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On 3 September 2013, the president of Armenia shifted the long-praised process of initialing political association and economic integration with the European Union and announced Armenia’s decision to join the Russia-led Customs Union and participate in the processes of formation of the Eurasian Economic Union (EAEU). Practitioners and observers interpreted it either as a U-turn or as a surprise move mainly assuming that what happened was the result of Russian pressure on Armenia. However, when tensions and uncertainty eased, it became obvious that what happened was a result of complex reasons. Geopolitical constraints and socio-political problems that had accumulated in Armenia during recent years coincided with an assertive expansion of Russia’s foreign policy. This research provides a number of explanations for that political decision to understand the primary determinants of that move. It also examines the political and economic implications of Armenia’s membership of the EAEU. [ABSTRACT FROM AUTHOR]

This paper examines elite-led domestic factors that pushed Armenian authorities to choose Russian rather than European-led integration path. To make this idea more comprehensive, the paper will focus first on the preconditions and reasons of elite formation in Armenia and then on the role of elite on Armenian economic and political institutions. The institutional framework shaped by elite has great influence not only on domestic policies but also on foreign policy choices. The central conceptual premise of the article is Daron Acemoglu and James Robinson's theoretical concepts of "extractive and inclusive political and economic institutions" developed in their co-authored book "Why Nations Fail: The Origin of Power, Prosperity and Poverty". The existence of extractive economic and political institutions in Armenia is not a spontaneous phenomenon, but they are rooted in post-Soviet history of Armenia and particularly in post-Nagorno Karabakh war political processes. Finally, the paper will argue that the institutional preferences of ruling elite can be used by external powers to export the values (authoritarian or democratic) to which they adhere. Eventually, this is one of cornerstone factors that, on the one hand, can explain the problems and challenges that the EU faced while supporting and disseminating democratic values in Armenia, and, on the other hand, Russia's assertive foreign policy towards Armenia. [ABSTRACT FROM AUTHOR]