Haykaz Fanyan, Director of the Yerevan-based Armenian Center for Socio-Economic Studies (ACSES), believes that Armenia can indirectly benefit from the financial sanctions imposed by the West on Russia after that country invaded neighboring Ukraine.

Fanyan, during a talk with Hetq, said that while these sanctions will negatively impact Armenia in the short run, there might be a silver lining in the long-term.

He said that Armenia’s tourism sector may benefit since the EU has banned flights from Russia.

“Russian tourists will have to consider Istanbul, Dubai, Tbilisi, Baku, as well as Yerevan, as alternative destinations,” Fanyan told Hetq.

The economist argued that Russian companies might open bank accounts in Armenia to circumvent western sanctions on Russian banks. The West has already banned Russian banks from using the Swift system.

Fanyan said it is “theoretically possible” that subsidiaries of international corporations may set up shop in Armenia to avoid disruptions resulting from the war in the Ukraine.

“Large corporations will not want to produce in regions that are subject to sanctions. They must redeploy production capacity. They can look to Turkey, Moldova, Armenia and other countries,” he said, noting that Armenia might replace Ukraine as a country producing cigarettes.

Fanyan said that many exporters in Armenia have already stopped shipping goods to Russia because they don’t want to get paid in devalued rubles. He said that while Russia has suspended imports from the West in retaliation to the sanctions, Armenian exporters cannot fill the gap because Armenia mainly ships food products, canned goods, fresh fruits and vegetables.

Fanyan argues that Armenia’s IT sector may also benefit from the conflict and sanctions.

There are many IT companies in Ukraine and Russia, working mainly with the West. These companies have problems both with ensuring the physical security of their employees and financially with servicing their accounts. Armenia can be a favorable environment for them. In addition, there is a significant demand for labor in our IT sector, especially for qualified professionals. Ukraine is known for the quality and accessibility of its specialists. Some of them may come to Armenia,” Fanyan said.

He noted there are Armenian companies that have branches in Ukraine who may consider moving their employees and their families to Armenia.

Fanyan called on the Armenian government to move quickly to change local labor laws to make it easier to attract foreign nationals as employees.

He said that Armenia can become an alternate transit route for goods, noting that Yerevan may, to some degree, replace Moscow as a regional air hub given the European Union’s banning of Russian air traffic.