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  • Economy: Diaspora Armenians In No Hurry To Invest, Seeing Poor Prote

    ECONOMY: DIASPORA ARMENIANS IN NO HURRY TO INVEST, SEEING POOR PROTECTION OF FOREIGN INVESTMENTS IN ARMENIA
    By NAIRA HAYRUMYAN


    19.11.12 | 12:59

    Economy: Diaspora Armenians in no hurry to invest, seeing poor
    protection of foreign investments in Armenia

    United States Ambassador to Armenia John Heffern

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    In his most recent video blog United States Ambassador to Armenia
    John Heffern made a statement on the U.S.-Armenian-American economic
    cooperation. He reminded that on October 18 Yerevan hosted a regular
    meeting of the Armenian-American Task Group held for the purpose of
    exploring ways to develop bilateral trade and making investments.

    Earlier, the Ambassador repeatedly stated that he was trying to attract
    U.S. investments to Armenia. Deputy Undersecretary of State Eric Rubin
    and project coordinator of U.S. government assistance projects Daniel
    Rosenblum discussed ways of improving the business environment to
    promote trade and investment, in particular, concerning the reform of
    tax and customs administration, ensuring open competition, intellectual
    property rights and independence of the judiciary.

    On November 16, the U.S. ambassador hailed the progress that
    Armenia had made in these areas, which he said was reflected in the
    improvement of Armenia's positions in the World Bank Doing Business
    2013 report. But he stressed that political will was needed to proceed
    with key reforms.

    This means that Armenia still lacks sufficient conditions for
    attracting sizable foreign investments. In an interview with Lragir.am
    in August Heffern said that when in the United States he spoke with
    potential investors, they asked him three main questions - whether
    their contracts in Armenia would be protected by the judiciary,
    how much their investment would cost them - taxes, customs, etc.,
    and whether there was a level-playing field for competition in the
    country. He noted that there was some progress in Armenia, reforms
    were continuing, but "unfortunately, I still could not answer those
    three questions."

    Armenia has signed bilateral agreements concerning the Encouragement
    and Reciprocal Protection of Investments with 37 governments of the
    world, including with 15 European Union-member countries, the United
    States, Russia, and six other post-Soviet countries. However, despite
    the fact that according to the Doing Business rating in terms of
    investment protection Armenia has risen from the 98th to 25th position,
    no big flow of investments has yet started into the country's economy.

    Several litigations are currently on in Armenia related to the
    protection of foreign investments. Armenian-American businessman
    Edmond Khudyan has unsuccessfully been trying, through courts, to
    regain several million dollars that he had invested in construction
    and says were seized away from him by scammers enjoying protection
    at the very top of the Armenian power pyramid.

    Khudyan is one of few Diaspora Armenians to have decided to use
    publicity to stand up for his rights. Many Armenians from abroad
    who became victims of fraud after investing money in Armenia prefer
    not to talk about it loudly, often out of "patriotic reasons". They
    simply silently leave, thus encouraging further fraud in Armenia.

    However, public courts can be a test for the Armenian government as
    they are to indicate whether investments in the country are protected
    in name or in action. What is the use of good laws if the court defends
    only the interests of local "fraud-committing" senior officials?

    Ambassador Heffern said that he has monitored the process related
    to the Khudyan case and lawyers of the Embassy would be present at
    the hearings to draw conclusions. Heffern also said that he had been
    in contact with the Armenian presidential administration to demand
    explanations in connection with the case that has been dragged out
    for two years now.

    A group on the protection of Diaspora investors is also attending to
    this case. This group has also chosen the way of publicity. Little
    progress has been made in the Khudyan case yet, but the fact that he
    is not accused of slander perhaps means that the accusations that he
    makes are grounded.

    There is also another court proceeding in connection with another
    U.S.-Armenian, Nareg Hartounian, who was charged with tax evasion.

    Remarkably, Hartounian's is a rare case when the Armenian public has
    stood next to the investor, which may have had an impact on the court.

    Court proceedings are also on into the claim of the German-owned
    company, InstInvest, against Prosperous Armenia Party leader Gagik
    Tsarukyan's Ararat Brandy-Wine and Spirits Factory. The German company
    is demanding the reinstatement of its shares, which it claims to have
    lost due to an alleged unlawful decision made by the General Meeting
    of Shareholders.

    Earlier this year, a New York court ordered Armenia's former Minister
    of Nature Protection Vardan Ayvazyan to pay $37 million in penalty to
    the American Global Gold Mining company. The ex-minister did not admit
    his guilt and the Armenian authorities have not commented on the case,
    which may also have an adverse effect the level of confidence among
    potential foreign investors

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