VARTAN OSKANIAN'S INTERVIEW TO AL JAZEERA
Story from Lragir.am News:
http://www.lragir.am/engsrc/politics24350.html
Published: 17:25:53 - 28/11/2011
On a current note, the fact that Moody's lowered Armenia's outlook
this week and put it on a negative watch, how much do you think that
is a reflection of Armenia's own economy or its exposure to Europe
and Russia?
I think it's the latter. Armenia's economy is exposed to the global
economy. Although we are a small country, if the 2009 recession is
any indication, I think any new slowdown or recession in the global
economy will clearly impact Armenia and since this time it seems like
the origins will be Europe, that impact will be even more direct
on Armenia because the European Union is Armenia's largest trading
partner. Armenia exports metals, cut diamonds to Germany, Bulgaria
and Belgium. The second conduit is Russia, which is the second largest
trading partner for Armenia, the biggest investor in Armenia and the
source of 75 percent of all remittances that come into Armenia.
Armenia exports mostly agricultural products to Russia, raw and
processed. Any global slowdown clearly will affect Russia and will
change these elements and factors and consequently Armenia's economy
will be affected. I think Moody's decision was based on this exposure.
Bearing all of that in mind, is there any way that Armenia can, maybe,
not become more self sufficient but perhaps move away from the types
of things you've talked about - mining, agriculture, natural resources,
or is it always going to be almost 100% dependent on the export market?
The 2009 recession of course brought this issue home. Diversification
finally became the government's priority, not that it was not. But
suddenly the government began to pay more attention because Armenia
was one of the hardest hit economies. Actually we were the second
hardest hit economy in 2009. Our GDP declined 14.5 percent which is
huge for Armenia's economy, so since then we've been questioning
the reasons for this decline, when our neighbors decline was much
less than ours. The answer is among many other things inefficiency in
governance, structural problems, also the issue of diversification. So
along with the traditional industries that we inherited from the
Soviet period such as mining and agriculture, Armenia I believe has
tremendous potential in other areas such as information technology,
we have a well-educated population. Tourism and services, because the
country is beautiful and the people are hospitable and also putting
the emphasis on small and mid-size enterprises, because Armenians are
entrepreneurial. Our neighbors of course have many other attractions.
Georgia is a transit country, has access to the sea. Azerbaijan
has oil and gas. Armenia is a land-locked country, has no natural
resources, it's small in size and population and territory. So our
only attraction for foreign investment, which is very necessary to
develop those areas so we diversify our economy, requires further
democratization of our society, rule of law, broader justice, so that
those will become Armenia's attractions. The government recognizes
that, we've made a lot of headway in those directions, but I don't
think we've done enough.
I wonder if I can ask you about another issue actually which
doesn't necessarily fall under the global slowdown. It may affect
you economically. This is Iran. The more that the West seeks to put
sanctions on Iran, the effect that that has on you as one of Iran's
neighbors and the future of things like the gas pipeline which you're
building between the two countries.
Sanctions on Iran have so far not affected Armenia. If there're any
additional sanctions because of these latest developments with regard
to nuclear arms, clearly those sanctions will come to bite Armenia.
There's no doubt about it. But on the other hand, Armenia is a member
of the international community. And is bound to honor mandatory
sanctions. That's why Armenia's position has always been that this
conflict with Iran be resolved through negotiations so that we can
avoid additional sanctions, and also, clearly, so we can avoid military
actions. That will be extremely detrimental to the region in its
entirety. So Armenia's position is that we need to have a negotiated
settlement because additional sanctions will be tantamount for Armenia
to having a third closed border which Armenia cannot afford.