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Armenia: Eurasian Union Malaise Puts Government In Budget Hole

Armenia: Eurasian Union Malaise Puts Government In Budget Hole by EurasiaNet

The expected economic benefits of membership in the Eurasian Economic Union are not materializing for Armenia. One way Armenian leaders are apparently hoping to offset looming shortfalls is by privatizing the postal service.

With roughly 3,000 employees, the state-run HayPost has been managed since 2006 by a firm owned by Argentinean billionaire businessman Eduardo Eurnekian. Under the HayPost Trust Management, facilities have been upgraded and, most Armenians seem to believe, services have improved.

The firm’s management contract does not expire until the end of 2016. That fact is prompting Armenians observers to question why the government wants to privatize the post office now? Many believe the country’s economic alliance with Russia is the main driver for privatization. As Russia’s economy has faltered, so, too, has Armenia’s.

Armenia joined the Eurasian Economic Union (EEU) in January, and during the first half of 2015, the country experienced a 20.6 percent decline in foreign trade, compared with the same period the previous year. Meanwhile, remittances from abroad, a pillar of the economy, fell by nearly a quarter between June 2014 and 2015. The vast majority of remittances are sent from Russia.

The EEU was expected to generate revenue for Armenia in the form of the redistribution of tax income. But in June, Finance Minister Gagik Khachatrian cautioned that Russia’s persistent economic woes mean that Armenia is unlikely to...


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