Recent political developments have prompted some politicians in Armenia to express concern about an erosion in the country's special relationship with Russia. However, government officials, along with some influential experts, downplay suggestions that Armenia's geopolitical rating is being downgraded. While acknowledging the existence of several problem areas in bilateral relations, they insist that the strategic partnership between Armenia and Russia is not threatened.

Government critics cite Russian President Vladimir Putin's recent visit to Azerbaijan, and difficult bilateral debt settlement talks, to buttress their arguments. In particular, some Armenians interpret the fact that Putin visited Baku without making a corresponding visit to Yerevan as a signal that Armenia's position of the Kremlin's favored diplomatic partner in the Caucasus is threatened. In addition, Putin's statement of support for the preservation of territorial integrity of states, made during his Baku visit, raised fears in Armenia that Russia is now willing to recognize Nagorno-Karabakh as a part of Azerbaijan. Likewise, a tough Russian stand on scheduling the repayment of Armenia's roughly $108 million debt prompted concern of a shift in the Kremlin's position.

Some opposition political leaders -- such as Ashot Manucharian, a leader of the Center of Socialist Forces -- have stated that Armenian-Russian relations have never been so poor, and have called for a policy overhaul to bolster ties. Many Armenians view the special relationship with Russia as critically important to national security, given the country's geographic position between Turkey and Azerbaijan, two nations with which Armenia has had traditionally frosty, if not outwardly hostile relations.

Government leaders have rejected calls for radical policy departures. In late January, shortly after Putin's Azerbaijan visit, presidential spokesman Vahe Gabrielian denied that ties with Russia were deteriorating. Other experts say those expressing fears about deteriorating relations are exaggerating the situation. There is no solid evidence, they say, to support the claim that any potential improvement in Azerbaijani-Russian relations would come at the expense of Moscow's ties with Yerevan.

When discussing the Karabakh issue directly during his Baku visit, Putin reiterated what was said earlier, namely, that Russia, as well as two other co-chairs of the OSCE Minsk group, would not impose any solution of the conflict, and would strive to achieve a compromise solution. Some prominent government leaders, including Defense Minister Serge Sagsian, point out that improved Russian-Azerbaijani relations would enhance Baku's confidence that Moscow can serve as an honest broker of a Karabakh political settlement. Government officials and experts also point out that Armenian-Russian military cooperation remains as strong as ever.

As for the debt issue, many observers admit it is problematic, but believe a deal will eventually be reached. The debt now stands at $108 million, $25 million of which was due in 2000. However, Armenian officials failed to officially reschedule the debt last year, despite Russian willingness to discuss a reorganization of payment terms. Observers say in all likelihood the issue will be resolved via a debt-for-equity swap scheme, perhaps involving the sale of a stake in Armenia's Hrazdan Thermal Power Plant to Russia. Another issue of debt is $9 million owed by Armenia to the Russian gas supply company ITERA, and another $16 million owed to a Russian state-owned enterprise for uranium fuel for the Armenian nuclear power plant. This problem was negotiated several times last year, and two more rounds of talks took place during the last three weeks. As a result, the Russian counterparts agreed to continue the supplies and extend the terms of payments. Thus the fears that ITERA could cut the gas supply to Armenia have proved to be groundless. ITERA has a 10 percent interest in the Armenian gas monopoly, Armrosgazprom. The Russian gas giant Gazprom already owns another 40 percent stake.

Opposition politicians and others claim that Russia is trying to use the debt problem as leverage to prevent privatization of the energy distribution networks of Armenia, now scheduled for March 2001. The Russian electricity monopoly, RAO ES, was among the bidders at the initial stage of the international tender (late 1999- early 2000), but was excluded from the list as it failed to meet the requirement of financial reporting. The shortlist of finalists in the tender include bidders from the USA, Spain and Switzerland.

Armenia and Russia have also feuded over television broadcasts. On January 20, 2001, Armenia stopped re-broadcasting one of the two principal Russian TV stations, ORT. The reason for the cut was a financial dispute in which Armenian officials claimed that ORT hadn't paid its broadcasting bills. A week later, ORT broadcasts resumed in Armenia, but on a different frequency that significantly reduced is audience. Many details about the broadcast dispute -- which have prompted popular protests in Yerevan, as well as complaints from the Russian Foreign Ministry – remain unexplained. Some observers suggest that the real motive for the Armenian government action is political, not financial, as the broadcasts seem to be cut only during periods of political tension between Russia and Armenia. In general, the opposition is critical of mass media policy, saying the government is restricting access to information, especially in the Russian language. Such action, they continue, is evidence that the government is shifting from a pro-Russian to a pro-Western orientation.

As the great oil and gas game plays out in the Caspian Basin, Armenia feels somewhat vulnerable, given that it lacks large reserves of natural resources. Under the existing circumstances, the Armenian-Russian relationship is entering a new, more complex phase. The traditional feelings of mutual friendship and cooperation that have characterized relations in the past are largely unchanged. There remain large reserves of good will on both sides. At the same time, Armenian-Russian cooperation faces new challenges largely arising out President Putin's political philosophy that emphasizes pragmatism.