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THREATS TO ARMENIA COME NOT SO MUCH FROM KAZAKHSTAN OR KYRGYZSTAN AS FROM INSIDE THE COUNTRY
ArmInfo's interview with Director of the Political Economy Research
Center Andranik Tevanyan
by David Stepanyan
Tuesday, December 9, 15:10
The opponents of Armenia's accession to the Eurasian Economic Union
have already called this the key cause of AMD's slump. What is the
real cause, in your opinion?
I'd rather answer your question by a counter-question: if Armenia
didn't join the Eurasian Economic Union, would the exchange rate
be stable and wouldn't there be any speculations? Admittedly, the
experts explaining the AMD exchange rate crash by the situation in
Russian economy are partially right. Armenian economy is closely
connected with the Russian one. One should also take into account
the drop in the transfers being sent from Russia to Armenia by our
citizens. In this light, it is quite natural that the Russian ruble
(RUR) depreciation and the RUR drop against USD have reduced the
amounts of USD coming from Russia. The decline has reached 30%
today and affected the currency market of Armenia immediately. So,
one of the key reasons of fluctuations in the currency market is the
decline in transfers due to the RUR crash. One should also take into
account the pre-New Year demand for USD by the entities preparing to
import new lots of commodities. There are several ways for Armenia
to overcome its current foreign exchange difficulties. The first one
is to ask Russia for a stabilization loan.
As was the case in 2009?
Yes, but the problem today is that the Russian authorities no longer
trust Armenia because of its European association double game. So, we
can hardly expect them to give us one more loan so we could spent it
on currency interventions. Nor can we get this money from them in the
West as they are also suspicious. So, our only way-out is to use our
own money as we repeatedly did in 2008-2009. Then the authorities spent
almost $700 million to keep the AMD rate at 305 AMD per 1 USD just to
finally push it down by 25%. During the last 15 days the Central Bank
has spent tens of millions of USD to stabilize the AMD rate but now it
seems to have realized that it can't continue its currency intervention
any longer as it is not able to forecast how long it will take Russia
to solve its financial-economic problems. In other words, by allowing
the Armenian dram to float, the authorities are concerned over possible
uncontrollable processes and tangible inflation, which will have not
only socio-economic but also political consequences. As a result, it
is almost impossible to calculate the real exchange rate today. The
boards of exchange offices feature 442 AMD as the purchase price and
450 AMD as the selling price. The banks sell no more than 1,000 USD
to individuals and 10,000 USD to legal entities. This demonstrates
that the authorities cannot yet find a real and effective solution to
the problem. And the commercial banks are trying to minimize the risks.
In other words, our banks are trying to minimize their risks?
Yes, you are right. Being illegitimate, our authorities cannot afford
telling people what is actually going on in the economy and are taking
stopgap measures only.
How will things develop, in your opinion?
It is hard to say, at least, for the time being. I guess AMD will
continue to fall. But I don't think anybody can say how low that fall
will be.
Does Armenia's draft national budget 2015 reflect the real
macroeconomic situation in the country?
Armenia's national budget has long turned from a means into a goal in
itself. In other words, fiscal policy in Armenia is no longer a lever
of influence on economic policy. Our authorities simply want to collect
certain sums just to be able to close off some loopholes. They don't
have a fiscal policy that can solve specific problems. All I see is
that they seek to collect more money and to put more pressure on small
and now event big businesses. So, our next year's national budget
is situational. In case of mid-term parliamentary or presidential
elections, it will become very unclear who will be responsible for
this off-target document.
Are there prerequisites for mid-term elections in Armenia?
Being not so much strong for the power shift, the opposition forces
are not so much weak to let, for instance, reforming the Constitution
by Serzh Sargsyan. In that case, vacuum will appear within the power
pyramid, taking into consideration the fact that Serzh Sargsyan has
no political successor to the presidency. In fact, there could be no
successor, taking into account the results of his two terms in office.
So, he does not have a task of having a successor but a task
of reproduction, which is rather difficult to settle in the
conditions of no constitutional reforms. Moreover, erosion of
power is unavoidable in such conditions. Therefore, today everything
depends on the pressure of the opposition forces and the society upon
the authorities. The compromise with the authorities, such as the
extraordinary parliamentary, and why not, presidential elections,
may become the result of this pressure.
Do you see any link between the forthcoming constitutional reforms and
the significant raise planned in the wages of political and military
officials by the next year's budget?
The authorities are preparing to the referendum in such a way. But,
at the same time, nobody has canceled displeasure of the authorities
with the power as well as the displeasure of the big business and
different layers of the society.
Then what is the resource the ruling regime is based on?
Inertance, since there is no layer in the society ready to support
Serzh Sargsyan's regime. Even the functionaries as well as all the
rest, which feel their helplessness, inflation, etc, are displeased
with his policy. That's why today the regime relies on the force
structures, which are still confronting the displeasure of the society
that has not been consolidated yet.
What can mobilize our society in the near future?
The opposition forces are already working with the population. The
headquarters formed by the pan-national movement are gradually
developing. And soon on the basis of communication with the society,
the opposition forces will be able to analyze the created situation,
and start more actively imposing pressure upon the authorities.
On Dec 23 the Eurasian Economic Union will consider admitting
Kyrgyzstan. If it does, Azerbaijan will have two votes (Kazakhstan
and Kyrgyzstan) for lobbying its interests in the Union.
Recently Armenia did something more dangerous: it has given up on
its complementary foreign policy. Only a political insane regime
seeing no difference between geopolitics and card game could negotiate
association with the EU for four years and join another organization
in one day. It is not Russia or Azerbaijan but our own authorities
that must be blamed for the decision to join the Eurasian Economic
Union. So, we should look for threats not outside but inside Armenia,
more specifically, inside the policy of our regime. Real threats
to Armenia come from inside the country, from the policy of its
ruling regime. After years of rush towards the European Union, we
have nearly escaped a situation similar to that in Ukraine. In fact,
Serzh Sargsyan's "initiative" policy could have ended in the loss of
Nagorno-Karabakh, Syunik and the Armenian state as such. After all,
it was because of our pro-Western policy that Russia improved its
relations with Azerbaijan - for they in the Kremlin had no other way
to pressure us. So, threats to Armenia come not from Kazakhstan or
Kyrgyzstan but from inside the country.
And what is the alternative?
A balanced foreign policy implying avoidance of membership in any
blocs and integration unions. Yerevan should have developed military
and strategic relations with Russia and friendly partner relations
with the West. We observe such cooperation in Azerbaijan's relations
with Russia and the West. To put it crudely, no one has been stiffed
in Baku, unlike Yerevan. As a result, Russians have locked us in a
dark room and have thrown the key into a river. As regards the West,
it does not want to have any relations with Armenia at all. The
Armenian authorities hoped the West would shut its eyes to the
electoral fraud in 2012-2013. One should also take into account the
"big money" promised by the West in case of "bigger integration". For
the Western officials the real politic was to legitimize the
illegitimate authorities of Armenia and to use them against Russia
as a token coin. It is quite natural that Moscow perfectly estimated
the situation and exerted pressure on Serzh Sargsyan, opening his
eyes to the unfavorable reality within a day, because by losing
Nagorno-Karabakh he would lose his power. In this light, I think the
change of power in Armenia is an imperative today. It is impossible
to ensure the security of the NKR and Armenia without changing the
power in Armenia. Only after that it will be possible to consider the
relations inside the EAEU, establish trust-based relations with Europe,
the United States, and other partners. Otherwise, Armenia will have
prospects neither in the EAEU nor in any other integration union.
http://www.arminfo.am/index.cfm?objectid=5827B320-7F9C-11E4-877A0EB7C0D21663
From: A. Papazian
ArmInfo's interview with Director of the Political Economy Research
Center Andranik Tevanyan
by David Stepanyan
Tuesday, December 9, 15:10
The opponents of Armenia's accession to the Eurasian Economic Union
have already called this the key cause of AMD's slump. What is the
real cause, in your opinion?
I'd rather answer your question by a counter-question: if Armenia
didn't join the Eurasian Economic Union, would the exchange rate
be stable and wouldn't there be any speculations? Admittedly, the
experts explaining the AMD exchange rate crash by the situation in
Russian economy are partially right. Armenian economy is closely
connected with the Russian one. One should also take into account
the drop in the transfers being sent from Russia to Armenia by our
citizens. In this light, it is quite natural that the Russian ruble
(RUR) depreciation and the RUR drop against USD have reduced the
amounts of USD coming from Russia. The decline has reached 30%
today and affected the currency market of Armenia immediately. So,
one of the key reasons of fluctuations in the currency market is the
decline in transfers due to the RUR crash. One should also take into
account the pre-New Year demand for USD by the entities preparing to
import new lots of commodities. There are several ways for Armenia
to overcome its current foreign exchange difficulties. The first one
is to ask Russia for a stabilization loan.
As was the case in 2009?
Yes, but the problem today is that the Russian authorities no longer
trust Armenia because of its European association double game. So, we
can hardly expect them to give us one more loan so we could spent it
on currency interventions. Nor can we get this money from them in the
West as they are also suspicious. So, our only way-out is to use our
own money as we repeatedly did in 2008-2009. Then the authorities spent
almost $700 million to keep the AMD rate at 305 AMD per 1 USD just to
finally push it down by 25%. During the last 15 days the Central Bank
has spent tens of millions of USD to stabilize the AMD rate but now it
seems to have realized that it can't continue its currency intervention
any longer as it is not able to forecast how long it will take Russia
to solve its financial-economic problems. In other words, by allowing
the Armenian dram to float, the authorities are concerned over possible
uncontrollable processes and tangible inflation, which will have not
only socio-economic but also political consequences. As a result, it
is almost impossible to calculate the real exchange rate today. The
boards of exchange offices feature 442 AMD as the purchase price and
450 AMD as the selling price. The banks sell no more than 1,000 USD
to individuals and 10,000 USD to legal entities. This demonstrates
that the authorities cannot yet find a real and effective solution to
the problem. And the commercial banks are trying to minimize the risks.
In other words, our banks are trying to minimize their risks?
Yes, you are right. Being illegitimate, our authorities cannot afford
telling people what is actually going on in the economy and are taking
stopgap measures only.
How will things develop, in your opinion?
It is hard to say, at least, for the time being. I guess AMD will
continue to fall. But I don't think anybody can say how low that fall
will be.
Does Armenia's draft national budget 2015 reflect the real
macroeconomic situation in the country?
Armenia's national budget has long turned from a means into a goal in
itself. In other words, fiscal policy in Armenia is no longer a lever
of influence on economic policy. Our authorities simply want to collect
certain sums just to be able to close off some loopholes. They don't
have a fiscal policy that can solve specific problems. All I see is
that they seek to collect more money and to put more pressure on small
and now event big businesses. So, our next year's national budget
is situational. In case of mid-term parliamentary or presidential
elections, it will become very unclear who will be responsible for
this off-target document.
Are there prerequisites for mid-term elections in Armenia?
Being not so much strong for the power shift, the opposition forces
are not so much weak to let, for instance, reforming the Constitution
by Serzh Sargsyan. In that case, vacuum will appear within the power
pyramid, taking into consideration the fact that Serzh Sargsyan has
no political successor to the presidency. In fact, there could be no
successor, taking into account the results of his two terms in office.
So, he does not have a task of having a successor but a task
of reproduction, which is rather difficult to settle in the
conditions of no constitutional reforms. Moreover, erosion of
power is unavoidable in such conditions. Therefore, today everything
depends on the pressure of the opposition forces and the society upon
the authorities. The compromise with the authorities, such as the
extraordinary parliamentary, and why not, presidential elections,
may become the result of this pressure.
Do you see any link between the forthcoming constitutional reforms and
the significant raise planned in the wages of political and military
officials by the next year's budget?
The authorities are preparing to the referendum in such a way. But,
at the same time, nobody has canceled displeasure of the authorities
with the power as well as the displeasure of the big business and
different layers of the society.
Then what is the resource the ruling regime is based on?
Inertance, since there is no layer in the society ready to support
Serzh Sargsyan's regime. Even the functionaries as well as all the
rest, which feel their helplessness, inflation, etc, are displeased
with his policy. That's why today the regime relies on the force
structures, which are still confronting the displeasure of the society
that has not been consolidated yet.
What can mobilize our society in the near future?
The opposition forces are already working with the population. The
headquarters formed by the pan-national movement are gradually
developing. And soon on the basis of communication with the society,
the opposition forces will be able to analyze the created situation,
and start more actively imposing pressure upon the authorities.
On Dec 23 the Eurasian Economic Union will consider admitting
Kyrgyzstan. If it does, Azerbaijan will have two votes (Kazakhstan
and Kyrgyzstan) for lobbying its interests in the Union.
Recently Armenia did something more dangerous: it has given up on
its complementary foreign policy. Only a political insane regime
seeing no difference between geopolitics and card game could negotiate
association with the EU for four years and join another organization
in one day. It is not Russia or Azerbaijan but our own authorities
that must be blamed for the decision to join the Eurasian Economic
Union. So, we should look for threats not outside but inside Armenia,
more specifically, inside the policy of our regime. Real threats
to Armenia come from inside the country, from the policy of its
ruling regime. After years of rush towards the European Union, we
have nearly escaped a situation similar to that in Ukraine. In fact,
Serzh Sargsyan's "initiative" policy could have ended in the loss of
Nagorno-Karabakh, Syunik and the Armenian state as such. After all,
it was because of our pro-Western policy that Russia improved its
relations with Azerbaijan - for they in the Kremlin had no other way
to pressure us. So, threats to Armenia come not from Kazakhstan or
Kyrgyzstan but from inside the country.
And what is the alternative?
A balanced foreign policy implying avoidance of membership in any
blocs and integration unions. Yerevan should have developed military
and strategic relations with Russia and friendly partner relations
with the West. We observe such cooperation in Azerbaijan's relations
with Russia and the West. To put it crudely, no one has been stiffed
in Baku, unlike Yerevan. As a result, Russians have locked us in a
dark room and have thrown the key into a river. As regards the West,
it does not want to have any relations with Armenia at all. The
Armenian authorities hoped the West would shut its eyes to the
electoral fraud in 2012-2013. One should also take into account the
"big money" promised by the West in case of "bigger integration". For
the Western officials the real politic was to legitimize the
illegitimate authorities of Armenia and to use them against Russia
as a token coin. It is quite natural that Moscow perfectly estimated
the situation and exerted pressure on Serzh Sargsyan, opening his
eyes to the unfavorable reality within a day, because by losing
Nagorno-Karabakh he would lose his power. In this light, I think the
change of power in Armenia is an imperative today. It is impossible
to ensure the security of the NKR and Armenia without changing the
power in Armenia. Only after that it will be possible to consider the
relations inside the EAEU, establish trust-based relations with Europe,
the United States, and other partners. Otherwise, Armenia will have
prospects neither in the EAEU nor in any other integration union.
http://www.arminfo.am/index.cfm?objectid=5827B320-7F9C-11E4-877A0EB7C0D21663
From: A. Papazian