Monthly Archives: August 2009

Bryza Criticizes Armenian Opposition

armenia_map_lgMatthew Bryza, the US envoy on the Minsk Group sponsored by the OSCE, met with the press on Friday, August 8 in Yerevan to discuss recent developments in the Nagorno-Karabagh peace process. It was most likely his last visit to Armenia.

In the press conference he was critical of Armenia’s oppositional parties which has been voicing its concerns that the agreed upon Madrid principles of 2007  would in no way serve Armenia’s interests. He called such sentiments “empty” in ridicule. He said that, “Certainly those who are claiming that the update of the Madrid document, based on what we did in Krakow, somehow disadvantages Armenia … are operating out of sheer ignorance.” The Madrid principles were outlined in a previous post on this blog.

The article I read quotes Bryza explaining what the Minsk Group has in mind by revising the Madrid principles:

Bryza maintained that the Armenian and Azerbaijani leaders agree on the “fundamental concept” behind the compromise settlement favored by the United States, Russia and France. “But it’s a long distance from agreeing on the basic concept to actually agreeing or to having a finalized document,” he cautioned.

“An analogy would be that they have agreed on the menu for a meal,” he said. “They know what dishes they want to cook, maybe they’ve even started cooking some of them, but none of those dishes are prepared yet. They’re still cooking. We don’t know what they will finally look like until the cooking process is finished.”

I just wanted to add here that I enjoy roasting a whole chicken from time to time. Usually I coat the skin with some oil and then apply fresh tarragon and even some basil. I also insert garlic cloves into the breast by first cutting small holes in the flesh. After an hour in the oven I know that the chicken will have a crispy skin and appear light golden brown in color. The meat will be very tender and infused with a subtle garlicky flavor. I know it will be delicious. But the three cooks of the revised Madrid principles seem to be ruining their dish with too many spices, although I am certain that it will be cooked to perfection for their main customer, Azerbaijan. Armenia will be served the leftovers–some skin and cartilage with a little meat hanging from the bones.

Soon Bryza will be off to Baku as the US ambassador to Azerbaijan. During his tenure as part of the Minsk Group he obviously failed to get the two sides to agree on a definite peace proposal, despite the “agreements” the two sides have made over the years that he has time and time again presented to the public with his pretentious smiles and aloof comments. His role in the peace settlement process will seemingly end unless he plays a behind-the-scenes role to appease his buddies in Baku.

A good friend of mine told me a couple of weeks ago, when I conveyed to him my concerns about the peace process and how the conditions seem to be wholly in Azerbaijan’s favor, that if a peace deal was indeed vitally important for stability in the region Moscow would have insisted that Yerevan sign the proposal a long time ago. Russia’s only safe outlet for maintaining its influence in the Caucasus has been Armenia, and the bond of friendship as well as trust has been fostered for hundreds of years. Georgia in its various incarnations has proven time and time again to be totally untrustworthy, and the Russians were historically always weary of the Tartars. A century ago Baku was prospering due to the influence of Armenian businessmen who were making a fortune there, and Russian interests were in that way safeguarded. Thus any interests Armenia currently has need to be protected as they are also those of Russia.

Russia is not about to lose access to its interests in the South Caucasus–it simply needs Armenia to allow that influence to continue. Therefore it will not allow Armenia to lose out in any peace deal, despite its perceived active role in the Minsk Group. These opinions of his make sense, and they provided some comfort, they put my mind somewhat at ease. After all, not one Armenian I have spoken to believes such a peace agreement will ever be signed. My friend believes that even President Sarkisian’s closest allies will never allow it to happen. Perhaps he’s right.

Armenia’s Financial Woes

recessionAn interesting article about the current financial situation in Armenia that appeared in business new europe was reprinted on Hetq Online. Although I  am not a financial adviser or banker, I can’t say that I agree with everything that was reported in the article.

Here is one excerpt that is interesting to note:

The growth of banks like AEB [Armeconombank] has slowed considerably, but they are still in profit and see 2009 as a hiccup rather than a disaster. Armenian banks find themselves in a frustrating position now: they have the liquidity to make loans, but they can’t find anyone to lend to.

According to AEB’s Web site, the bank is currently offering mortgages for five-year terms at an annual rate of 14 percent. These types of plans, plus or minus a percentage point payable in five or seven years, have been offered for a while now by Armenian banks, and they’re obviously not great offerings by any means. I’ve seen rates as high as 20 percent or even more being advertised for short-term loans.

By contrast, mortgage rates in the US are now around 5.25 percent for a 30-year term and that’s now considered on the high side. And the rate for a 15-year mortgage is only 4.69 percent.

Thus the Armenian mortgage lending business can best be defined as basically legitimized loansharking.

But really, who would agree to sign on to such terms? Cash poor businessmen most likely, or people who have come into lots of money quite suddenly and have diversified their funds into several different sectors, be it real estate, consumer trade or what have you.

Imagine the following scenario. A new house becomes available in a part of Yerevan where having a home is considered very trendy these days, like Nork-Marash where lots of expensive homes have been built. The buyer, finding himself short on cash but eager to buy a house in a prestigious area, takes out the loan. The percentage rate doesn’t necessarily make much of a difference to him, he just needs some cash handed over to him fast so he can buy the home. Five years gives him plenty of time to pay off the loan in monthly payments while most of his capital funds continue to be tied up elsewhere.

No ordinary Armenian citizen could ever afford such a loan, not with a $200 monthly salary on the low end or even $2000 at the top tier. It doesn’t make any logical sense to consider such a mortgage loan, and it is certainly not a viable option anyway. So these loans being offered by Armenian lenders have never made much sense.

What about the over $1 billion in loans coming from Russia and IMF? Some of it is supposedly going to soften the drop in the GDP while another chunk is trickling down to businesses via the banking sector, like construction companies, to help them offset losses as a result of the crisis. It’s true that housing prices have fallen considerably since the beginning of the year, but a three-room apartment in central Yerevan can still fetch around $150,000, depending on the specific location, perhaps even more. For a tiny landlocked country like Armenia, that’s astronomical. By comparison you can buy a villa in the coastal town of Guardamar, Spain for under 100,000 euros.

Yet despite the construction crunch, building continues unabated. A new crane has just gone up at the foot of the slope that reaches the “Monument” area. Sure, some sites seem to be dormant, but that’s been the case for the last five years. Construction of a building starts, then comes to a halt for months on end before it resumes again. The cycle continues over and over. That’s why it’s been taking so long for these high-rise buildings to go up. That’s been the case throughout the Yerevan construction boom, it’s nothing new. These same companies that are supposedly hurting are getting money to support their business efforts. But do they really need the money? No one can tell. Try performing an audit on them to find out.

What About Javakhk?

An interview with a Georgian parliamentarian, Armen Bayandouryan, was published by Hetq yesterday. He was trying to justify several points about the plight facing Armenians in Samtskhe-Javakheti, or Javakhk, such as the inability for many to speak the Georgian language.

Here’s what he had to say:

All I’d say is that there isn’t one nation on earth where its citizens don’t speak its primary language. If they don’t speak Georgian in Javakhk today, it’s not their fault. The system has been lacking, incorrect.

Yet later in the interview he said the following regarding the question of making Armenian a second official language of Javakhk:

To establish a second official language in Javakhk would imply that Armenians are incompetent. We’d be doing ourselves a great disservice if we said that we Armenians cannot learn another language. This is my view. It would be like saying; we are citizens of Georgia but we aren’t capable of learning the language. Ridiculous, isn’t it? Today we can’t, but tomorrow we can.

My father used to say that it is their language that binds Armenians together, to keep them unified and less apt to succumbing to assimilation in their host countries. By contrast, I have heard others like my grandmother argue that it is rather Christianity that maintains the identity and fuels the persistence of Armenians. I think both are correct to some degree, but I am leaning more on the language aspect of being able to sustain Armenian integrity rather than religion. There’s plenty of agnostic or atheist Armenians in the world who maintain their culture and identity by speaking the language and teaching their children to do the same. Many of them live in Armenia.

But in Javakhk Armenian youth are not “incompetent” because they are not able to learn Georgian. Rather, they are not given the proper means to do so. I was in Javakhk in 2002 with a fellow Armenian from Boston, and everywhere we went people complained about poverty, the low standard of education for children in the region and the lack of job opportunities for earning a decent living.

Georgians tend to live better in the region despite the fact that it is mainly populated by ethnic Armenians. Bayandouryan is linking the capacity to get decent jobs with the ability to speak the state language. He’s right, Armenians in Javakhk need to know Georgian, but he’s not addressing the underlying issues, namely the damaged educational system—or lack of one—that is in place in the region.  He mentions several times that Armenian kids need to go to Armenian school, yet those same schools were not receiving the proper amount of state funding and were thus in shambles. How are you going to teach kids without proper classroom facilities and especially, books?

Later he states, when asked about the recent arrests of Armenian activists who were from Javakhk:

No one is illegally arrested in Georgia; just as in Armenia. There is a justification one someone has been charged with a crime. Being Armenian has nothing to do with it. If you’ve committed a crime you go to jail. These people broke the law. It’s that simple.

That first sentence alone is alarming. How stupid does he think the people are who are reading this interview? Anyone who has been following Armenian news for the last 18 months knows that this is an absurd statement to make.

Bayandouryan also went on to mention that President Mikheil Saakashvili has been doing a lot for the region by building a road from Akhalkalak to Tbilisi, suppying gas to rural areas and supposedly ensuring that the elderly receive pensions. I don’t know about that because I haven’t visited Javakhk since then and thus I haven’t been able to speak to people firsthand.

But I will say one thing: Akhalkalak, which was 90 percent populated by Armenians at one time and most likely still is, was the most miserable, depressing, aesthetically displeasing city I have ever visited in the South Caucasus so far. Things were very bleak for many families there. At that time 5,000 people were employed at the Russian military base that was operating, but that’s been closed for about two years. I have no idea how people are getting by now, but back then people were barely eking out a living from what I saw and heard. The kids I spoke to couldn’t wait to attend university in Yerevan (a sublime paradise by comparison) to get out of there. And I can’t imagine that sentiment has changed at all since then.