Artsvik Minasyan: Any integration is senseless for unreformed economy of Armenia
ArmInfo's Interview with Artsvik Minasyan, well-known Armenian
economist, MP from ARF Dashnaktsutyun
by Arthur Yernjakyan
Tuesday, January 27, 22:02
The Western sanctions and the steep fall in oil prices have resulted
in economic downturn in Russia and have affected Armenia, too. Some
experts think that if Armenia chose European integration instead of
Eurasian one, the situation in the economy would be different. What
would you say?
Armenia's economy depends on the situation in Russia, which is
reflected in the commodity turnover and transfers. In this light, even
if Armenia failed to join the Eurasian Economic Union, it would all
the same feel the negative impact of the "sagging" Russian economy.
Armenia's commodity turnover with the CIS countries is 35%, with its
major part falling on Russia, which is almost equal to the commodity
turnover with the EU countries. When you study the structure of the
commodity turnover, you understand that Armenian commodities cannot be
ousted from the European market as a result of Eurasian integration.
In this context, we will at least maintain the current level of
relations with European states unless the EU takes a political
decision the way it was in the case of Russia. Moreover, the decline
in prices of the key primary goods may lead to creation of new
productions in Armenia, which may be in demand in the EU. The matter
concerns cheap oil, gas and other primary goods. The fall in their
prices will be able to enhance the competitiveness of our agricultural
products, which may be exported to the EU.
In Jan 2015 the EBRD downgraded its outlook of Armenia's GDP growth
for 2015 from 3.5% to 0% and linked it to the situation in Russia. Do
you agree with such an outlook?
No, I don't. I expect a 4-4.5% GDP growth this year. The EBRD complies
with the EU's policy, so, it also has political motives. So, its
negative outlook concerning Armenia was just a response to the
country's accession to the Eurasian Economic Union.
In addition, this year Armenia will mark the Centenary of the Armenian
Genocide, which implies a big inflow of tourists. Tourism is one of
the most important economy sectors in Armenia and also secures GDP
growth. The inflow of tourists in the future depends on the quality of
our services.
I believe that our country's economic growth depends exclusively on
the policy conducted by the authorities. If we really start attracting
large investments to the industrial sector, for instance, to
rehabilitation of the Nairit Plant or to the hi-tech sector, including
the enterprises transferred to Russia against the government debt, at
least half of the expected 4.5% economic growth in 2015 will be
ensured by industry and agriculture. But if we leave everything as it
is, if our government keeps conducting its ostrich policy, if the
authorities fail to perform the needed reforms and if no domestic
atmosphere of accord is formed, we may have even worse results. Due to
the country's passive behavior, we may even lose Karabakh.
Following the accession to the Eurasian Economic Union, the public and
the business expected the primary goods - gas, oil derivatives,
diamonds - to drop in prices. However, the situation is quite the
opposite. By late 2014 the petroleum prices even rose despite the
considerable decline in world prices of oil. Why have the Armenian oil
traders refused cheaper European oil products and have chosen more
expensive Russian ones?
When we signed three big agreements with Russia concerning oil
products, gas price formation and import of rough diamonds, all the
calculations were made in US dollars. Afterwards, both the Russian
ruble and the Armenian dram sharply depreciated and this resulted in
the growth in prices of petroleum and other goods. But this does not
at all mean that we should depend on one source of supply. These
agreements do not restrict our relations with Iran, for instance,
which is an alternative source. If you remember, there was a joint
Armenian-Iranian project on creation of an oil refinery in Armenia,
but the project has remained ink on paper.
What prevents our oil traders from buying cheaper fuel from Europe,
not from Russia?
This is a monopolistic position, when the authorities give
administrative privileges to monopolies and require them to do what
the authorities dictate. What the authorities should do is make the
market open and competitive for economic entities with expectations of
economic benefits rather than with administrative privileges. This is
approach Number 1 and one should not shift the blame on the EEU, i.e.
one should not say that strategic goods can be supplied from the EEU
countries only.
There are two opposite opinions about the investment activity
following Armenia's accession to the EEU. Some experts claim that
within the EEU Armenia will become more attractive for investments.
Others think that the EEU will hinder the inflow of investments.
I am deeply convinced that the accession to the EEU will considerably
restrict the inflow of foreign investments but it does not deprive us
of the opportunity to attract investments. In fact, much depends on
the investment climate, regulation of economy and national
legislation. Armenia's economy should be open and non-monopolized so
that the foreign investors could have a desire to invest and could see
fair competition here. Our legislation should ensure protection of
property rights and a fair judicial system. If we manage to do this,
we will have the right to expect growth in investments. If we fail to
do this, any integration will become senseless.
Armenia would like to be free to choose between the EU and the EEU or
to establish partnership with Asian countries and to conduct an
independent and balanced policy with all countries. We had to make the
decision we made for security reasons. This does not mean that Armenia
is safe now. But if we failed to make that decision, the degree of
danger would be higher. Armenia's failure to join the EEU would have
resulted in irreversible territorial losses.
Here the viewpoints also differ. Some experts think that the security
system should also be diversified.
We couldn't diversify the political relations. NATO does not extend
its influence in our region, as it wants to avoid a conflict with
Russia. Therefore, today Armenia has no alternative to the CSTO
anti-aircraft defense and ground defense system. The US policy in this
region obviously needs to revise NATO's role.
But even within the CSTO, it is very important to fulfill our rights
to the full extent. Azerbaijan's aggressive actions against the
Nagorno-Karabakh Republic and on the borders of Armenia demonstrate
that we have grounds to claim something from the CSTO. Unfortunately,
the international community was unable to tackle one of the most
important issues for Armenia - opening of the border with Turkey
without any preconditions. This is why we can expect no other security
system for us.
http://www.arminfo.am/index.cfm?objectid=1AAF7730-A657-11E4-95110EB7C0D21663
From: Baghdasarian
ArmInfo's Interview with Artsvik Minasyan, well-known Armenian
economist, MP from ARF Dashnaktsutyun
by Arthur Yernjakyan
Tuesday, January 27, 22:02
The Western sanctions and the steep fall in oil prices have resulted
in economic downturn in Russia and have affected Armenia, too. Some
experts think that if Armenia chose European integration instead of
Eurasian one, the situation in the economy would be different. What
would you say?
Armenia's economy depends on the situation in Russia, which is
reflected in the commodity turnover and transfers. In this light, even
if Armenia failed to join the Eurasian Economic Union, it would all
the same feel the negative impact of the "sagging" Russian economy.
Armenia's commodity turnover with the CIS countries is 35%, with its
major part falling on Russia, which is almost equal to the commodity
turnover with the EU countries. When you study the structure of the
commodity turnover, you understand that Armenian commodities cannot be
ousted from the European market as a result of Eurasian integration.
In this context, we will at least maintain the current level of
relations with European states unless the EU takes a political
decision the way it was in the case of Russia. Moreover, the decline
in prices of the key primary goods may lead to creation of new
productions in Armenia, which may be in demand in the EU. The matter
concerns cheap oil, gas and other primary goods. The fall in their
prices will be able to enhance the competitiveness of our agricultural
products, which may be exported to the EU.
In Jan 2015 the EBRD downgraded its outlook of Armenia's GDP growth
for 2015 from 3.5% to 0% and linked it to the situation in Russia. Do
you agree with such an outlook?
No, I don't. I expect a 4-4.5% GDP growth this year. The EBRD complies
with the EU's policy, so, it also has political motives. So, its
negative outlook concerning Armenia was just a response to the
country's accession to the Eurasian Economic Union.
In addition, this year Armenia will mark the Centenary of the Armenian
Genocide, which implies a big inflow of tourists. Tourism is one of
the most important economy sectors in Armenia and also secures GDP
growth. The inflow of tourists in the future depends on the quality of
our services.
I believe that our country's economic growth depends exclusively on
the policy conducted by the authorities. If we really start attracting
large investments to the industrial sector, for instance, to
rehabilitation of the Nairit Plant or to the hi-tech sector, including
the enterprises transferred to Russia against the government debt, at
least half of the expected 4.5% economic growth in 2015 will be
ensured by industry and agriculture. But if we leave everything as it
is, if our government keeps conducting its ostrich policy, if the
authorities fail to perform the needed reforms and if no domestic
atmosphere of accord is formed, we may have even worse results. Due to
the country's passive behavior, we may even lose Karabakh.
Following the accession to the Eurasian Economic Union, the public and
the business expected the primary goods - gas, oil derivatives,
diamonds - to drop in prices. However, the situation is quite the
opposite. By late 2014 the petroleum prices even rose despite the
considerable decline in world prices of oil. Why have the Armenian oil
traders refused cheaper European oil products and have chosen more
expensive Russian ones?
When we signed three big agreements with Russia concerning oil
products, gas price formation and import of rough diamonds, all the
calculations were made in US dollars. Afterwards, both the Russian
ruble and the Armenian dram sharply depreciated and this resulted in
the growth in prices of petroleum and other goods. But this does not
at all mean that we should depend on one source of supply. These
agreements do not restrict our relations with Iran, for instance,
which is an alternative source. If you remember, there was a joint
Armenian-Iranian project on creation of an oil refinery in Armenia,
but the project has remained ink on paper.
What prevents our oil traders from buying cheaper fuel from Europe,
not from Russia?
This is a monopolistic position, when the authorities give
administrative privileges to monopolies and require them to do what
the authorities dictate. What the authorities should do is make the
market open and competitive for economic entities with expectations of
economic benefits rather than with administrative privileges. This is
approach Number 1 and one should not shift the blame on the EEU, i.e.
one should not say that strategic goods can be supplied from the EEU
countries only.
There are two opposite opinions about the investment activity
following Armenia's accession to the EEU. Some experts claim that
within the EEU Armenia will become more attractive for investments.
Others think that the EEU will hinder the inflow of investments.
I am deeply convinced that the accession to the EEU will considerably
restrict the inflow of foreign investments but it does not deprive us
of the opportunity to attract investments. In fact, much depends on
the investment climate, regulation of economy and national
legislation. Armenia's economy should be open and non-monopolized so
that the foreign investors could have a desire to invest and could see
fair competition here. Our legislation should ensure protection of
property rights and a fair judicial system. If we manage to do this,
we will have the right to expect growth in investments. If we fail to
do this, any integration will become senseless.
Armenia would like to be free to choose between the EU and the EEU or
to establish partnership with Asian countries and to conduct an
independent and balanced policy with all countries. We had to make the
decision we made for security reasons. This does not mean that Armenia
is safe now. But if we failed to make that decision, the degree of
danger would be higher. Armenia's failure to join the EEU would have
resulted in irreversible territorial losses.
Here the viewpoints also differ. Some experts think that the security
system should also be diversified.
We couldn't diversify the political relations. NATO does not extend
its influence in our region, as it wants to avoid a conflict with
Russia. Therefore, today Armenia has no alternative to the CSTO
anti-aircraft defense and ground defense system. The US policy in this
region obviously needs to revise NATO's role.
But even within the CSTO, it is very important to fulfill our rights
to the full extent. Azerbaijan's aggressive actions against the
Nagorno-Karabakh Republic and on the borders of Armenia demonstrate
that we have grounds to claim something from the CSTO. Unfortunately,
the international community was unable to tackle one of the most
important issues for Armenia - opening of the border with Turkey
without any preconditions. This is why we can expect no other security
system for us.
http://www.arminfo.am/index.cfm?objectid=1AAF7730-A657-11E4-95110EB7C0D21663
From: Baghdasarian