has faced pressure from Moscow when it sought closer ties to the EU. Armenia had originally hoped to pursue two-track economic cooperation — both with the EU and the Russian-led Eurasian Economic Union. However, Yerevan opted for the Eurasian Economic Union in 2013 when Moscow threatened gas tariff hikes. Armenia’s energy dependence on Russia deepens its vulnerability to Moscow. Should the U.S. and EU be interested in challenging Russian influence and liberating Armenians from its coercive political stratagems, investments in the Armenian energy sector could be the best place to start. A positive development in this regard was the purchase by U.S. company ContourGlobal of Armenia’s largest hydropower plant, Vorotan, for $250 million in June — the largest ever private U.S. investment in Armenia.

In the military sphere, Armenia has been an even more willing ally of Russia due to Yerevan’s regional security concerns, particularly vis-a-vis its neighboring states of Azerbaijan and Turkey. For more than two decades, conflict has persisted in and around the self-declared republic of Nagorno-Karabakh that broke away from Azerbaijan, resulting in well over 20,000 deaths. Turkey is also perceived as more of a foe than a friend by Yerevan, since it threatened economic embargoes and amassed its troops on the Armenian border in the 1990s and still refuses to recognize the Armenian genocide of 1915 despite rising international pressure. In this troubled regional context, Moscow has been Armenia’s security guarantor and in the 1990s, Russia established a military base in the Armenian city of Gyumri.

As of late, Russia’s relationship with Armenia over the military base has been far from rosy. Most recently, in January 2015, the Gyumri base and the surrounding areas were rocked by tensions after a Russian serviceman brutally murdered an Armenian family of seven, including a 2-year-old girl and a six-month-old boy. The Russian government’s refusal to have the suspect tried in an Armenian court as provided by the military base treaty led to unprecedented protests by Armenians and clashes with police near the base. The events seemed to undermine Armenian public trust in Russian military forces and possibly even future Armenian-Russian cooperation. Significantly, during the Electric Yerevan protests, Russian government officials had a change of heart and finally agreed to hand over the suspect to Armenian law enforcement.

For now, the Electric Yerevan movement will leave its greatest mark as evidence of the strengthening Armenian civil society. Fear of both Armenian government crackdown and reprisals from Moscow have kept the protestors away from wider political or foreign policy agenda. As Emil Sanamyan, an Armenia expert, notes: “Maidan with more than 100 people killed and Russia’s reaction to it — the annexation of Crimea and support for a rebellion in Donbass — have had a chilling effect on the entire former Soviet space, where in many places public activism was already restricted. Yerevan protesters overcame the fear of police violence and potential Russian punishment. And should they succeed in peacefully attaining their goals, this could help halt the region’s drift towards authoritarianism.”

In the meantime, protests in Yerevan raised the question of whether or not tensions could escalate as they did in Ukraine and what role Russia would play in the events going forward. In contrast to Ukraine, Armenia is a homogenous society with other ethnic groups (including Russians) totaling only 0.5 percent of the population. Nonetheless, despite Yerevan’s objections, Russia has in the past pursued an extensive passport dispersal program to turn Armenians into Russian citizens. The program was terminated in 2013 due to Armenian public and government opposition, but by then, some 200,000 to 300,000 Armenian citizens had already acquired Russian passports. These newly minted Russian citizens and the Gyumri military base are risk factors that could potentially serve as a pretext for Moscow’s meddling in Armenia’s internal affairs.

If Armenia were ever to choose Europe and the West over Russia — as its neighbor Georgia did — it is unlikely that Moscow would let Yerevan drift away easily from its sphere of influence. Here, Armeni’s allies could help reduce the country’s vulnerability. In addition to investment in the energy sector, if the U.S. and the EU would help Armenia to finally reconcile with Azerbaijan and Turkey, it would potentially eliminate Yerevan’s security dilemma and the resulting military dependence on Russia. In a similar manner, the nearly 8-million-member Armenian diaspora (largely dispersed among the United States, France and Russia) should also provide support in alleviating historical grievances with Armenia’s neighbors to help bury the hatchet. Until then, any efforts of Armenian reform, economic development or closer relations with the EU will be met caution in Yerevan, not least because they will be met with resistance in Moscow.

Grigas, Ph.D., is a Truman National Security Fellow and the author of Beyond Crimea: The New Russian Empire, forthcoming from Yale University Press, and The Politics of Energy and Memory Between the Baltic States and Russia (Ashgate, 2013). Follow her on Twitter @AgniaGrigas.