How Armenia helps Russia bypass sanctions
By News.Az
Geopolitical changes in the South Caucasus continue to significantly impact the economic ties of the region's countries with Russia. Amid growing tensions and shifting political directions, economic interactions between these countries and Moscow remain a crucial factor that shapes not only domestic but also foreign political strategies. Despite ongoing discussions about Armenia's possible integration with the West, economic data suggests that the country's dependence on Russia not only persists but is also deepening. An analysis of trade relations between the South Caucasus and Russia over the past three years provides deeper insights into how these connections have evolved amid global changes.Azerbaijan's trade relations with Russia
Azerbaijan's economic ties with Russia remain stable and exhibit a trend towards growth. From 2021 to 2023 , the volume of foreign trade turnover between the two countries increased by 1.45 times, reaching 4.36 billion USD. This growth was driven by an increase in both exports and imports. Azerbaijan's exports to Russia during this period grew by 275 million USD, reaching 1.12 billion USD, indicating a stable demand for Azerbaijani goods in the Russian market. Imports from Russia increased by 1.1 billion USD, amounting to 3.16 billion USD, reflecting a steady supply of Russian goods in the Azerbaijani market.
However, despite overall growth, an analysis of Russia's share in Azerbaijan's foreign trade structure reveals that this indicator remained relatively stable. Russia's share in Azerbaijan's exports decreased from 4.15% to 3.53% between 2021 and 2023, while its share in imports increased from 17.7% to 18.3%. In the first half of 2024, Russia's share in exports was 4.31%, and in imports, 18.17%. These figures confirm that Azerbaijan does not prioritize Russia as its main trading partner, though it maintains stable economic relations.
Georgia's trade relations with Russia
Georgia's trade relations with Russia also demonstrate an interesting dynamic. In 2022 , there was a significant increase in trade turnover between the two countries, which grew by 1.53 times, reaching 2.45 billion USD. This growth was primarily driven by an increase in imports from Russia, indicating Georgia's dependence on Russian goods in certain sectors. Exports from Georgia to Russia in 2022 increased slightly, by only 32 million USD, indicating modest growth in demand for Georgian products in Russia.
However, in 2023, the situation changed: the volume of trade turnover between the countries decreased by 71 million USD, amounting to 2.4 billion USD. In the first five months of 2024, the downward trend continued: exports decreased by 2.8%, and imports by 6.1%. Despite this, Russia's share in Georgia's foreign trade remained stable, at around 11-13%, indicating Georgia's continued dependence on the Russian market.
Notably, despite political disagreements with Russia, Georgia continues to maintain economic ties with it. This suggests a pragmatic approach in Georgia's foreign economic policy, aimed at preserving trade balance despite political risks.
Armenia's trade relations with Russia
Among the South Caucasus countries, the most significant changes in trade relations with Russia occurred in Armenia. From 2021 to 2023, the volume of foreign trade turnover between Armenia and Russia increased by 2.6 times, reaching 7.4 billion USD . This growth was driven not only by an increase in exports but also by a sharp rise in imports, which became particularly evident in 2024, when the trade volume in the first five months exceeded the figures for the entire previous year. The fivefold increase in imports from Russia during the first five months of 2024 indicates Armenia's growing dependence on Russian goods.
Russia's share in Armenia's exports in 2022 was 28%, increasing to 45% in 2023, but sharply declining to 17% in the first half of 2024. These changes may indicate a redirection of Armenian exports to other markets or a decline in demand for Armenian products in Russia. Simultaneously, Russia's share in Armenia's imports significantly increased from 32.5% to 69% in the first half of 2024, confirming Armenia's growing dependence on Russian imports.
It is noteworthy that despite the sanctions imposed on Russia in 2022, Armenia managed to take advantage of the situation by becoming a key intermediary for the re-export of sanctioned goods to Russia. However, in 2024, a trend shift occurred: Armenia began actively participating in the re-export of Russian goods to third countries. This particularly involves the re-export of diamonds, which Russia sends through Armenia to the UAE and other countries. This process gained particular importance after the European Union imposed sanctions on the Russian diamond mining company "Alrosa," prompting the search for new routes to bypass sanctions.
Comparative analysis of trade relations
An analysis of the trade relations of the South Caucasus countries with Russia over the past three years shows that, despite the stability of Azerbaijan's and Georgia's economic ties with Russia, the most significant changes occurred in Armenia. This is due to Armenia becoming a key intermediary in bypassing sanctions, which allowed it to derive significant economic benefits. However, in 2024, the situation began to change: Armenia is now more focused on re-exporting Russian goods to third countries, possibly due to new sanctions and changes in the global economy.
While Georgia and Azerbaijan maintain stable but less dynamic relations with Russia, Armenia demonstrates a high level of flexibility and adaptability in changing external economic conditions. This suggests the possibility of further growth in economic ties between Armenia and Russia, especially under increasing sanctions pressure.
The economic ties of the South Caucasus countries with Russia remain an important factor influencing regional stability and development. Despite political disagreements and changes in global politics, trade relations between the countries continue to evolve, albeit with varying degrees of intensity. Amid stable relations between Russia and Azerbaijan and a gradual decrease in trade ties with Georgia, Armenia demonstrates a significant strengthening of economic interactions with Russia, particularly in 2024. It seems Armenia continues to assist Russia and countries with close trade ties with it in bypassing sanctions, deriving significant benefits from this. While the focus was previously on exports to Russia, Armenia is now more actively involved in the re-export of Russian goods to third countries. This dynamic suggests Armenia's growing dependence on trade with Russia: in 2024, Russia's share in Armenia's foreign trade turnover exceeded 46%, indicating further strengthening of economic ties between the two countries.
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