Russia as Armenia’s #1 strategic partner…

ARKA News Agency – Interview
April 26 2004


Exclusive interview of the Chairman of Union of Manufacturers &
Businessmen (Employers) of Armenia Arsen Ghazaryan to ARKA News

ARKA – Mr. Ghazaryan, what is the current state of the Armenian-
Russian economic relations?

A. Ghazaryan – I should say that after the collapse of the Soviet
Union Russia remained a key partner to Armenia. We import raw
materials and energetic carriers from Russia.. On the other hand, the
Russian market is the largest and the most available for the Armenian
goods. During the recent 3-4 years the volume of bilateral
trade-economic relations has considerably grown as compared with the
previous period. This was achieved due to the fact that the Armenian
companies adjust the quality of their products to the international
standards, which Russia, naturally, adheres. Besides, our companies
gain experience of being involved in the Russian market. In case of
existing of normal transport communication between our countries, the
bilateral turnover of goods would have surpassed today’s indicator
three-, four-fold as a minimum. For instance, at present, there are
many imported construction materials from Ukraine in Armenia, if the
railway would have functioned normally, such goods could have been
purchased from Russia as well. Bilateral economic co-operation
received new dynamics after the mutual visits of the President of RF
and RA Vladimir Putin and Robert Kocharian in 2001. So called ethnic
capital was moved to the first view; Russian businessmen with
Armenian background became more active. Today they make rather
considerable investments in their motherland, particularly, in
construction sector, banking system and other spheres. As one of the
best examples of the kind I can name the International Business
Centre, which, in fact, rescued one of our leading banks,
particularly Ardshinbank, as well as several industrial plants such
as Syrius, Arax, Basalt, Almast. As far as I know, IBC, headed by
Karen Safaryan, a famous Moscow businessman, is going to make new
investments in Armenia, which I can only welcome. The activities of
Ara Abrahamyan, Chairman of Union the Armenians of Russia, must be
highly appreciated, who except social initiatives, unfolds
considerable business activities. We count on the fact that our
compatriots having effective business in Russia, will join the
Property for Debts joint program and will attract new Armenian
businessmen in the program. Recently the Russian side displays
interests in the Armenian plants, which were a part of a single
powerful military-industrial complex. We are preparing a detailed
database on these companies and are going to present it to our
Russian partners by the late February. It is of utmost importance to
receive new offers for them, especially if they have preserved their
productive and sci- tech potential, professional specialists that can
and wish to work. I should especially mention the steps taken by RAO
UES. A number of leading energetic objects of Armenia were
transferred under the management or became the property of this
powerful company. New and very good possibilities for exporting
energy to the third countries are opening for the Russian power
engineers. At the same time, the issue of import of the fuel for the
Armenian NPP, which guarantees its normal functioning, was solved.
The Russian capital enlivens ALSO the Armenian construction sector.
For instance, due to it was possible to begin the construction of
Northern Avenue in Yerevan, construction of which was planned already
in 1930 by the great Armenian architect Alexander Tamanyan. The
Russian investors, being confident in perspectives of Armenia’s
economic development, decided to make investments in the real estate
sector as well. By the way, it isn’t accidental that the prices of
apartments on the Northern Avenue increased very quickly reaching
almost the prices of Moscow (today 1 sq. meter of the elite
apartments under construction cost $1000, while the ready ones cost
$1600 and more. Lately, promising results were recorded in the
engineering tools and mechanical engineering sectors. I would like to
mention Mshak CJSC, headed by Levon Poghosyan, who recently became
Deputy Director of Stankoimport Russian company on scientific issues.
At present joint projects on Armenian companies participation in
technical renovation of Russian Tool engineering and machinery
engineering industry are being developed. ABM Soft company attracted
Russian capital for purchasing the control packet of shares of
Yerevan’s Armstanok plant and it is going to implement Digital
Program Installments projects, which are expected to be exported to
Russia. We can bring many such examples. It’s worth mentioning that
they witness an important constructive step forward. Russia doesn’t
treat Armenia as a `junior brother’, who needs assistance
permanently. Armenia is the equal partner for Russia. Armenian market
becomes more attractive for the Russian investors, as a convenient
transit point and a gateway to Iran, countries of the Middle East and
the Persian Gulf too. All these activities contribute to the
formation of joint economic space. That’s why it’s a good example for
the other CIS member countries, as the level of the economic
integration within the framework of CIS, notwithstanding numerous
declarations on that occasion, is still is not satisfactory.

ARKA – Thus, considerable growth of the Russian investments in
Armenia is evident now. But is there any opposite process?

A. Ghazaryan – Yes, there is. Today the volume of the investments
made by the Armenians in Russia is increasing as well. This is
connected with the traditional labour migration. The matter is, that
if we objectively evaluate the given phenomenon, it should be
considered as the least evil, as, in fact, it is an investment too, a
technical, financial, intellectual , etc. On the other hand, our
compatriots leaving for Russia to work, aren’t separated from their
families and don’t lose the sense of obligations to their country.
The new migration regime, regulating the communication between our
countries, helps to be confident about receiving Russian citizenship
or the permanent residence right. They can peacefully work. That is
why it is very important that the Armenian businessmen began
establishing joint companies in Russia. Kasnodar and Stavropol,
Rostov and other regions of the Southern Russia can be examples. The
number of our compatriots living compactly here is traditionally
enormous. The businessmen living here are our `agents’ in Russain
market in the best meaning of the word. I wouldn’t like to be
trivial, but the successful advancement of the Armenian brandy can be
explained not only by the investments and professionalism, but also
by the skilful management of French company `Piernod Ricard’, which
is today’s Yerevan Brandy Company, but also by Russian market. At
present, both YBC and Great Valley, Yerevan Wine-Vodka Factory Ararat
and many other companies are effectively working there. The problem
is not the realisation but the production in the necessary volume:
more and more offers are being received. The same thing concerns the
production of Armenian canned fruits and concentrates, over 50 % of
which is exported to RF.
Thus, Russia is our strategic partner # 1, which can secure logical
continuation and dynamic development for the Armenian economy.
Armenian businessmen working there never face communicative and
psychological problems there.

ARKA – Then what’s the matter?

A. Ghazaryan – The matter is, that we have to define the spheres in
which the realisation of the joint projects is the most optimal and
prospective, where Armenia is a very convenient transi corridor and a
market for Russia. The researches should be madin this very
direction. The UIEA, as NGO, in which many leading Armenian
businessmen are included, also the entrepreneurs working with the
Russian partners, try to do their best to strenghten these relations.
Naturally, we will continue the cooperation with our Russian
partners. First of all with the Russian Union of Industrialists and
Entrepreneurs, led by A. I. Wolsky. We regularly hold joint forums,
`round tables’, conferences. We are meeting each year. Th e regular
dialogue took place in end February in Moscow, within the framework
of the meeting of Yuri Lugzkov and Yervand Zakharyan, Mayors of
Moscow and Yerevan. Anopther our big partner is the International
Congress of the Industriallsits’ and Entrepeniours’ Unions, led by W.
K. Glukhikh. This congress unites the businesmen from the 22
countries of the former Soviet Union and Western Europe. The
cooperation with such authority organizations help operatively
exchange valuable information and find partners for our businessmen.

ARKA – But the transportation problems still make the work more
difficult, don’t they?

A. Ghazaryan – Unfortunately, they really do. The lack of land
borders with Russia makes the matter more difficult. But, it doesn’t
hinder to organize exporting goods and row materials. Armenia isn’t
in transport blockade, as it was in the early 1990-es. But today the
expenditures for the transportations are extremely high, which
increases the first cost of the goods. It is a paradoxes, but today
to sent a container to Moscow will be more expensive that to send it
to Rotterdam or Marseille. As it is cheaper to send it by the sea
directly, than to do it by the railroad or by tracking.

ARKA – What can you say about the legal field?

A. Ghazaryan – There are no problems here. The agreement- legal base,
regulating the bilateral economic relations, has been elaborated,
discussed and signed long ago.
We merely shouldn’t forget that in CIS Armenia and Russia are
different countries. And today, our managing objects increase the
advalorem tax not here but, when exporting them to Russia, in Russia.
The import is built according to the same principle. At the same
time, Armenia can have preferences when importing some row materials,
based on the deals signed within the framework of CIS. I think, if
Armenia joins the Custom’s Union, it will make export to Russia
easier. Many things will be specified also after the RF’s statement
in the World Trade Organization. Armenia joined the WTO in the
September of 2003, and in this respect, the normative base was rather
improved. Wee have become quite experienced here.

ARKA – Does it seem that this experience could be useful for Russia?

A. Ghazaryan – In current job Russia, of course, follows the
experience of the governments wich are friendly to it, also including
Armenia. Really, we have something to tell and explain.

ARKA – What do the Russian-Armenian economic links think about
three-sided co-operation between Armenia, Russia and Iran?

A. Ghazaryan – Great importance is given to this co-operation like
before. Iranian businessmen are very interested in establishing
contacts with Russian colleagues, and here they don’t frequently see
any trusty `lighthouses’ among the Armenian entrepreneurs for gaining
that aim. The Russians are also interested in Iranian market. From
our side we assure the business circle of Russia and Iran that
Armenia is able to serve as a real transit corridor. For example, for
solving lots of problems it is convenient the rout of
Meghri-Yerevan-Poti-Novorosisk, because such kind of cargo
transportation for West Russian is not usually cheaper than ferry
announcements on Caspian Sea between Iranian port Enzeli and Russian
Astrakhan. –0–