WE NEED DIALOGUE WITH SOCIETY AND BUSINESSES - ROBERT KOCHARYAN 14:56 * 23.01.15 In an interview with the 2rd.am website Armenias ex-president Robert Kocharyan spoke of the latest developments in Gyumri, economic and domestic political situation in Armenia.According to him, Armenias authorities should be ready for a candid dialogue with society and with the business community. Mr Kocharyan, the first question is about the Gyumri tragedy. As soon as the murderer was detained, popular unrest spread throughout Gyumri, which developed into clashes with police amid high emotional tension. The major reason for the unrest - as well as for persistent popular discontent - was uncertainty over the following questions: which state is to try the murderer and where is he to serve his sentence? What should Armenias authorities have done in that situation? The crime committed in Gyumri shocked entire Armenia because of its extreme cruelty. Public protests could have obviously developed into large-scale actions with unpredictable consequences. The authorities should have taken urgent preventive measures. First of all, they should have clearly assured the public that Armenias law-enforcement agencies would investigate the crime and the criminal would be convicted by an Armenian court (we have a precedent of 1999). I am sure that both the Armenian and the Russian side needed that because that would have precluded any attempts to let a particular tragic incident go all the way to the level of Armenian-Russian relations. Our officials confused and contradictory statements only poured oil on the flames. Regrettably, people vented their anger on Armenian policemen. In any way, it was a horrifying tragedy and my family and I are shocked and share common grief. A slump in the national currency late last year caused a real shock among the population. Armenia had not seen such a serious depreciation of the Armenian dram for long. Government officials cited geopolitical reasons for the situation - rouble downfall, decline in world oil prices, anti-Russian sanctions. Do external factors alone account for the black December? Did Armenias authorities take adequate measures in that situation? Should further AMD depreciation be expected? This is the second time for the past five years. Of course, pleading external factors and playing a victim of geopolitical processes is the easiest way. Russian economy was in a much worse situation in 1998. A 6% economic decline was recorded, and the ruble showed triple depreciation against the USD. At present, Russia has huge gold and foreign currency reserves, which rules out a default. With all that, the Armenian dram showed stability despite Armenias weak economy and banking system. Certainly, external factors play their role, but last December they exposed our ailing economy rather than caused that unhealthy situation. However, amid the pessimistic expectations, even minor speculations may prove decisive despite seeming financial stability. The Central Bank of Armenia is officially responsible for Armenian currency and it made certain efforts to stabilize the Armenian dram. But it was not enough last December. All the branches of power had to coordinate their actions. But the results showed they were too late. Economists say that the authorities reputation and management efficiency is often more important than fundamental factors during crises. As a negative factor, you mentioned also the fall in the prices of oil. Its just the other way about. Oil-exporting countries take advantage from falling prices. Cheap petrol and diesel fuel are a good stimulus for economic development and can make up for the losses caused by the decreasing transfers from Russia - given cheap energy carriers multiplying effect on the economy. Given the internationally observed trend, the gas supply prices may be revised too, if of course, the controversial agreement with Gazprom allows that. What will be the situation with the [Armenian] Dram? The Dram exchange rate reflects the general situation of the economy and the payment balance. Their deterioration will make the Dram cheaper, while the improvement will foster. The Dram cannot live its own life, isolated from the general economy. Anyway, sharp fluctuations of the currency rate are impermissible; they jeopardize the financial sector, undermining trust in the national currency and hitting our citizens pockets. In one of your interviews last year, you made a prediction that the country was entering into period of negative expectations. Some of those expectations have unfortunately come true. Besides, as early as just a couple of days ago, Moodys downgraded Armenias sovereign rating, changing the estimated forecast as negative. What are your estimates of Armenias economic situation for the near future? I cannot, unfortunately, say anything encouraging. If the economic policies remain unchanged, then it isnt absolutely clear what should improve the situation or cause an economic growth, motivating its increased effectiveness. The downgrading of Armneias sovereign rating by Moodys will make the foreign borrowings far more expensive for us, especially light of an increased foreign debt. In the mid-term perspective, the EEU economy will be in a state of recession; hence it is very difficult to assume any essential role there. The strictly devalued Ruble will seriously change the structure of the trade with Russia, without offering any advantage to our economy. There is a low likelihood of serious investments from Russia; due to the sanctions, they themselves have a problem with the refinancing of Western loans. We are not particularly attractive to western companies because of our membership in the EEU. It isnt clear what our trade volumes with Iran will be. The international prices for colored metals are not going to rise, as the forecasts suggest; its going to be just vice versa. The introduction of stricter norms by Armenian banks raise the borrowed moneys price, making business crediting expensive. As for the development sector, [its prosperity] is not even to be dreamed of given such a micro-economy, population flow and decadent moods. With the economys monopolization increasing, the investment volumes decrease steadily, degrading the investment activity. The internal political situation is not likely to improve, as the political monopoly continues. So without drastic changes, it will be extremely difficult to resolve those numerous problems. We never hear any keynote speech from officials apart from speeches that everything is fine or will be fine. It is obvious that the evaluation of the countrys situation drastically varies from the authorities to the society, with either one or the other not being able to develop the necessary understanding of the reality. Perhaps the authorities really think that everything is all right or have been persuaded that nothing has changed. Neither scenario leaves room for optimism. This automatically gives rise to the question as to what the authorities should do to extricate themselves from this difficult situation. They have to first of all admit the existing fundamental problems and dispose themselves for an open dialogue with the society and the business community over ways towards overcoming the situation in the country, and the crisis. The groundwork of the success behind the authorities work is trust, which is missing today. The country needs drastic changes, but I do not absolutely mean constitutional reform. I wouldnt like to one by one enumerate all the obvious and necessary steps. In Armenia, particularly its government, there arent few people who realize what needs to be done first. The biggest impediment towards success would a conflict between the political elites economic interests with the long-term interests of the country. tert.am/en/news/2015/01/23/Robert-qocharyan/1567795
Posted on: Sat, 24 Jan 2015 04:27:05 +0000
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