Yerevan in the past week saw protests in response to plans by the city government to raise bus fares by 50 percent, from 100 drams to 150 drams (24 to 36 cents). Armenia is one of the poorest countries of the former Soviet Union, and such a hike was opposed by much of the population, particularly the lower classes. Margaryan acknowledged that the fare hike "did not take into account the interests of the socially vulnerable sections of the population," and thus reversed the decision in response to the public outcry and striking bus drivers.
The fare hike plans came at a particularly vulnerable time for Armenia, since Yerevan's primary patron, Russia, had recently raised the price of natural gas exports to the country from $316 per thousand cubic meters to $374 per thousand cubic meters. This caused retail gas prices to rise from 132 to 156 drams per cubic meter, undoubtedly leading to the government's plans to raise public transportation costs. Armenia has been negotiating with Russia for a new discount to the natural gas price, but Moscow has been asking for concessions in such a deal, such as complete ownership in Armenia's state natural gas firm ArmRosGazprom, similar to recent deals that Russia has struck with Kyrgyzstan and Belarus.
Though Russia already has a very strong position in Armenia's economy, with stakes in strategic industries such as railways and telecommunications, and is the primary destination for Armenian migrant workers, Yerevan wants to avoid being completely dependent on Moscow economically. Indeed, Armenia has remained uninterested in membership in Russia's Customs Union, a bloc representing the highest degree of economic integration with Russia. Armenia does not have many viable economic alternatives within the region, since its borders with Azerbaijan and Turkey are closed as a result of the ongoing conflict between Yerevan and Baku over the Nagorno-Karabakh territory.
However, Armenia has recently been looking outside of the region and beyond traditional assets such as the large diasporas in the United States and Europe in order to improve its economic prospects. Armenia has for the past two years been in negotiations with the European Union on establishing a free trade agreement in the context of the EU's Eastern Partnership program. On July 24, Armenia concluded its negotiations with the European Union and it is likely that Yerevan will initial the agreement at the upcoming Eastern Partnership summit in Vilnius in November.
Ultimately, Armenia's strong orientation toward Russia is not likely to shift anytime soon, since the two countries are aligned in the security sphere and Moscow remains Yerevan's primary patron. But recent events in the country show that Yerevan is looking to further diversify its relationships in the economic sphere, a move that Armenia hopes will allay some of the growing economic pressures it is facing.
