Central Bank Chairman Says New Western Sanctions Against Russia Would Affect Armenia

YEREVAN (Arka) — Potential new sanctions that the West would slap on Russia are one of the most undesirable developments for Armenia and especially its financial sector that could happen in 2022, the chairman of Armenia’s Central Bank Martin Galstyan told a news conference on Tuesday.

“Naturally, the level of impact (of the potential Western sanctions against Russia) on our economy will depend on what kind of sanctions will be imposed. If they are sanctions against individuals, that will be one story. If the sanctions will also affect the financial sector, the Russian ruble is likely to devaluate, as a result of which we will, to some extent, lose competitiveness with respect to the Russian economy,” he said.

Galstyan added that the risks coming from the financial system are much greater. “Our (financial) relations are also serviced by Russian banks,” he explained, not ruling out that the imposition of sanctions on Russian banks could also affect Armenia in the form of possible mirror restrictions.

According to the head of the Central Bank, these are scenarios that contain some uncertainties at the moment.

“We have to wait and understand. But I hope that the escalation (of tension between Russia and the West) will stop at some point,” he stressed.

Galstyan briefly answered the question on how Russia’s possible disconnection from SWIFT would affect the Armenian economy and banking system, saying the impact would be very “serious.”

U.S. President Biden has pledged that if Russia invades Ukraine it will face “severe economic consequences,” saying that Washington would unleash a blistering package of sanctions that would effectively cut the Russian economy off from much of the global financial system. EU countries also said they would slap new sanctions on Russia if it attacked Ukraine.