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EurasiaNet.org, NY
March 7 2013
Armenia Sees Only Oligarchs in Its Dreams of Carrefour
March 7, 2013 - 12:28pm, by Marianna Grigoryan
Photo: The Armenian government is in negotiation with French
supermarket giant Carrefour to open one of its grocery and department
stores, such as this one in the southwestern French town of Beauzelle,
in the Armenian capital, Yerevan. The company opened in 2012 its first
store in the Caucasus - a Carrefour hypermarket outside of Tbilisi.
(Photo: Carrefour)
Are Armenia's oligarchs using their financial and political power to
block the world's second-largest retail empire, the French-owned
Carrefour Group, from entering the country's largely monopolized
foodstuffs sector? For Armenian consumers beset by high food prices
and low incomes, the question has become a matter of principle.
For roughly the past six months, billboards at one of Yerevan's luxury
shopping centers, the Dalma Garden Mall, owned by Russia-based
billionaire Samvel Karapetian, have announced the arrival of a
10,000-square-meter Carrefour hypermarket, a facility combining a
large supermarket with departments selling electronics, household
items, clothes, toys and more.
The discount retail giant, second in size only to Wal-Mart, has
already taken a first step into the South Caucasus; in 2012, along
with its United-Arab-Emirates-based partner, Majid Al Futtaim, it
opened a Carrefour hypermarket outside of Tbilisi, the capital of
Armenia's northern neighbor, Georgia.
The Armenian government, still struggling to boost foreign investment
after the 2009 financial crisis, has made its interest plain in
Carrefour, Europe's biggest retailer, but, still, the facility has not
opened. Reasons for the delay remain unclear.
But some Armenian observers believe the reason is entirely human -
namely, 44-year-old Samvel Alexanian, the alleged owner of the
country's largest supermarket chain, Yerevan City, and of the
country's largest food importer, Alex Grig, which ranks as one of
Armenia's biggest taxpayers (in 2012, roughly 17.43 billion drams, or
$42.4 million).
Compared with Carrefour, which owns 14,000 hypermarkets and posted a
2012 profit of $1.6 billion, Alexanian, a member of parliament for the
ruling Republican Party of Armenia, might not appear a formidable
opponent. But within this country of just over 3 million people, his
assumed influence - most directly reflected in the prices of flour and
sugar - is legendary.
Yet one senior Republican Party of Armenia member argues that
Alexanian has no bearing on Carrefour's decision to enter Armenia or
not. As a member of parliament, Alexanian is banned from directly
owning any businesses. (The MP claims that his wife, Shoghine
Alexanian, owns Alex Grig, and has described himself as a poor man
with seven children.)
`You know, the word `oligarch' is a matter of perspective... depending
on what we imply by saying `oligarch,'' cautioned RPA parliamentary
faction leader Galust Sahakian. `The emergence of economic pillars in
Armenia cannot be considered an oligarchy.'
Critics counter, though, that Alexanian, commonly known as `Lfik Samo'
(`Lfik' taken from the Russian word `lifchik' for bra; a reference to
a lingerie company popularly linked to the Alexanians - ed), is more
than just an `economic pillar.'
Not known for his legislative activity - no record exists of his work
on draft laws - Alexanian nonetheless does his part for the government
in exchange for being allowed wide play with food imports, they
allege. Local election observers and media charge that Alexanian paid
for buses to transport voters to take part in carousel voting for the
RPA during Armenia's February 18 presidential election. His
representatives said that Alexanian only `helped' voters get to the
polls.
So long as powerful businesspeople like Alexanian work with the RPA,
the `link' between the government and Armenia's oligarchs `will be
maintained like a vicious circle,' fumed human rights activist Arthur
Sakunts, chairperson of the Helsinki Assembly's Vanadzor office.
`There seems to be no end to this at the moment.'
A 2012 Investment Climate Statement from the US Department of State
noted that `well-connected businessmen ... enjoy government-protected
market dominance [which] raises barriers to new entrants, limits
consumer choice, and discourages investments by multinational firms
that insist on partnering with politically independent businesses.'
The list of such businessmen is as motley as it is short on exact
details. Arguably, the best known figure is 55-year-old entrepreneur
Gagik Tsarukian, the flamboyant head of the Prosperous Armenia Party,
a former government ally, and chairperson of Armenia's Olympic
Committee, who holds interests in multiple companies, ranging from
beer to furniture.
Other such businesspersons range from Mikhail Bagdasarov, an oil and
gasoline tycoon who owns the national airline Armavia, to the former
boss of HayRusGazArd, Karen Karapetian, a onetime Yerevan mayor.
Popular anger against the `permissiveness' granted Armenia's oligarchs
on everything from tax breaks to accountability before the law
surfaced most visibly last summer, when Yerevan residents took to the
streets to protest the death of army doctor Vahe Avetian at the hands
of security guards employed by businessman Ruben Hayrapetian,
chairperson of the Armenian Football Federation. Hayrapetian later
resigned from parliament over the scandal.
Even before that outcry, opposition members, civil society
representatives and the Diaspora have urged the government to
diversify the economy and push back against the oligarchs' influence,
but, as yet, no tangible progress has been made.
Arguably, though, reasons apart from Alexanian could explain any
reluctance by Carrefour to charge full-steam into Armenia. More than a
third of its population lives in poverty, according to official data.
Although the World Bank has ranked Armenia second in the region (after
Georgia) for ease of doing business, the country has high import costs
(thanks in part to its blockaded borders with Turkey and Azerbaijan)
and a reputation for corruption, including within customs.
In a February 20 comment to reporters, though, State Revenue Committee
Chairperson Gagik Khachatrian asserted that the reasons why Carrefour
has not yet entered Armenia `are not related to the customs service.'
In late December 2012, Vache Arsen, the project's Armenia-based
representative, stressed to the newspaper Zhogovurd that the Carrefour
hypermarket would open, but did not elaborate. Representatives of
Majid Al Futtaim did not respond to requests for comment from
EurasiaNet.org about their plans in Armenia.
To many observers, that brings the blame right back onto Alexanian,
given his presumed control of food imports, and other Armenian
oligarchs.
`These people will vanish from the system if rules of the game are
changed,' argued Stepan Safarian, a senior member of former
presidential candidate Raffi Hovhannisian's opposition Heritage Party,
who lost his seat in parliament to Hayrapetian in 2008.
Editor's note: Marianna Grigoryan is a freelance reporter based in
Yerevan and editor of MediaLab.am.
http://www.eurasianet.org/node/66656
From: Baghdasarian
March 7 2013
Armenia Sees Only Oligarchs in Its Dreams of Carrefour
March 7, 2013 - 12:28pm, by Marianna Grigoryan
Photo: The Armenian government is in negotiation with French
supermarket giant Carrefour to open one of its grocery and department
stores, such as this one in the southwestern French town of Beauzelle,
in the Armenian capital, Yerevan. The company opened in 2012 its first
store in the Caucasus - a Carrefour hypermarket outside of Tbilisi.
(Photo: Carrefour)
Are Armenia's oligarchs using their financial and political power to
block the world's second-largest retail empire, the French-owned
Carrefour Group, from entering the country's largely monopolized
foodstuffs sector? For Armenian consumers beset by high food prices
and low incomes, the question has become a matter of principle.
For roughly the past six months, billboards at one of Yerevan's luxury
shopping centers, the Dalma Garden Mall, owned by Russia-based
billionaire Samvel Karapetian, have announced the arrival of a
10,000-square-meter Carrefour hypermarket, a facility combining a
large supermarket with departments selling electronics, household
items, clothes, toys and more.
The discount retail giant, second in size only to Wal-Mart, has
already taken a first step into the South Caucasus; in 2012, along
with its United-Arab-Emirates-based partner, Majid Al Futtaim, it
opened a Carrefour hypermarket outside of Tbilisi, the capital of
Armenia's northern neighbor, Georgia.
The Armenian government, still struggling to boost foreign investment
after the 2009 financial crisis, has made its interest plain in
Carrefour, Europe's biggest retailer, but, still, the facility has not
opened. Reasons for the delay remain unclear.
But some Armenian observers believe the reason is entirely human -
namely, 44-year-old Samvel Alexanian, the alleged owner of the
country's largest supermarket chain, Yerevan City, and of the
country's largest food importer, Alex Grig, which ranks as one of
Armenia's biggest taxpayers (in 2012, roughly 17.43 billion drams, or
$42.4 million).
Compared with Carrefour, which owns 14,000 hypermarkets and posted a
2012 profit of $1.6 billion, Alexanian, a member of parliament for the
ruling Republican Party of Armenia, might not appear a formidable
opponent. But within this country of just over 3 million people, his
assumed influence - most directly reflected in the prices of flour and
sugar - is legendary.
Yet one senior Republican Party of Armenia member argues that
Alexanian has no bearing on Carrefour's decision to enter Armenia or
not. As a member of parliament, Alexanian is banned from directly
owning any businesses. (The MP claims that his wife, Shoghine
Alexanian, owns Alex Grig, and has described himself as a poor man
with seven children.)
`You know, the word `oligarch' is a matter of perspective... depending
on what we imply by saying `oligarch,'' cautioned RPA parliamentary
faction leader Galust Sahakian. `The emergence of economic pillars in
Armenia cannot be considered an oligarchy.'
Critics counter, though, that Alexanian, commonly known as `Lfik Samo'
(`Lfik' taken from the Russian word `lifchik' for bra; a reference to
a lingerie company popularly linked to the Alexanians - ed), is more
than just an `economic pillar.'
Not known for his legislative activity - no record exists of his work
on draft laws - Alexanian nonetheless does his part for the government
in exchange for being allowed wide play with food imports, they
allege. Local election observers and media charge that Alexanian paid
for buses to transport voters to take part in carousel voting for the
RPA during Armenia's February 18 presidential election. His
representatives said that Alexanian only `helped' voters get to the
polls.
So long as powerful businesspeople like Alexanian work with the RPA,
the `link' between the government and Armenia's oligarchs `will be
maintained like a vicious circle,' fumed human rights activist Arthur
Sakunts, chairperson of the Helsinki Assembly's Vanadzor office.
`There seems to be no end to this at the moment.'
A 2012 Investment Climate Statement from the US Department of State
noted that `well-connected businessmen ... enjoy government-protected
market dominance [which] raises barriers to new entrants, limits
consumer choice, and discourages investments by multinational firms
that insist on partnering with politically independent businesses.'
The list of such businessmen is as motley as it is short on exact
details. Arguably, the best known figure is 55-year-old entrepreneur
Gagik Tsarukian, the flamboyant head of the Prosperous Armenia Party,
a former government ally, and chairperson of Armenia's Olympic
Committee, who holds interests in multiple companies, ranging from
beer to furniture.
Other such businesspersons range from Mikhail Bagdasarov, an oil and
gasoline tycoon who owns the national airline Armavia, to the former
boss of HayRusGazArd, Karen Karapetian, a onetime Yerevan mayor.
Popular anger against the `permissiveness' granted Armenia's oligarchs
on everything from tax breaks to accountability before the law
surfaced most visibly last summer, when Yerevan residents took to the
streets to protest the death of army doctor Vahe Avetian at the hands
of security guards employed by businessman Ruben Hayrapetian,
chairperson of the Armenian Football Federation. Hayrapetian later
resigned from parliament over the scandal.
Even before that outcry, opposition members, civil society
representatives and the Diaspora have urged the government to
diversify the economy and push back against the oligarchs' influence,
but, as yet, no tangible progress has been made.
Arguably, though, reasons apart from Alexanian could explain any
reluctance by Carrefour to charge full-steam into Armenia. More than a
third of its population lives in poverty, according to official data.
Although the World Bank has ranked Armenia second in the region (after
Georgia) for ease of doing business, the country has high import costs
(thanks in part to its blockaded borders with Turkey and Azerbaijan)
and a reputation for corruption, including within customs.
In a February 20 comment to reporters, though, State Revenue Committee
Chairperson Gagik Khachatrian asserted that the reasons why Carrefour
has not yet entered Armenia `are not related to the customs service.'
In late December 2012, Vache Arsen, the project's Armenia-based
representative, stressed to the newspaper Zhogovurd that the Carrefour
hypermarket would open, but did not elaborate. Representatives of
Majid Al Futtaim did not respond to requests for comment from
EurasiaNet.org about their plans in Armenia.
To many observers, that brings the blame right back onto Alexanian,
given his presumed control of food imports, and other Armenian
oligarchs.
`These people will vanish from the system if rules of the game are
changed,' argued Stepan Safarian, a senior member of former
presidential candidate Raffi Hovhannisian's opposition Heritage Party,
who lost his seat in parliament to Hayrapetian in 2008.
Editor's note: Marianna Grigoryan is a freelance reporter based in
Yerevan and editor of MediaLab.am.
http://www.eurasianet.org/node/66656
From: Baghdasarian