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Pashinyan’s government tries to create favorable conditions for businessmen: Tatul Manaseryan
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- Mr. Manaseryan, Prime Minister Pashinyan underscores that Armenia is the only member of the EAEU which is building deep political and economic relations with the EU. According to the Prime Minister, this factor is extremely attractive for foreign companies. Which countries and foreign markets (apart from Armenia's traditional partners) are considered to be more interesting for the Armenian government and businessmen?
- I want to highlight that we talk a lot about the Eurasian Economic Union and the European Union, cooperation and integration. But I don’t recall them refering to markets of the Middle East, which is, without exaggeration, of strategic importance for us. From this perspective, regardless of the fact some countries are in conflict with each other, we have to think that these connections should not be weakened. Particularly, Iran, gives us opportunities to enter these markets. We need to adopt an active approach. I consider them to be Iranian-Armenian relations, not Armenian-Iranian as the initiative is almost always from the Iranian side. Of course, it is not easy, with differences in the way of thinking, administration system, economics, political structure But we do our best and there has been progress. In particular with Iraq, with Syria, and with other countries we have to restore our ties originally established mainly thanks to the Armenian merchants but they have transformed into cultural ties, political ties, and real friendship was formed between the nations. Let’s not forget that Iraq was one of the first countries of the Muslim world that gave shelter to the survivors of the Armenian genocide. We should not forget these facts. And after all, as a consumption market, Iraq announced a couple of years ago that it is ready to buy all kinds of agricultural products from Armenia. We need to appreciate this chance.
If the countries I have listed have or can have a reliable partner in the region who can be a bridge between them and the European Union, then definitely it is the Republic of Armenia. Armenia is natural partner for the European Union, not only because it is a Christian country, with ancient civilization, which is appreciated by the Europeans, but also during these years institutionally no matter how much we -locals complain about the slow pace of reform or record some failures, nevertheless in post-Soviet states, these are not my words, these are the words of the EU High Representative which were reconfirmed by different structures, Armenia is a leader in institutional reforms, and the other states can take an example.
I think that the Eastern Partnership is a good format, and here the European Union has quite clear interests. Look, there is a motley mosaic, there is Georgia together with Armenia, which has recorded considerable progress, but there is Azerbaijan and Belarus which do not shine in democracy. And the Europeans realize that. For them, Armenia, maybe together with Georgia, is one of the important fulcrums, if not the most important. We realize that Moldova has a long way to go. Ukraine is in a difficult situation. And we need to remember that when Moldova tried to adopt extremist approaches, it focused too much on the European Union, thus isolating itself from the post-Soviet states. Then eventually it had to and still has to find ways to get closer to the Eurasian Union.
It seems that regardless of all the confusion, the Republic of Armenia pursues a balanced policy. The fact that Armenia is the only country that managed to harmonize its interests both with West and the East deserves praising.
- Mr. Manaseryan, are the markets of above-listed countries interesting for Armenian businessmen?
- I think that Armenian businessmen don’t really consider those markets. I don’t recall many businessmen who are aware of the market of the Middle East today, October 2019. Moreover, we have no idea of our neighbor Iran, Turkey. What do we know about the economy? 0! We have orientalists who may represent their religion, culture, politics but when we talk about the economy, the only thing that they can mention is the so-called Nuclear Energy program. Who knows that Iran has entered the third phase of major reforms, that it dynamically develops the IT sector without making any noise, it pays great attention to various researches, including the World Ocean and the universe? Its engineering mind-set is developed. We don’t know our neighboring 80-million market. Half of the market of the Eurasian Union is our neighbor. That is to say if the cognitive level of the businessmen I don’t think that they won’t be interested in several fields.
- And what about Armenia?
- Now we are given a historic opportunity. I want to look back to 5 years or 10 years ago, we couldn’t even dream that Armenia, Armenian businessmen can have unrestricted access and will be using GSP, GSP+ systems, which Turkey has already been doing for a long time, will have unrestricted access to the most of the markets of post-Soviet states, will have a special status and have a free zone with Iran. That is to say, if we we’re told all of this a couple of years ago, we would not have belived it. Besides being a chance, it is also a very important fact. In the past, a foreign businessman considered Armenia to be an unpleasant environment, a country with a small, limited consumer market which has additional difficulties with an unfinished war, blockade, problems with product movement, closed borders with two countries and other problems. Today Armenia is different, and WCIT (World Congress on Information Technology) and the summit of Eurasian Economic Union proved that things have chanfed. Why did the Prime Minister of Singapore visited Armenia? Of course, he had some connections that were established by his father but also because of the president of Iran. It also should be considered also in the context of the Eurasian Economic Union.
[Armenia now is considered] Not so much as a tube to these countries but an important part of a big market. Because who establishes or is going to establish a business here cannot complain that s/he is doing it only for 3 million population. No. Surely it is the Eurasian market of 172 or 180 million. And Armenia is perhaps the most preferred out of these five countries, as its national currency has been stable for the last four years and the development is predictable, there were no abrupt economic shocks in the last years, the political environment, regardless the problems that we have had, is predictable. And this lets to focus here.
If we try to think like an investor, and we want to make investments for example in Turkey or Azerbaijan or Georgia or Iran. There is one circumstance, the currencies of the countries that I have listed have been devalued by double digits. The currencies of our two neighbors have been devalued by 100%: Iran which has two currencies, both have been devalued and Turkish lira too. Azerbaijani currency has also been devalued by 60-70%. Georgia could not avoid it, and it has devaluated by 60%. The Republic of Armenia in this background managed to maintain stability. What is important in this case? The financial background implies stability.
- You have explained that the current economic problems in Armenia after the election of Nikol Pashinyan as Prime Minister are because of a lack of political stability caused by the recent parliamentary elections. Many observers had suggested that the situation would improve after the election and the country will get an investment stream. But it still does not happen. What steps should Armenia take to ensure its own economic security? (not only in the production field).
- If we compare this situation with the change of power in any other country, not even with a revolution, we notice fluctuations in the economy or in the financial field. Let’s take the most developed country - The United States. Not only the change of power but also election speeches can affect the stock market, including the dollar exchange rate. It didn’t happen here. Of course, some people were afraid and withdrew their deposits. But after a couple of months, the same deposits grew. This means that the trust has been materialized.
I want to pay attention to both sides - those who came into power and tried to maintain it and those who left. Let’s imagine what would have happened if the ones who actually stepped down refused to leave. Economic shock and bloodshed would have been unavoidable. The whole nation was wise and prevented it. I would ascribe it to the people.
Nevertheless, I also wrote an article, where I note that the Armenian experience has been instructive for different nations bringing economic indicators. Which, let’s hope, will be a basis for further development.
- Are there any new projects expected to start under the Armenia-EU agreement? -
- Armenia and the EU can be viewed on three different levels: the relations of Armenia with different structures of the EU, bilateral and multilateral relations with members of the EU and the Eastern Partnership. I think we need to strengthen the role of civil society but not as it is currently perceived. There are many multi-profile NGOs, they can apply for a grant for any project, and start to implement them in a very creative way. I tend to think that the expert part of the civil society should be intensively included in the Eastern Partnership: lawyers, economists, engineers - people who have experience and can develop and implement projects that can be interesting and useful not only for Armenia but for other countries. I believe that one of the solutions to the foreign political conflicts can be the Eastern Partnership. And if we think hypothetically, on the one hand, these 6 countries can do 1, 2, 5, 10 joint projects and connect the civil societies, on the other hand, the task of the membership to be set like years ago when 10 Eastern and Central European countries joined the European Union. We all understand that it was not an economically mature step: Bulgaria, Hungary and other countries haven’t reached that level. But politically that move justified itself. And I believe the presence of Armenia and Azerbaijan in the frameworks of the same project and their simultaneous membership can be a very serious basis for establishing peace, security, and cooperation.
- The creation of Free Economic Zones should stimulate internal production, development of competitive fields of Armenian economics and help to combat monopoly. On the other hand, in the reports by various international organizations, Armenia is still considered to be facing problems like corruption and monopoly. How would you describe the position of the government in this regard?
- We need to be careful about classifying the economic zones. Some people even some economists confound, for instance, Meghri Free Economic Zone, which is a free economic zone between Iran and the Eurasian Union, it is a unique case. We should not confuse it with some jewelry free economic zone or Gyumri airport or with another free economic zone. One cannot confound it, as it [Meghri Free Economic Zone] has an international status and the others are separate areas within the country. I appreciate that they are free technology zones, free export zones, free touristic zones.
What does the free economic zone mean? It gives an opportunity to implement joint projects and productions reducing trade and cooperation barriers. It gives an opportunity to create interest and start teamwork to develop separate branches.
I want to draw your attention to the fact that happened in the Republic of Armenia with the fault of the former government, and the current government wants to not to notice it. Usually, the free zone status is given to branches and areas which are underdeveloped, and they want to develop it, or to a certain branch, for example, they want to make the production of perfume priority and they want to be exempt from the income tax. The most important thing is that jewelry is a developed field and did not need it, it was competitive, it was given the status of a free zone. And it was given to the one company, but here we have approximately 15 000 businesses, but one company was given the status thus forcing the others to come under this umbrella, which is not a democratic move, or privileges were granted to one company which is a manifestation of discrimination which also contradicts the principles of the World Trade Organization.
Evaluation of international organizations is a little bit stereotyped. I appreciate the work done by Transparency International. There are other evaluations as well. There are reports and studies of the World Bank which includes the fight against corruption. There are also separate studies. Simplistic approaches do not allow us to delve deeper into the phenomena. I strongly believe, that there is serious corruption in Armenia, moreover, it is systemic. I think that discretionary appointments in important positions are still a dangerous manifestation of corruption. When a person is appointed without taking into consideration his/her energy conversion efficiency, his biography, professional knowledge, this is a problem. If such cases are recorded and those people who can pretend to position, thanks to their knowledge and experience, are left out, it is big mischief. Firstly, it causes problems because unsuitable people governing and they don’t know. And the damages which are caused unknowingly are immeasurable. Secondly, as a professor, I cannot say to my students that you need knowledge as I can bring many examples when they [officials] don’t have the knowledge or they are specialists in other fields and they have just appeared in the government. For me, it is more dangerous than corruption cases when a deal has been made thanks to a phone call or USD1000.
That’s why I think that international organizations should be more watchful and take into consideration the local characteristics.
-How would you comment on the actual situation of the Free Economic Zone at the border with Iran? What are the reasons that lead to the existing situation? How do you assess the perspectives of Iranian investment info the Free Economic Zones “Meghri” and “Syunik”?
- I am very optimistic and I know that Iran is interested. The Armenian side should negotiate intensively in order to make it a reality. Regarding the Megri Free Economic Zone here are objective and subjective reasons. The objective reason is known to everyone, that the territories were purchased at non-market prices, at artificially low prices and now they will try to use them for the benefit of their owners and not the country. I think that the state has a lot to do here.
- There are many positive examples of commercial diplomacy in history. You are known as a proponent of exporting goods from Nagorno Karabakh to different international markets. Which international markets would you recommend for consideration apart from the countries of the Eurasian Economic Union? Is there any interest on the part of the European countries in business with Stepanakert? How can Nagorno Karabakh strengthen its economic ties with European countries, bring its goods to European markets - and what could be Armenia’s role?
- Strange as it may seem I wouldn’t start with the agricultural products, I would start with education and science. The Shushi University of Technology has made remarkable progress. I occasionally have the opportunity to go there and I think it would be very interesting for the partners in the European Union in terms of projects in the IT sector and apply the technology in different spheres. Agricultural products are a different sphere, which is an absolute advantage and to my deep conviction, few of the European countries have it. What is currently exported from Armenia and Nagorno Karabakh, honey, for instance, is being exported meeting the strict standards of the European Union. It gives grounds for optimism. The hydropower sector is another important cooperation field, alternative energy sector and so on. Nagorno Karabakh is an undisclosed value in terms of economy. And I believe that there is a lot to do in terms of commercial diplomacy.
Armenia has to do something, Nagorno Karabakh, unfortunately, has limited opportunities to be represented abroad and to be legal in the European market, as it is still an unrecognized state. As far as I know, the European Union has different projects regarding the communities and not the whole unrecognized state and we don’t use that opportunity. That should be used. The Republic of Armenia’s joint projects or joint enterprises should include Nagorno Karabakh. No one has deprived us of this right to cooperate with someone in any legal format. I think in that framework we can best represent Nagorno Karabakh.
- What important economic projects does Armenia want to realize in the near future? And which states could Armenia count on in order to finance these projects? Is there hope for gaining new economic partners who are not considered traditional Armenian partners?
- It seems to me, that we need to work in all directions. I don’t think that there should be stereotypes of a traditional partner. Relations with traditional partners can just be models, we can learn lessons from them, we can develop them. I believe that there are no independent states in the world, we all depend on each other. It may seem paradoxical, the more countries we depend on the more independent we are because we have a lot of choices. If we depend on two countries that creates serious threats in terms of economic and national security. But if we have a lot of partners, in that case, it is more favorable.
I am not aware of any big projects. I think if there were some, I would have known. It’s worth paying special attention, especially by including the experts.
- The main investments in the Armenian economy come from Russia. In recent years, the volume of these investments has risen. Both parties are aiming for the development of the defense industry and the establishment of joint venture companies in this field. How do you assess these economic perspectives?
- I think that the Republic of Armenia has to have its rightful place in Russia’s military-industrial complex, in particular with its IT technologies, nanotechnologies, production of dual-purpose products. They are very big opportunities. I believe that we don’t use our intellectual abilities that much, we have stimulated the energy sector, the nuclear power plant and so on. But there are serious opportunities in the field of innovation, in the field of science and technologies. And there are endless opportunities.
- Are Armenian businessmen satisfied with the tax policy of the Prime Minister? Did you receive any complaints in this regard?
- You should ask that to the businessmen. I am not sure. But I think that the government of Pashinyan tries to create favorable conditions realizing that without the partnership with businessmen they cannot hope about tax collection, an increase of revenues in the state budget, development of the economy. As the first carriers of all that are the businessmen. If this consciousness prevails I think we have room for progress.
- It is clear that a large part of Armenia's GDP is provided by foreign investment. What steps could Armenia take to reduce the disproportionate dependence on foreign capital?
- Firstly, we need to stimulate domestic investments. The foreign investments have a political nature: if we have good political relations with Russia, then Russia makes investments, we have good relations with Japan but they are not strategic, so Japan is not interested. We must make it so that any country can make non-politicized investments. First, we need to make investments in our country. If we don’t trust and won’t make domestic investments then we should not hope about foreign investments.
- Could you list the most important obstacles for Armenian business people?
- Firstly, it is competitiveness, I think it also depends on the Armenian businessmen, they need to master the qualities of management. And also, the government should help them increase their competitiveness. There are also economic threats that need to be diagnosed, so people can understand they field they work in and what awaits them. I think we won’t be isolated if the state prompts the businessmen or listens to them.
- Are there many business people in Armenia who want to relocate their business abroad? What are the reasons for that? In which area are the biggest problems for business people? (tax office, police, customs, etc.)
- In my opinion, now the opposite is trending. Now, hopes have been revived and people want to believe that they have the opportunity of a more free and just competition in the new Armenia, so they don’t run away. Even those people who were wanting to emigrate, now they linger, bearing damages they want to find their place in the new environment. I am relentless in the criticism but anyway that we need to notice the signs which are worth relying on and show your own initiative. One cannot expect anything from the government. One may expect two things from the government - not to disturb and support if necessary.
Interviewed by Ami Chichakyan
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