European integration of Moldova, reformation of Armenia and Russia’s calculations

The intentions and actions stated by the political elites in Moldova and Armenia in relation to Russia reveal a series of changes related to the resetting of the Russian interests. On the one hand, the multi-vector policy of President Igor Dodon, which is relatively calm with regard to the EU IPN, April 23, 2018), in the Russian business community reveals signals of curiosity about the Moldova – EU Association Agreement. On the other hand, the anticorruption initiatives of the government in Armenia, which became a member of the Eurasian Economic Union in 2015, puts on the alert the Russian senior administration given that persons from the transnational clientele system connected to Russian decision makers are involved.

The succession of the crises through which the Moldovan state went, in particular in 2014-2018 (theft from the banking system, invalidation of elections in June 2018 etc.), the ascent of the Party of Socialists, the loyalty shown by President Igor Dodon and the congruence of the interests of the Socialists and the Democratic Party places Moldova in a favorable light for Russia. The Moldovan realities show a reduced efficiency of the capacity to transform the Association Agreement, which was confirmed by the European Parliament’s resolution of July 5, 2018 and the anti-European aggression of the Moldovan government (IPN, July 9, 2018). The lack of progress in the investigation of the criminal cases concerning MoldovaGAZ, where Gazprom controls about 50% of the shares, and the delayed trying of judges involved in the “laundering” (US$ 18 billion in 2010-2014), makes Moldova look more attractive to corrupt groups from the company of the Russian president. The protesting deficiency in society, constant neutralization of the political opposition and preferences for arrangements for maintaining the status-quo are other characteristics of the Moldovan political class that are compatible with the essence of the Russian political system.

At the same time, while the Moldovan authorities fail to do reforms with visible results that would consolidate the country’s European course, the new leaders in Armenia initiate reforms that run counter to the logic of the leaders of the Eurasian Union (Atlantic Council, August 15, 2018). The more ambitious  is the Armenian administration’s approach to the fight against juridical impunity that favors the old elite, the stronger is Russia’s perception of the possible distancing of Armenia. Despite the constraints and dependence on Moscow (remittances of Armenian migrants, military security, supply of natural gas, etc.), Prime Minister Nikol Pashinyan prioritizes the meeting of Armenian citizens’ expectations without taking into account Russia’s wishes. This thing strengthens the perception that the positive moves in the Armenian internal policy can inevitably lead to the qualitative change of the foreign policy that will also involve the dialogue with Russia.

Moldova’s accessibility amid non-functionality of rule of law

The rise in exports to the EU (to over 65% of the total in 2017) and functioning of the Moldovan citizenship by investment  mechanism that was introduced in 2018 are a powerful stimulus for the Russian business community. The maintaining of the Western sanctions, both individual and by sectors, at high intensity affects the economic interests of the Russian oligarchic groups. Russia’s eligibility for sanctions derives from its involvement in the case of poisoning with chemicals on British territory (Skripal case), with the assistance of Russians secret services, evidence of Russia’s involvement in the presidential elections in the U.S., downing of the civil plane MH17 and involvement in the militarization of separatism in Donbass region. The denial of responsibility and continuation of actions leads to the maintaining and generation of new sanctions that limit the privileges of the Russian economic elites that are essential for the survival of Vladimir Putin’s regime. Therefore, the mechanisms offered by the current Moldovan conjuncture (cheap citizenship, favorable commercial regime with the EU, including for the Transnistrian region) cannot be neglected by some of the economic groups in Russia.

An additional encouragement, on the one hand, is the lack of a robust justice system exemplified by the invalidation of the municipal elections in June 2018 or the difficult trial, with delays of half a year) of the main suspect in the theft of the US$ 1 billion Ilan Shor. On the other hand, the simplification of the procedures for doing business, in particular for foreigners, also creates more openness. This amalgam of factors did so that the Association Agreement became one of the reasons for introducing bans in a beneficial commercial opportunity for penetrating the European market.

The President’s representative for the rights of Russian entrepreneurs Boris Titov underlined the interest in entering the EU market through Russian investments in Moldovan economy (Mold-Street, August 29, 2018). These intentions can be put into practice after the parliamentary elections of 2019, where President Igor Dodon aims to achieve a better results for the Party of Socialists, including by eventually topping the list of candidates. The multitude of Socialist seats of MP will also ease the possibility of more effectively promoting a possible immigration of Russian investors with whom President Dodon actively socialized during the first 100 days in office.

Thus, despite the noxious rhetoric as to the negative impact of the Association Agreement in 2010-2016, the Russian authorities approve of this document and President Dodon also adopted an approving attitude. Currently, this keeps his criticism of the export quotas that he intends to renegotiate with the EU. So, the discussions about the scrapping of the Agreement lost topicality not only in Chișinău, but in Moscow too.

Anticorruption in Armenia and foiled Russian interests

Armenia’s reorientation to the West in search of viable economic development models and political culture standards different from those in the Eurasian Union can take place, but depends on the success of the reforms done at present. Most of all, Armenia’s reorientation will be influenced if Russia exerts too visible pressure on principled subjects, like the judging of corrupt officials. The high popularity of Premier Nicol Pashynian and the lack of a momentary interest in reviewing the foundations of the Russian-Armenian dialogue predetermine a pro-reform agenda and distance from geopolitical debates, with polarizing impact in society.

Russia’s tolerance of the progress made in Armenia is minimal or is absent when the clientele or economic interests connected to the Russian public sector are involved. At the same time, if the government of Pashynian plans to fight corruption, this should assume a clash with the old system that transferred strategic sectors of the economy, such as the electric power and railways, under Russia’s administration.
 
The investigations by the Armenian inspection authorities (State Revenue Committee) initiated in the case of the subsidiary of the Russian state-owned company “Railroads” in August 2018, by confiscating the official documents on tax evasion (US4 20,000) charges, prefigures an inevitable conflict with Russian narrow interests. 

Russia’s influence inside the Eurasian Union is based on a ramified network of informal clientele relations, including in Armenia. This is incompatible with the goal pursued by the government of Pashynian, which promises to ensure the rule of law, independent justice and an efficient fight against corruption. In accordance with this agenda, the Armenian law enforcement agencies investigate and judge a number of persons from old political echelons (Rober Kocharyan, Yuri Khachaturov, who were involved in the repression of the 2008 protests).

The harsh criticism of these investigations, vociferated by Minister Sergey Lavrov in August 2018, reveals a series of frustrations with the unpredictable changes initiated under the administration of Pashynian, which would be hard to be manipulated by (from) the Kremlin.

First of all, the fight against corruption involves any player, respectively those who promote the Russian interests. The economic impact on the illegal schemes (tax evasion, manipulated privatization, etc.), from which groups close to the Kremlin benefit, is the second thing that bothers the Russian authorities. Thirdly and lastly, Armenia’s actions encourage practices and standards that exist inside the Eurasian Union and strengthen public interest in the “Armenian model” of justice and even democracy functioning.

Initially, Russia expressed interest in maintaining the situation intact, until a new political system was gradually set. The reality acceptable to Russia was to respect a balance of interests between the old elite that were numerous and associated with the existent corruption and the new elite whose political future depends on the capacity to reform the state institutions into functional and integral entities.

Instead of conclusion.

Unlike the Republic of Moldova, where the EU unconditionally supports the most efficient anticorruption polices, in Armenia Russia is tempted to discourage the efforts made by the Pashynian administration to do away with the corrupt practices, especially if these involve persons from the proximity of the Kremlin.

Even if Russia has ideological discrepancies with the EU, it can overcome them easily when pragmatic economic interests are at stake. The Russian preferences for the Moldovan Association Agreement reveal the duplicity of the Russian policy. This way, the Russian authorities do not eliminate the commercial restrictions imposed on Moldovan producers starting with 2013 on the pretext of preventing the negative effects of the Agreement with the EU (re-exports). However, concomitantly with maintaining these restrictions, the exponents of Vladimir Putin’s regime express interest in the benefits of the same Agreement for the Russian business community.

Russia’s incoherence with the Agreement points to an acuter lack of attachment to constructive principles in the bilateral relations with other countries, others than those based on force, intimidation and asymmetric exploitation of economic benefits. For these reason, the pro-democratic political forces in Moldova and Armenia have real chances of transforming their societies with the assistance of the Association Agreement or in the absence of this, if they enjoy wide popular support and show an integral political will.