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Panorama.am presents an interview with Dr. Rainer Lindner, Executive Director of German Committee on Eastern European Economic Relations, Berlin. Dr. Lindner comments on Armenia’s accession to the Customs Union and on future prospects of cooperation between Armenia and Europe. 

Dr. Lindner, as you know the Republic of Armenia has announced about her decision to join the Russia-led Customs Union. How do you as a German expert evaluate this decision given the choice Armenia was faced with? What do you think was Armenia mostly motivated by and do you find this motivation reasonable?

Lindner: Russia is the most important partner for Armenia in terms of the economy and security policy. In the long run, however, we believe that the Free Trade Agreement with the European Union would provide Armenia with greater benefits - economically, as well as socially. With more than 500 million consumers, the European market is very attractive for the Armenian economy.

What do you see as a driving force behind the Customs Union? Can we draw any parallel between the Customs Union and the European Coal and Steal Community?

Lindner: The unification process in Western Europe started in 1951 with the European Coal and Steel Community. Almost equal in size and influence, there were three countries - France, Germany and Italy that were involved in the process. Russia, in contrast, due to its size, will take an outstanding role in the Customs Union. However, it remains to be seen whether this situation can be balanced to the satisfaction of all members. Economically speaking, the creation of a greater, unified domestic market is reasonable. Nevertheless, it is important, that the domestic market does not isolate itself, by means of higher customs, separate norms and certification regulations. Thereby, investors might be irritated. Therefore, the German economy would appreciate initial talks about a common, greater free trade zone between the European Union and the Customs Union.

EU Commissioner for Enlargement and Neighborhood Policy Stefan Fule has stated that the political association and economic integration are integral parts of the EU Association Agreement and cannot be decoupled. What exactly made it impossible to decouple the agreement so that Armenia as a CU member could still pre-sign it?

Lindner: The Eastern Partnership programme of the EU promotes a harmonization of the law systems and the introduction of EU standards. Armenia is a partner of the programme. As a member of the Customs Union, which is to be eventually developed into the Eurasian Union, Armenia would adapt the law and standards of the Customs Union. In this context, we face a competitive situation. A closer look is needed to conclude, which elements of the Association Agreement would harmonize with the membership of the Customs Union. As member of the Customs Union, Armenia would join a common market with Russia, Kazakhstan and Belarus. Internally, the market is distinctive of common standards and legal procedures. Externally, the market sets up common customs. Armenia would have to adapt these customs. Moreover, Armenia would not be able to conclude bilateral Association Agreements with other states or the European Union respectively. Only the Customs Union as a whole could do so. Instead of a full membership, it would be easier for Armenia to aim for a Free Trade Agreement with the Customs Union. This would be compatible with an Association and Free Trade Agreement with the European Union.

In your latest interview you said that the way out of the dilemma between Russia and the EU is the dialogue between the two on the creation of common economic space. How do you think this can be achieved? What steps can or should be taken by the officials in Russia and in the EU to find the compromise option in this situation?

Lindner: The idea of a common European Economic Space with common rules for the traffic of goods, persons, services and capital has existed since the EU-Russia summit in Rome in 2003. From an economic point of view, it would be a success for Europe as a whole. The German economy actively promotes this solution and advocates a common European economic conference, which could elaborate a roadmap to this economic space. One precondition is, that the politicians in charge in Moscow and Brussels overcome political differences and gain mutual trust in each other.

Some commentators have expressed an opinion that the European partners abandoned Armenia (unlike Ukraine) when the latter was faced with what some termed as “brutal pressure by Russia”. Could you comment on this?

Lindner: In contrast to Ukraine, Georgia and Moldova, that aim for an Association Agreement with the European Union, the Armenian President has declared, that his country wants to join the Customs Union. In the EU this statement was taken with surprise. At the same time, if Armenia wishes to do so, we have to accept it. The consequences of this step for the future collaboration with the European Union will be discussed at the summit of the Eastern Partnership at the end of November in Vilnius.

Armenia presently has a facilitated tariff regime with the EU. As a member of Customs Union how will this impact Armenia’s trade (both import and export) with Europe? Will the tariffs be increased?

Lindner: Armenia has to adopt the customs of the Customs Union. It might be reasonably assumed, that in most cases the custom tariffs are above the Armenian customs level, which would certainly affect the Armenian trade with the EU negatively. In this respect, similarities can be drawn to Kazakhstan. After joining the Customs Union, Kazakhstan had to raise their custom tariffs to the Russian tariff level.

We know that the Armenian market is not very attractive for Europe but that investment opportunities are. Could you please specify particularly in what spheres the German companies are eager to invest? What are the prospects of these investments and of future cooperation now?

Lindner: The last delegation visit of the Committee on Eastern European Economic relations was held in May 2013. We had talks with Prime Minister Tigran Sargsyan and the Secretary of Commerce, Vahram Avanesyan. Above all, the participating companies were interested in the telecommunications industry, IT services, tourism, fruit cultivation and projects in the field of renewable energies. Regarding the mining sector, the German company Cronimet represents an investor with great commitment. In association with Prime Minister Sargsyan, we agreed on further joint projects. Due to the planned membership of the Customs Union, Armenia attracts investors that aim for trade with the countries of the Customs Union. This could affect most of the German investors.

Interview by Nvard Chalikyan