By Dr. Syuzanna Vasilyan The ‘Sandwich’ The September 3rd, 2013 decision of Armenia’s President Serj Sargsyan after his meeting with the President of Russia Vladimir Putin not to pre-sign the Association Agreement AA and the Deep and Comprehensive Free Trade Agreement DCFTA with the EU and instead enter into the Customs Union CU with Russia, Belarus and Kazakhstan came as a domestic, regional and international surprise. Armenia had been negotiating the AA with the Union for more than three years, the DCFTA for about two years, while the alternative of signing a different document or integration ‘with’/’into’ another bloc had hardly been placed on the political agenda having neither figured in domestic rhetoric nor transmitted as a message to international partners. What was the drastic shift in Armenia’s foreign policy agenda conditioned by? How can it be comprehended? This article will tell a ‘sandwich story’ and frame it in policy relevant terms by categorizing the EU as the upper slice of the ‘bread’, Russia – the lower slice, and Armenia – the ‘meat’. The Upper Slice With the collapse of the Soviet Union in 1991 the EU started providing economic assistance and humanitarian aid to Armenia by launching the grant-financed Technical Assistance to the CIS TACIS program so as to stretch ‘a hand of help’ with the transition process.1 Under the auspices of TACIS, in 1993 the EU generated the Transport Corridor Europe-Caucasus-Asia TRACECA program.2 In 1996 the Union decided to bolster its relations with the former Soviet countries, including Armenia, by resorting to a more active policy and signing the Partnership and Cooperation Agreement PCA, which entered into force in 1999. In July 1999 the EU also initiated the Inter-State Oil and Gas Europe INOGATE program.3 In June 2004, by putting forth a new policy framework, namely, the European Neighborhood Policy (ENP).4 The Union explained: ‘the objective of the ENP is to share the benefits of the EU’s 2004 enlargement with neighboring countries in strengthening stability, security and well being for all concerned. It is designed to prevent the emergence of new dividing lines between the enlarged EU and its neighbors and to offer them the chance to participate in various EU activities through greater political, security, economic and cultural cooperation’ European Commission 2004, 3. The ENP intended to include Russia, which considered it denigrating and expressed preference for a bilateral partnership. In 2004 Armenia and the European Commission signed an agreement transforming the European Commission Office in Yerevan into a Delegation European Commission 2005, 5. The relationship between Armenia and the EU was institutionalized through the ENP Action Plan, the negotiations over which started in 2005. In 2006 the Action Plan was signed. The document which was political in essence, aimed at bringing the country closer to the EU, by listing all the spheres of public life as ‘priorities for action’: political dialogue and reform, trade and measures preparing partners for gradually obtaining a stake in the EU’s internal market, justice and home affairs, energy, transport, information society, environment and research and innovation, and social policy and people-to-people contacts European Commission 2004, 3. In 2009 Armenia joined the Eastern Partnership EaP, which reinforced Armenia’s political approximation and economic integration ‘with’ the Union. In addition, in July 2010 an AA, which would replace the PCA as the legal backbone of the relations, was proposed within the EaP framework. The AA would also be accompanied by the DCFTA, which would liberalize trade, foster investments and growth, protect intellectual property rights and introduce European standards and practices. In the economic domain, through the PCA, which eliminates trade quotas and provides for the protection of intellectual, industrial and commercial property rights, the EU and Armenia have accorded each other Most Favored Nation (MFN) treatment and Armenia has benefited from the EU’s Generalized System of Preferences (GSP) scheme, which concerns trade in goods, while as of 2012 the new GSP has strengthened the GSP+ available since 2005. The latter tied trade to respect for human rights, environmental protection and labor standards (European Commission 2012). In the security domain EU member-states (with France as a co-chair, and Sweden, Germany, Italy and Finland as participating states) have been engaged in the resolution of the Karabakh conflict since 1994. With the Union not being a direct donor to Karabakh, in the period of 1997-2002 assistance has been provided to Azerbaijan for rehabilitation and mine clearance (Vasilyan 2013). Although by appointing a Special Representative to the South Caucasus in 2006 the Union has charged him, least of which, with conflict resolution tasks, it has given credence to the OSCE Minsk Group as a mediator of the conflict. Meanwhile, with its member-states not having envisaged and advocated for engagement of the de facto state in the talks, the Union has been subject to loss of external legitimacy (Vasilyan 2011). The Lower Slice While in an article published in Izvestiya in 2011 President (then Prime Minister) Putin argued that the Eurasian Union would encompass an area ranging from Lisbon to Vladivostok, the ‘complex’ of not being viewed as credible must have led Russia to adopting more divisive tactics in 2013. The imminent Vilnius summit of November 2013 was the ‘fire alarm’ for Russia to embark on a forceful politics of protecting its ‘near abroad’ – a term coined in 1992 by the then Russian Foreign Minister Kozyrev. Conceiving of the latter as its backyard the then President Yeltsin stated that Russia had a ‘vital interest’, i.e. security, to protect on the territory of the former Soviet Union. Thereby Russia perceived the Union as vying for hegemony on a terrain, which has historically been considered as the border between Russian, Persian and Ottoman Empires. While the EU has articulated that through the ENP and the EaP, it aspires to share its values and interests to the advantage of the neighbors, including Russia, its own policy was sobered by the ‘zero-sum’ game it realized Russia was playing, not only vis-à-vis Armenia, but also Ukraine, which had to sign the AA. Moldova and Georgia, which intended to pre-sign their AAs in Vilnius and whose integration ‘with’ the Union is still pending. Despite highlighting that the incompatibility between the DCFTA and the CU is technical, the Union realized that it had underestimated the Russian willingness to restore its political standing, if not in the world, in its own vicinity. With US strategy having cast a shadow of doubt on Russia as far as security threats have been concerned through the pledge to integrate Ukraine and Georgia into NATO, create a missile defense shield (with Poland, Czech Republic, Romania and Turkey as host countries) allegedly against Iran, the Union’s overtures/inroads were now perceived as undermining Russia’s footing in its ‘zone of influence’. Meanwhile, the EU and Russia are not comparable neither in terms of their policy forms nor substance. As far as the styles are concerned, the Union, unlike its member-states, has been a novel type of actor, not the least of which towards Armenia. Its programs, aimed at institutional capacity building, support to SMEs, and civil society, have been meant to regulate the public-private relations in a new mode by helping to advance in line with European principles its projects, such as TAIEX, Twinning, and providing policy advice have underscored the importance of technocratic mode of governance. Although having negative conditionality in its toolkit, the Union has not punished Armenia, despite lack of progress in some cases and regress in specific policy domains, opting instead for political dialogue. Most importantly, it has practiced a template-based approach with the partner-neighbors having to ‘climb the ladder’ one step at a time in an incremental manner until deemed by the Union as worthy of becoming more equal, i.e. potential members (if they cherish such a dream). Russia, in contrast, has been a traditional actor, relying on diplomatic dialogue with state officials and using rewards/sanctions (e.g. gas, visas, etc.) – a mechanism practiced by abrupt shots more akin to a great power. As far as the nature of the policy is concerned, the Union has attributed primacy to economic issues, thus, aiming to regulate the ‘high’ politics from a ‘low’ level. In contrast, Russia’s policy has been centered on security, especially signified by the Maindorf Declaration for the resolution of the Nagorno-Karabakh conflict in the aftermath of the August war with Georgia over Abkhazia and South Ossetia the ‘domestic’ and ‘border’ logics (with the Russian military base to remain stationed in Armenia up to 2044) have dominated over the ‘foreign’ logic (Vasilyan and Petrossian 2014, forthcoming). The Meat In terms of trade, according to 2012 data, the EU is Armenia’s primary trading partner (27.3%) (European Commission 2013) and Russia was its second leading trading partner. As a whole, the EU is the largest foreign direct investor (with Germany, France and Cyprus being among the top), with Russia as the largest single investor (National Statistical Service of the Republic of Armenia 2012).5 Armenia’s trade with the EU is dominated by trade in fuels and mining products. These account for 65.9% of the EU imports from Armenia. The EU exports are mostly machinery, equipment and vehicles which, together, accounted for 31.7% in 2012 (European Commission 2013). In general, Armenia’s trade with the EU has expanded on a yearly basis, despite a significant drop after the 2008 global financial crisis. Exports increased by an average of 25% annually between 1999 and 2006, between 2007 and 2009 exports decreased by 15-20%, but by 2011 gained by over 80% (Index Mundi 2012). Yet, being a small economy, in 2012 Armenia ranked as the EU’s 112th trade partner. In order to stimulate political reform in its political neighborhood the Union been ‘strengthening the rule of law, of democratic structures and pluralism’ (European Commission 2006). EU funding provided specifically for democracy promotion in Armenia under the ENPI for 2007-2010 and 2011-2013 are €29.52 million and €47-55 million, respectively. During the period 2008-2011, Armenia also received democracy-targeted funding in the amount of €88.381,247 million (Vasilyan 2010). Moreover, €7.865 million and €1.5 million have been channeled through the European Instrument for Democracy and Human Rights (EIDHR) and Non-State Actors and Local Authorities (NSA & LA) budget lines, respectively. Armenia has also been allocated €32 million from the Comprehensive Institution Building (CIB) program to strengthen its public administration. To facilitate political dialogue through the EaP, the EU has launched the Euronest Parliamentary Assembly. Observers saw the affiliation of the Republican Party and Rule of Law and Heritage with the European People’s Party (EPP) as potentially contributing to strength democratic governance in a country which is classified by Freedom House as ‘partially free’. The Union’s social democratic model has been juxtaposed with the Russian ‘sovereign democracy’, presupposing government control over democratic processes. Through its promulgated foreign policy of ‘complementarity’ Armenia has benefited not only by being able to direct its guise equally towards both the EU and its member-states and Russia and take advantage of the technical and financial assistance offered by the former and military guarantees ensured by the latter but it has also managed not to be the ‘apple of contention’ between the United States (US) and Iran. In its National Security Strategy, Armenia has emphasized that the ‘strategic partnership with Russia, its adoption of a European model of development, mutually beneficial cooperation with Iran and the US, membership in the Commonwealth of Independent States (CIS) and the Collective Security Treaty Organization (CSTO), and its intensification of cooperation with the NATO alliance all contribute to the consolidation of the potential of Armenia’s policy of ‘complementarity’ (Ministry of Defense of the Republic of Armenia, 2007, 10). Meanwhile, Armenia has also wished to consolidate regional stability and develop friendly relations with its neighbors (Ibid., 15). However, the settlement of the Nagorno-Karabakh conflict, together with the overt threat posed by Azerbaijan to Armenia and Nagorno-Karabakh, especially in view of possible ‘heightened’ instability additionally radiating from Turkey, remains a key issue of concern (Ibid., 3). The Strategy also notes the disruption of transit routes – the Tbilisi-Sukhumi railway and the imposition of sanctions on Iran - as other direct threats (Ibid., 16). Previously hopeful of the EU as capable of delivering on these challenges by ‘disciplining’ Azerbaijan to halt military escalation and Turkey to open the border with Armenia, the country seems to have become discouraged given the Union’s inability/non-disposition to meddle with such a major security provider as Turkey and energy provider as Azerbaijan. Aggravated by Russia’s move on the ‘chess-board’ exhibited through the arms-sale to Azerbaijan in the summer of 2013 and fearing full abandonment, Armenia declared its readiness not only to not sign the DCFTA with the Union but also to enter the CU. This entails that with the ‘juices’ were not ‘soaked’ into the lower slice of the sandwich it might as well be ‘edible’ without the upper slice. The intolerance by Russia over Armenia’s willingness as an ‘orphan’ to benefit from two parents – biological (Russia) and adoptive (EU) – has made it move from a foreign policy of complementarity to ‘supplementarity’. Footnotes 1 TACIS covers Armenia, Azerbaijan, Belarus, Georgia, Kazakhstan, Kyrgyzstan, Moldova, Russia, Tajikistan, Turkmenistan, Ukraine and Uzbekistan. 2 The beneficiaries of TRACECA are Armenia, Azerbaijan, Bulgaria, Georgia, Kazakhstan, Kyrgyzstan, Moldova, Romania, Tajikistan, Turkey, Uzbekistan, Ukraine, and Turkmenistan. 3 Twenty-one countries (Albania, Armenia, Azerbaijan, Belarus, Bulgaria, Croatia, Georgia, Greece, Kazakhstan, Kyrgyzstan, Latvia, Macedonia, Moldova, Romania, Slovakia, Tajikistan, Turkey, Turkmenistan, Uzbekistan, Ukraine and the FRY) acceded to INOGATE Umbrella Agreement. 4 The ENP covers Algeria, Armenia, Azerbaijan, Belarus, Egypt, Georgia, Israel, Jordan, Lebanon, Libya, Moldova, Morocco, Syria, Tunisia, Ukraine and the Palestinian Authority. 5 Iran is the sixth largest FDI holder (stock of investments); Turkey is eighth, and the US is second. Bibliography European Commission (2004). European Neighborhood Policy, Strategy Paper. Communication from the Commission, Brussels: European Commission. European Commission (2005). European Neighborhood Policy, Country Report Armenia. Commission Staff Working Paper, Brussels: European Commission. European Commission (2006). EU/Armenia Action Plan. Brussels, European Union External Action Service. European Commission (2012). The EU’s New Generalised Scheme of Preferences (GSP). DG Trade - European Commission. http://trade.ec.europa.eu/doclib/docs/2012/december/tradoc_150164.pdf (accessed January 4, 2013). European Commission (2013). Armenia: EU Bilateral Trade and Trade with the World. European Commission. http://trade.ec.europa.eu/doclib/docs/2006/september/tradoc_113345.pdf (accessed December 8, 2013). Index Mundi. Armenia-Exports-Historical Data Graphs per year. 2012. http://www.indexmundi.com/g/g.aspx?c=am&v=85 (accessed December 28, 2013). National Statistical Service. External Economic Activity (2012). Yerevan: National Statistical Service of the Republic of Armenia, 2012. Ministry of Defense, Republic of Armenia, Republic of Armenia National Security Strategy. Yerevan: Ministry of Defense, January 26, 2007. Vasilyan, Syuzanna (2010) ‘Dizygotic Twins: The EU and US Promoting Democracy in the South Caucasus’ in Scott N. Romaniuk, ed. (2010, forthcoming) EU and Russia in a ‘New Europe’ (New York: Springer Press), 120-162. Vasilyan, Syuzanna (2011) ‘The External Legitimacy of the European Union (EU) in the South Caucasus’, European Foreign Affairs Review, 16 (3), 341-357. Vasilyan, Syuzanna (2013) ‘Moral Power as Objectification of ‘Civilian’/‘Normative’ Eulogy: the European Union (EU) as a Conflict-Dealer in the South Caucasus’, Journal of International Relations and Development. Vasilyan, Syuzanna and Shant Petrossian (2014, forthcoming) “Russia’s Policy towards the South Caucasus: Triangulation of Domestic, Border and Foreign Loics”, in L. Asta, Padova: University of Padova. Dr. Syuzanna Vasilyan is an Assistant Professor and Jean Monnet Chair of European Studies in the Political Science and International Affairs program, College of Humanities and Social Sciences, American University of Armenia. She has been a member of the Faculty Senate (2011-2012) and the Extensions Committee (2011-2013) and the Graduate Admissions Committee (2013-present). Dr. Vasilyan has been doctoral researcher and lecturer at the Centre for EU Studies, Department of Political Science, Ghent University in Ghent, Belgium (2006-2010) from where she also holds her PhD, a visiting PhD researcher at the Department of Social and Political Sciences, European University Institute in Florence, Italy (2009-2010), a Visiting Professor at the Department of International Relations and European Studies, Central European University in Budapest, Hungary (2010-2011), a visiting scholar at the University of Padova, Italy (2012) and a Visiting Fellow at the European University Institute in Florence, Italy (2013). She specializes in international relations theories, international organizations, foreign policy of the United States, decision-making and external relations of the European Union and, primarily, the European Neighbourhood Policy. Before embarking on her PhD she has gained professional experience, among others, at the Embassy of the Republic of Armenia in the United States, Organization of Security and Cooperation in Europe Office in Armenia, the Committee of Ministers and the Venice Commission, Council of Europe in France, the European Parliament and an intelligent communications consultancy - The Centre - in Belgium. Dr. Vasilyan has been a reviewer of the Cambridge Review of International Affairs, the Nations in Transit, Freedom House and the International Affairs Forum (IA-Forum). Dr. Vasilyan has book chapters published in edited volumes by LAP Lambert, Ashgate, Routledge, articles in the European Foreign Affairs Review and the Journal of International Relations and Development. Currently she is working on a monograph “The European Union as a ‘Moral Power’ in the South Caucasus”.