According to the Armenian government’s first forecasts, economic growth should have been 4.9%. This expectation was not met. According to World Bank estimates for the next few years, economic growth will not exceed 5% annually and according to economic experts, Armenia needs an annual economic growth of 9.5% to meet the 2050 targets set by Prime Minister Pashinyan. How do you think Pashinyan will achieve the goals set for 2050? 

Economic growth is not a goal but a means. The government’s policy [and goal] is the welfare of society and providing better and more secure life to more people. Therefore, economic growth is one of the tools which should contribute to our goal. Therefore, I [do not] value… the number of the economic growth whether it is 4%, 5% or 15% as in Armenia and in different countries various negative indexes are being recorded. For instance, if we had double-digit economic growth for several years but it is obvious that we did not have an essential shift in the well-being of society. Why? Because the economic growth means that Gross Domestic Product (GDP) i[increased from] last year, and if [you] have an economy [where] the economy is concentrated in several branches and several participants are involved in whose product growth provides the growth of the Gross Domestic Product but they have few employees. Figuratively speaking let’s take two industries, which foster the economic growth during last couple of years, mining and services, for example bookmaker’s offices. These two sectors provide significant growth of GDP. However very few people are involved in these sectors. The growth provides profitability of couple of companies and as a result the welfare of the society does not increase. 

Therefore, the government has adopted [an] inclusive policy, which means to have such [an] economy… has so many participants that small and medium-sized enterprises will develop and more participants will contribute to the growth of GDP and during that process they will contribute to the development of their businesses. From that point of view, we don’t value the number of economic growths, our economic policy is aimed at changing the structure of [the] economy so that more people will have the opportunity to succeed.  Tax reforms [that] will come into force from 2020 and our other steps in different fields contribute to the development of small and medium-sized enterprises. 

Apart from that, it is expected that there will be [a population of] 5 million by 2050, which means that unemployment issues will remain on the agenda. What do you think about it?

Unemployment is one of the biggest problems of Armenia. Unemployment and poverty are very important. From that perspective we are going to work on two directions. The first one – poverty benefit system where nearly 100.000 families are included. Unfortunately, that system only provides some financial support to those families and do not support them to overcome the poverty. At the moment, the government is making a strategic change in that direction as a result we will have a system when the government will encourage people to work and have stable income. 

The other problem is the creation of workplaces. The government does not directly have a function of creating workplaces, but we try to form such [an] business environment in the context of tax legislation, administration, rule of law, and in absence of corruption and protectionism. Now an environment has been formed in Armenia which gives opportunity to the people to freely engage in entrepreneurship. Therefore, to some extent the problem of unemployment is being solved, of course not to the extent that we would like. But we already can see that during the first year there have been many companies established even with small staff. Yes, that problem continues to be one of priorities of the government. And substantial reduction of unemployment will contribute to population growth through immigration. 

Please give your assessment of the Armenian Diaspora’s support for the new or planned economic projects in Armenia. What role does the diaspora play in signing economic agreements and attracting investment from foreign countries?

The former government perceived diaspora as a source of funding, that is to say according to them, people who live outside of Armenia [should do charity] through different charitable foundations in Armenia. Unfortunately, it was accepted by some of them and they considered their duty towards homeland accomplished. Even in that case we had revelations – we had abuses also there. 

What we offer to our compatriots in diaspora. We offer to come and start their business activities here, which they have already succeeded in other countries and to move to Armenia for permanent residence. From that perspective, we continue creating beneficial conditions for business, also we have some ideas and programs regarding repatriation which will allow us to achieve better results faster. At the moment we have investments which are considered to be foreign investments, but we believe that they include small investments of our compatriots. Moreover, we do not expect the presence of several global mega-companies, but we have serious possibilities in Armenia for many small companies. They are also for our compatriots who have some savings or have some enterprises in other countries, we offer them to move one part of their business to Armenia. We not only value the patriotic factor but also business interest, as with its workforce and different factors Armenia can offer more than some other countries. Therefore, this can also promote our compatriots to start a business in Armenia.

In your opinion, what should Armenia do to lessen the amount of economic dependency on Russia? Are any measures already taken to achieve this goal?

[Armenia’s] Relations with Russia are also conditioned by the Eurasian Economic Union (EAEU). Armenian-Russian active cooperation is natural [and] is normal to any other union. For instance, in the European Union (EU) countries tend to develop business relations between other members of the union. And from that perspective, the trade relations between members of the EAEU are much less than in the EU. That is to say, members of the EU cooperate more within the union. Therefore, it is natural, and those relations should develop. 

Regarding the dependency, yes, we have two important concerns. Firstly, the remittances by individuals [in] Russia. As part of our compatriots work in Russia. The second part is dependency on energy carriers – dependency on gas. We notice some decrease in remittances. As the share of remittances in income of the citizens of Armenia decrease. The other important direction which unfortunately do not have results is sharp increase in construction volumes. We have different projects in road construction but unfortunately, we don’t have [a large] enough workforce. The budget has allocations and we [are] underperforming in road construction. As the workforce is not enough for that volume and significant part our compatriots work in road construction field for decades. With these projects we expect them to continue their work in their homeland and will stay with their families, and they will earn no less than they earned in Russia, as these projects are large-scale and long-term. There are already some projects which are going to be implemented within 5, 10 years. 

Regarding the energy carriers, we import gas from Russia, but we continue negotiations with Iran. We value the renewable energy, particularly… solar power. And the government started… several big projects. We have liberalized the field of solar power, and there are some investments. But we plan to increase the share of solar power in our energy system which will diversify the import of energy carriers from Russia.

As we know, Serzh Sargsyan had endeavored to open the Turkish-Armenian border and normalize relations between the two countries. Will Pashinyan's government try the same? And who will benefit the most if the borders are opened?

There are two factors in [Armenia’s] relations with Turkey – economy and Armenian Genocide. The Armenian Genocide has never been and never will be a topic for discussion. That fact is not a topic for discussion not only for Armenia but also for many countries. 

We don’t have diplomatic relations with Turkey, but we have economic relations. Regarding foreign trade turnover, Turkey has a big share. As the borders are closed, the trade turnover takes place through Georgia, but these relations actually exist and there are no obstacles at the state level for the business relations of citizens of Armenia and Turkey. From that perspective, we think that these relations can be discussed without any preconditions. 

It is hard to say who will benefit from the opening of the borders, as business is an always developing field which demands work. It is multifactorial. And we cannot take just one factor that it is more beneficial for us we can make cheaper and faster trade turnover to Europe. But as Armenia is a part of Eurasian Economic Union, we can say that Turkey opens its borders with EAEU. Therefore, the benefits can be mutual. At this moment, there are disadvantages of closed borders as our trips to Europe takes longer and more complicated route.

Are there any signals from Turkey that could indicate a change in their position regarding the issue of opening borders with Armenia?

Unfortunately, Turkey’s in the region does not only show sign of cooperation but also ruins the peace. In particular, invasion of Syria is yet another prove that Turkey is still far from establishing civilized relations.

What economic benefits could Armenia get from the innovative structure of its military industry? With which states does Armenia cooperate most to strengthen its repatriation industry?

Science has always been a priority in Armenian economy. Also, during [the] Soviet years, Armenia [had] potential in [the] scientific field [and] was involved in military and heavy industries. From that perspective, we value the role of science and innovative technologies in economy. We have a separate ministry – [the] Ministry of High-Tech Industry which is [actively] working… as Armenia [considers] high technologies… to be a priority. We have special tax exemptions and very good investment environment for representatives of IT sector. And using that field in military industry we believe that we can succeed also there. 

At the moment our main partner of military equipment is Russia. We mainly import weapon[s] from Russia. But regarding production and development of that field there is no problem for wider cooperation. And we think that direction also will become important for Armenian economy in the coming years.
 

Is there any potential for Armenia to join regional infrastructure projects such as Baku-Tbilisi-Ceyhan and become a hub for freight transit and gas transit in the region without having solved the Nagorno-Karabakh conflict?
 

Look, unfortunately, Turkey considers Nagorno-Karabakh conflict as a precondition in relations with Armenia. We do not see any problems in the context of regional cooperation. Of course, [the] Nagorno-Karabakh conflict should be resolved peacefully. Which will result some cooperation with the neighboring countries. From that perspective, Armenia does its utmost to resolve the conflict peacefully. And of course, it supports regional economic wide cooperation. But Azerbaijan and Turkey, as a supporter, with their bellicose statements and increasing tension on the border do not show the level of willingness to resolve the conflict peacefully. 

Yes, we see that at this moment relations with Azerbaijan, moreover, economic relations are almost excluded. Therefore, we value the regulation of Nagorno-Karabakh conflict in terms of establishment of peace in the region. 

Is there a change in Armenia’s position regarding the Metsamor power plant and are there plans in Armenia for the construction of a second nuclear power plant? If so, in cooperation with which country will this be built or financed? If a second nuclear power plant is built, what do you think will be the fate of Metsamor nuclear power plant?

At the moment, there are no programs regarding the construction of the second nuclear power plant. It will be discussed in the context of energy development strategy.
 

The volume of direct foreign investment in Armenia in the first quarter of 2019 totaled $ 7.6 million. That's 10 times less than last year. What could be the reason for this? Could this be related to investor uncertainty over the history of the Amulsar gold mine?

Let me correct you. The volume of direct net investments was decreased not the volume of direct investments. We have 25% increase in foreign investments compared to the last year. We should compare it with the first quarter of 2017, as it is more comparable, as the first quarter of last year because of the revolution. It is nature that foreign investments increase. But in 2017, under the former authorities we have nearly 40% growth. We have not yet achieved the desired result, but we take all steps. We think that next year there will be foreign investments. We have adopted a policy that the investments should be multipurpose and multiple so that we won’t depend on one or two large projects.

Interviewed by Ami Chichakyan