Artsvik Minasyan: Any integration is senseless for unreformed economy of Armenia

 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.