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Project Armenia: The Awakening Of A New Democracy

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  • Project Armenia: The Awakening Of A New Democracy

    PROJECT ARMENIA: THE AWAKENING OF A NEW DEMOCRACY

    http://www.totalpolitics.com/articles/364032/project-armenia-the-awakening-of-a-new-democracy.thtml
    by Anoosh Chakelian / 21 Feb 2013

    Anoosh Chakelian examines the struggles of an emerging player in the
    Caucasian circle as it takes its first steps into western markets

    "When Russia sneezes, Armenia catches cold". This was an Armenian
    proverb often used to refer to the dominance of first the Russian
    empire and then the USSR over the small Caucasian republic during
    the previous two centuries, and how Russian incompetence and warring
    would damage its hapless neighbour.

    Ironically, today, it is the opposite. It is the success, rather
    than the hazardous sternutations, of Armenia's neighbours that is
    one of the reasons its business relations with Britain, and the west
    in general, are hampered. Namely Azerbaijan and Turkey, as today,
    Armenia is firmly pro-Russian.

    Armenia is landlocked, has a population of three million, and
    lacks any significant variety of natural resources, but there is a
    pressing feeling among the Armenian community and politicians both
    east and west, that these traits are not its only obstacles to trade
    and commerce.

    The country's fractious relationship with its neighbours is bad for
    business. This is due to a bloody tangle of geopolitical history,
    characterised on one side by Ottoman Turkey's genocide of the Armenians
    during World War I, and bitter wrangling with Azerbaijan over the
    Nagorno-Karabakh territory on the other.

    Both Turkey and Azerbaijan undoubtedly have more to offer the
    west materially, in terms of diplomatic and financial interest -
    respectively, a secular Islamic haven in the Middle East and a festival
    of oil and natural gas.

    Jonathan Aves has been the British ambassador to Armenia since January
    last year, a job he shares, unusually, with his wife, Katherine Leach.

    The couple alternate four months of work with four months off looking
    after their children. This arrangement, and the fact the previous
    ambassador married his Armenian press secretary, has reportedly led
    to locals labelling their workplace "the love embassy."

    Aves admits that uncertain political relations can be a hindrance to
    Armenia: "It's still dealing with the legacy of 70 years of Soviet
    rule, as well as the legacy and consequences of the Nagorno-Karabakh
    conflict and difficult relations with Turkey, so its two longest
    external borders are closed. And then, if you want to pile on the
    pain, while Armenia has pretty good relations with Iran, sanctions
    to some extent do constrain it."

    But he is keen to emphasise that despite this difficult geographical
    jigsaw it finds itself in, the republic has still developed its
    economy at an impressive rate. He points out that preliminary figures
    show Armenian GDP in 2012 rose by over seven per cent, recovering
    rapidly from the global economic crisis, remarking upon the country's
    "economic dynamism".

    "Even within the constraints posed by the problems it faces
    externally, there is a lot of potential here, and that potential
    could be increased. Clearly, if its external border opened up with
    Turkey, that would give a massive boost to Armenia's economy, but
    this shouldn't prevent, and I don't think is necessarily preventing,
    companies from coming here and looking at opportunities."

    Indeed, despite Armenia's rather wretched positioning in the Caucasus,
    there seems to be a mood of optimism about its business relations
    with Britain. Today, if you walk the streets of its strange capital
    - Orthodox Christian opulence meets Soviet uniformity - you will
    find Marks & Spencer, Debenhams, Next and HSBC, among many others,
    displaying a bond between the two nations.

    A handy M&S on the high street may be the noble legacy of such
    ancient friendship as sparked by King Levon II of Cilician Armenia
    fighting alongside Richard the Lionheart in the 12th century during
    the Third Crusade.

    For Armenia and Britain have a rich history of friendly relations, from
    this 1191 siege, to Churchill famously using the word "Holocaust"
    when referring to the Ottoman massacres of Armenians, to the
    present day. Prince Charles hosted an Anglo-Armenian charity event
    at Buckingham Palace in 2011, with 250 guests including royal family
    members, business leaders and the Armenian prime minister. The next
    major fundraising event for the project, called 'Yerevan My Love',
    will take place in the Armenian capital in May this year. As the
    patron of the charity, Prince Charles is expected to attend, the
    first time he would visit Armenia.

    If even the Prince of Wales is taking an interest in this often
    overlooked member of the Caucasus, relations must be positive - but is
    there anything tangible to be gained from such pleasantries? Dr Hratch
    Tchilingirian, of the Associate Faculty at Oxford University's Oriental
    Institute, who organises these events, infers that Armenia's status
    as a Christian country interests the British royal, as well as its
    architectural heritage. He gives me his own view of the relationship
    between the two countries: "Yes, relations are friendly. Obviously,
    Britain has much greater foreign policy interests in Azerbaijan and
    Turkey than in Armenia. UK bilateral trade in goods with Azerbaijan
    in 2012 in January to August have increased by 70 per cent compared
    with 2011. Trade with Armenia is about $100m annually and only a
    handful of British companies operate in Armenia. It is very obvious
    where British priorities would be.

    "What are the main drivers of British-Armenian foreign policy? It's
    difficult to say. I don't see any concrete development of the
    relationship.

    "There is goodwill to grow and develop this positive relationship,
    but both sides don't know how, or in what areas, that would be."

    So is this goodwill purely symbolic, and therefore unlikely to open
    Armenia up to the "concrete" area of economic growth via foreign
    investment and exportation of its business?

    Aves is quick to defend the Anglo-Armenian bond: "I wouldn't
    underestimate the goodwill. It's great to have friends in this world.

    I have had to deal with countries where, when you try to talk to
    them about political co-operation with the UN, or whether you're
    just talking about common values like human rights and democracy,
    you don't get a very good hearing. But with our Armenian friends you
    do get a very good hearing, on a basic level of common understanding
    and shared values."

    He suggests that this is a good platform upon which to build a
    bilateral relationship between the two states, albeit explaining that
    commercial relations "are not at a very developed stage", and lists
    some areas where he sees real opportunity for Armenia and Britain,
    including the spreading of British outlets and brands in Armenia,
    pharmaceuticals and construction materials.

    There is also the British-based mining company, Lydian International,
    which has a large gold-mining project planned in Armenia; Aves and
    others are keen to explore the potential of Armenia's gold reserves
    when forging Anglo-Armenian relations.

    At the beginning of this year, Armenia abolished visa requirements
    for EU citizens, which has therefore made it easier, and a more
    attractive prospect, for British businesses to visit the country in
    search of opportunities.

    Bedo Eghiayan, an Armenian businessman who lives in London, owns a
    pharmaceutical manufacturing company in Yerevan called PharmaTech,
    which he started in 1995, and he describes how it has become easier
    to do business in Armenia over the past 15 years, partly due to
    its government.

    "Now it's pretty well organised, in very much the western way of doing
    business - the legal strength does protect you. Before, there were
    no company laws or regulations and banking was non-existent until
    HSBC went there. Now it's a very strong banking country.

    "The government helps a lot, the laws are such that money transfers are
    quite easy and there are no restrictions at all. Taxations are very
    low. Slowly, organically, it's opened up in the past 15, 16 years,
    I suppose since it's left Soviet Union. But I think major improvement
    started since 2000."

    Eghiayan refers to Armenia's advances in IT, and of course,
    gold mining, as attractive prospects to Britain, as well as
    pharmaceuticals. But it's not all positive.

    "The main obstacle is transportation," he explains. "The government
    needs to make exportation easy. We have grown as much as we can with
    such a small population, but we need help to export."

    Again, it comes down to the frustration of closed borders. He explains
    gloomily that the cost of transporting from England to Poti, a port
    in Georgia (which he describes as Armenia's "main bloodline") is the
    same as then transporting from Poti to Yerevan, which he says is only
    about 250 miles from the port.

    Aves explains that he is focusing mainly on Armenia internally, to
    break down the existent layers of bureaucracy in order to make it
    more attractive to foreign investors.

    While within its borders, Armenia seems to be on track for growth,
    global relations will make it a challenge to reach its potential,
    because of its place on the Caucasian chessboard of socio-political
    turmoil. Its unfortunate positioning is a sad irony for a country
    that remains top of the world at chess.

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