A Shift Away From Russia

A recent change in Armenian foreign, security, and economic policy has garnered attention in Washington and Brussels, unleashing accusations in Moscow of betrayal by an ally. The government in Yerevan, however, describes its move as merely a response to a shifting political situation in the Caucasus, part of a new diversification policy that is centered on reducing dependence on Russia.
 

The aftermath of the Second Nagorno-Karabakh War in 2020 heralded the need for a new policy approach. The conflict exposed Armenia's vulnerability, exacerbated by a disrupted balance of power with Azerbaijan and an ineffective regional security structure that the country had relied on for decades. Three years later, the country’s precarious position was again evident after Russian peacekeepers failed to protect Armenians in Nagorno-Karabakh from an Azeri invasion that subsequently prompted their mass exodus. Yerevan, goaded by changes in public opinion, responded by reformulating its national security planning.

Polls by the International Republican Institute (IRI), published in March 2024, show a significant rise in anti-Russian sentiment among Armenians in recent years. Two-thirds now express a negative view of Russia, and 40% consider Russia a threat. Such sentiment is unprecedented in Armenia, where the public perception of only Azerbaijan and Türkiye is now worse. The government had to act for this reason, too.

Political Diversification: Opening to the World

In the last two years, Armenia has significantly expanded dialogue on multiple fronts, particularly with the EU, France, and the United States. The political agenda with all three has been broadened, and more high-level visits among them have occurred. Armenia is also expanding its diplomatic representation, with new missions in Luxembourg and Uruguay, and plans are underway to have a presence in Cyprus and South Korea. Yerevan is also hosting more embassies. In the last two years, Canada, Belgium, the Dominican Republic, the Holy See, Spain, and Uruguay have opened representations in Armenia.

Armenia is also taking steps to fully normalize diplomatic relations with Hungary, despite a report by RFE/RL’s Armenian Service that the country vetoed a European Council proposal to allocate approximately €10 million from the European Peace Facility for nonlethal military aid to Armenia.

Yerevan is also taking steps to broaden its presence in multilateral forums. In October, Armenia ratified the Rome Statute of the International Criminal Court (ICC), making Russian President Vladimir Putin subject to arrest if he visits Yerevan. This move was highly welcomed by European partners but deemed unfriendly by Russia, which issued a note of protest to the Armenian ambassador in Moscow.

The driving force behind Armenia's diplomatic initiatives is the strategic aim of diversifying its foreign relations and lessening its reliance on Russia. These diplomatic efforts are crucial not only for promoting economic growth and stability but also for maintaining Armenia’s sovereignty and ability to maneuver through a rapidly shifting geopolitical environment.

Military Diversification: From Capacity Building to New Arms Deals

Greater international military cooperation is another significant aspect of Armenia's diversification strategy. Historically, Russia has been the primary supplier of Armenia's military equipment. This reliance was driven by a combination of objective and subjective factors, including legally binding contracts, relatively affordable prices, and Yerevan’s political constraints in seeking alternative suppliers.

However, the war in Ukraine has severely impacted Moscow's export capacity. Russia now accounts for less than 10% of Armenia’s armaments, down from 96% just four years ago. In addition, Russia has yet to deliver €250 million worth of weapons that Armenia has paid for.

The second Karabakh war and subsequent border skirmishes have also brought to the fore the limitations of Armenia’s Soviet-era military model, leading the country to pursue a comprehensive reform of its armed forces that includes transitioning to NATO standards.

Amid these developments, Yerevan has begun to distance itself from the Russia-led Collective Security Treaty Organization (CSTO). The military bloc has failed to meet its obligations to Armenia and does not acknowledge the South Caucasus as its zone of responsibility. As a result, Armenia has effectively frozen its participation in the alliance. Since September 2023, there has been no Armenian permanent representative to the organization, and the country is absent from meetings. Armenia has stopped making financial contributions to the organization, refused the quota allocated to it for the post of deputy secretary general, declined to host CSTO military exercises, and ceased sending observers to other member states' exercises.

To further distance itself from the Kremlin, Armenia has had Russian Federal Security Service (FSB) border guards withdrawn from Zvartnots, Yerevan’s main international airport, where they had been stationed since the 1990s. Only Armenian border troops man the border since September 2023.

Meanwhile, Armenia is cultivating new military partnerships with France and India. The French are providing advisory support for military reforms, military education, military exercises, and modernizing the armed forces' defensive capabilities and military-technical assets. The Indians are primarily providing hardware, leading Armenia to become one of the largest arms importers of Indian weaponry.

Discussions with the EU about tapping the European Peace Fund to provide Armenia with non-lethal arms are advancing from negotiation to implementation. The United States is also expanding its support for Armenia, especially in military education. Military exercises with US and Armenian forces, conducted in September 2023, attracted regional attention.

Economic Diversification

Armenia faces multiple economic challenges, for which diversification may be a solution. Trade is heavily skewed toward Eurasian Economic Union (EAEU) countries, primarily Russia, which account for a little more than a third of all imports and exports. Armenia relies heavily on Russia for key resources such as nuclear energy, gas, and fuel. Other neighbors also present problems. Azerbaijan and Türkiye are blockading Armenia, and Iran faces international sanctions. Armenia’s only fully functioning border is with Georgia, which makes economic diversification difficult. On top of all that, the appeal of Armenian products is limited due to poor quality.

Still, there is some hope of progress. Armenian Prime Minister Nikol Pashinyan, EU Commission President Ursula von der Leyen, and US Secretary of State Antony Blinken discussed the Armenian economy at a meeting in April in Brussels. Their joint statement reflected Yerevan's commitment to democratic reform but also noted EU and US readiness to help strengthen Armenian economic independence. Brussels pledged support in several key areas, including trade diversification, infrastructure development, energy and aviation security, and support for addressing the long-term needs of internally displaced persons from Nagorno-Karabakh. The United States expressed a willingness to work with Armenia to promote its economic growth and reform, attract American investment, expand technology trade, cooperate in cybersecurity, and diversify the Armenian energy sector, including with nuclear energy.

Support from Washington and Brussels is crucial for Armenia's economic diversification, but lengthy bureaucratic processes and upcoming European and US elections are likely to stymie progress in the near term.

Stuck in Place

Armenia’s pursuit of diversification, whether in foreign, security, or economic policy, is a complex effort. Russia views it as a geopolitical shift and a challenge to its regional influence, and has openly threatened economic consequences. If it is to have any chance of success, Armenia’s diversification policy will need time and support from international partners.

Western countries sometimes expect Armenia to make immediate choices, but this ignores a dearth of options that Yerevan faces. Policy decisions must also consider security implications, especially as a peace deal with Azerbaijan has yet to be reached. 

At the same time, Armenia lacks a coherent vision for itself, something its Western partners cannot provide. The gap between the continuing need for realpolitik and a desire to break free from current policy constraints hampers effective decision-making. Yerevan remains stuck with reactive policies when a well-defined strategy could provide a way forward. Such a strategy would need to strive for a proactive diversification of alliances, strengthened economic and military capabilities, and political reforms to enhance Armenian security and international standing.