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IMF, World Bank See Quick Impact From Turkish-Armenian Border Openin

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  • IMF, World Bank See Quick Impact From Turkish-Armenian Border Openin

    IMF, WORLD BANK SEE QUICK IMPACT FROM TURKISH-ARMENIAN BORDER OPENING

    Asbarez
    http://www.asbarez.com/2009/10/06 /imf-world-bank-see-quick-impact-from-turkish-arme nian-border-opening/
    Oct 6th, 2009

    YEREVAN (RFE/RL)-The International Monetary Fund and the World
    Bank have reaffirmed their strong support for the reopening of the
    Turkish-Armenian border, saying that its positive impact on Armenia's
    recession-hit economy could be felt as early as next year.

    Senior officials from the two multilateral US-led lending
    institutions welcomed economic implications of the unprecedented
    thaw in Turkish-Armenian relations which will result in the signing
    of key fence-mending agreements between Ankara and Yerevan later
    this week. Speaking to RFE/RL on the sidelines of the ongoing IMF
    and World Bank meetings in Istanbul, they said that growing signs of
    economic recovery around the world should also reflect positively on
    the economic situation in Armenia.

    According to the latest IMF projections presented during the global
    forum, the Armenian economy will grow by 1.2 percent next year after
    enduring one of the steepest declines in the world this year. The
    World Bank also expects renewed modest growth in the South Caucasus
    country in 2010.

    Ratna Sahay, deputy director of the IMF's Middle East and Central
    Asia Department, said the growth rate could well be higher if the
    Turkish-Armenian frontier is opened for commerce and travel soon. "Once
    the border opens up we think that the impact would be pretty quick
    because it would reduce [Armenia's] transportation costs tremendously,"
    she said. "There would also be a lot of indirect impact through trade
    in goods and services with Turkey."

    "I don't know if it will happen in 2010," said Indermit Gill, the
    World Bank's chief economist for Europe and Central Asia. "But my
    sense is that [positive effects of border opening] can happen very,
    very quickly because there are entrepreneurs on both sides that are
    very keen to take advantage of business opportunities on the other
    side of the border."

    "What we find is that countries that are globally integrated tend to
    be also pretty regionally integrated as well," said Gill. "And both
    of these integrations are very good things. Countries that are more
    integrated tend to converge faster to higher income standards.

    "So I think these are very positive developments, and if you want to
    see a whole body of evidence of why this is a good thing you should
    actually look at Western Europe, which was a very divided neighborhood
    not so long ago. Now it's the most integrated neighborhood."

    Both officials emphasized the fact that Armenia is a landlocked country
    with high transportation costs that hamper economic activity and badly
    needed foreign investment. "Therefore, to have access in terms of
    transportation through Turkey would be of great benefit to Armenia,"
    said Sahay. "At the same time it would also benefit Turkey in terms
    of cross-border trade and tourism."

    The IMF official said an open border with Turkey would also make
    Armenia more attractive to foreign investors. "Armenia has a lot
    of advantages vis-a-vis the level of education and skills of the
    Armenian people," she argued. "There is also, of course, a big Armenian
    population that is outside, which is also going to be looking to see
    how opportunities in Armenia are going to expand. So provided that the
    policy environment is good, the opportunities to me seem quite a lot."

    That border opening would lower the disproportionately high cost
    of shipping cargos to and from Armenia is accepted by many local
    businesspeople and analysts. But just how quick and positive its
    impact on the economy as a whole would be is a matter of contention
    in the country. Some Armenian economists believe that it would take
    years before the country starts reaping tangible benefits.

    The entire Armenian Diaspora and Armenia's opposition political parties
    are opposed to the protocols set to be signed this week, warning
    that an open border with Turkey at this juncture would actually hurt
    the economy. Armenia's relatively tiny and weak economy will see its
    domestic market flooded with cheap Turkish consumer goods and thereby
    hurt many Armenian manufacturers.

    President Serzh Sarkisian has ignored much of those concerns and is
    continuing to push forward on the issue.
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