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Between Two Models
Naira Hayrumyan
Story from Lragir.am News:
http://www.lragir.am/engsrc/economy25395.html
Published: 16:34:09 - 10/03/2012
The national carrier, Armavia Airlines, may soon go insolvent, stated
the owner of the company Mikhail Baghdasarov unless Zvartnots Airport
cuts taxes by ¼.
In 2001, Eduardo Eurnegian took up the management of Zvartnots Airport
for 30 years. The airport has changed dramatically. New and modern
terminals were built. Eurnegian said 160 million dollars have been
invested.
Nobody knows how much money was invested in Armavia. At least, this
number has never been published. The company often appears amid
scandals. For example, 8 years ago Sibir Avia gave its shares of
Armavia to Baghdasarov and left Armenia.
It was 70% of shares of the new company. At that time, the company was
fined 2 million dollars for not having a license to run flights in
certain directions. However, as soon as Baghdasarov bought Sibir
Avia's shares, tax issues disappeared.
As reported by press, Baghdasarov got a fully fledged and intensively
developing company in 2005, not without the support of the government.
The quality and geography of flights has improved but 700 passengers
travelled via Armavia in 2011, which is down from 2010.
The airlines and the airport always have issues which reflect the
clash of two types of business, Western and Russian. The Russian
business represented by Baghdasarov is used to the old methods, namely
state protection, tax allowances, tax waivers in return for support
during elections, quotas, etc.
More importantly, the Russian business does not suppose long-term
investments. It is intended to generate fast and uncontrollable profit
without making investments, get state or other investments instead,
borrow money and fail to repay, raise prices and generate immense
profits.
The western type is different. Investments are considered as an
important condition for development. There are no political
privileges, everything is based on commerce, planning, business rules.
In Armenia, two types clashed. Armavia claims that Zvartnots Airport
does not charge special taxes from the national carrier and demands
discount while the airport argues that they apply discount but pay
debts first.
Were the manager of the airlines a Russian businessmen, Baghdasarov
would solve the problem with the old method. However, the Armenian
government cannot force Eurnegian to ignore the rules of business and
follow the rules of the oligarchy where the government and business
are one.
On the other hand, it is possible that the government is not trying to
save Baghdasarov. It is possible that he has appeared on the list of
odious oligarchs the government is trying to rid of. Last year
Baghdasarov stated in a news conference that some influential people
are willing to get Armavia. Eurnegian was rumored likely to buy
Armavia.
One way or another, the Russian business falls to parts as soon as it
clashes with the Western company and gets no support from the state.
It is possible that Baghdasarov is right in his argument with
Eurnegian but the problem is that Armavia's bankruptcy may mark the
collapse of the new economic policy in Armenia. In any case, it is
possible.
Naira Hayrumyan
Story from Lragir.am News:
http://www.lragir.am/engsrc/economy25395.html
Published: 16:34:09 - 10/03/2012
The national carrier, Armavia Airlines, may soon go insolvent, stated
the owner of the company Mikhail Baghdasarov unless Zvartnots Airport
cuts taxes by ¼.
In 2001, Eduardo Eurnegian took up the management of Zvartnots Airport
for 30 years. The airport has changed dramatically. New and modern
terminals were built. Eurnegian said 160 million dollars have been
invested.
Nobody knows how much money was invested in Armavia. At least, this
number has never been published. The company often appears amid
scandals. For example, 8 years ago Sibir Avia gave its shares of
Armavia to Baghdasarov and left Armenia.
It was 70% of shares of the new company. At that time, the company was
fined 2 million dollars for not having a license to run flights in
certain directions. However, as soon as Baghdasarov bought Sibir
Avia's shares, tax issues disappeared.
As reported by press, Baghdasarov got a fully fledged and intensively
developing company in 2005, not without the support of the government.
The quality and geography of flights has improved but 700 passengers
travelled via Armavia in 2011, which is down from 2010.
The airlines and the airport always have issues which reflect the
clash of two types of business, Western and Russian. The Russian
business represented by Baghdasarov is used to the old methods, namely
state protection, tax allowances, tax waivers in return for support
during elections, quotas, etc.
More importantly, the Russian business does not suppose long-term
investments. It is intended to generate fast and uncontrollable profit
without making investments, get state or other investments instead,
borrow money and fail to repay, raise prices and generate immense
profits.
The western type is different. Investments are considered as an
important condition for development. There are no political
privileges, everything is based on commerce, planning, business rules.
In Armenia, two types clashed. Armavia claims that Zvartnots Airport
does not charge special taxes from the national carrier and demands
discount while the airport argues that they apply discount but pay
debts first.
Were the manager of the airlines a Russian businessmen, Baghdasarov
would solve the problem with the old method. However, the Armenian
government cannot force Eurnegian to ignore the rules of business and
follow the rules of the oligarchy where the government and business
are one.
On the other hand, it is possible that the government is not trying to
save Baghdasarov. It is possible that he has appeared on the list of
odious oligarchs the government is trying to rid of. Last year
Baghdasarov stated in a news conference that some influential people
are willing to get Armavia. Eurnegian was rumored likely to buy
Armavia.
One way or another, the Russian business falls to parts as soon as it
clashes with the Western company and gets no support from the state.
It is possible that Baghdasarov is right in his argument with
Eurnegian but the problem is that Armavia's bankruptcy may mark the
collapse of the new economic policy in Armenia. In any case, it is
possible.