Category Archives: Economy

Interview with Levon Zourabyan


Two days ago I had the opportunity to interview a parliamentary candidate representing the Armenian National Congress, Levon Zourabyan. He was Levon Ter-Petrossian’s right-hand man during his presidency and evidently still is.

In this interview for Hetq, Zourabyan talks about the need to break up the Armenian monopolies, impeachment, the expected rise of the opposition in parliament and government, methods of electoral fraud, and the importance of fair elections.

To watch the interview go to the Hetq web site.

Notes on emigration from Armenia

190436_4073Emigration is the single-most detrimental threat to the Armenian nation today, even more so than governmental corruption. The National Statistics Service insists that the population of Armenia is still 3.2 million, a figure it has maintained since 2001. Meanwhile, behinds closed doors rumors are heard that there are barely 2 million people actually living in the country today. A new census is slated to be taken this year.

Emigration is increasing for the following reasons.

Lack of jobs and persistent mass poverty. The government needs to attract more investment in the IT sector. The overtures to give tax breaks to companies are still not aggressive enough. The IT sector needs to increase four-fold. Technology centers need to be established across the country, from Kapan to Alaverdi, and new talent must be continually cultivated. In the meantime, as part of a mass rural development plan entire villages are being uprooted and transplanted to remote regions of Russia, where people are offered free housing and employment.

According to the National Statistics Service, the total number of poor increased from 27.6 percent in 2008 to 35.8 percent in 2010, despite the tens of millions being pumped into the country in foreign aid packages, investments, loans and remittances. During the same period there was about a 10 percent increase in poverty in rural Armenia. The 2010 poverty line was set at a monthly income of 33,517 dram, or about $90, per adult.

Problems related to sustaining small business. Rents are going up, and smaller businesses find it hard to compete, especially with the chain supermarkets that are branching out across the city. Higher rent and prices for imported goods means less profit when customer loyalty dwindles. The lower middle class — the core of Armenian society — has less and less to spend.

Bad attitudes and pervasive apathy. I still hear lame statements like “The country’s not a country” and “Is Armenia even a country for you to come here?” A defeatist dissatisfaction with everything and blind indifference to the state of affairs are suppressing the vital strengthening of society. The only segment of the population that has the genuine right to express a feeling of hopelessness is the poor/very poor of society. Many of these people have no choice but to leave for Russia or elsewhere to find work.

Leaving is fashionable. The youth dream of leaving the country and moving to more exotic places like the US, Canada and Europe. Even if someone has a hard time making a go of things where they end up, emotionally, financially or whatever, the stigma that it is “shameful” to go back inhibits their desire to return. So you have one group that is ecstatic about living elsewhere in the world — anywhere but Armenia — and another that regrets leaving in the first place but won’t return to the homeland.

The majority of Armenian citizens have a lot to be thankful for. Although they may be blind to it, they presently have a relatively stable government and economy. The government insists that the economy will grow by 4.2% this year and that it will meet its target in collecting about $2.3 billion in tax revenues. Armenia is considered by the Heritage Foundation to have a “moderately free” economy — ranked 39th in the world ahead of Norway, France, Turkey and Azerbaijan — and is now implementing a revised, amicable registration process for doing business. It benefits from the support of the European community, the Americas, China, Japan and of course its big brother, Russia. Petty crime is not common in many parts of the capital and arguably less so in the regions. There is little to fear by walking the streets of the city center late at night, and that’s something that certainly can’t be said of very many cities in the world. And despite the beating of war drums by its oil-happy neighbor to the east, there isn’t a clear sign of a possible resumption in hostilities. No one in the international community, Armenia or Artsakh seems to take the rhetoric seriously. Moreover, Armenians have had the privilege of living in a democracy for twenty years, enjoying the freedoms of casting a ballot, thought, expression, and enterprise, all of which are taken for granted.

Emigration has long ago become a national security risk for Armenia, fueled by boundless cynicism and apathy towards nation building. If it continues unchecked, the emigration problem will instigate a severe, harrowing depopulation of the only parcel of land the Armenian nation can legally call its own. And ultimately, that will mean others will move in to take their place. The exodus from Armenia needs to be curbed and that would entail more than just evasive action taken by the Armenian government. It will need the support and encouragement of the Armenian diaspora to ensure Armenia becomes a country where anyone returning there would never dream of leaving again. That has to start happening now.

Photo credit: David Knudsen

Many babies are the future

I just read a poignant photo essay about the maternity drive in Nagorno-Karabagh published by the New York Times called The National Womb.

The NK government is encouraging young families to have babies by giving them incremental sums of money for each additional child they rear. After the sixth child has been born the family is given a home. Unfortunately there is no other way to keep the population there somewhat steady. As in Armenia, the youth are emigrating in search of better opportunities elsewhere. Lucrative business ventures to employ people are few there.

I was in Nagorno-Karabagh in July and couldn’t help but notice that areas of the countryside seemed bare of residents. The capital Stepanakert is a lively city but Shushi, which is far more picturesque, still seems neglected, despite all the work being done there to repair the infrastructure and open new hotels to attract visitors.

The entire region needs settlers and money so that society can advance. Compared with Armenia corruption is apparently very low, so I don’t understand why the willingness to invest in Nagorno-Karabagh more aggressively is not there. Perhaps daily flights between Yerevan and Stepanakert, hopefully to start next year, will entice that much-needed investment.

In the meantime, many babies are needed. But the question as to whether the parents of those families will be able to consistently provide remains to be answered.

Incidentally, I wanted to mention an excellent article published by Hetq last June  called On That Side of the World about life in Kashatagh, where there are no normal roads or even electricity, and where Armenians who sacrificed life in civilization choose to survive. I cannot imagine living without electricity and I don’t understand how they do it. The heartbreaking thing is that no one cares, not the governments of Armenia or Nagorno-Karabagh, and not the Armenian Diaspora. They just linger there, waiting for someone to pay attention to them, waiting for something to change that never does.

Reflecting on twenty years of independence

Armenian coat of armsTwenty years ago when Armenia declared itself independent from Soviet rule it was not only claiming statehood, it was calling for a restoration of values.  The Armenian people would be able to think and create freely in a fledgling democracy that was both naïve yet highly optimistic. Many people believed that prosperity was on the horizon, jobs would be created, and a bright future awaited them. Little did they know that both war and unchecked entrepreneurship would set them back several years.  Some have never seen any kind of prosperity after independence, whether financial or spiritual.

Armenia today is ruled by a handful of wealthy families competing for prominence, similar to what you would find in a Hollywood film about the mafia, but without all the gory violence. The common people are subjects to the nepotistic society these leaders, or oligarchs, have created. Citizens who speak out against government decisions are cruelly suppressed by this system. Others are victims to bad policies and lose their livelihoods in the process. Civil society is weak, and initiatives to bring about change in the form of grassroots movements are often supported by outside special interest groups, mainly from the US or Europe. Narcissism has long become a virtue of the nepotists, with general disregard for law and order and respect for neighborhood peace violated day and night. Society is increasingly polarized with the dividing line between the haves and have nots all the more obvious. The social equality of Armenia’s soviet past is long gone.

Although the president is quite aware of the dire economic and societal issues that most Armenians face day to day, he either plays them down or fails to address them. For instance, he recently discounted the somber fact that entire villages have been relocating to remote parts of Russia as part of a controversial resettlement program promoted by the Russian government. Judging from the headlines in the Armenian press, it is clear that the president is often out of sync with what is transpiring in the country he supposedly rules.

Below is a list of problems that the president needs to contend with to ensure Armenia’s democratic and economic progress in the years to come:

Create jobs. In the wake of independence countless factories that were prosperous during the soviet era closed either overnight or during the course of several years. Although some like chemical plants and sugar processing facilities have reopened in recent years, Armenia’s industrial output is nowhere near what it was just before the Soviet Union began to crumble. The permanent closure of key factories in rural areas, like Sisian in the southern Syunik region and Charentsavan to the north of the capital, not to mention scores of other towns throughout the country, have resulted in a depopulation, with many people once living in small towns and villages flocking to Yerevan or leaving the country, most of them for Russia, in search of work. The president needs to create an environment whereby new factories can be built by wealthy Armenian citizens or foreign businessmen weary of doing business in Armenia. Eradicating corruption in the tax and customs departments and simplifying the business registration process would be an excellent start.

Promote small business. Yerevan mayor Karen Karapetyan made himself public enemy by sweeping traders off the streets (oddly only florists are allowed to sell roses from sidewalk stands) and destroying inconspicuous kiosks where cobblers, tailors, and cigarette sellers set up shop. Shopkeepers are harassed by taxmen and some are even forced to close for days on end while they scramble to clear up minute discrepancies found as a result of loopholes purposely left open by the tax authorities to extort bribes.  Although Prime Minister Tigran Sarkisian has often talked about encouraging the growth of small businesses, he has been reluctant to disclose the details of policies his government plans to implement. Tax breaks coupled with guaranteed interest-free government loans would encourage small businesses to open and help nurture an environment of trust.

Encourage civil society. In flourishing, deep-rooted democracies dissent and opposition to government policy are tolerated, and public advocacy is allowed to function. Initiatives to promote civil society need to be implemented, mainly by immediately stopping police confrontations or crackdowns on peaceful demonstrators. Society cannot be built while oppression and fear looms overhead Armenian citizens.

Tax the wealthy and give tax breaks to the lower classes. Hundreds of millions of dollars in revenue can be generated if only oligarchs were taxed, the sums of which could be funneled to important social programs. By 2006 estimates 26.5 percent of the population lives below the poverty line. Free housing could be provided to impoverished citizens still living in shacks, temporary housing, or on the street. Also, pensioners could finally receive monthly stipends that are in line with the current standard of living, which is continually on the rise with food prices often skyrocketing, especially in the period leading up to the holiday season. The government should aim to eradicate poverty nationwide, and it can easily do so if and when taxes are properly collected.

Prevent emigration and promote immigration. President Sarkisian desperately needs to draft a plan for slowing down the exodus from Armenia. That should include job creation through promoting foreign investment in the manufacturing and IT sectors, an increase in the minimum wage, and equal opportunity, particularly in government agencies. He also needs to address the relatively low birthrate, with 12 children born for every 1,000 people and on average one child born per household, according to 2011 figures. He also needs to ensure that infrastructure is modernized even in the most remote villages of the republic.  Several areas of Artsakh along with the Armenian controlled territories surrounding it must be populated, and that again can only come about with increased investment and the vital infrastructure in place.  When Armenians worldwide feel confident that the Armenian government is able to provide the means and conditions for promoting growth throughout the regions, they will begin to immigrate.

These are only a handful of issues that loom over Armenia’s destiny.  There are just as many if not more challenges related to Armenian foreign policy that must be addressed, the most important being the resolution of the Nagorno-Karabakh conflict, which seems to be floating in an eternal stalemate.

In his Independence Day remarks, President Sarkisian hailed the new generation of the republic recognizing its “concerns and demands” of a better society.  He also stated that “… in the next twenty years we will be able to build a country which will come close to our ideals. I believe in that because I believe in our collective power.”

Now the pressure is on the president. He alone can muster the support of both an apathetic public and the oligarchic society backing him by making the right policy decisions that would benefit all, not just a select few. That is a difficult balancing act, but the means to accomplish such a feat simply need implementing and the vision to do so. Having said that, it is up to Armenian society as a collective whole to ensure he aspires to the same ideals to which he alludes, the same that all citizens expect to live by.

Why Demolish Yerevan Kiosks?

Dismantling a Yerevan kiosk
Dismantling a Yerevan kiosk

About three days ago while driving down Papazian Street in the Arabkir district I noticed a lot of commotion beside the kiosks that are situated along the sidewalk near the intersection with  Komitas Street. There were several police officers while other citizens seemed to have been irate and agitated. Yesterday there were red beret policemen on the scene. The kiosks came down upon a verbal decree by the Yerevan Mayor, Karen Karapetian. He gave the business owners a three-day warning.

Karapetian, who was the the former head of ArmRosGazprom, has proven himself since his appointment late last year to be a ruthless, despised leader who doesn’t have the interests of Yerevan residents that are barely able to get by in mind. Just after the New Year he infamously declared that street trading — in other words grandmothers selling cilantro and lemons on the sidewalk — was to end, no ifs, ands or buts. Even fruit stands could not be allowed to display their produce right in front, despite ample space available for foot traffic. Now he wants to destroy the lives of small shop owners, most of whom are most certainly living day to day, an opinion based on conversations I’ve had with many of them during the last seven years of my stay. He claims that they are an eye sore and are in the way. Just over 900 have already been dismantled this year.

Papazian Street is far from the city center and is by no means a busy street frequented by tourists. The area is a center for trade of basic foodstuffs and services. One man repairs shoes while another works as a tailor out of these tiny, inconspicuous stores. Perhaps they are not as impressive as the posh boutiques on Abovyan Street, but they serve a purpose and have steady clients. Now their owners and employees are out of work. Some of them have taken out huge business loans.

But, thanks to the power of the people, the government supposedly is putting a stop to further demolition. Apparently the authorities have been dumped with letters of protest, not to mention having been embarrassingly forced to deal with sit-ins.

The only political party that was present to support the shopkeepers was Heritage, led by Raffi Hovannisian, which comes as no surprise given their track record of consistently fighting for people’s rights. The Armenian National Congress and ARF-Dashnaktsutiun seem to be dubiously silent on the issue.

Yesterday at a cabinet session Prime Minister Tigran Sarkisian, another controversial figure who made a fool of himself last week when he stated that continued emigration was good for the country as it filtered out the bad citizens from the good, blasted Karapetian for his decisions. But this morning I saw that the dismantling of kiosks on Papazian Street continued unabated, and there were no police officers in sight.

About the future plight of these shopkeepers, Karapetian has this to say: “I don’t think that there are poor people among the owners of kiosks on central streets, and the Mayor’s Office has no obligations to them … We are not obliged to give them an alternative [source of income] or compensation.” This statement alone demonstrates how utterly clueless and out of touch he is. He probably never walks down any city sidewalk, carted around in an outlandishly expensive European sedan or SUV, just like all the other selfish, abhorrent big shots.

Yesterday once again I was left wondering where Armenian society is headed. Emigration continues. People are thrown out of work and no new jobs are created. Governmental officials aren’t very concerned about these issues, distracted by making millions for themselves. People are too scared or apathetic to protest. How long can this indifference continue? And how am I expected to raise my infant son in this environment? How long will any new parents be able to withstand these injustices? Why doesn’t the Armenian Diaspora care? What the hell is going on?

I’d like to have some indication of when these questions will be answered positively. But it appears as though I have a very long wait.