Armenia goes to the polls today, but the real vote is on whether the country can escape the Kremlin’s orbit. With Russian troops still stationed along its borders and a fragile peace deal with Azerbaijan holding, this election is less about domestic policy and more about geopolitical survival. The UK, fresh from a G7 push for global democratic resilience, has been quietly advising Western allies to funnel resources towards Armenian civil society and independent media. But as a financial editor, I see a different set of numbers: capital flight has already spiked by 12% this quarter, and the dram has lost 8% against the dollar since January. The message from the markets is clear. Investors are betting on instability, not democracy.
The debt-to-GDP ratio is manageable at 60%, but that masks a dangerous reliance on remittances from Russia and diaspora cash. Yields on Armenian sovereign bonds have crept up to 9.5%, a premium that screams ‘risk premium’. The central bank has been burning through reserves to prop up the currency, but at this rate, they’ll be dry by Christmas. Meanwhile, Russia’s Gazprom has been tightening the gas tap, a classic leverage play. The UK’s rhetoric is noble, but without a real financial backstop, it is just noise. The West needs to put money where its mouth is: a sovereign loan guarantee, a currency swap line, something tangible. Otherwise, the only thing pro-democracy forces will inherit is a hollowed out economy and a debt trap.
Today’s vote will change little. The real battle is for the next budget. Keep an eye on the gilt yield spread. If it widens further, Russia will be the only buyer of Armenia’s debt — and that’s a price no democracy can afford.
