Spring 2026 marked a new stage of tension in Russian-Armenian economic relations. Restrictions on the supply of several Armenian goods to the Russian market coincided with public statements about a possible revision of some of the key economic preferences Armenia has enjoyed within the Eurasian Economic Union (EAEU).

Against this backdrop, questions are increasingly being raised about the future of economic cooperation between Moscow and Yerevan, the sustainability of Armenia’s economic model, and the consequences of a potential revision of integration mechanisms. How serious are the current disagreements? Are the newly imposed restrictions an economic necessity or a political signal? And what risks does further distancing from Eurasian integration pose for Armenia?

The CASPIA Analytical Center discussed these issues with Elvira Belozorova, PhD in Economics and Associate Professor at the Financial University under the Government of the Russian Federation.

Can we say that Russian-Armenian economic relations are experiencing a systemic crisis?

The restrictions introduced in May 2026 on Armenian exports of mineral water, wine products, brandy, flowers, and several categories of fruits and vegetables indeed indicate that bilateral relations have entered a qualitatively new phase.

Particularly significant is the fact that, for the first time at the official level, the possibility of revising agreements on duty-free supplies of natural gas, petroleum products, and rough diamonds was raised. This is no longer about isolated trade disputes but about the core integration mechanisms that have long served as the foundation of economic cooperation between the two countries.

Therefore, what we are witnessing should not be viewed as an ordinary trade disagreement but rather as a manifestation of deeper structural changes in bilateral relations.

What does trade turnover data tell us about relations between Russia and Armenia?

After the record figures of previous years, a pronounced downward trend has emerged. By the end of 2024, trade turnover between Russia and Armenia reached a historic high of approximately $12.4 billion. However, in 2025, trade volume declined to between $6.4 billion and $7.7 billion, depending on the methodology used.

At the same time, Armenia’s overall foreign trade indicators also weakened. The decline is visible not only in trade with Russia but also with several other major partners. This suggests that we are dealing not merely with a bilateral crisis but with broader challenges affecting Armenia’s export-oriented economic model.

Why did the sharp growth in Armenia’s foreign trade during 2022–2024 prove to be short-lived?

To a large extent, that growth was driven not by an expansion of domestic production but by re-export operations.

A particularly important role was played by trade in precious metals and diamonds. Significant volumes of Russian products passed through Armenia, where they underwent processing and acquired a new country of origin before being exported to foreign markets.

The situation changed dramatically when the G7 countries and the European Union extended restrictions to Russian diamonds, including products processed in third countries. As a result, Armenia’s diamond exports fell sharply, which automatically affected both overall foreign trade and trade turnover with Russia. In essence, one of the most profitable export schemes of recent years was dismantled. 

How important are the economic preferences associated with Armenia’s membership in the EAEU?

Their importance is difficult to overstate. If we aggregate all the major advantages, their combined value for the Armenian economy may amount to approximately $2.5–3 billion annually.

First and foremost, this concerns preferential prices for Russian natural gas. Thanks to special arrangements, Armenia enjoys substantial savings for both businesses and households.

Duty-free imports of petroleum products also remain a significant factor. In addition, Armenian agricultural producers benefit from preferential access to the Russian market, which strengthens their competitiveness. Another important advantage is the free access of Armenian citizens to the Russian labor market. Remittances from labor migrants remain a key source of income for many Armenian families and play a notable role in the country’s economy.

The energy sector deserves separate mention. Armenia’s nuclear power plant provides a substantial share of the country’s electricity generation, while modernization projects are being implemented with the participation of Russian entities. Thus, integration with Russia affects not just individual sectors but virtually all key components of Armenia’s economy.

Why did the may restrictions target water, alcoholic beverages, flowers, and agricultural products in particular?

The selected categories carry more political-economic than macroeconomic significance. These are sectors in which Armenian producers have traditionally held strong positions in the Russian market and where restrictions are most visible to Armenian businesses. At the same time, such products account for a relatively small share of Russia’s overall imports. Consequently, the impact on the Russian economy is minimal, whereas the effect on specific Armenian producers may be quite substantial. For this reason, these measures should primarily be interpreted as a signal regarding the potential revision of the existing framework of relations.

How does Yerevan’s course toward closer ties with the European Union affect economic relations?

This raises a fundamental question about the compatibility of different integration models. The Eurasian Economic Union is a customs union with a unified external trade regime. Full participation in European integration mechanisms implies a different regulatory and trade architecture. As a result, attempts to simultaneously benefit from both systems inevitably encounter legal and economic constraints. If the process of distancing from the EAEU accelerates, Armenia’s economy may face further export reductions, rising business costs, and declining real household incomes.

Which side is more dependent on preserving the current format of economic relations—Russia or Armenia?

From a macroeconomic perspective, the dependence is asymmetric. For Russia, Armenia’s share in overall foreign trade remains relatively small. Therefore, even a substantial reduction in economic preferences would not create serious macroeconomic risks. For Armenia, the situation is different. Russia remains the country’s largest trading partner and one of the principal sources of investment, energy resources, and labor income.

Moreover, recent experience demonstrates that any military or political instability in the region has a direct impact on Armenia’s economy, increasing its vulnerability to external shocks.

What is your overall assessment of the current stage in Russian-Armenian relations?

In my view, we are witnessing the conclusion of a particular historical phase. The model under which Armenia enjoyed significant economic benefits from Eurasian integration while simultaneously pursuing a multi-vector foreign policy is encountering objective limitations.

The restrictions introduced by Russia so far remain targeted and do not constitute a full-fledged sanctions regime. Rather, they should be viewed as a warning signal demonstrating the existence of instruments for revising current preferences. The future trajectory of events will depend on the strategic choices made by Armenia’s leadership. From an economic standpoint, the advantages of the current integration model remain substantial. However, as is often the case, the final decision will be shaped not only by economics but also by politics.