In response to Russia’s illegal war on Ukraine, countries worldwide and governmental organizations initiated a coordinated effort of economic sanctions against Russia. The imposed measures aim to penalize the Russian economy through hardships in Russia’s relations, trade, and financial sectors. The force behind these sanctions remains as the last leg of deterrence before moving toward the use of existential force. However, the impacts of these sanctions cannot be contained within Russia’s borders. Economic sanctions aim to disrupt the economy. However, Russia must interact with the outside world to maintain its economy and society. Neighboring countries sharing borders with Russia are subsuming the effects of the sanctions with sometimes even more profound impacts based on the respective countries’ size and pre-sanction stability.

To understand the current situation, USAID/Armenia utilized the Learning, Evaluation, and Analysis Project (LEAP III), implemented by Integra, to conduct an on-the-ground qualitative investigation to examine the current situation in Armenia, a country heavily dependent on the Russian economy. The study looks at the sanctions’ immediate and possibly longer-term direct impact on the Armenian economy. The study outlined the troubling, often surprising implications of the sanctions on Russia on the Armenian economy and potential benefits and opportunities. The study focused on the agriculture, food security, and tourism sectors and cross-cutting issues, including transportation/logistics and currency fluctuations.

Based on the study findings, Integra developed several recommendations aimed at helping Armenian stakeholders in the agricultural, food processing, and inbound tourism sectors overcome or soften the negative impact of the recent developments. Among those are recommendations to help U.S. ICT firms smoothly relocate to Armenia, bridge the information asymmetry gap at local banks, help food processing exporters to begin hedging foreign exchange risks, assist producers in diversifying export destinations in the face of new opportunities and help property owners bring those up to a level for rent-out for tourism.

ABOUT LEAP III
LEAP III provides a mechanism for USAID field missions and bureaus to efficiently and cost-effectively access rigorous, independent, and high-quality analytical services to support economic and policy analyses, strategy and project design, monitoring and evaluation, training, and knowledge management.