No Country Can Afford to Be Totally Dependent on One Partner
Naira Hayrumyan
Story from Lragir.am News:
Published: 10:18:32 – 30/08/2012
Exclusive interview of Lragir.am with the U.S. Ambassador John Heffern
I have chosen the economic topic on purpose because I believe that
economic issues are very important in terms of politics and regional
development. My first question is the following: what are the main
directions of your work, your primary objectives on the economic side.
Let me broaden the question. Our economic elements are three. So I am
going to answer your economic questions in a little bit broader
context. The clear instruction I got from Washington before I came to
Yerevan last October was to do what we can, what the United States can
to help Armenia succeed as a prosperous, secure, democratic country.
And you can There is regional piece of that, there is a political
piece and there is an economic piece, and we are focusing on the
economic piece.
The second is to help Armenia create options for itself, every country
needs options, so we’re going to help Armenia create options. No
country can afford to be totally dependent on one partner, on one
border, or one sector of the economy, or one separated economy. And
that goal also I see a strong economic component.
And the third is to keep Armenia looking frankly to the West as a
partner. We’re not competing with anybody, we’re not trying to replace
anybody but we think Armenia can benefit from Western values, Western
trade and investment and Western partnership. So here are our three
economic objectives to help Armenia succeed as a prosperous country,
help create economic options and work to increase trade investment
with the West, the United States as well.
Have you any success stories since your arrival in Armenia last October?
Well, I wouldn’t say they’re all necessarily in the last ten months.
Yeah, we have some success stories, especially in two sectors I’ll
talk about. And what excites me about these successes is that it’s not
the U.S. government’s successes. The U.S. government has played a
part, the U.S. private sector has played a part but especially strong
Armenian partners have played a major part. And those two sectors are
information technology and food processing.
Are there specific examples?
Sure. No, I’ve got specific examples. I’ll start with IT. As you know
very well, the IT sector is probably the fastest growing sector of
Armenia’s economy: 20 percent of annual revenue growth, 13 percent
annual job creation, job growth, and because it develops on Armenia’s
strengths. But the United States has played a part there, and I’ll
tell you a couple of examples.
First, the U.S. private sector. A number of major U.S. companies have
offices here and projects here – Synopsys, National Instruments,
Oracle, Sun, there’s about half a dozen major U.S. IT companies,
telecommunications companies, who are working here very successfully
with local partners. And what we’ve tried to do at the U.S. embassy is
to build on that private sector’s success. For example, last year we
sent, actually earlier this year, we sent ten IT businessmen and
businesswomen to the U.S. to build on their partnerships with U.S.
companies. So we sent them to the United States to build partnerships
with other IT companies, U.S. IT companies. And
USAID has launched a program last year on entrepreneur development, IT
is one of the key sectors as part of that program. It’s a sizeable
program, it’s 17 million dollars over the next 5 years. So there’s
something concrete in the IT area, you know about food processing and
other issues so I’ll stop there.
Just to follow up your answer, I know about a program the Embassy was
doing to develop entrepreneurship and competition. What’s your
assessment of the competitive environment?
There’re obviously challenges here, as well as opportunities. I’ve
tried to focus on the opportunities since I’ve been here but let me
talk a bit about challenges. Considering the close people-to-people
ties between the two countries, Diaspora and other people-to-people
ties, we should be doing a lot better than we’ve been doing in the
economic sphere. Our trade is about, I think, last year it was about
250 million dollars, I think it’s really very small for bilateral
trade. We’re not satisfied with that. We’re going to do better than
that. The U.S. investment last was about 40 million dollars, it’s not
bad, and it’s the third among investors but again we think we can do a
lot better than that.
When I talk to U.S. companies and potential investors, they ask me
three questions. First, will any contracts that they sign be honored
by independent courts here? Second question is I need to know what my
costs are going to be, cost of business. Will the tax and customs
payments be predictable to me? And the third question is how
competitive is the market. If I come in, will I be able to compete
fairly and equally with other companies in the market.
And well there has been progress, and there continues to be reform and
we commend the government and people of Armenia for these reforms. I
frankly cannot be totally reassuring to the U.S. investor on those
three points. So there needs to be more work in the area of
independent judiciary, predictable taxes and customs, and economic and
also political competition, competition in the economic sphere.
Still one of the scenarios that was discussed is that this situation
can be addressed by means of huge amounts of foreign investment.
I do think if and when big western companies come to Armenia and
invest in Armenia, that will have a positive impact on the reform
effort and the business climate. So, partly yes to that question. So
that’s one of the things I try to do every day, it’s to find that
company to make that big investment that will drive, change and
transform, help transform Armenia’s economy. So yes, partly yes.
But, frankly, the main thing that’s needed to drive the reform program
is political will and not resources. So when all the policy makers
that I talk to and all the business people I talk to and NGO, civil
society leaders and the media people I talk to, I and my other
partners stress the need for more political will, bolder political
will to make the changes necessary.
My next question is on another issue. You mentioned in an interview,
at least I read it, that Kars-Gyumri railroad could be operated even
without opening the border.
We remain committed to the protocols, the Turkey-Armenia protocols,
that’s the first priority. Opening those borders will help with all
the three goals I mentioned in the beginning. And will also help
Turkey by the way, the purpose of the protocols is not just to help
Armenia, the purpose of the protocols is to help both countries and
both people. So that every opportunity we push, and frankly the
problem is on Turkey’s side, and at every opportunity we push Turkish
policy makers to ratify, implement the protocols as signed in 2009.
And by that I mean ratifying, implementing protocols without
preconditions. Turkey so far is not doing that. So does that mean we
don’t do everything, do we just sit and wait for Turkey to do the
right thing? I don’t think so. We’re going to continue with the
embassy, with the United States, to push progress in the
reconciliation process wherever we can find an opportunity to do so.
And there are a number of economic areas where there could be progress
and that could be accomplished without a total agreement on diplomatic
relations and opening borders.
And one of those options that would be a huge economic boost not only
for Armenia but also Eastern Turkey the opening of Gyumri-Kars would
be a huge economic boost for both countries. There is a fiber optic
that could be completed and help both countries, and in the energy
field there are all sorts of electricity swaps, again to help both
countries, even if the protocols, even if Turkey is not ready to do
the right thing on the protocols.
Do you know anything about the reaction of the Turkish side to these
kinds of projects?
I think they are most open to the fiber optic project. So, as I
understand it, I don’t have first-hand knowledge of this but as I
understand it, Turkish and Armenian companies are discussing the fiber
optic thing. The railroad is tougher. Not as much progress on the
railroad project, not yet.
Millennium Challenge Corporation is no longer working in Armenia. Also
the EU has postponed the donor conference. These resulted in thoughts
that this is pressure on the authorities or these organizations do not
want to help Armenia.
Well, I can’t speak about the EU but I can speak about the MCC part of
it. But absolutely, aid and assistance is conditional, no question
about that, no apology for that. Economic development here, prosperity
and success in the economic field will not be possible without
political will to make the necessary changes. And so we are not
interested in spending our taxpayers’ money here unless there is some
prospect for success. So if didn’t believe there was a prospect of
success we would not be here at all. We have a sizable assistance
program and will continue to have a sizeable assistance program and we
are trying to focus that cooperation, assistance on transformation, on
building capacity, on training, building up Armenia’s knowledge base,
so that it can take the advantage of the resource it has, its people.
So that’s the goal of our cooperation. We’re not building
infrastructure projects here anymore. Our goal is to help Armenia
transform itself into a knowledge-based society so that it can compete
in the 21st century.
Back to MCC. MCC is explicitly conditional. There are 13 very explicit
categories, indicators that countries are judged upon, are assessed
on, and the decision about whether the country is eligible for MCC is
based on its performance in those 13 areas. And the key indicator is
anti-corruption and good governance. And for the three reasons, the
three challenges that I mentioned earlier, Armenia does not meet the
requirements for the new MCC compact.
In August you mentioned about development of the Armenian civil
society. Do you think changes in civil society will help improve
economic competition as well?
Absolutely, I mean not by itself, it will not succeed by itself, but
it is a key component in Armenia’s transformation and reforms. So one
of our goals every day is to identify partners in Armenia’s civil
society, political and economic sectors, the media. A key part of what
we do every day is exactly this.
My last question is on the Civilitas Foundation. Do you follow the
developments? What are your thoughts on its case?
Sure, we follow those developments carefully. Civilnet and the
Civilitas are really very important for Armenia. We worked with them
closely and we will continue to work with them. And the whole question
with Mr. Oskanian is complicated, I don’t know all the financial
details, I don’t have specific information of the substance of the
specific case. But I have to say that the timing of the investigation
and the charges and the information that has come out was very
suspicious in terms of the political agenda. I hope the authorities
will treat it appropriately but I will have to say the timing is
suspicious.
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