Why is Armenia’s industry dependent on imported energy and raw materials?

Armenia’s industry is heavily dependent on imported energy and raw materials due to a combination of its economic structure and geopolitical challenges. While the country developed a significant industrial base—including mechanical engineering, chemicals, and nonferrous metallurgy—it lacks sufficient domestic resources to sustain these sectors independently.12

The country must import essential commodities such as coal, petroleum products, and various raw materials like ferrous metals, wood, and paper to support its manufacturing and consumer needs. Historically, the economy’s transition from agriculture to industry under Soviet rule created a reliance on external supply chains that remains a structural feature of the economy.31

Geopolitical factors have exacerbated this dependency. Following the 1988 earthquake and the conflict over Nagorno-Karabakh, blockades and the closure of vital natural gas pipelines—particularly from Azerbaijan—led to severe energy shortages. Although Armenia utilizes hydroelectric power and nuclear energy to supplement its power needs, the disruption of key trade routes and the lack of abundant domestic fossil fuels necessitate ongoing reliance on imports from trading partners like Russia and Iran.1435