Armenia: Falloff in Remittances is a Cause for Economic Uncertainty at Home

A sharp decline in remittances from Russia, coupled with a soured domestic economic outlook, may sharpen political tensions within Armenia over the next few months, some economists are forecasting.

Information provided to EurasiaNet by the Central Bank of Armenia shows a 28-percent drop between the volume of foreign-sourced, private remittances that entered the country from Russia in January 2008 ($60.17 million) and what entered the country in January 2009 ($43.58 million).

Officially, the total number of such transfers from Russia, the United States and other countries has dropped by 25 percent for this same period.

One economist, though, notes that the situation could be far worse than the available statistics indicate.

"The official figures do not reflect the real picture," said Zoya Tadevosian of the Armenian State University of Economics. The data only reflects bank transfers; not the funds that are often brought into the country by friends or relatives. "We still need time to get the real one. Thousands of families getting financial support from Russia, the United States, or European countries have ended up in a tough situation."

For 15 years, 47-year-old Vahagn Saghatelian had provided for his wife and two children in Abovyan by working in seasonal construction in Moscow. But now, like thousands of other Armenians who can no longer find work in Russia, Saghatelian must return home.

The $800 per month her husband used to send decreased to $300 in recent months, "and now he has totally lost his job," recounted Saghatelian's wife, Hasmik. "He is returning in several days and only God knows what will happen to us then."

"The situation is particularly tough for labor migrants in Russia and Ukraine," commented Tadevosian. "Our compatriots used to be engaged in almost 60 percent of the construction work in Russia that was suspended due to the crisis."

Price hikes that followed the March 3 devaluation of the Armenian dram has complicated matters further. The costs for flour, bread, butter, vegetable oil and medicine have increased by as much as 30 percent. [For details, see the Eurasia Insight archive].

"We can hardly even imagine how we will live and raise our three children without work, when prices in Armenia increase daily," said Shoghik Hovhannisian, an unemployed Yerevan woman whose husband used to work in Russian construction.

Travel agencies say that the number of sold plane tickets to Russia has fallen to near-nothing in January-March, when traditionally labor migrants leave Armenia. "Finding a ticket to Moscow used to be a problem for this time of year, but tickets are available now," said Karine Davtian, deputy director of Flight travel agency.

Irina Davtian, head of the Ministry of Territorial Administration's Migration Department, told EurasiaNet that the agency still lacks a comprehensive sense of the situation, but stressed that "it has definitely changed."

"The numbers do not reflect who the people who leave or stay are, but the number of those who leave has decreased by two and a half times compared with January 2008," said Davtian. Precise figures were not available.

Twenty-five-year-old Artak Salardzortian, who has worked as a construction worker in Russia for the last five years, is among those usual migrants staying home this year.

"Finding a job in Russia has become a difficult task," said Salardzortian, a road construction worker. "Even if one manages to find work, the pay won't be as good as it was before. We have already been warned [against returning], so we better stay in Armenia rather than look for ways to provide for ourselves in a foreign country."

Aharon Adibekian, chairman of the Sociometer sociological research center, noted that there is a need to develop a support system for repatriated Armenians. "Those who return feel themselves defeated, adding to the overall negative perceptions of the public," Adibekian said. "The jobs people had abroad inspired their hopes that the situation would improve here. But now, as they return without any prospects, the situation may worsen, including the political one."

As do opposition leaders like ex-President Levon Ter-Petrosian themselves, Adibekian forecasts that dejected returnees could swell the opposition's ranks. "No doubt, the socio-economic tensions will have some consequences," commented Suren Sureniants, an active opposition politician. "Of course, the movement needs to have a social basis, but it pursues more global aims than just uniting people who have ended up in a difficult socio-economic situation."

Increasingly, government officials cite help from international financial organizations as critical.

The executive board of the IMF confirmed on March 6 it will provide Armenia with a $540 million loan for 28 months aimed at overcoming the consequences of the financial crisis as well as protecting the needy population groups. The World Bank will extend $525 million, which has been slotted for infrastructure and educational system improvements, while Russia has promised a tentative $500 million loan.