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Evaluating L. A. Armenian Consul General's Assertions on
Armenian-Turkish Protocols
DIASPORA'S MOST WIDELY ACCLAIMED & CIRCULATED INDEPENDENT ARMENIAN WEEKLY
Issue #1188 January 9, 2009
Stepan Sargsyan
"ARARAT" Center for Strategic Research
For the first time during these latest negotiations surrounding the
Armenian-Turkish conflict an Armenian official engaged in a public
debate to defend the Protocols and fielded unscripted questions
directly from the audience in Los Angeles. The U.S.-based Diaspora
organization called ARPA Institute had organized a debate between the
Honorable Consul General of the Republic of Armenia to Los Angeles
Grigor Hovhannissian and two Diaspora academics. Dr. Richard
Hovannisian moderated the debate. The Consul General deserves a lot of
praise for agreeing to discuss the Armenian-Turkish conflict and the
recently signed Protocols in such a public forum, despite the
persistent efforts by his superiors in Armenia, namely President Serzh
Sargsyan and Foreign Minister Edward Nalbandian, to avoid having any
meaningful public discussion with the Armenian people regarding this
issue. It must be noted that a lot of heartache and mistrust could
have been avoided had these discussions been held prior to agreeing to
the Roadmap and drafting the Protocols.
Articles describing the debate and the ideas that were exchanged have
been written and may continue to be written 1 . Whoever has followed
this process since the beginning and is intimately familiar with the
various arguments put forth by the supporting and opposing sides can
attest that nothing markedly new was added during the debate. Before
delving into the details of his speech, the Consul General referred to
the unfavorable economic forecasts offered by the opposing camp as
"amateur." In fact, the discussion of the economic benefits of opening
the factual border between Armenia and Turkey took the majority of the
15 minutes allotted to the Consul. What stood out, though, was Mr.
Hovhannissian's extensive use of technical terms and specialized
vocabulary when referring to key economic concepts not commonly known
by the general public. It shall be left to the Consul General to
explain why he chose this tactic (use of unfamiliar terminology and
concepts) for the debate, given that the goal was to alleviate the
concerns of a bewildered Armenian public, which, on average, would not
have been expected to know the economic definitions of consumer
surplus and comparative advantage. However, his incorrect
interpretations of those key economic concepts and the resulting
unfounded conclusions cannot be left unaddressed and must be
scrutinized. This brief analysis will attempt to do just that by
evaluating the Consul General's own interpretations and applications.
Mr. Hovhannissian's economic arguments can be reduced to the following:
* Open border and imports from Turkey will weaken the Armenian
oligarchy and break-up its tight grip on the Armenian economy;
* Lack of competition kills Armenia's comparative advantage;
* Cheaper imports from Turkey will increase consumer surplus in Armenia; and
* Turkey offers "more predictable and better" trade routes.
It must also be noted that Mr. Hovhannissian made a direct linkage
between the Protocols and Armenia's negative economic growth in 2009.
According to him, Armenia experienced an 18% fall in its gross
domestic product 2 (GDP) in 2009; therefore, the government had to
resort to all means to lessen the negative effects of such a severe
economic contraction. While it is true that in 2009 the Armenian
economy shrank by 18%, it had absolutely no effect on the rationale
for initiating this latest round of the Armenian-Turkish negotiations.
While President Serzh Sargsyan made the negotiations public in June of
2008, this new phase had started with the advent of the "secret"
Armenian-Turkish talks in Switzerland as early as the fall of 2007,
when the Armenian economy was still growing in double digits.
Justifying the Armenian-Turkish negotiations with the 18% decline of
2009 does not at all elevate the Consul General's argument above those
"amateur" analyses he has come across in the Armenian press.
Thus, let us review each of the economic assertions outlined above.
Break Up of Oligarchy
During his speech the Consul General reiterated that the opening of
the factual border will weaken and break up the Armenian oligarchic
system. The specific steps that would lead to the demise of the
oligarchy were not outlined, but the general line of reasoning was
implied: the opening of the border will allow the inflow of cheaper
goods from Turkey, which in turn will erode the monopolistic hold of
powerful Armenian businessmen on the domestic market.
If a particular set of assumptions are selected, the simplified
"world" of economic models may actually yield the outcome predicted by
the Consul General. Under the right circumstances, the emergence of
another source of imports, especially cheaper sources, will create
competition to the existing monopoly and reduce its influence on the
market along with that of the oligarchs. However, this is where the
problem arises - assumptions. Economic models are used to analyze
real-world issues, because they allow the economists to simplify the
reality by making certain assumptions. If incorrect assumptions are
made, the model will predict outcomes that will never occur in the
real world. In our example one underlying assumption is that the
Armenian legal system functions properly, there is no collusion, no
corruption, etc. Unfortunately, that is not the reality in Armenia
today.
The Armenian businessmen are entrenched in the government and maintain
relationships with government officials that resemble to those of
business partnerships. Let us assume that the factual Armenian-Turkish
border is opened and a new source of imports emerges. All imported
goods have to pass through the customs (either at border checkpoints
or at airports), where a customs official determines who can import,
what can be imported and at what price. In other words, the
concentration and structure of the domestic markets of imported goods
are ultimately shaped not by the status of the border and market
forces, but by the decisions of the customs officials. Even if all the
borders of the Republic of Armenia were relieved of their blockades,
the customs employees would still make the decision regarding who,
what and at what price. In the sad reality of Armenia the customs
officials are directly linked to powerful Armenian businessmen and
make decisions not with the interests and laws of the state in mind,
but considering those of their oligarchic patrons. Often, the head and
other senior officials of the customs are themselves wealthy
businessmen with business interests in various domestic markets of
imported goods.
The example of the coffee importing company Royal Armenia is telling.
Senior customs officials had offered the directors of the company to
register the imported coffee at the customs at lower prices in return
for sharing the resulting extra profit3. After refusing the "offer"
and making it public, the directors had been charged with various
trumped up charges and arrested. Even the presiding judge, who had
sensationally acquitted the directors, had been dismissed and the
directors had been arrested again. This case shows that the state of
internal governance in Armenia and the widespread corruption and
collusion among government officials do not even allow to fully
utilize the opportunities offered by the existing open borders for
de-monopolizing and diversifying the domestic market. Yet, such cases
are widespread. It is of no secret that one of the sons of former
President Robert Kocharian had a virtual monopoly in the import of
cell phones. Similarly, another oligarch, Samvel Aleksanian, holds the
monopoly over the imports of sugar and other commodities. Had others
been allowed to freely engage in entrepreneurship, import/export and
other economic activity, the current oligarchs would not have the
immense pricing powers, which in turn translate into enormous profits.
Does any customs official have the stamina to refuse a request from a
mighty oligarch, let alone the son of a president, to create barriers
to entry to other potential businessmen? The monopolistic structure of
the market in Armenia is nurtured from within and is not necessarily
conditioned by external factors. If the opportunities offered by the
existing Armenian-Georgian border are not being fully utilized to
combat the oligarchs and diversify the importers (as the case of Royal
Armenia shows), what notable difference would the addition of the
Armenian-Turkish factual border make? The Turkish soldiers may allow
imports to flow in from the Turkish side, but it is the Armenian
customs officials who will decide who, what and at what price can
transport those imports into the Armenian side. Any added measure of
competition resulting from the opening of the blockaded factual border
will be stifled by the corrupt Armenian officials at the request (and
adequate compensation) of those very same oligarchs. Everyone became
very optimistic when an attempt was made to clean up the corruption
within the Armenian customs after the election of Serzh Sargsyan.
Unfortunately, the current situation is even worse than it was during
the Kocharian administration. Therefore, there is no indication that
anything has changed or will change in the very near future.
Returning to the Consul General's prediction, the opening of the
Armenian-Turkish factual border will shake the foundation of the
Armenian oligarchy and erode their power if and only if the internal
governance in Armenia is improved, corruption is eradicated and
collusion of businessmen and government officials is addressed.
Without it the all-powerful Armenian oligarchs will continue
controlling the levers capable of neutralizing anything that threatens
their privileged position. In these circumstances, it would be wiser
to exhaust all the internal means of combating the oligarchy before
turning to external factors. Otherwise, this argument sounds awfully
similar to the Azerbaijani leadership's preposterous claim that the
lack of solution in the Nagorno Karabakh conflict is what hampers
progress in democratic governance, respect of human rights and freedom
of speech in Azerbaijan.
Competition and Comparative Advantage
In his assertions the Consul General also referred to the concept of
comparative advantage. Mr. Hovhannissian claimed that the lack of
competition kills Armenia's comparative advantage. This statement is
at odds with the definition of that key concept, which is the ability
of an individual or country to produce a good at lower cost or more
efficiently than competitors4. Originally, the concept of comparative
advantage was proposed by David Ricardo, who used the examples of
Portugal and England to show that Portugal was relatively more
productive in producing wine thanks to its climate and geography,
while those same characteristics made England relatively more
productive in the production of wool. Therefore, the relative
advantage in the production of a certain good - comparative advantage
- is determined by innate or internally developed capabilities.
External factors, such as trade or competition, only exploit the
benefits offered by the existing comparative advantage. Countries
generally attain comparative advantage in a specific industry thanks
to the climate, the geography, the existence of natural resources,
relative abundance of labor and capital, technology, etc. No matter
how hard Armenia competes with Saudi Arabia or how many open border
crossings the two countries share, Armenia will not achieve a
comparative advantage over Saudi Arabia in the production of oil. The
Consul General's statement implies that this is possible.
What are Armenia's comparative advantages? This requires an extensive
review of the various factors mentioned above. However, it may be
noted that during Soviet times Armenia excelled in industries which
required solid intellectual grounding and highly skilled workforce. As
in the previous discussion regarding the oligarchy, this economic
concept implies that spurring competition by relieving the blockade
will not improve Armenia's comparative advantage if the country does
not already possess one. To develop one, the Armenian officials must
turn their attention to the internal resources and capabilities, draft
plans and policies to further develop the capabilities where Armenia
has the most potential to excel and implement those plans consistently
over time. In addition, it is not uncommon to use different
protectionist measures, such as trade barriers and tariffs, to support
a capability and give it a chance to evolve into a comparative
advantage, especially in technological sectors. However, this would
conflict with another statement that Mr. Hovhannissian made, which
asserted that "open borders and zero tariffs are the way to go." This
motto will be further examined in the following section.
Armenian Consumer Surplus
One of the key economic concepts referred to by the Consul General in
his speech was consumer surplus. Specifically, he argued that the
import of cheaper goods from Turkey will increase the consumer surplus
in Armenia. In order to understand how and why this occurs, let us
review the economic definition of consumer surplus, which is "... the
difference between the highest price a consumer is willing to pay and
the price the consumer actually pays5." For example, if a tomato paste
costs $3, but the consumer is willing (and able) to pay $4, then the
consumer surplus is $1, the difference between the $4 and $3.
Accordingly, if the tomato paste can be imported from Turkey more
cheaply, at $2, the consumer surplus in Armenia will increase to $2,
which is the difference between the $4 and the new price of $2.
Clearly, in such a construct the Armenian consumer is the clear
winner. Unfortunately, this is only the first half of the story.
Let us assume that the economies of Armenia and Turkey consist of the
production of the same single good. When reviewing consumer surplus,
one should also consider the producer surplus, both of which comprise
the total economic surplus in an economy. Similar to the consumer
surplus, the producer surplus is the difference between the lowest
price a firm would be willing to accept and the price it actually
receives6. If a good can be imported from Turkey more cheaply than it
can be produced in Armenia, the Armenian producer will be pushed out
of the domestic market, resulting in the severe reduction (or the
disappearance) of the Armenian producer surplus. To be more precise,
the lost Armenian producer surplus will be shared by the Armenian
consumers and the Turkish economy (through their exporters). Along
with the Armenian producer the local jobs provided by that producer
will disappear as well. Thus, if during the first phase of this
process the Armenian consumer appeared to be a winner, during the
second phase the consumer is worse off, because without a job his
income shrinks. Despite the lower price of the imported good, the
Armenian consumer surplus will decrease almost by definition, because
the highest price the consumer is willing (and able) to pay will be
significantly lower due to lower income (or the lack thereof). In
summary, during the first phase the Armenian consumers and Turkish
exporters overtake and share the Armenian producer surplus, as a
result, reducing the total economic surplus in Armenia. During the
second phase, the Armenian consumer surplus is reduced due to
shrinking consumer incomes, which results from job loss. This, in
turn, reduces the total Armenian economic surplus even further.
What is the implication for the Armenian economy? Let us take the
example of the agricultural sector. The Turkish agricultural sector is
stronger and more developed (i.e. more mechanized, more plains and
fertile land, etc.) than the Armenian agricultural sector. In other
words, Turkey has a comparative advantage over Armenia in the
production of agricultural goods. In case of open borders and
unrestricted trade Turkey's comparatively higher efficiency in
agricultural production has the potential to cripple the Armenian
agricultural sector, which employs almost 50% of the labor force in
Armenia. Unfortunately, this is also true in the case of other sectors
of the Armenian economy with more or less meaningful economic
activity. Turkey commands the advantage in most. Combine the impact
from the agricultural sector with the similar impact from other
industries, such as food processing, textile, construction, and one
finds a recipe for social disaster. The income and job generation from
potential electricity sales to Turkey will not be sufficient to
compensate and soften the economic pain. To avert a potential social
disaster the government will be compelled to impose tariffs in an
effort to recreate the situation prior to the opening of the border
and buy time for the Armenian economy to develop sectors in which the
country possesses comparative advantage. Let us be clear. It is
irrational to continue indefinitely sustaining sectors of economy in
which Armenia does not hold the comparative advantage. It only
perpetuates the inefficiency and wastes the limited valuable
resources. Therefore, imposing tariffs to support those inefficient
industries is only a temporary measure designed to soften the pain
associated with the transitioning of resources from inefficient
sectors of the economy (i.e. killing off industries) to those sectors
where Armenia is more efficient (i.e. holds comparative advantage).
Without the tariffs or other protectionist measures intended to soften
the blow, Armenia will become subject to the consequences of a "shock
therapy," or the situation of the early 1990's in the former USSR
countries.
Another activity that might have eased somewhat the negative economic
impact would have been the potential establishment of new
Turkish-owned businesses within Armenia to produce the imported goods
locally. However, this activity is constrained by the very fact that
Armenia does not possess the comparative advantage in the production
of the imported goods; otherwise, these goods would continue to be
produced locally and would not have to be imported from Turkey in the
first place. Therefore, the number and size of such enterprises will
be limited and conditioned by the cost of transportation from Turkey
to Armenia and the amount of Armenian tariffs. What is ignored in a
strictly economic analysis is the ubiquitous security threat posed by
foreign-owned businesses. The preceding discussion has assumed that
Turkey will allow the market forces to shape the economic relationship
between Armenia and Turkey. Unfortunately, the review of Turkey's
hostile policies towards Armenia during the past two decades leaves
little room for such an optimistic expectation6. It would be more
realistic and pragmatic to expect that Turkey will shape the economic
relationship between the two countries so that it is detrimental to
the long term viability of the Armenian state. After all, there is no
indication that Turkey has abandoned the old plans of preventing the
emergence of a self-reliant and truly independent Armenian statehood.
At all times and in all countries foreign-owned corporations have
collaborated with the intelligence services of the countries of their
origin. That is why Prime Minister Tigran Sargsyan's invitation
extended to Turkish businesses to participate in the construction of
Armenia's new nuclear power plant was as incomprehensible and
dangerous as President Serzh Sargsyan's call to Turkish President
Abdullah Gul to assist in the resolution of the Nagorno Karabakh
conflict. Currently, we are all witnesses to the kind of assistance
Turkey is providing in that issue.
The logical question is then whether an open border with tariffs is
better than a blockaded border. Imposing tariffs on an open
Armenian-Turkish factual border will shift the revenue from the
Georgian customs to the Armenian state coffers. First of all, since
Armenia is compliant with WTO rules and regulations, that
organization's limitation on the amounts and types of tariffs that
Armenia can impose must be observed. In fact, as part of accession to
the WTO Armenia pledged to reduce or eliminate certain types of
subsidies to the agricultural sector. Therefore, in the case of an
open border Armenia will be limited in available options to restrict
or control the flow of goods through the Armenian-Turkish factual
border. Second, in assessing whether this additional revenue from
tariffs will add to the bottom line of Armenia we must consider all
the costs (explicit and implicit) associated with the Protocols and an
open border. Here are just a few of them:
* Long-term costs associated with the serious compromises made by
the Armenian side (recognition of the de facto borders and the
historical commission);
* Additional cost of policing an open border;
* Increased cost incurred by the national security services of
Armenia in preventing the potential economic and other types of
hostile actions by an enemy state. This also includes covert actions
by Azerbaijan through the open Armenian-Turkish factual border;
* Potential demographic challenges arising from the ease of
migration of Armenian workers to Turkey and migration of Turks to
Armenia under various pretexts (work, "repatriation," etc). Let us
note that the groundwork for a massive resettlement of Turks as well
as Kurds in Armenia is being laid right now thanks to the "discovery"
of millions of "Muslim Armenians" or "Hidden Armenians7, 8 ."
* Increased cost of countering the elevated levels of
informational-psychological warfare, this time conducted within
Armenia by Turkey and, indirectly, by Azerbaijan. It must be noted
that Armenia's weak defenses against information warfare and
propaganda will be unable to cope with the total disorientation and
loss of vigilance among Armenians caused by intermarriages with Turks,
employment under Turkish managers, business partnerships and other
relations with citizens of Turkey. Here are just a few examples:
- Armenian authorities tolerate and even promote the use of the
word genocide in quotation marks in reference to the Armenian Genocide
within Armenia. Only a few years ago the Armenian public was outraged
at an Israeli ambassador who dared to doubt the Armenian Genocide and
demanded that she be designated a persona non grata. Yet, already in
2008 the Yerevan-based Caucasus Institute published a book in Armenia
in which there was an explicit denial of the Armenian Genocide by a
Turkish author. The extent of the success by unfriendly foreign
propaganda became obvious when an Armenian judge, who presided over
the first ever lawsuit against genocide denial in Armenia brought by
the "ARARAT" Center for Strategic Research against the Caucasus
Institute, made a decision to suspend the case, implicitly agreeing
that using the word genocide in quotation marks, referring to the
Armenian Genocide as "allegations" and calling it subject to "serious
doubts ... and intense discussion ..." did not constitute genocide
denial in Armenia 9 . To add insult to injury, immediately after the
suspension of this case in the Court of First Instance, the Turkish
genocide denier himself was invited to Armenia to participate in a
seminar attended, among others, by Hayk Demoyan, the director of the
Yerevan Institute-Museum of Genocide;
- The gaping holes in Armenia's defenses resulted in the
organization of "Days of Azerbaijan" in Armenia in 2007 by some
members of Armenia's intelligentsia (e.g. Ashot Bleyan, Georgiy
Vanyan), while the Azerbaijani leaders were ordering the destruction
of the cross stones in Jugha, the beheading of the Armenian officer in
Budapest, issuing threatening statements to Armenia, referring to the
territory of the Republic of Armenia as Western Azerbaijan, etc.
Turkey will be more subtle, yet, far more damaging than
Azerbaijan. Let us not forget that on the eve of both 1915 and 1988
the Armenians and Turks/Azeris were in "brotherly" relations. What
followed were the Armenian Genocide and the massacres of Sumgait,
Baku, Maragha.
Without delving into the numerical detail it is obvious that
these costs will far outweigh any additional revenue from the
imposition of tariffs.
Now, let us return to the statement made by the Consul General
regarding "open borders and zero tariffs." As the Consul had correctly
stated, this is the official line of the Armenian government, which is
not yet achieved, but is religiously pursued. Generally, no one argues
that open borders and zero tariffs are wrong. As stated earlier,
sustenance of inefficient industries through protectionism (e.g.
tariffs, quotas, etc.) wastes the limited valuable resources that
could be invested in sectors where Armenia possesses comparative
advantage. However, in certain instances protectionism offers a path
towards increased competitiveness. For example, the European
governments continued subsidizing the Airbus project for years until
it was able to stand on its own and directly compete with Boeing.
Industries which require time and large investments to acquire a
competitive edge necessitate the use of such protectionism. On the
other hand, just recently the European Union imposed new tariffs on
aluminum imports from various countries, including from Armenia. While
this tariff on aluminum imports is without merit and rife with
criticism, it still underscores the fact that the motto "open borders
and zero tariffs" is not perceived so unambiguously even by one of its
most wealthy and ardent supporters - the European Union. Yet, when the
Armenian Prime Minister Tigran Sargsyan was asked about the dangers
posed to the Armenian economy by the more developed and powerful
Turkish economy, his advice was essentially to sink or swim. In terms
of a sport analogy popular in our Foreign Ministry as of late, the
Armenian Prime Minister's advice is equivalent to putting an untrained
amateur lightweight boxer in a fight with a super heavyweight
professional boxer and asking the amateur to win the match if he
really wants to become a boxer.
Predictable and Better Trade Routes
One of the final arguments put forth by the Consul General posited
that Turkey offered "more predictable and better" trade routes. One
would think that Armenia's recent experience with Turkey would have
dispelled any notion of that country being a reliable partner of
Armenia. Turkey closed off the factual border at a time when Armenia
was in most need of it. The centrally planned Soviet economy had not
yet adjusted to the new realities and closed borders, shortages of all
commodities plagued Armenia. However, this did not stop Turkey from
using the border as a pressure point to force Armenia into
geopolitical compromises (e.g. surrender of the newly liberated region
of Karvajar as well as Artsakh at large). When qualifying the Turkish
trade routes as predictable and secure, do the Armenian officials
recall these historical events? Turkey has not pledged that it will
stop its hostile policies towards Armenia. In fact, it continues to
pursue its old policy of forcing Armenia into making concessions in
the issue of Artsakh. Yet, our officials and experts have already
dubbed the Turkish routes "predictable and better" and discounted the
need for alternative, reserve routes. Has the Armenian government
acquired a newly found confidence in the genuine intentions of Ankara?
What assurances do we have that during one such inopportune moment, as
in 1993, Turkey will not try to force her will upon Armenia by
threatening to close the border, this time a functioning border fully
integrated into the Armenian economy? As to how can a territory with a
raging Kurdish insurgency and heavy military presence be considered a
"more predictable and better" trade route, where even the heavily
protected Baku-Tbilisi-Ceyhan pipeline can be blown up (whether
orchestrated or not), is perhaps a redundant question...
Conclusion
At the conclusion of the debate, moderator Dr. Richard Hovannisian,
historian by training, shared with the audience what he had learned
from an Indian student during an undergraduate seminar. Qualifying it
with "I don't know if I agree with it", the professor proceeded to say
that, according to the Indian student, opening the border would be a
good thing, because it would destroy the oligarchs along with a part
of the Armenian economy. Nevertheless, the student had opined, this
would instill competition and compel Armenians to develop their
"intellectual" export industries. The student had supported his view
with India's example, which had stopped protective tariffs and had
developed a high-tech industry.
All the theories advanced by the Indian student have already been
evaluated in the paragraphs above. To supplement what has already been
said, India's high tech industry grew not so much thanks to the
abolition of all tariffs, but rather the elimination of the
bureaucratic hassle involved in starting a new business and internal
corruption. These very same problems exist in the Armenian economy and
need to be abolished. However, the Indian student's insights are not
the reason for the inclusion of his quotation in this analysis. The
mention of him at the conclusion of the debate symbolized one of the
most glaring deficiencies in Armenia's treatment of the
Armenian-Turkish conflict - the lack of serious scientific study of
the conflict and professional approach. As Dr. Armen Ayvazyan notes:
"... the policies and approaches displayed by the Armenian political
elite and social-political thought towards the [Turkish-Armenian
Conflict] are still amateur in nature6." During the discussion of what
may likely be one of the most fateful documents in this generation's
lifetime, the concerned Armenian public was served the "insights" of
an undergraduate Indian student, despite the fact that any number of
economists at the UCLA, where Dr. Richard Hovannisian holds the chair
of modern Armenian history, could have been approached for a scholarly
opinion. Rest assured that if nothing else, the deep veneration for
Armen Alchian, a distinguished economist and an icon in the UCLA's
department of economics, would have compelled any faculty member to
respect such a request and offer an expert opinion. The incorrect
interpretations of key economic concepts and incorrect or incomplete
conclusions presented during this debate are yet another expression of
Armenian leadership's unscientific approach to the Armenian-Turkish
conflict. As opposed to making a decision based on the findings of
serious scholarly research, the political leadership makes a
situational decision hoping for "quick fixes" to serious geopolitical
and economic problems, after which pseudo-scientific and other
arguments are sought to justify it.
-------
1. Asbarez.com, "Armenia's Consul General Comes Face-to-Face with
American-Armenians," retrieved from
http://www.asbarez.com/2009/12/23/the-semanti cs-of-the-turkish-armenian-protocols-discussed-in- the-valley/
?©
2. The GDP is the value of all the goods and services produced in a
given a country during a year. ?©
3. "Criminal Case Against Royal Armenia's Management Sent To
Court," retrieved from
http://www.armeniandiaspora.com/forum/archive /index.php/t-66885.html
"Armenia: Presidential Dismissal of Judge Sparks Outcry over
Judicial Independence Issue," retrieved from
http://www.eurasianet.org/departments/insight /articles/eav101807.shtml
?©
4. Hubbard, R. Glenn "Microeconomics," Pearson Prentice Hall 2006, p. 247. ?©
5. Hubbard, R. Glenn "Microeconomics," Pearson Prentice Hall 2006, p. 100. ?©
6. Ayvazyan, Armen "Concise Structural Analysis of Turkish-Armenian
Conflict," retrieved from http://blog.ararat-center.org/?p=253. This
analysis lists the many levels of hostile policy actively carried out
by Turkey towards Armenia. ?©
7. Melkonyan, Ruben "The Problem of Islamized Armenians in Turkey,"
(in Armenian) article in the "21st Century" quarterly, issue #1, 2008.
?©
8. Ayvazyan, Armen "There are no Muslim Armenians", (in Armenian)
retrieved from http://www.ararat-center.org/?art=34&l=arm& ;p=22. This
article was originally published in Russian in Golos Armenii newspaper
on 16.12.2008; Nalchajyan, Albert "Ethnic Identity or National
Self-defense", retrieved from http://blog.ararat-center.org/?p=172. ?©
9. Refer to the following links for the text of the first lawsuit
against the denial of the Armenian genocide in Armenia and the
articles on the court's verdict: http://blog.ararat-center.org/?p=325
and http://www.ardarutyun.org/?p=741.
Armenian-Turkish Protocols
DIASPORA'S MOST WIDELY ACCLAIMED & CIRCULATED INDEPENDENT ARMENIAN WEEKLY
Issue #1188 January 9, 2009
Stepan Sargsyan
"ARARAT" Center for Strategic Research
For the first time during these latest negotiations surrounding the
Armenian-Turkish conflict an Armenian official engaged in a public
debate to defend the Protocols and fielded unscripted questions
directly from the audience in Los Angeles. The U.S.-based Diaspora
organization called ARPA Institute had organized a debate between the
Honorable Consul General of the Republic of Armenia to Los Angeles
Grigor Hovhannissian and two Diaspora academics. Dr. Richard
Hovannisian moderated the debate. The Consul General deserves a lot of
praise for agreeing to discuss the Armenian-Turkish conflict and the
recently signed Protocols in such a public forum, despite the
persistent efforts by his superiors in Armenia, namely President Serzh
Sargsyan and Foreign Minister Edward Nalbandian, to avoid having any
meaningful public discussion with the Armenian people regarding this
issue. It must be noted that a lot of heartache and mistrust could
have been avoided had these discussions been held prior to agreeing to
the Roadmap and drafting the Protocols.
Articles describing the debate and the ideas that were exchanged have
been written and may continue to be written 1 . Whoever has followed
this process since the beginning and is intimately familiar with the
various arguments put forth by the supporting and opposing sides can
attest that nothing markedly new was added during the debate. Before
delving into the details of his speech, the Consul General referred to
the unfavorable economic forecasts offered by the opposing camp as
"amateur." In fact, the discussion of the economic benefits of opening
the factual border between Armenia and Turkey took the majority of the
15 minutes allotted to the Consul. What stood out, though, was Mr.
Hovhannissian's extensive use of technical terms and specialized
vocabulary when referring to key economic concepts not commonly known
by the general public. It shall be left to the Consul General to
explain why he chose this tactic (use of unfamiliar terminology and
concepts) for the debate, given that the goal was to alleviate the
concerns of a bewildered Armenian public, which, on average, would not
have been expected to know the economic definitions of consumer
surplus and comparative advantage. However, his incorrect
interpretations of those key economic concepts and the resulting
unfounded conclusions cannot be left unaddressed and must be
scrutinized. This brief analysis will attempt to do just that by
evaluating the Consul General's own interpretations and applications.
Mr. Hovhannissian's economic arguments can be reduced to the following:
* Open border and imports from Turkey will weaken the Armenian
oligarchy and break-up its tight grip on the Armenian economy;
* Lack of competition kills Armenia's comparative advantage;
* Cheaper imports from Turkey will increase consumer surplus in Armenia; and
* Turkey offers "more predictable and better" trade routes.
It must also be noted that Mr. Hovhannissian made a direct linkage
between the Protocols and Armenia's negative economic growth in 2009.
According to him, Armenia experienced an 18% fall in its gross
domestic product 2 (GDP) in 2009; therefore, the government had to
resort to all means to lessen the negative effects of such a severe
economic contraction. While it is true that in 2009 the Armenian
economy shrank by 18%, it had absolutely no effect on the rationale
for initiating this latest round of the Armenian-Turkish negotiations.
While President Serzh Sargsyan made the negotiations public in June of
2008, this new phase had started with the advent of the "secret"
Armenian-Turkish talks in Switzerland as early as the fall of 2007,
when the Armenian economy was still growing in double digits.
Justifying the Armenian-Turkish negotiations with the 18% decline of
2009 does not at all elevate the Consul General's argument above those
"amateur" analyses he has come across in the Armenian press.
Thus, let us review each of the economic assertions outlined above.
Break Up of Oligarchy
During his speech the Consul General reiterated that the opening of
the factual border will weaken and break up the Armenian oligarchic
system. The specific steps that would lead to the demise of the
oligarchy were not outlined, but the general line of reasoning was
implied: the opening of the border will allow the inflow of cheaper
goods from Turkey, which in turn will erode the monopolistic hold of
powerful Armenian businessmen on the domestic market.
If a particular set of assumptions are selected, the simplified
"world" of economic models may actually yield the outcome predicted by
the Consul General. Under the right circumstances, the emergence of
another source of imports, especially cheaper sources, will create
competition to the existing monopoly and reduce its influence on the
market along with that of the oligarchs. However, this is where the
problem arises - assumptions. Economic models are used to analyze
real-world issues, because they allow the economists to simplify the
reality by making certain assumptions. If incorrect assumptions are
made, the model will predict outcomes that will never occur in the
real world. In our example one underlying assumption is that the
Armenian legal system functions properly, there is no collusion, no
corruption, etc. Unfortunately, that is not the reality in Armenia
today.
The Armenian businessmen are entrenched in the government and maintain
relationships with government officials that resemble to those of
business partnerships. Let us assume that the factual Armenian-Turkish
border is opened and a new source of imports emerges. All imported
goods have to pass through the customs (either at border checkpoints
or at airports), where a customs official determines who can import,
what can be imported and at what price. In other words, the
concentration and structure of the domestic markets of imported goods
are ultimately shaped not by the status of the border and market
forces, but by the decisions of the customs officials. Even if all the
borders of the Republic of Armenia were relieved of their blockades,
the customs employees would still make the decision regarding who,
what and at what price. In the sad reality of Armenia the customs
officials are directly linked to powerful Armenian businessmen and
make decisions not with the interests and laws of the state in mind,
but considering those of their oligarchic patrons. Often, the head and
other senior officials of the customs are themselves wealthy
businessmen with business interests in various domestic markets of
imported goods.
The example of the coffee importing company Royal Armenia is telling.
Senior customs officials had offered the directors of the company to
register the imported coffee at the customs at lower prices in return
for sharing the resulting extra profit3. After refusing the "offer"
and making it public, the directors had been charged with various
trumped up charges and arrested. Even the presiding judge, who had
sensationally acquitted the directors, had been dismissed and the
directors had been arrested again. This case shows that the state of
internal governance in Armenia and the widespread corruption and
collusion among government officials do not even allow to fully
utilize the opportunities offered by the existing open borders for
de-monopolizing and diversifying the domestic market. Yet, such cases
are widespread. It is of no secret that one of the sons of former
President Robert Kocharian had a virtual monopoly in the import of
cell phones. Similarly, another oligarch, Samvel Aleksanian, holds the
monopoly over the imports of sugar and other commodities. Had others
been allowed to freely engage in entrepreneurship, import/export and
other economic activity, the current oligarchs would not have the
immense pricing powers, which in turn translate into enormous profits.
Does any customs official have the stamina to refuse a request from a
mighty oligarch, let alone the son of a president, to create barriers
to entry to other potential businessmen? The monopolistic structure of
the market in Armenia is nurtured from within and is not necessarily
conditioned by external factors. If the opportunities offered by the
existing Armenian-Georgian border are not being fully utilized to
combat the oligarchs and diversify the importers (as the case of Royal
Armenia shows), what notable difference would the addition of the
Armenian-Turkish factual border make? The Turkish soldiers may allow
imports to flow in from the Turkish side, but it is the Armenian
customs officials who will decide who, what and at what price can
transport those imports into the Armenian side. Any added measure of
competition resulting from the opening of the blockaded factual border
will be stifled by the corrupt Armenian officials at the request (and
adequate compensation) of those very same oligarchs. Everyone became
very optimistic when an attempt was made to clean up the corruption
within the Armenian customs after the election of Serzh Sargsyan.
Unfortunately, the current situation is even worse than it was during
the Kocharian administration. Therefore, there is no indication that
anything has changed or will change in the very near future.
Returning to the Consul General's prediction, the opening of the
Armenian-Turkish factual border will shake the foundation of the
Armenian oligarchy and erode their power if and only if the internal
governance in Armenia is improved, corruption is eradicated and
collusion of businessmen and government officials is addressed.
Without it the all-powerful Armenian oligarchs will continue
controlling the levers capable of neutralizing anything that threatens
their privileged position. In these circumstances, it would be wiser
to exhaust all the internal means of combating the oligarchy before
turning to external factors. Otherwise, this argument sounds awfully
similar to the Azerbaijani leadership's preposterous claim that the
lack of solution in the Nagorno Karabakh conflict is what hampers
progress in democratic governance, respect of human rights and freedom
of speech in Azerbaijan.
Competition and Comparative Advantage
In his assertions the Consul General also referred to the concept of
comparative advantage. Mr. Hovhannissian claimed that the lack of
competition kills Armenia's comparative advantage. This statement is
at odds with the definition of that key concept, which is the ability
of an individual or country to produce a good at lower cost or more
efficiently than competitors4. Originally, the concept of comparative
advantage was proposed by David Ricardo, who used the examples of
Portugal and England to show that Portugal was relatively more
productive in producing wine thanks to its climate and geography,
while those same characteristics made England relatively more
productive in the production of wool. Therefore, the relative
advantage in the production of a certain good - comparative advantage
- is determined by innate or internally developed capabilities.
External factors, such as trade or competition, only exploit the
benefits offered by the existing comparative advantage. Countries
generally attain comparative advantage in a specific industry thanks
to the climate, the geography, the existence of natural resources,
relative abundance of labor and capital, technology, etc. No matter
how hard Armenia competes with Saudi Arabia or how many open border
crossings the two countries share, Armenia will not achieve a
comparative advantage over Saudi Arabia in the production of oil. The
Consul General's statement implies that this is possible.
What are Armenia's comparative advantages? This requires an extensive
review of the various factors mentioned above. However, it may be
noted that during Soviet times Armenia excelled in industries which
required solid intellectual grounding and highly skilled workforce. As
in the previous discussion regarding the oligarchy, this economic
concept implies that spurring competition by relieving the blockade
will not improve Armenia's comparative advantage if the country does
not already possess one. To develop one, the Armenian officials must
turn their attention to the internal resources and capabilities, draft
plans and policies to further develop the capabilities where Armenia
has the most potential to excel and implement those plans consistently
over time. In addition, it is not uncommon to use different
protectionist measures, such as trade barriers and tariffs, to support
a capability and give it a chance to evolve into a comparative
advantage, especially in technological sectors. However, this would
conflict with another statement that Mr. Hovhannissian made, which
asserted that "open borders and zero tariffs are the way to go." This
motto will be further examined in the following section.
Armenian Consumer Surplus
One of the key economic concepts referred to by the Consul General in
his speech was consumer surplus. Specifically, he argued that the
import of cheaper goods from Turkey will increase the consumer surplus
in Armenia. In order to understand how and why this occurs, let us
review the economic definition of consumer surplus, which is "... the
difference between the highest price a consumer is willing to pay and
the price the consumer actually pays5." For example, if a tomato paste
costs $3, but the consumer is willing (and able) to pay $4, then the
consumer surplus is $1, the difference between the $4 and $3.
Accordingly, if the tomato paste can be imported from Turkey more
cheaply, at $2, the consumer surplus in Armenia will increase to $2,
which is the difference between the $4 and the new price of $2.
Clearly, in such a construct the Armenian consumer is the clear
winner. Unfortunately, this is only the first half of the story.
Let us assume that the economies of Armenia and Turkey consist of the
production of the same single good. When reviewing consumer surplus,
one should also consider the producer surplus, both of which comprise
the total economic surplus in an economy. Similar to the consumer
surplus, the producer surplus is the difference between the lowest
price a firm would be willing to accept and the price it actually
receives6. If a good can be imported from Turkey more cheaply than it
can be produced in Armenia, the Armenian producer will be pushed out
of the domestic market, resulting in the severe reduction (or the
disappearance) of the Armenian producer surplus. To be more precise,
the lost Armenian producer surplus will be shared by the Armenian
consumers and the Turkish economy (through their exporters). Along
with the Armenian producer the local jobs provided by that producer
will disappear as well. Thus, if during the first phase of this
process the Armenian consumer appeared to be a winner, during the
second phase the consumer is worse off, because without a job his
income shrinks. Despite the lower price of the imported good, the
Armenian consumer surplus will decrease almost by definition, because
the highest price the consumer is willing (and able) to pay will be
significantly lower due to lower income (or the lack thereof). In
summary, during the first phase the Armenian consumers and Turkish
exporters overtake and share the Armenian producer surplus, as a
result, reducing the total economic surplus in Armenia. During the
second phase, the Armenian consumer surplus is reduced due to
shrinking consumer incomes, which results from job loss. This, in
turn, reduces the total Armenian economic surplus even further.
What is the implication for the Armenian economy? Let us take the
example of the agricultural sector. The Turkish agricultural sector is
stronger and more developed (i.e. more mechanized, more plains and
fertile land, etc.) than the Armenian agricultural sector. In other
words, Turkey has a comparative advantage over Armenia in the
production of agricultural goods. In case of open borders and
unrestricted trade Turkey's comparatively higher efficiency in
agricultural production has the potential to cripple the Armenian
agricultural sector, which employs almost 50% of the labor force in
Armenia. Unfortunately, this is also true in the case of other sectors
of the Armenian economy with more or less meaningful economic
activity. Turkey commands the advantage in most. Combine the impact
from the agricultural sector with the similar impact from other
industries, such as food processing, textile, construction, and one
finds a recipe for social disaster. The income and job generation from
potential electricity sales to Turkey will not be sufficient to
compensate and soften the economic pain. To avert a potential social
disaster the government will be compelled to impose tariffs in an
effort to recreate the situation prior to the opening of the border
and buy time for the Armenian economy to develop sectors in which the
country possesses comparative advantage. Let us be clear. It is
irrational to continue indefinitely sustaining sectors of economy in
which Armenia does not hold the comparative advantage. It only
perpetuates the inefficiency and wastes the limited valuable
resources. Therefore, imposing tariffs to support those inefficient
industries is only a temporary measure designed to soften the pain
associated with the transitioning of resources from inefficient
sectors of the economy (i.e. killing off industries) to those sectors
where Armenia is more efficient (i.e. holds comparative advantage).
Without the tariffs or other protectionist measures intended to soften
the blow, Armenia will become subject to the consequences of a "shock
therapy," or the situation of the early 1990's in the former USSR
countries.
Another activity that might have eased somewhat the negative economic
impact would have been the potential establishment of new
Turkish-owned businesses within Armenia to produce the imported goods
locally. However, this activity is constrained by the very fact that
Armenia does not possess the comparative advantage in the production
of the imported goods; otherwise, these goods would continue to be
produced locally and would not have to be imported from Turkey in the
first place. Therefore, the number and size of such enterprises will
be limited and conditioned by the cost of transportation from Turkey
to Armenia and the amount of Armenian tariffs. What is ignored in a
strictly economic analysis is the ubiquitous security threat posed by
foreign-owned businesses. The preceding discussion has assumed that
Turkey will allow the market forces to shape the economic relationship
between Armenia and Turkey. Unfortunately, the review of Turkey's
hostile policies towards Armenia during the past two decades leaves
little room for such an optimistic expectation6. It would be more
realistic and pragmatic to expect that Turkey will shape the economic
relationship between the two countries so that it is detrimental to
the long term viability of the Armenian state. After all, there is no
indication that Turkey has abandoned the old plans of preventing the
emergence of a self-reliant and truly independent Armenian statehood.
At all times and in all countries foreign-owned corporations have
collaborated with the intelligence services of the countries of their
origin. That is why Prime Minister Tigran Sargsyan's invitation
extended to Turkish businesses to participate in the construction of
Armenia's new nuclear power plant was as incomprehensible and
dangerous as President Serzh Sargsyan's call to Turkish President
Abdullah Gul to assist in the resolution of the Nagorno Karabakh
conflict. Currently, we are all witnesses to the kind of assistance
Turkey is providing in that issue.
The logical question is then whether an open border with tariffs is
better than a blockaded border. Imposing tariffs on an open
Armenian-Turkish factual border will shift the revenue from the
Georgian customs to the Armenian state coffers. First of all, since
Armenia is compliant with WTO rules and regulations, that
organization's limitation on the amounts and types of tariffs that
Armenia can impose must be observed. In fact, as part of accession to
the WTO Armenia pledged to reduce or eliminate certain types of
subsidies to the agricultural sector. Therefore, in the case of an
open border Armenia will be limited in available options to restrict
or control the flow of goods through the Armenian-Turkish factual
border. Second, in assessing whether this additional revenue from
tariffs will add to the bottom line of Armenia we must consider all
the costs (explicit and implicit) associated with the Protocols and an
open border. Here are just a few of them:
* Long-term costs associated with the serious compromises made by
the Armenian side (recognition of the de facto borders and the
historical commission);
* Additional cost of policing an open border;
* Increased cost incurred by the national security services of
Armenia in preventing the potential economic and other types of
hostile actions by an enemy state. This also includes covert actions
by Azerbaijan through the open Armenian-Turkish factual border;
* Potential demographic challenges arising from the ease of
migration of Armenian workers to Turkey and migration of Turks to
Armenia under various pretexts (work, "repatriation," etc). Let us
note that the groundwork for a massive resettlement of Turks as well
as Kurds in Armenia is being laid right now thanks to the "discovery"
of millions of "Muslim Armenians" or "Hidden Armenians7, 8 ."
* Increased cost of countering the elevated levels of
informational-psychological warfare, this time conducted within
Armenia by Turkey and, indirectly, by Azerbaijan. It must be noted
that Armenia's weak defenses against information warfare and
propaganda will be unable to cope with the total disorientation and
loss of vigilance among Armenians caused by intermarriages with Turks,
employment under Turkish managers, business partnerships and other
relations with citizens of Turkey. Here are just a few examples:
- Armenian authorities tolerate and even promote the use of the
word genocide in quotation marks in reference to the Armenian Genocide
within Armenia. Only a few years ago the Armenian public was outraged
at an Israeli ambassador who dared to doubt the Armenian Genocide and
demanded that she be designated a persona non grata. Yet, already in
2008 the Yerevan-based Caucasus Institute published a book in Armenia
in which there was an explicit denial of the Armenian Genocide by a
Turkish author. The extent of the success by unfriendly foreign
propaganda became obvious when an Armenian judge, who presided over
the first ever lawsuit against genocide denial in Armenia brought by
the "ARARAT" Center for Strategic Research against the Caucasus
Institute, made a decision to suspend the case, implicitly agreeing
that using the word genocide in quotation marks, referring to the
Armenian Genocide as "allegations" and calling it subject to "serious
doubts ... and intense discussion ..." did not constitute genocide
denial in Armenia 9 . To add insult to injury, immediately after the
suspension of this case in the Court of First Instance, the Turkish
genocide denier himself was invited to Armenia to participate in a
seminar attended, among others, by Hayk Demoyan, the director of the
Yerevan Institute-Museum of Genocide;
- The gaping holes in Armenia's defenses resulted in the
organization of "Days of Azerbaijan" in Armenia in 2007 by some
members of Armenia's intelligentsia (e.g. Ashot Bleyan, Georgiy
Vanyan), while the Azerbaijani leaders were ordering the destruction
of the cross stones in Jugha, the beheading of the Armenian officer in
Budapest, issuing threatening statements to Armenia, referring to the
territory of the Republic of Armenia as Western Azerbaijan, etc.
Turkey will be more subtle, yet, far more damaging than
Azerbaijan. Let us not forget that on the eve of both 1915 and 1988
the Armenians and Turks/Azeris were in "brotherly" relations. What
followed were the Armenian Genocide and the massacres of Sumgait,
Baku, Maragha.
Without delving into the numerical detail it is obvious that
these costs will far outweigh any additional revenue from the
imposition of tariffs.
Now, let us return to the statement made by the Consul General
regarding "open borders and zero tariffs." As the Consul had correctly
stated, this is the official line of the Armenian government, which is
not yet achieved, but is religiously pursued. Generally, no one argues
that open borders and zero tariffs are wrong. As stated earlier,
sustenance of inefficient industries through protectionism (e.g.
tariffs, quotas, etc.) wastes the limited valuable resources that
could be invested in sectors where Armenia possesses comparative
advantage. However, in certain instances protectionism offers a path
towards increased competitiveness. For example, the European
governments continued subsidizing the Airbus project for years until
it was able to stand on its own and directly compete with Boeing.
Industries which require time and large investments to acquire a
competitive edge necessitate the use of such protectionism. On the
other hand, just recently the European Union imposed new tariffs on
aluminum imports from various countries, including from Armenia. While
this tariff on aluminum imports is without merit and rife with
criticism, it still underscores the fact that the motto "open borders
and zero tariffs" is not perceived so unambiguously even by one of its
most wealthy and ardent supporters - the European Union. Yet, when the
Armenian Prime Minister Tigran Sargsyan was asked about the dangers
posed to the Armenian economy by the more developed and powerful
Turkish economy, his advice was essentially to sink or swim. In terms
of a sport analogy popular in our Foreign Ministry as of late, the
Armenian Prime Minister's advice is equivalent to putting an untrained
amateur lightweight boxer in a fight with a super heavyweight
professional boxer and asking the amateur to win the match if he
really wants to become a boxer.
Predictable and Better Trade Routes
One of the final arguments put forth by the Consul General posited
that Turkey offered "more predictable and better" trade routes. One
would think that Armenia's recent experience with Turkey would have
dispelled any notion of that country being a reliable partner of
Armenia. Turkey closed off the factual border at a time when Armenia
was in most need of it. The centrally planned Soviet economy had not
yet adjusted to the new realities and closed borders, shortages of all
commodities plagued Armenia. However, this did not stop Turkey from
using the border as a pressure point to force Armenia into
geopolitical compromises (e.g. surrender of the newly liberated region
of Karvajar as well as Artsakh at large). When qualifying the Turkish
trade routes as predictable and secure, do the Armenian officials
recall these historical events? Turkey has not pledged that it will
stop its hostile policies towards Armenia. In fact, it continues to
pursue its old policy of forcing Armenia into making concessions in
the issue of Artsakh. Yet, our officials and experts have already
dubbed the Turkish routes "predictable and better" and discounted the
need for alternative, reserve routes. Has the Armenian government
acquired a newly found confidence in the genuine intentions of Ankara?
What assurances do we have that during one such inopportune moment, as
in 1993, Turkey will not try to force her will upon Armenia by
threatening to close the border, this time a functioning border fully
integrated into the Armenian economy? As to how can a territory with a
raging Kurdish insurgency and heavy military presence be considered a
"more predictable and better" trade route, where even the heavily
protected Baku-Tbilisi-Ceyhan pipeline can be blown up (whether
orchestrated or not), is perhaps a redundant question...
Conclusion
At the conclusion of the debate, moderator Dr. Richard Hovannisian,
historian by training, shared with the audience what he had learned
from an Indian student during an undergraduate seminar. Qualifying it
with "I don't know if I agree with it", the professor proceeded to say
that, according to the Indian student, opening the border would be a
good thing, because it would destroy the oligarchs along with a part
of the Armenian economy. Nevertheless, the student had opined, this
would instill competition and compel Armenians to develop their
"intellectual" export industries. The student had supported his view
with India's example, which had stopped protective tariffs and had
developed a high-tech industry.
All the theories advanced by the Indian student have already been
evaluated in the paragraphs above. To supplement what has already been
said, India's high tech industry grew not so much thanks to the
abolition of all tariffs, but rather the elimination of the
bureaucratic hassle involved in starting a new business and internal
corruption. These very same problems exist in the Armenian economy and
need to be abolished. However, the Indian student's insights are not
the reason for the inclusion of his quotation in this analysis. The
mention of him at the conclusion of the debate symbolized one of the
most glaring deficiencies in Armenia's treatment of the
Armenian-Turkish conflict - the lack of serious scientific study of
the conflict and professional approach. As Dr. Armen Ayvazyan notes:
"... the policies and approaches displayed by the Armenian political
elite and social-political thought towards the [Turkish-Armenian
Conflict] are still amateur in nature6." During the discussion of what
may likely be one of the most fateful documents in this generation's
lifetime, the concerned Armenian public was served the "insights" of
an undergraduate Indian student, despite the fact that any number of
economists at the UCLA, where Dr. Richard Hovannisian holds the chair
of modern Armenian history, could have been approached for a scholarly
opinion. Rest assured that if nothing else, the deep veneration for
Armen Alchian, a distinguished economist and an icon in the UCLA's
department of economics, would have compelled any faculty member to
respect such a request and offer an expert opinion. The incorrect
interpretations of key economic concepts and incorrect or incomplete
conclusions presented during this debate are yet another expression of
Armenian leadership's unscientific approach to the Armenian-Turkish
conflict. As opposed to making a decision based on the findings of
serious scholarly research, the political leadership makes a
situational decision hoping for "quick fixes" to serious geopolitical
and economic problems, after which pseudo-scientific and other
arguments are sought to justify it.
-------
1. Asbarez.com, "Armenia's Consul General Comes Face-to-Face with
American-Armenians," retrieved from
http://www.asbarez.com/2009/12/23/the-semanti cs-of-the-turkish-armenian-protocols-discussed-in- the-valley/
?©
2. The GDP is the value of all the goods and services produced in a
given a country during a year. ?©
3. "Criminal Case Against Royal Armenia's Management Sent To
Court," retrieved from
http://www.armeniandiaspora.com/forum/archive /index.php/t-66885.html
"Armenia: Presidential Dismissal of Judge Sparks Outcry over
Judicial Independence Issue," retrieved from
http://www.eurasianet.org/departments/insight /articles/eav101807.shtml
?©
4. Hubbard, R. Glenn "Microeconomics," Pearson Prentice Hall 2006, p. 247. ?©
5. Hubbard, R. Glenn "Microeconomics," Pearson Prentice Hall 2006, p. 100. ?©
6. Ayvazyan, Armen "Concise Structural Analysis of Turkish-Armenian
Conflict," retrieved from http://blog.ararat-center.org/?p=253. This
analysis lists the many levels of hostile policy actively carried out
by Turkey towards Armenia. ?©
7. Melkonyan, Ruben "The Problem of Islamized Armenians in Turkey,"
(in Armenian) article in the "21st Century" quarterly, issue #1, 2008.
?©
8. Ayvazyan, Armen "There are no Muslim Armenians", (in Armenian)
retrieved from http://www.ararat-center.org/?art=34&l=arm& ;p=22. This
article was originally published in Russian in Golos Armenii newspaper
on 16.12.2008; Nalchajyan, Albert "Ethnic Identity or National
Self-defense", retrieved from http://blog.ararat-center.org/?p=172. ?©
9. Refer to the following links for the text of the first lawsuit
against the denial of the Armenian genocide in Armenia and the
articles on the court's verdict: http://blog.ararat-center.org/?p=325
and http://www.ardarutyun.org/?p=741.