Russia Lures Armenia to Trade Bloc After Ukraine, Belarus Spats

Armenia will join a Russian-led customs union, bolstering President Vladimir Putin’s designs for closer integration between former Soviet states days after disputes rattled his country’s ties with Belarus and Ukraine.

Armenia plans to “join the customs union, undertaking practical steps for that purpose, and later to take part in forming the Eurasian Economic Union,” Putin and his Armenian counterpart, Serzh Sargsyan, said today in a joint statement distributed to reporters after a meeting at the Russian leader’s residence near Moscow.

Putin has championed Russia’s alliance with Belarus and Kazakhstan to strengthen economic ties among former Soviet republics, promising reduced natural-gas prices to Ukraine if it agreed to join the trade bloc. The three former Soviet republics, with a combined population of about 170 million people and more than $2 trillion in combined output, created a single economic space on Jan. 1, 2012.

The government of Belarus President Aleksandr Lukashenko arrested the Russian head of OAO Uralkali, the world’s biggest potash producer, last week, prompting Russia to raise scrutiny of its neighbor’s products including pork and announcing plans to reduce oil flows. Ukraine’s Prime Minister Mykola Azarov has linked delays experienced by Ukrainian exporters on the border with Russia last month to disagreements between the two countries over the customs union.

Russia will assist Armenia’s bid “to the utmost,” Putin said in the statement.

The joint economic bloc, which plans further policy integration to become the Eurasian Economic Union by 2015, wants to coordinate economic and currency policy and adopt unified visa and migration rules. Putin has said that the alliance of former Soviet countries will help reduce global imbalances and fuel integration across “Greater Europe.”

Before it's here, it's on the Bloomberg Terminal.