Armenia Charts a Western Course Amidst Shifting Alliances
Heading West – April 6, 2026
Armenia’s economy is demonstrating robust growth as the nation adjusts its ties with Russia and embraces the European Union. This shift is largely driven by strategic decisions, not merely coincidence. On April 1, Vladimir Putin informed Prime Minister Nikol Pashinyan that membership in both the EU and the Russian-led Eurasian Economic Union (EAEU) was impossible, leveraging the price of Russian gas (177.50 US dollars per thousand cubic metres) as a point of contention.
Pashinyan responded that Armenia’s citizens would determine its future. This dynamic represents a significant departure from Armenia’s history, which for three decades after independence remained firmly within Moscow’s orbit, participating in the EAEU and Collective Security Treaty Organisation (CSTO), hosting a Russian military base, and relying on Russian gas. Azerbaijan’s 2023 reconquest of the Karabakh region catalyzed this shift, with Russia failing to provide security guarantees.
Pashinyan and ordinary Armenians have since suspended CSTO membership and passed an EU accession law. The economy is bolstering Pashinyan’s strategy. The World Bank’s latest economic update reveals 7.6% year-on-year growth in January, fueled by construction (18.7%) and mining (25.2%).
Retail expanded by 7.9%, and tourist arrivals increased by 28.6%. The financial system exhibits stability, with a capital adequacy ratio of 20.3% and non-performing loans at 1.3%. A budget surplus of 0.9% of projected GDP was recorded, alongside 5.5 billion US dollars in gross reserves.
However, exports and imports declined sharply in January, reflecting a slowdown in the re-export boom linked to the Ukraine conflict. Excluding these categories, exports rose by eight percent, and the technology sector, now accounting for roughly seven percent of GDP, is expanding rapidly, with over 10,700 active high-tech companies. A 500 million US dollars partnership between Firebird, NVIDIA, and the Armenian government to build an AI computing facility demonstrates this shift.
Remittances remain complex, with 52% originating from Russia and 38% from the United States. Inflation rose to 4.3% in February, primarily due to food prices. Elections are scheduled for June, presenting a referendum on Pashinyan’s westward turn.
Putin expressed interest in the outcome, referencing detained businessman Samvel Karapetyan. Pashinyan countered that dual citizenship prohibits candidacy. The EU is actively welcoming Armenia with a 270 million euros Resilience and Growth Plan and ongoing visa liberalization talks.
Despite challenges, including Armenia’s landlocked status and reliance on Russian gas, the country appears determined to continue its trajectory.
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