With Ukraine now a lost cause for the Customs Union, Russia’s Vladimir Putin has checked in with Armenian Prime Minister Tigran Sarkisian to see how Armenia's plans to join the Customs Union are coming along.
For Russia, Armenia is a poor substitute for Ukraine, but still a victory in Moscow's efforts to assert its broader economic clout through the trade bloc.
Prime Minister Sarkisian seems to have seized on that status to lodge a request with Moscow to keep the investments coming and to underwrite some of the legal and institutional changes that Armenia needs to meet the upcoming trade club’s membership rules by 2015. Yerevan also needs resources to keep selling Armenians on the idea of pushing the country into what many claim will be an economic throwback to the USSR.
How far Kocharian could go with this is unclear. Memories of the 2008 bloodshed under his administration do not endear him uniformly to Armenian voters. But his choice of topic could add at least some fuel to the fire.
So what do the Armenian government, the Armenian Apostolic Church and Sierra Leone all have in common? The answer is businessman Ashot Sukiasian, who was arrested in Tbilisi on February 1 in connection with an alleged $10.7-million con-job.
Several years back, Sukiasian borrowed that sum from AmeriaBank, an Armenian concern of uncertain ownership, to invest in importing raw diamonds from Sierra Leone for refining in Armenia, the Hetq.am investigative service reported last May. Diamond-refining is one of the few booming businesses in Armenia, and a key source of exports.
Documents unearthed by Hetq.am revealed that Sukiasian borrowed the money for his own diamond venture in the name of Wlispera Holdings, a Cyprus-based company allegedly co-owned by Armenian Prime Minister Tigran Sarkisian and former Archbishop Navasard Kjoian.
Prime Minister Sarkisian and Kjoian have denied being Sukiasian's business partners, but the ownership documents for Wlispera Holdings have their signatures, Hetq reported.
Jumping on the make-your-own-national-gadget bandwagon, Armenia has come up with a smartphone and a tablet computer of its own. Presented to the Armenian government on December 6, Armphone and Armtab are expected to hit stores after New Year's Day.
As is often the case with such devices, Armphone and Armtab are only partly sovereign Armenian. Designed in Armenia, the devices run on an Android operating system and will be assembled in the US and Hong Kong. The creators – Technology and Science Dynamics/Armtab Technologies, described as an Armenian-American joint-venture – say that they hope the low price will attract first regional (Georgia and Ukraine) and, eventually, international customers.
The price of the 16-GB tablets will range from $225 to $280, Vahan Sahakian, the director of Technology and Science Dynamics/Armtab Technologies, told Armenpress. Sahakian presented Prime Minister Tigran Sarkisian with a sample Armtablet at a government meeting, which then managed to segue from smart technologies to a discussion about Armenia's textile, knitting and shoe industries.
This was the news that the country’s economy stewards were excited to share last week, not long after Armenia launched its first Eurobond. But for anyone looking to verify the government’s claims, good luck in defining poverty.
Armenian officials specified that they were referring to definitions by international aid groups, which have an entire lexicon of kinder synonyms for poverty, such as “transitional,” “developing” and “less-developed,” and a list of acronyms (GDPs, GNIs, CPIs, HDIs) to measure development.
Finance Minister David Sarkisian referred to "international standards" when he said that Armenia has left the poor countries’ club -- graduating from the low-income league to the medium-income league; or, rather, the “lower middle-income” category, as the World Bank puts it.
But the descriptions, just like weather forecasts, may not fully capture the real feel on the ground. Looking at the largely hand-to-mouth life in rural parts of Armenia, the nature of the country’s economy, in which cash from labor-migrants and Diaspora abroad still plays a large role, the Armenian ministers’ announcement may come across as an overstatement.
Some Armenian officials would have you believe that Yerevan's surprise decision to join the Russia-led Customs Union all came down to economic moxie. And, in a way, perhaps it did. But in gaseous form.
Armenian Energy and Natural Resources Minister Armen Movsisian told parliament on September 11 that the question of how to grapple with the higher prices Russia's state-owned Gazprom is now charging for natural gas would be decided within the framework of the Customs Union.
"The decision already has been found, and soon [everything] will be resolved," Movsisian said, expressing his support for the trade deal, Lragir.am reported.
Announced this summer, the 18-percent price hike by Gazprom, Armenia's chief provider of natural gas, had fueled not only further worries for the country's hard-pressed economy, but, also, predictions of widespread opposition to the government.
President Serzh Sargsyan had made no mention of gas when announcing on September 3 the plan to form a trade pact with Russia, Kazakhstan and Belarus -- an unexpected decision that has ruined (at least for now) Armenia's chances of an Association Agreement with the European Union.
Officials since have scrambled to make it seem that the Customs Union was the only choice going.
The Armenian foreign ministry building -- 14,000 square meters of Stalin-era, colonnaded grandeur -- will soon be charging foreign guests for visits. The building, perched on Yerevan’s central Republic Square, has been sold to Argentine-Armenian millionaire Eduardo Eurnekian, who reportedly plans to set up a luxury hotel in the structure.
Many Armenians opposed the sale, arguing that the cultural value of the building and its location make it better fit for a cultural purpose. What does it say "about the image of our country, our capital city, its center, if half or even most of the buildings at its heart . . . are to be hotels, not centers of culture?” asked Samvel Karapetian, head of the non-profit group Research on Armenian Architecture .
As in other ex-Soviet cities where commercialization is changing the faces of downtown areas, many consider the privatization of state buildings that used to house government offices (and hosted historic events) to be improper and distasteful.
In neighboring Georgia, there has been a lot of carping about earlier plans for the privatization of Tbilisi's old parliament building, a structure with a prime role in the country's recent history.
(The privatization plans, reportedly, are now frozen.) In Azerbaijan, the destruction of buildings from Baku's 19th-century oil-boom era also has raised alarm.
Armenia's May 6 parliamentary election may have left less space for political checks and balances than desired, but it could lead to more financial cheques. While opposition parties cry fraud and observers frown at irregularities, the triumph of Armenian President Serzh Sargsyan’s ruling Republican Party of Armenia at the polls is a “credit positive” event for Armenia, according to Moody's Investor Service.
That the Sargsyan-loyal parliamentary majority has become even a larger majority will have a stabilizing effect on Armenia’s national creditworthiness, Bloomberg reported, citing Moody’s Investor Service.
The election outcome “will ensure a degree of political stability and policy continuity,” Moody’s analysts are quoted by Bloomberg as saying. And that policy has been to reduce government deficit and improve tax collection.
Yet Armenia's creditworthiness still carries a junk rating. The Ba2 grade on Moody’s list of naughty-and-nice countries (ranked by their ability to repay loans) means that lenders to Armenia run “significant” risk. Armenia has little external shock-absorption capacity thanks to its high dependence on the volatile Russian and EU markets, Moody’s wrote in November last year. Though Armenia has convalesced from its 2009 slump, Moody’s assessment for Armenia’s credit outlook has remained “negative” ever since.
Armenia has joined the band of Caucasus explorers headed to Singapore in search of a holy grail that supposedly transforms developing economies into developed.
Armenian President Serzh Sargsyan will be in Singapore until March 31 to ease bilateral visa rules and attract investment from the Southeast Asian country, but also to learn how the island state turned from a malarial swamp (as one writer for The Economist put it) into one of the world’s most developed economies.
Sargsyan received a warm welcome. First, an orchid was named after him. Then, his counterpart, Tony Tan Keng Yam, took him out to dinner. The Singaporean leader kindly offered to share the Singaporean recipe for economic success, which, members of Sargsyan's Republican Party of Armenia hope, after being mixed with a few local ingredients, can help fast-track the Caucasus country into the developed world.
Tan also remembered the good old 1810s, when the British established a free trade port in Singapore, which attracted many traders from all over the world, including Armenian merchants. “Armenians were among the first traders to arrive,” Tan reassured Sargsyan.
But many others are not going anywhere at all, rejoined President Serzh Sargsyan at a July 20 cabinet meeting. While expressing concern about migration rates, Sargsyan also called for a cautious interpretation of the data. Predictions of a mass exodus only provide grit for the enemy’s (read, Azerbaijan's) mill, he said.
“[S]ome say 45,000 people have left Armenia [this year], but had someone taken the trouble to look at this rate on a monthly or quarterly basis, he would clearly see that in October-November period of this year… 40,000 of those who left will come back,” the president said.
Where international data is concerned, though, the numbers don't look pretty. The Central Intelligence Agency’s 2011 migration ranking puts Armenia in 186th place out of 202 countries with a net migration rate of - 3.76 per 1,000 people. That's far worse than Azerbaijan (-1.14), but a tad better than Georgia (-4.06).
The United Nations gives a similarly stark long-term view; an estimated 700,000 to 1.3 million people emigrated from Armenia between 1991 and 2009, it says.
For a country with a population of just 3.2 million, those numbers spell trouble. To keep the population in place, some critics advise that the government put reforms in place for a stronger rule of law and a healthier economy.
Armenia's economy is disappointing as it is, but now Forbes had to rub it in by ranking it as one of the world’s worst economies, second only to Madagascar.
“Per-capita GDP of $3,000 is less than a third of neighboring Turkey, and inflation is running at 7%,” Forbes Senior Editor Daniel Fisher wrote in his blog. “On top of that, Russia cut back on supplies of diamonds, hurting Armenia’s once-thriving diamond-processing industry.”
CPR performed by international financial institutes, the West and Russia may have helped put the economy on the mend, but recovery is slow.
Economic data for the first quarter of 2011 shows no sign of an immediate turnaround; Gross Domestic Product growth registered just 1.2 percent, RFE/RL's Armenian service reports.
For a country badly whacked by the global financial crisis, the Forbes ranking, no doubt, adds insult to injury, but, so far, no official reactions from Yerevan.