Richard Giragosian: New EU-Armenia agreement to mark important breakthrough

12:04 • 21.10.17



The EU-Armenia Comprehensive and Enhanced Partnership Agreement (CEPA), initialed in March 2017, presents a fresh start for the deepening of relations between the two parties in the wake of Armenia’s abortive Association Agreement and related Deep and Comprehensive Free Trade Agreement (DCFTA). Despite a difficult and complicated context, both the EU and Armenia have demonstrated the necessary political will to negotiate a new compromise agreement that takes into account Armenia’s commitments and limitations as a member of the Eurasian Economic Union (EAEU).  

And the agreement keeps a considerable amount of content from the sacrificed Association Agreement, including the areas of political dialogue, justice and freedom, and even security.


The new agreement also includes a substantial amount of legally binding provisions across a range of sectoral areas of cooperation, although the effectiveness of CEPA’s essential degree of conditionality remains an open question. The issues most affected by Armenia’s EAEU membership are core trade policy elements and the consequential loss of any DCFTA. CEPA may be viewed in EU policy terms as an example of ‘differentiation’ and greater flexibility as advocated by the 2015 European Neighborhood Policy review, although this was prompted by Russian force majeure. The ultimate impact of CEPA remains a test of implementation, which still poses undeniable challenges for Armenia.


The new CEPA, initialed in May 2017, is now expected to be signed at by the end of the year.


Despite the original plan to have it ready in time for the EU Eastern Partnership (EaP) summit in Brussels on 24 November 2017, an unexpected delay within the EU institutions, which then triggered a delay in the legal review and translation, has set the timetable back. That delay, despite being unintended, may raise new concerns on Armenia’s part and possibly trigger resentment and frustration that the EU would be well advised to address.


The agreement, once officially adopted, will represent an important breakthrough for both the EU and Armenia, for two reasons. First, although CEPA can be seen more as an Association Agreement lite, it is the first successful example of European engagement in the Eastern Partnership that is based less on wishful thinking and more on a realistic consideration of the specific conditions and constraints that are unique to each EaP state. In Armenia’s case, this refers to the necessity of recognizing the government’s insistence on exercising its ‘sovereign choice’ as a condition for deepening ties to the EU weighed against the limits inherent in the country’s security reliance on Russia. This stance was a result of the May 2015 Riga Summit, when the EU presented its earlier review of the European Neighborhood Policy (ENP), which was completed in November of that year6 to the EaP countries. Both the Summit Declaration and the newly revised ENP strongly advocated for a policy of ‘differentiation’ in the EU’s relations with the neighbors and prudently abandoning a ‘one-size-fits-all’ approach, as demonstrated by the EU-Armenia CEPA. In other words, the degree of policy flexibility demonstrated by the EU underscored the modified policy of differentiation by being more acutely attuned to Russian concerns and Eurasian Economic Union constraints.


A second element of success stems from the fact that the new agreement was able to replace the Partnership and Cooperation Agreement (PCA) of 1999, with a legally binding and politically significant commitment underpinned by an essential degree of conditionality. And although the coming test of the success of CEPA will be in the implementation stage, there is an additional opportunity stemming from a possible move by the EAEU to leverage Armenia as a potential new platform to engage the EU, thereby offering a chance for garnering greater credibility for the EAEU while also elevating the strategic significance of Armenian membership in the EAEU.


Conclusion


After weathering the uncertainty of a period of ‘strategic pause’ in its relations with the European Union, Armenia recently initialed a new EU-Armenia framework agreement. Hailed as a rare second chance to restore relations and regain trust, the agreement, now on track to be signed in November 2017, represents a strategic opportunity for Armenia. The inherent opportunity stems from the agreement’s offer to salvage Armenia’s 2013 decision to sacrifice its earlier Association Agreement and related DCFTA with the EU and, in the wake of Russian pressure, to commit to join the EAEU instead.

Despite inherent constraints, CEPA stand out as an ambitious agreement. It has kept the substance of the Association Agreement in its political dialogue part. The commitments undertaken in the areas of justice, freedom and security and in 23 sectoral cooperation chapters are rather extensive. Many of these charters are kept at ‘approximation’ levels, which the failed Association Agreement included.

 

Despite the shortcomings in the new Armenia-EU agreement, the greatest reflected in selective trade chapters, the outlook for a deepening of relations is both positive and practical. On the one hand, the advantage for the EU lies in the successful elevation of bilateral relations with Armenia above and beyond the now outdated Partnership and Cooperation Agreement (PCA). For Armenia, on the other hand, the benefits stem from restored access to the EU toolbox of technical expertise and financial support. This latter point is especially critical to ensure that the reform effort in Armenia is sustained in the face of more drastic budgetary and political pressures. And for Armenia, this promises to offer more sweeping opportunities in several areas, such as border management, mobility partnerships and democracy-building instruments. At the same time, the new agreement provides a degree of political cover and practical incentives, magnified by the timing of the opportunities with Armenia’s own transformation and transition to a parliamentary form of governance in April 2018.


Another benefit for Armenia was the securing of a set of ‘transitional exemptions’ for a sweeping set of some 800 goods and products, thereby shielding the Armenian economy from the direct impact of the higher traffic regime required by the EAEU. But it was another aspect of timing that was equally encouraging for the normally timid Armenian officials to return to a concerted effort to re-engage the EU. While this motivation obviously stemmed from the twin necessities of the country’s economic fragility and political weakness, nevertheless, it did stand out and stand apart as a rare example of Armenian statesmanship and strategic vision, not to mention an instance of Armenia defending its own independence and pursuing its national interest.


Timing was also helpful for Armenia in another key regard. Whereas in 2013, when Moscow saw Armenia as the sacrificial pawn and leveraged its successful pressuring of Yerevan as a message of strength aimed to deter other Eastern Partnership countries, by 2015 there was no such need, with Russia also sensing little danger of ‘losing’ Armenia to the EU no matter what new agreement was reached, especially since any new agreement would be less than the broader Association Agreement and DCFTA. Thus, Russia provided Armenia with a much greater degree of flexibility, as seen in little real interference and certainly less interference over the negotiations between Armenia and the EU in this second attempt at redefining the relationship.


Amid Russia’s demonstration of such a seemingly more permissive stance, Armenia was also able to leverage a third, related trend that was driven by the downturn in fortunes of the Eurasian Economic Union and defined by Russia’s recognition of the need to garner greater legitimacy and credibility of the EAEU. In this context, Armenia’s argument that its eventual agreement with the EU could actually serve Russian interests by serving as a ‘bridge’ between the EU and the EAEU began to win adherents.64 At the same time, Armenia’s geographic position, despite the lack of land borders with the EAEU itself, was also reinterpreted as an advantage, offering the EAEU alternative avenues to leverage Armenia’s relations with Iran, proximity to the Middle East and even interest in the possible benefits from the possible reopening of its closed border with Turkey.


Yet even with the success to date of CEPA, in terms of both the process and the product, the full realization of the benefits and gains from the agreement are far from assured. As demonstrated by each of the other Eastern Partnership states, and especially in the cases of those with Association Agreements and DCFTAs, the implementation stage is as daunting as the negotiations, and perhaps even more difficult. And, as the implementation of CEPA will require even greater political will and determination to deepen and accelerate reform in several areas simultaneously, which Armenia has failed to do so far, the outlook for EU-Armenian relations still remains an open question. Thus, this is a strategic opportunity for the country, but one that it can no longer squander.

……………………………

Richard Giragosian is the Director of the Regional Studies Center (RSC), an independent “think tank” in Yerevan, Armenia.

 

Hripsime Hovhannsyan





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