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Lobbyist interests hindering development
By Mher Ohanian
Yerkir/arm
8 July 05
It is obvious that people working in the Armenian business environment
are doing their best to protect their interests as much as they
can. Large businesses are more or less organized.
Though not politically organized, small and medium businesses
sometimes come together around this or that issue and succeed in
causing trouble for the government with their mass protests. However,
small businesses have very little influence over political decision
making that directly impacts their interests.
On the other hand, large businesses do not have many legal ways of
influencing such decision making. They prefer to solve their lobbying
problems on the backstage of political decision making.
Representatives of Armenian large businesses believe that neither
large nor small businesses are adequately protected in our
country. The fact is that Armenia does not have legal mechanisms
necessary to regulate the relations between the businesses and the
government. An example of such a legal mechanism is the law on
lobbying.
This does not mean that the interests of private entities are not
absolutely protected in Armenia. Observation of the policy making and
law creation processes in the country shows that the interests of
private entities are given the greatest consideration among the
interests of other groups.
But this is so only because the large businesses have more
opportunities and resources to present and protect their interests;
unfortunately, this mostly happens in unlawful ways. Such unlawful
`solutions' requiremuch money and efforts. Various studies and opinion
polls support this point.
Nevertheless, some organizations lobbying for the interests of small
and medium businesses are trying to protect the interests of their
members. These attempts are not always successful mostly because of
conflict of interests of competing members. An interesting example to
illustrate this point is the Union of Manufacturers and Businesses, an
organization that was not created from bottom up but is the
realization of an idea the government came up with in mid 1990' s.
In other words, the government is always tempted to unite the large
businesses and use them for certain purposes, mostly before the
elections. The businesses in their turn try to pursue their interests
by seeking protection among the government officials.
Let's look at the results of some public opinion polls - only 30% of
Armenian businessmen consider solution of their business problems
through lobbying mechanisms. The remaining 70% prefer to solve their
problems through direct` bargaining' with public officials. Another
poll shows that 40% of the Armenian private companies have to bribe
public officials - the companies spend 6-7% of their revenue for this
purpose.
In other words, some of the large businesses do not think that
protection of their business interests through non-governmental
organizations is an adequate mechanism. Large businessmen mostly go
into politics themselves to be able to personally protect their
rights.
About three dozens of large businessmen are directly engaged in a
`dialog of interest groups' with the government. This has recently
become the prevailing tendency. Moreover, the businessmen prefer to
create their own political parties and participate in this way in
political processes.
Though there is a lot of time until the parliamentary elections in
2007 some businessmen have already started working in this
direction. The logic underlying the tax system in Armenia is most
likely a product of such lobbying. The tax policies were initially
designed to reflect the interests of large businesses.
The `reforms' in tax policies have particularly benefited the
importing businesses as well as those exporting base resources from
the country. Another target for lobbying activities is no doubt
privatization - as a result of ` reforms,' government and money have
been incorporated.
What we mean by this is the acquisition through various direct and
indirect leverages of property and its further inefficient
operation. This explains the inefficiency of mechanisms of bankruptcy,
financial recovery or liquidationof insolvent enterprises as well as
accumulated huge tax debts and fines in the economy.
By Mher Ohanian
Yerkir/arm
8 July 05
It is obvious that people working in the Armenian business environment
are doing their best to protect their interests as much as they
can. Large businesses are more or less organized.
Though not politically organized, small and medium businesses
sometimes come together around this or that issue and succeed in
causing trouble for the government with their mass protests. However,
small businesses have very little influence over political decision
making that directly impacts their interests.
On the other hand, large businesses do not have many legal ways of
influencing such decision making. They prefer to solve their lobbying
problems on the backstage of political decision making.
Representatives of Armenian large businesses believe that neither
large nor small businesses are adequately protected in our
country. The fact is that Armenia does not have legal mechanisms
necessary to regulate the relations between the businesses and the
government. An example of such a legal mechanism is the law on
lobbying.
This does not mean that the interests of private entities are not
absolutely protected in Armenia. Observation of the policy making and
law creation processes in the country shows that the interests of
private entities are given the greatest consideration among the
interests of other groups.
But this is so only because the large businesses have more
opportunities and resources to present and protect their interests;
unfortunately, this mostly happens in unlawful ways. Such unlawful
`solutions' requiremuch money and efforts. Various studies and opinion
polls support this point.
Nevertheless, some organizations lobbying for the interests of small
and medium businesses are trying to protect the interests of their
members. These attempts are not always successful mostly because of
conflict of interests of competing members. An interesting example to
illustrate this point is the Union of Manufacturers and Businesses, an
organization that was not created from bottom up but is the
realization of an idea the government came up with in mid 1990' s.
In other words, the government is always tempted to unite the large
businesses and use them for certain purposes, mostly before the
elections. The businesses in their turn try to pursue their interests
by seeking protection among the government officials.
Let's look at the results of some public opinion polls - only 30% of
Armenian businessmen consider solution of their business problems
through lobbying mechanisms. The remaining 70% prefer to solve their
problems through direct` bargaining' with public officials. Another
poll shows that 40% of the Armenian private companies have to bribe
public officials - the companies spend 6-7% of their revenue for this
purpose.
In other words, some of the large businesses do not think that
protection of their business interests through non-governmental
organizations is an adequate mechanism. Large businessmen mostly go
into politics themselves to be able to personally protect their
rights.
About three dozens of large businessmen are directly engaged in a
`dialog of interest groups' with the government. This has recently
become the prevailing tendency. Moreover, the businessmen prefer to
create their own political parties and participate in this way in
political processes.
Though there is a lot of time until the parliamentary elections in
2007 some businessmen have already started working in this
direction. The logic underlying the tax system in Armenia is most
likely a product of such lobbying. The tax policies were initially
designed to reflect the interests of large businesses.
The `reforms' in tax policies have particularly benefited the
importing businesses as well as those exporting base resources from
the country. Another target for lobbying activities is no doubt
privatization - as a result of ` reforms,' government and money have
been incorporated.
What we mean by this is the acquisition through various direct and
indirect leverages of property and its further inefficient
operation. This explains the inefficiency of mechanisms of bankruptcy,
financial recovery or liquidationof insolvent enterprises as well as
accumulated huge tax debts and fines in the economy.