Collapse of ruble - Judgment Day for Armenia

Collapse of ruble - Judgment Day for Armenia

Baku, Azerbaijan, Dec. 16

By Elmira Tariverdiyeva - Trend:

To put all eggs in one basket is one of the worst ways for unstable economies to try to strengthen the positions in the modern world. The collapse of the economy, accompanied by unprecedented growth of the crisis tendencies, slowly but surely appears in Russia. And it does not matter what the real cause of the catastrophic situation was in the Russian economy. Western sanctions, imposed in connection with the events in Ukraine or the fact that the Central Bank of Russia just found a good opportunity to put the blame on the eternal "ideological enemies" and simply revealed the "economic bubble" inflatable by the country for many years are among these reasons. This led to the fall of the ruble, i.e., the ruble is committed to its real value.

However, the current article is not about Russia, but concerns those countries which bet only on the Russian market as the fates decree or because of a lack of foresight. Unfortunately, it can not reciprocate to former exporters today.

The issue of replacing the market for supplied goods is not a big problem for such a country as Turkey. But the situation is catastrophic for the countries which do not maintain the trade relations with any country except Russia.

Such countries include not only Armenia which has been in the economic blockade for many years due to the stupidity of its authorities and gets small dividends from the sale of products to Russia, but also for instance, Belarus. Iran can also join these countries in the near future.

Right after the sanctions imposed on Russia and the process of ruble's collapse began, Yerevan found itself in a deplorable situation. This was expected, since Armenia's weak economy is too strongly tied to the economy of the 'Big Brother'.

As a result of the crisis, Russia saw a sharp decline in the volume of money which Armenian migrants send home, let alone the small volume of export from Armenia to Russia.

Yerevan was enthusiastically preparing to increase the volume export of its agricultural products to Russia yet in August and this issue was discussed by Armenian Prime Minister Hovik Abrahamyan in Moscow.

However, instead of the significant impetus to the country's economic development, today Armenia faces as many as 10 percent increase in product prices as of December and dismal prospects to sell its agricultural products to another country. But to which country?

It should be noted that 70 percent of Armenian agricultural products was traditionally bought by Russia.

Today, all countries are aware that the exporters, mainly those oriented to the Russian market are in a hopelessly bad situation.

After the 'Black Monday' in Russia, that is, December 15, when the Russian ruble plummeted by 10 percent in one day, the Belarusian President Alexander Lukashenko sounded an alarm and demanded the Belarusian government to immediately start searching new markets and not to take into account the Russian market as a major buyer of Belarusian goods.

"Although Russia is our brotherly country, we should not pray all the time to the Russian market," Lukashenko said. "You see, their market collapsed, and we collapsed right after that."

"Yes, we used to sell up to 85 percent, and today it is 40-45 percent," Lukashenko added.

To get away from the main buyer of Belarusian goods is actually quite difficult. Today neither Ukraine, which was one of the main markets for Belarusian products, nor Kazakhstan are ready to buy Belarusian tractors, dump trucks, vehicles etc., due to their attachment to the Russian market.

And the dairy products of Belarus, in general, were not bought in such quantities by anyone except for Russia.

The same can be said about Iran, which has just only become inspired by the new opportunities in the Russian market.

Russian authorities, being under a food embargo imposed Aug. 7, 2014, began in response to Western sanctions to negotiate for the import substitution, including with Iran.

Moscow promised Tehran that it will replace the food volumes, dropping due to the retaliatory sanctions, and even gave several companies the permission to export food products to Russia.

However, a frightening situation arose by mid-December - suppliers, with whom Russian traders had previously agreed, have goods worldwide, which the Russians are simply unable to pay for. One cannot even speak of the opening of new markets and purchases of Iranian or any other products in such a situation. As they say, beggars can't be choosers.

Isn't the statement of the Director of the Trade Development of Iran Valiollah Afhamiraomd, made December 2 at a meeting of the board of representatives of the Chamber of Commerce, Industries and Mines of Iran, connected with this fact? He said that despite the steps taken by Iran and Russia, the volume of trade between the two countries still remains unsatisfactory.

By the way, one more touch - with the election of new president in Iran, the country has got a chance to boost its economic policy, not oriented to the West and Tehran will use it very soon. Recently, in early December, Iranian President Hassan Rouhani noted the special importance of the project at the opening ceremony of the Iran-Turkmenistan-Kazakhstan railway, held with the participation of the presidents of the three countries.

"Today we have taken an important step in meeting the needs of the region and the development of regional states," he said. "However, it is only the first step, and it should be further developed."

So, it is most likely that in the near future Iran, having realized the futility of trying to increase the volume of trade with Russia, will direct its energy in a completely different direction and pay its attention to other markets.


Elmira Tariverdiyeva is Trend Agency's staff writer, follow her on Twitter @EmmaTariver

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