Armenia

Leaders

President Serzh Sargsyan
Prime Minister Karen Karapetyan

Background

Armenia prides itself on being the first nation to formally adopt Christianity (early 4th century). Despite periods of autonomy, over the centuries Armenia came under the sway of various empires including the Roman, Byzantine, Arab, Persian, and Ottoman. During World War I in the western portion of Armenia, the Ottoman Empire instituted a policy of forced resettlement coupled with other harsh practices that resulted in at least 1 million Armenian deaths. The eastern area of Armenia was ceded by the Ottomans to Russia in 1828; this portion declared its independence in 1918, but was conquered by the Soviet Red Army in 1920.Armenian leaders remain preoccupied by the long conflict with Azerbaijan over Nagorno-Karabakh, a primarily Armenian-populated region, assigned to Soviet Azerbaijan in the 1920s by Moscow. Armenia and Azerbaijan began fighting over the area in 1988; the struggle escalated after both countries attained independence from the Soviet Union in 1991. By May 1994, when a trilateral cease-fire between Armenia, Azerbaijan, and Nagorno-Karabakh took hold, ethnic Armenian forces held not only Nagorno-Karabakh but also seven surrounding regions - approximately 14 percent of Azerbaijan’s territory. The economies of both sides have been hurt by their inability to make substantial progress toward a peaceful resolution.Turkey closed the common border with Armenia in 1993 in support of Azerbaijan in its conflict with Armenia over control of Nagorno-Karabakh and surrounding areas, further hampering Armenian economic growth. In 2009, senior Armenian leaders began pursuing rapprochement with Turkey, aiming to secure an opening of the border, but Turkey has not yet ratified the Protocols normalizing relations between the two countries. In January 2015, Armenia joined Russia, Belarus, and Kazakhstan as a member of the Eurasian Economic Union.

Economy

Under the old Soviet central planning system, Armenia developed a modern industrial sector, supplying machine tools, textiles, and other manufactured goods to sister republics, in exchange for raw materials and energy. Armenia has since switched to small-scale agriculture and away from the large agro industrial complexes of the Soviet era. Armenia has only two open trade borders - Iran and Georgia - because its borders with Azerbaijan and Turkey have been closed since 1991 and 1993, respectively, as a result of Armenia's ongoing conflict with Azerbaijan over the separatist Nagorno-Karabakh region.Armenia joined the World Trade Organization in January 2003. The government has made some improvements in tax and customs administration in recent years, but anti-corruption measures have been largely ineffective. Armenia will need to pursue additional economic reforms and strengthen the rule of law in order to raise its economic growth and improve economic competitiveness and employment opportunities, especially given its economic isolation from Turkey and Azerbaijan.Armenia's geographic isolation, a narrow export base, and pervasive monopolies in important business sectors have made it particularly vulnerable to deteriorations in the global commodity markets and the economic challenges in Russia. Armenia is particularly dependent on Russian commercial and governmental support, as most key Armenian infrastructure is Russian-owned and/or managed, especially in the energy sector. Remittances from expatriates working in Russia are equivalent to about 7-8% of GDP. Armenia joined the Russia-led Eurasian Economic Union in January 2015, but has expressed interest in expanding its economic ties with the European Union as well, and in March 2017 an EU-Armenia Comprehensive and Enhanced Partnership Agreement was initiated. Armenia’s rising government debt is leading Yerevan to tighten its fiscal policies – the debt almost reached the debt to GDP threshold set by national legislation as of March 2017.

GDP

10.6 Billion