Monthly Archives: June 2009

Where’s The Money Going

On Monday the Executive Board of the International Monetary Fund (IMF) agreed to disperse $158 million in an emergency loan to Armenia to help offset the economic downturn. Just a few months ago the IMF had issued a $540 million loan shortly after the dram deflated 70 drams against the dollar virtually overnight.

According to official statistics, Armenia’s Gross Domestic Product fell by as much as 15.7 percent since the beginning of the year, hovering at around $2.4 billion.

What I want to know is–who is exactly feeling the heat of the recession in Armenia? The Deno Gold Mining Company just let go between 200-300 workers, citing expiration of contracts as the reason, even though many employees admitted that their contracts were open-ended. This has happened strangely enough while the demand for gold has increased significantly in recent months–just yesterday the price of gold in the US market was $924.10 per ounce, which obviously means it’s is high demand. Why scale back operations now?

It’s true that some construction projects have come to a halt in Yerevan’s center, but the construction of many sites have been stop-and-go for years. Work on an eight-story building just a block down from where I live on Hanrabedutyan Street has been going on for nearly four years for instance–it resumes for a month and stops for two months for some bizarre reason. But has the economic downturn affected its ongoing construction in the last few months? Who can say.

Meanwhile, citizens are still living the high life. The cafe season is in full swing, people are out and about, and there are more cars on the road than ever before. A store goes out of business one day, and the following week a new tenant moves in. So I don’t understand who is feeling the crisis per se.

At the company where I work some people who were employed as software programmers were recently laid off, but they managed to find work elsewhere in their field. Meanwhile, several middle-aged citizens are working on gardening projects in green spaces and small plots of land across the city, something that wasn’t the case a year ago, and there are more women sweeping the streets, so there’s work. Some of the loan money, an insignificant amount, seems to be trickling down that way.

But where is the rest of the money going to? Is it possible that government officials are pocketing it somehow? There seems to be an increasing divide between the haves and the have-nots in favor of the former during this “recession,” with no end in site. I don’t get it. This is the paradox of the Armenian economy.

Armenia Receives $500 Million Loan From Russia

I just read that a loan to Armenia provided by Russia in the amount of $500 was completed on June 15. The loan will be repayable in 15 years.

Armenia’s Finance Ministry will supposedly ensure that some of the funds will be distributed to small and medium-sized businesses as well as to large companies that have taken a blow from the world economic crisis. Infrastructure projects will also be undergone and budget deficits will be managed. Also, $70 million will supposedly be spent on reconstruction projects in areas hit by the 1988 earthquake. It’s hard to believe that the Armenian government is still trying to channel funding to such projects which should have been completed several years ago.

I’m having a hard time comprehending that loan distribution–$500 million is a lot of money. Given Armenia’s dismal record in governmental corruption, I am skeptical about how this money will actually be spent. Enough money never seems to be distributed to fully complete projects that fall within the budget scheme. It’s hard for me to fathom that in Gyumri for instance partially destroyed buildings are still standing after all these years, where they should have been demolished with new ones  built in their place long ago. Will part of the $70 million be used for finally resolving such issues? And what about installing new water and gas pipelines in remote rural areas of the country, not to mention road repair–will that happen anytime soon?

The Armenian government has to be called into check with how exactly this half-billion will be spent. Apparently the Finance Ministry will issue reports on occasion detailing where the money is going, but whether the information contained in them will indeed be credible is anyone’s guess. I’m wondering if Moscow will be auditing Armenia’s spending practices going forward.

Is Armenia European?

Or should the title of this entry read, “Is Armenia Aspiring to Be Something Else Other Than European?”

One morning while on the bus I began to contemplate what Armenia intends itself to be in the 21st century, that is, how does it see itself in the world or how will its identity be defined by other nations?

Armenia is wedged between three Muslim nations whose influence has long been noticeable in Armenian music and even modern spoken language. The open markets throughout Armenia are the same types where ordinary people shop in its neighboring countries, so commerce is very similar. I have not had the opportunity of mingling with either Azeris or Turks so I can’t judge whether Armenians use similar kinds of body language or even if they engage in conversation with total ambivalence or on the offensive from the start. Iranians seem to be very polite from the few conversations I have had with them and it is unfortunately seldom nowadays that I run into Armenians by happenstance who are equally as dignified. Actually, some Armenian men especially behave rather badly in public, spitting every few minutes for no apparent reason. Some start arguing with you shortly after saying hello on the street. What is this attributed to?

I think that Armenia is far from reaching a point where it would be considered among the nations of Europe socially, economically, or in terms of general governance. Certainly Armenia has embraced capitalism to the fullest extent possible, the number one sign of that being homeless people and pensioners begging on sidewalks throughout the city. New posh boutiques displaying the latest fashions that only a small percentage could ever afford or have the inclination to wear seem to open weekly, not to mention supermarkets carrying foods consumed for the most part traditionally in the West, especially in Europe. Even landmarks and newly constructed buildings are taking on a sort of neo-European sophistication. But cosmetics and fancy shopping outlets do not define a European country. Rather, it is the way society itself is forged by its own citizens.

In Armenia a minority complains about the absence of the “rule of law” and “justice.” Citizens turn to Europe to solve their domestic complaints–in 2007 nearly 600 cases were opened by Armenians with the European Court of Human Rights in Strasbourg. The government agencies and ministries are all connected to the policies of the governing Republican party and President Serge Sarkisian, and thus the courts do not act independently. Only the Ombudsman seems to be able to criticize and get away with it, and he is rather good at it, but it may only be a matter of time before he is replaced. No one in the government seems to be listening to him, anyway.

Many ministries fail to do what they have been created to accomplish. For instance the Ministry of Nature Protection last year approved the destruction of the Teghut forest in the Lori region for copper ore exploration–the move will certainly destroy a good part of the environment there and cause long-term problems for the wildlife. Also in the same area toxic waste is being dumped into a river threatening the health of local residents in the process with the government turning a blind eye.

The educational system has been reduced to tatters. A friend of mine named Shahan who is originally from Beirut pulled his teenaged kids from the local public school because he complained that they weren’t learning anything, not to mention they were not accepted by the students there who communicate using “street” Armenian. Now they attend a private German school and according to what Shahan’s son explained to me, he is able to find his niche there, not to mention study properly.

Regarding the healthcare system–I wrote about my recent health problems a while back and identified some of the faults that I found. Simply walking through the hallways of some hospitals can be a frightening experience with the dim lighting, exposed electrical wiring, water-damaged walls with peeling paint, broken doors, and worn-out floors. In a tiny country which boasts a fiscal budget of $2.5 billion, what is the excuse for having state-run hospitals operating in near shambles? How much money will it take to install brighter light bulbs–perhaps florescent since they are more economical–and affix new linoleum on each floor, prioritizing on the ones that need the repairs most urgently? Construction materials are generally cheap as they come from neighboring Turkey which does not produce goods of the highest quality, but it would certainly be better to have mediocre floors and clean walls than none at all.

I don’t want to get started on the social services of Armenia, which are horrendous to put it mildly. I should just add that nothing seems to be changing in that sphere–pensioners are struggling more than ever and homelessness is an issue that may start getting out of control if urban development continues unchecked. You can see out-of-luck mothers with their children begging door to door and even in underground shopping areas, something practically nonexistent only five years ago–certainly in 2002 during my first stint at living here. I am not aware of what the current situation is like in European countries–in France the number of homeless was about 86,000 in 2004 for instance, and in 2006 there were approximately 345,000 people without homes in Germany (there aren’t official statistics available). But what is the excuse for a country in which housing was virtually guaranteed for all citizens when it was part of the Soviet Union? Why should those values change with the adoption of a free-market economic system? Armenian society is obsessed with German technology and German-made goods–perhaps Armenia wants to adopt this European power’s homeless problem as well.

European countries take pride in their adoption of democratic values and the rule of law. Their court systems are arguably the best in the world. And those who choose to defy the law do not go unpunished. But none of those things can be said about Armenia. True democracy is still a long ways off with vote bribing and beatings continuing. Petty lawlessness is evident every day, examples being motorists driving rapidly against traffic along one-way streets and people shooting off guns during arguments in the middle of the street, as I witnessed last autumn.

Illegal construction continues, as does mindless civil construction, with new roads and tunnels built that are not used as often as they should be. Sidewalks and side roads in the meantime continue to fall apart. Parks are disappearing. State funds seem to keep going to the wrong projects. Now that the global recession is just starting to show its face in Armenia, who can say how that money will be spent through the end of the year?

What does being European mean for Armenia, its leaders and citizens? To be quite honest, I don’t have the faintest idea.

Armenian and Azeri Presidents Meet Again

On June 4,  Armenian president Serge Sarkisian met with his counterpart Ilham Aliev in St. Petersburg, Russia to discuss ways in resolving the Nagorno-Karabagh conflict. Supposedly they have made some progress by at least agreeing to move forward in the negotiation process.

Armenian Foreign Minister Edward Nalbandian was quoted by journalists saying that “Although we cannot talk about a breakthrough or substantial progress today, the parties are moving forward and have agreed to continue negotiations.”

The Foreign Minister of Azerbaijan, Elmar Mammadyarov, gave a similar positiive assessment of the talks, stating that, on the part of the presidents, “What we heard today is creating a basis for the continuation of our work.”

But what work is that realistically? Baku has repeated stated that it will never accept Nagorno-Karabagh’s independence. Meanwhile, there have never been rumors about the republic’s possible merger with Armenia in these talks. Instead there is purported discussion about an ambiguous status for Nagorno-Karabagh in a final deal, with a land link, presumably the one which already exists in Berdzor, otherwise known as the “Lachin corridor,” to Armenia. That land link would supposedly be protected by some sort of peacekeeping force.

I don’t know how many Armenians believe this peace deal will ever be signed or if they are taking these negotiations seriously. However, we have to keep in mind that the two presidents have already met five times during the last 12 months, which is unprecedented, so something significant worth paying close attention is indeed transpiring.

President Sarkisian has been taking careless steps recently in trying to appease the West by initiating diplomatic dialogue with Turkey. Nothing has been accomplished in the talks, other than diminishing the importance of recognizing the Armenian Genocide and providing Turkey with the opportunity to finally have some input in the negotiating process between Armenia and Azerbaijan.

I can’t say that the current negotiations with Azerbaijan are in the best interests of Armenia. Western nations have made it clear repeatedly that they respect Azerbaijan’s territorial integrity. Let’s not forget the UN’s resolutions during the war defending Azerbaijan. So I don’t understand what is going on here and what Armenia’s leadership is thinking. Something’s not right.

A Customs Nightmare

I just ran across an article published on Hetq Online about a recent repatriate named Dro Tsarukyan going through hell with the Armenian customs agency to retrieve some goods that he had sent to Armenia. Below is the text in full.

On May 27, 9:30 am, I happily went to Noragavit custom agency in the outskirt of Yerevan, to pickup my car that I had shipped from Los Angeles two months prior to repatriating to Armenia. In the back of my car I had placed my personal items such as my used construction tools, computer/printer and sports supplies.

Upon arrival, I was told that I would have to wait for all other car recipients to arrive at the custom agency so that the Georgian transport trucks could be opened in front of the eyes of all car recipients. Of course later on, I found out that the only logical purpose for making us wait to open the transport trucks, was for the workers to get tips in order to give priority of who’s car comes out first and tips for recharging the dead batteries of the cars.

After a 4 hour wait, my car was finally pulled out of the truck and handed to me, however, my personal items from inside my car were removed and placed in the truck along with the items of another person. The truck was then locked up and I was told to go to the custom house in the city of Abovian in order to retrieve my personal items, despite my angry protest at the ridiculous idea of removing my items from the car and sending it to another place. Of course their excuse was that “Noragavit’ is the custom house for cars and “Abovian” is the custom house for personal items.

After driving to Abovian city’s custom house and waiting for another hour for the transport truck to arrive, I was handed a piece of paper by the custom agent that detailed my personal items in the truck. I was then told to take that piece of paper to the “Araratian” custom house near lake Yerevan, in order to apply for permission for my items to be removed from the truck and placed in a warehouse in Abovian.

However, they also said, I would have to coordinate with the other person who had items in the truck so that both of us would be in Abovian at the same time with our stamped permissions, in order for our belongings to be removed and stored. The items would then stay in the warehouse until a future date for taxes to be determined and items handed to the owners.

During this time, I received a call from the shipping company that said if I was not able to remove my items from the truck on that day, the shipping company would charge me extra fees for keeping the Georgian truck in Armenia longer than necessary. After much struggle to find the phone number of the other person with items in the truck, I was able to coordinate and go to the “Araratian” custom house near lake Yerevan and apply for permission for removal and storing of my items.

Upon getting the permission letter from near lake Yerevan, I drove back to Abovian, waited for the other person to arrive with his permission letter, paid a storing fee of 7000 drams and then watched my items be removed from the truck and placed in a warehouse. I was then told to go to the main custom house on Khorenatsi street in Yerevan to apply for possible tax break as a repatriate sending his personal car and items. It has now been a week since my items arrived and they are still stored in Abovian as I await answer from the main custom house on Khorenatsi regarding taxes.

Above story is only one small example of the unnecessary bureaucratic torture regular people in Armenia go through daily in order to retrieve their personal items sent from abroad. Besides the difficult retrieval process, there are thousands of horror stories of arbitrary taxation on used products, which often makes Armenia’s custom tax higher than the product purchase price from abroad.

Such example is common on car parts being sent from junk yards in America bought for minimal costs, but people in Armenia having to pay taxes based on the kilo weight of the product which often ends up being several times more than the purchase price. Armenia desperately needs to simplify its custom’s systems with humane taxation for retrieval of personal items that are not meant for resale. Until then, I hope everyone could hold up a good sense of humor at the comedy they must go through with the custom’s agency in order to obtain their personal belongings in the Republic of Armenia.

A few questions for Dro:

  1. Why didn’t you simply bring the items along with you in separate suitcases?  As far as I remember, it only costs about $150 to bring aboard an additional piece of baggage other than the two-suitcase limit for international flights that is granted by most passengers. In the past I have shipped printers, some tools and various other bulky personal items in my suitcases by first wrapping them tightly in a couple layers of bubble wrap so that they would survive the trip without damage, and they always have. No one from customs at the airport has ever made a fuss about what was contained in my suitcases.
  2. Did you offer or even consider paying a bribe at Noragavit to avoid all these hassles? Often that’s the best solution to circumvent such nightmares. It’s how the system works in Armenia, unfortunately, as absurd and unacceptable the practice is. However, sometimes offering bribes will not work, especially at the Customs House near the airport which intercepts anything shipped by freight carriers like UPS, FedEx, DHL and others. I hate paying bribes/fees/donations, the term changing depending upon which agency or organization you run up against, but after several years of living here I have come to accept that sometimes, in order to avoid going insane with bureaucratic red tape, it’s the only solution.
  3. Did you consider shipping these items via the United States Post Office? I have often had items transported to Armenia that way but I never needed to pay any taxes, bribes or anything else using the USPS. I have only had problems with sending or receiving items via FedEx.

In retrospect, what would you have done differently, or others reading this entry for that matter?