Armenia's relations with Russia are no doubt complex. Yet, Armenia’s stance during the invasion of Ukraine exemplifies the difficult decisions smaller countries must face when stuck between major powers, Vlad Olteanu writes.

Armenia has historically held a challenging geopolitical position, sandwiched between the opposing objectives of the West and Russia.

With the onset of Moscow's war in Ukraine, Armenia's role has evolved into one that leverages its unique relationship with Russia, raising questions about the nation's use of its position to navigate Western sanctions and bolster its economy.

Despite not being a direct participant in the conflict, Armenia's economic connections to Russia have become a focal point of criticism, especially regarding the re-exportation of commodities and the facilitation of trade between sanctioned Russian entities and the international market.

Armenia's economic relationship with Russia has flourished, particularly in the aftermath of Western sanctions on Russia due to the Ukraine invasion.

Russia reported strong growth in trade between the two countries, noting that it hit $7.4 billion last year and increased 2.5 times in the first half of this year, surpassing $8.3 billion. It is estimated that the trade volume could reach $14-$16 billion by the end of this year if the current pace continues.

This rapid expansion could be interpreted as Armenia leveraging its status as a re-export hub, allowing Russia to bypass Western sanctions imposed due to the invasion of Ukraine.

Thus, Armenia is probably actively engaged in re-exporting Russian gemstones and gold. In 2023, Armenia exported 4.5 million carats worth of diamonds, which is 30 times more than produced in the republic itself.

Not a passive observer
Armenia elevation to a prominent role in the geopolitical sphere, has indirectly bolstered Russia’s economic resilience under sanctions. While Armenia is focused on advancing its own national interests, this dynamic raises concerns on the undermining of global efforts to isolate Russia.

By permitting re-exports and sustaining robust trade relations, Armenia helps lessen the impact of sanctions, allowing Russia continued access to restricted goods and technologies.

Armenia’s close ties with Russia have not gone unnoticed, though the Western response has remained relatively subdued. Behind the scenes, well-organised lobbying efforts, likely driven by influential elites and supported by major PR and communication firms, seem to be playing a significant role.

This successful lobbying campaign highlights a broader issue: Armenia's ability to maintain crucial relationships with both the West and Russia, manipulating Western perspectives on its economic interactions with Russia.

 As a result, it becomes increasingly difficult to distinguish whether Armenia's diplomatic efforts are genuinely sincere or opportunistic manoeuvres designed to capitalise on global instability, particularly in the context of the Ukraine conflict.

Armenian politicians, especially Prime Minister Nikol Pashinyan, have sought to distance Yerevan from Russia following the war in Ukraine.

However, the country's close economic links indicate a more complicated reality. Armenia's economic expansion, spurred by trade with Russia, appears to be indirectly subsidised by the war.

Critics contend that Armenia is not just a passive observer but an active player in a network supporting Russia's war efforts. By leveraging its territory and economy to bypass sanctions, Armenia has strengthened its economy while, arguably, undermining global stability.

Soured or just strained?
Armenia has traditionally relied on Russia for security and economic support, particularly due to its ongoing tensions with Azerbaijan. However, relations between the two nations have soured in recent years.

The 2018 Armenian Revolution, which brought Pashinyan to power, marked a significant shift as Armenia began to distance itself from Moscow's influence.

This strain was further amplified by the 2020 Nagorno-Karabakh War and the September 2022 clashes with Azerbaijan, where Russia, despite being a nominal mediator, hesitated to intervene decisively in Armenia's favour.

Russia's focus on its invasion of Ukraine has left Armenia feeling increasingly isolated.

The 2023 Azerbaijani lightning-fast military operation in Nagorno-Karabakh and the subsequent exodus of Nagorno-Karabakh Armenians have only deepened Armenia's disillusionment with Russia. Moscow was criticised for failing to prevent Azerbaijan's actions.

Armenia's relations with Russia are no doubt complex. Yet, Armenia’s stance during the invasion of Ukraine exemplifies the difficult decisions smaller countries must face when stuck between major powers.

As the war progresses, Armenia will face further scrutiny, particularly as the international community assesses the implications of preserving its economic links with the Russian Federation.

Vlad Olteanu is the founder of i3pact EU and an EU affairs expert.