On November 24th, the European Union and Republic of Armenia formally signed the Comprehensive and Extended Partnership Agreement (CEPA) during the Eastern Partnership summit in Brussels. Representing a much needed update to the 1999 EU-Armenia Partnership and Cooperation Agreement, CEPA is the second major effort by the European Union to deepen bilateral relations with Armenia – the first effort being the cancelled 2013 Association Agreement.
Unlike the proposed Association Agreement, CEPA contains no clauses related to the establishment of a free trade area or a customs union between Armenia and the EU. This is because bilateral economic engagement is limited by Armenia’s participation in the Eurasian Economic Union (EAEU). Similar to the relationship between individual EU members and the Single Common Market, it is impossible for Armenia to negotiate a free trade deal or customs union with a third party without including all other members of the EAEU.
Instead, CEPA is focused on the development of Armenian civic society, encouraging reforms within the Armenian government, and exploring areas of political cooperation between Armenia and the European Union. There is hope that by providing benchmarks for institutional stability and reform, the EU may present Armenia into a valuable ally in the South Caucasus and an attractive business environment for European firms. This is particularly relevant to areas of industry related to the digital economy as the European Union’s emphasis on the development of the Single Digital Market converges with Armenia’s growth into an IT powerhouse of the South Caucasus.
However, Armenia’s bilateral ties to Russia have set a limit on the amount of possible cooperation between the EU and Armenia. Since remittances from Armenian workers in the Russian Federation represent a major section of the Armenian economy, any treaty or legislation from the European Union that would pull Armenia away from the Eurasian Economic Union may place the Armenian remittance economy in jeopardy (as EAEU membership guarantees Armenian residency rights in Russia). Disruption of free trade with the Russian Federation and EAEU would place a major strain on the Armenian economy as Russia is Armenia’s largest import and export partner. Moscow also represents a key player in Armenian national security – Russia maintains a military presence in Gyumri and Yerevan and is Armenia’s main arms supplier. As relations between Russia and the EU continue to cool, Armenia may be forced to choose between its political interest with the EU and its strategic dependence on the Russian Federation.
While CEPA represents a significant step forward, both parties continue to face the same challenges that have shaped the past 25 years of EU-Armenia relations. Given the geopolitical climate of the South Caucasus, Armenia’s national security and strategic interest in the Republic of Artsakh will always take precedence over political cooperation with the European Union. Should the EU wish to present itself as a valued strategic partner for Armenia, the articles of political cooperation outlined in CEPA should act as grounds for renewed engagement in the Nagorno-Karabakh peace process. Looking beyond security, CEPA is the first of many steps towards building closer ties in areas of education and civic cooperation between the Republic of Armenia and the European Union.
Justin Tomczyk is a Political Science major and a REEES minor at the University of Illinois. He is a FLAS fellow studying at the Russian-Armenian (Slavonic) University in Yerevan, Armenia.