The EAEU Report: A Threat Hanging Over Armenia’s Head

Russia continues to exert economic pressure on Armenia in an effort to discourage its government from pursuing its aspirations for European Union membership. At the same time, Moscow is warning Armenian public opinion that leaving the Eurasian Economic Union (EAEU) could have disastrous consequences for the country.

As part of this pressure campaign, the EAEU Council last week presented a report it had prepared outlining the potential economic consequences for Armenia should it decide to suspend its membership in the organization. According to the report, suspending Armenia’s EAEU membership could lead to a 15.6 percent decline in the country’s gross domestic product (GDP), a 14.9-percentage-point increase in inflation, and a 14.6 percent reduction in consumption.

The report also addresses a potential increase in gas prices, tighter restrictions on labor migration, customs controls, and taxation of goods. It emphasizes that suspending Armenia’s EAEU membership could result in a 48.8 percent decline in imports and a 55.6 percent reduction in the overall volume of trade.

The report concludes that, if Armenia suspends its EAEU membership, exports of domestically produced Armenian goods could decline by 30 to 50 percent, while re-exports could fall by more than 90 percent.

If the bleak figures presented in the report were to materialize, they could indeed deal a severe blow to Armenia’s economy and lead to social unrest.

Rather than responding point by point to the report, the official response from Yerevan was limited to Prime Minister Nikol Pashinyan’s remark: “We will live and see.” He also concluded that the report was intended to provoke domestic political instability in Armenia.

On this occasion, we turned to artificial intelligence, ChatGPT, for an assessment of how closely the claims presented in the report reflect economic realities and to what extent they may deviate from them.

“The figures describe a severe economic shock. However, there is an important distinction between estimating how specific trade preferences might be affected and demonstrating that those losses would cause Armenia’s entire economy to contract by 15.6 percent.

“The report’s main weakness is that its calculation of the projected GDP loss is not sufficiently substantiated. This is the most important issue in assessing the report’s credibility.

“According to the figures cited in the report, Armenia’s nominal GDP in 2025 was approximately $29.2 billion. Consequently, the projected loss of $4.6 billion would represent an extremely severe economic blow. However, several methodological questions remain unanswered. Total trade volume is not the same as GDP.

“The report forecasts that trade between Armenia and the EAEU will decline by 55.6 percent. However, this does not automatically mean that Armenia’s economic output will fall by the same proportion.

“For example, a company may import electronic equipment from Russia and resell it in Armenia or other markets. The full value of imported goods is recorded in trade statistics, whereas their contribution to Armenia’s GDP consists primarily of the value added through distribution, transportation, warehousing, and other services. If that company were to stop importing and reselling those goods, overall trade volume could decline significantly without causing a corresponding drop in Armenia’s GDP.

“It is also necessary to distinguish the effects of EAEU membership from other economic developments. Armenia’s trade relations in recent years have been influenced by geopolitical changes, the reconfiguration of supply chains, and re-export activities. To calculate the consequences of leaving the EAEU, the impact of these developments must be separated from the actual effects of membership.

“Finally, using historical trade levels as the basis for calculating future losses, as the report appears to do, raises questions,” the artificial intelligence assessment notes.

In any case, leaving the EAEU is not among the Armenian government’s immediate plans. Meanwhile, joining the European Union would require many years, and the process could take 10 to 15 years. Nevertheless, Moscow is already talking about suspending Armenia’s membership, even though the EAEU charter makes no provision for such a move.

This latest report is yet another addition to the series of pressures Russia is exerting to keep Armenia within its sphere of influence. Yerevan, meanwhile, faces a difficult choice: submit to Moscow’s blackmail or stand firm in defending its right to make sovereign decisions.
“MASSIS”

Editor’s Note: The above assessment was prepared using the ChatGPT artificial intelligence system in response to a question submitted by Massis. It does not constitute an independent economic expert study or a factual verification of the data presented in the EAEU report.