Armenia to join Russia's Union, surprises EU

The Kremlin communique said: "The presidents reaffirmed the focus of the Russian federation and the Republic of Armenia on the further development of economic integration in the Eurasian territory … In this context, Mr Sargsyan said Armenia had decided to join the Customs Union and take the necessary practical steps to subsequently participate in the formation of the Eurasian Economic Union."

Sargsyan, before flying back to Yerevan, confirmed the news.

But he added, in a statement on his own website, that he still wants good EU relations.

"This decision is not a rejection of our dialogue with the European institutions. During recent years, Armenia, with the support of European partners held a number of important institutional reforms. And today's Armenia, in this sense, is considerably a more effective and competitive state than years ago. We intend to continue these reforms also in the future," he said.

The news came as a surprise to EU officials.

The EU has concluded negotiations on a political association and free trade pact with Armenia and expected to initial it at an EU summit with former Soviet states in Vilnius in November.

If Armenia does become a full member of the Russian-led customs bloc, along with Belarus and Kazakhstan, it cannot sign the EU pact at the same time.

But Sargsyan might be trying to cherry pick bits of the Russian offer which are compatible with the EU deal.

EU diplomats in Yerevan held crisis meetings on Tuesday evening to get an insight into events.

A European Commission spokesman told this website: "We are consulting closely with our Armenian partners. When we have all the information, we will, of course, examine all the potential implications of what was announced today."

Sargsyan's u-turn was made in the context of tricky developments on Nagorno-Karabakh.

Russia is Armenia's main security guarantor in its frozen conflict with Azerbaijan over the breakaway territory.

It has a military base in Armenia itself.

But in June this year Russia began delivery of some $1 billion of tanks, artillery and rocket launchers to Azerbaijan.

Russia in recent weeks has also threatened Moldova and Ukraine, two other former Soviet states which are seeking deeper ties with the EU.

It told Moldova that if it inks an EU deal in Vilnius it will cut trade relations and make it harder to solve its conflict with the breakaway territory of Transniestria.

It told Ukraine it will take "protective measures" on trade.

Putin has said he wants all former Soviet republics, except the Baltic states, which are EU members, to join his customs bloc.

He plans to transform it into a political union, the Eurasian Union, in 2015.

"There is a saying in Russia: It takes a long time to saddle a horse, but no time at all to make it gallop," a Russian diplomat told EUobserver, referring to the pace of progress on Russia's Eurasian plan.