Russia is giving Armenia a break designed to boost the Caucasus country’s diamond-cutting sector.

The Federation Council, the upper house of Russian Parliament, has ratified an agreement that scraps export duties on sales of Russian hydrocarbons and raw diamonds to Armenia. “We will be one step ahead of other countries that purchase raw Russian diamonds,” Artur Ashugian, an aide to the Armenian economics minister, told the Regnum news agency back in 2013, when the agreement was signed.

Armenia was a hub for diamond cutting and processing during the Soviet era, but the sector has struggled in recent years. Armenian officials expect a 15 percent hike in cut-diamond production as a result of the Russian concession. Last year, Armenia produced 94,498 carats of cut diamonds, the ARKA news agency reported. Russia is a major supplier of raw diamonds, oil and gas to Armenia.

The agreement contains a provision that bars Armenia from re-exporting Russian oil, gas and raw diamonds. Oil and gas sales cannot exceed the domestic needs of Armenia, which virtually has no other source of oil and gas, other than Russian Armenia also cannot re-sell customs-free raw Russian diamonds, but can sell the cut Russian diamonds to its heart’s content.  
   
Armenia received the concession even before agreeing to join the Moscow-led ex-Soviet trade club, the Eurasian Economic Union (EEU). The diamond-and-energy agreement may help Armenia compensate for some of drawbacks of EEU membership. Russian officials have said EEU may create problems vis-à-vis Armenian’s commitments to the World Trade Organization and that Yerevan may have to re-negotiate terms of its membership in WTO.