Armenian PM: '2021 a year to restore the economy.' Experts doubtful

“2021 will be the year of recovery of Armenia’s economic ambitions”, Prime Minister Nikol Pashinyan said on January 15.

Pashinyan admitted 2020 had been a difficult year for the Armenian economy, both due to the Karabakh conflict and the outbreak of the global COVID-19 pandemic. Nevertheless, Prime Minister Pashinyan said the recent trilateral agreement, which he signed along with the heads of Russia and Azerbaijan, may bring some new economic opportunities for Armenia.

Armenian and Georgian experts do not seem to share his point of view.

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“We have determined what should be done, in order to overcome the existing problems and restore the economic ambitions that were cast aside due to the events of 2020. We are faced with many economic challenges, but we also have many opportunities”, Pashinyan said.

In his opinion, new economic opportunities are provided, in particular, by the statement signed by the heads of Armenia, Azerbaijan, and Russia. According to this document, all economic and transportation links should be restored in the region:

“We are ready to take full advantage of these opportunities, not only to restore our economic ambitions but also to set a higher standard”.

Economic forecasts

According to World Bank forecasts, the decline in the Armenian economy in 2020 amounted to 8%. In 2021 the country’s economy is expected to grow by 3.1%, and by 4.5% in 2022.

The International Monetary Fund predicted a decline in Armenia’s GDP by 7.25% by the end of 2020 and a similar prediction of 7.2 % was made by the Central Bank of Armenia. In 2021, the country’s GDP is expected to grow by 1%.

What the experts say

Economist Hrant Mikaelyan believes that there is no reason to expect any economic benefits from the restoration of communication and transportation links:

“It will only benefit Azerbaijan. One look at the map of the new railway project is enough to understand that Armenia has nothing to look forward to.

First of all, the railway line from Azerbaijan to the Russian border is about 2.3 times longer than the existing route via Georgia. Secondly, if Azerbaijan retains sovereignty over the road passing through its territory, then the corridor running through Armenia will be extraterritorial. Azerbaijan will be able to close this corridor at any moment, but not Armenia.

Let’s have a closer look at some facts:

• Armenia has already managed to effectively overcome the blockade once, at the beginning of 2018
• Armenia is ahead of Moldova and Ukraine in terms of economic development, and both of these countries have no problems with communication routes.

Professor of the Georgian Institute for Public Affairs (GIPA) Tornike Sharashenidze draws attention to whether or not the new railway will operate smoothly and quickly, connecting the “two Azerbaijans” via the territory of Armenia:

“What is likely to happen is Armenia will hold up trains at its border for inspection, which will make this route very inconvenient.

Things will be even more difficult with the new Armenian-Russian corridor. Firstly, the railway line running from Yerevan that they wish to reconstruct no longer exists. On top of that, trains going from Armenia to Russia (and vice versa) will have to pass through a fairly large territory of Azerbaijan.

Assuming security is not an issue, the movement of the trains is likely to slow down: the route is long and consists of three countries, including Azerbaijan, which is hostile to Armenia and which will also detain Armenian trains at its border.

Considering all this, the easier way for Armenia to enter Russia may be through Georgia”.