THE REALITY THAT IS ARMENIA
By Michael Mensoian // January 29, 2014 in Featured, Headline, Opinion
Special for the Armenian Weekly
Now that a new year is here, maybe we can resolve to spend some time
thinking about what is happening in and to Armenia. We can recall
the joy and the pride we felt when the second free and independent
Republic of Armenia was declared in 1991 (please don’t equate the
Bolshevik-dominated republic as our second republic). It was a
moment that many thought would never come, but it did. Since then
Armenia has been beset by many crises: The devastation of the Spitak
earthquake that occurred in 1988 was coupled with the total collapse of
an economy that eschewed proven economic principles in order to meet
the political objectives of the Bolshevik’s new order. The liberation
of historic Artsakh and the uneasy truce along the Line of Contact
has created its own lingering set of problems, as has the presently
moribund issue of the Turkish-Armenian protocols; looming large over
all of this is Russia’s influence that has, for the moment, shifted
our orientation from the West to closer ties with Moscow. These have
been difficult years, but Armenia has not only survived, it has made
some palpable gains. Unfortunately, there is always thehowever that
has to be considered.
The however refers to the pernicious problems that plague Armenia.
First is the high rate of unemployment and underemployment that is
responsible for many families and most pensioners living below or
close to the poverty level. Apologists will immediately point to
the devastated economy (already mentioned) that Armenia inherited
as the reason, or the shop-worn excuse that other countries have
similar problems.
They do, but in large measure our problems stem from the
institutionalized corruption within the country that has its roots
in the chaotic conditions that accompanied our independence.
Unfortunately, what has evolved is a symbiotic alliance of governing
politicians and monopolists able to exploit the economy for their
personal enrichment. Unemployment, poverty, and the absence of
opportunity are written off as collateral damage as these Apex
predators within society amass wealth and influence to the detriment
of the nation and its citizens. Whatever legitimate economic gains
the administration has made (and to its credit, gains have been made),
it is the shameful disparity in the distribution of the wealth that is
produced that keeps poverty at over 30 percent; encourages emigration;
and allows unemployment and underemployment to exceed 20 percent. One
might question how this disparity in the distribution of wealth
relates to unemployment. Oligarchs or monopolists (or however you wish
to identify them) are not necessarily driven to expand the economy,
because the more expansive and diverse it becomes, the more difficult
it is to manipulate. Consider that in the poorest of poor countries
where unemployment and poverty are rampant, the Apex predator is still
able to amass wealth well beyond his needs from economies that barely
seem to function. It belies the adage that you cannot get blood from
a stone.
Given this unhealthy concentration of power, Armenia is closer to
an oligarchy in practice than the democracy that is defined by its
constitution. A patina of social justice that can be burnished when
necessary not only misleads us, but the great pride we have in our
country encourages us to overlook the reality that is Armenia.
Our problems are not due to a lack of resources that can be developed;
or to the absence of a pool of intelligent and ambitious workers
who could be retrained if required; or to the lack of energetic and
creative entrepreneurs within and outside Armenia who would enter
the marketplace to provide a range of goods and services that would
increase employment and provide much needed competition.
Rather, it is the powerful alliance of politicians and oligarchs
that controls the marketplace by determining who can participate;
the goods and services that may be offered; as well as the prices
that consumers must pay. And in subtle and blatantly obvious ways,
they are able to profit from the various public and private projects
at the national, district, and local levels. The end result is an
ever-widening gap in the distribution of the wealth produced (wealth
includes wages/salaries, access to medical delivery systems, education,
leisure time, housing, opportunity for self-improvement, etc.) to the
detriment of the worker and his family. As long as Armenia’s small
economy (its present Gross Domestic Product, or GDP, is estimated
at $10-$11 billion) can be manipulated by those who have acquired
wealth, power, and influence, the quality of life for the majority
of the people will not dramatically improve.
For a country supposedly suffering from a battered economy that has
resulted in high rates of unemployment and poverty, a recent study
(Illicit Financial Flows from Developing Countries: 2002-2011,
D. Kar and B. LeBlanc, Global Financial Integrity, December 2013)
determined that Armenia had an illicit outflow of $6.2 billion
during the 10-year study period. Illicit outflows are defined as
“…all unrecorded private financial outflows involving capital that
is illegally earned, transferred, or utilized, generally by residents
to accumulate foreign assets.” The annual outflow during the years
2008, 2010, and 2011 exceeded $1 billion annually. This is about 10
percent of Armenia’s estimated GDP.
The second problem is the lack of opportunity available for our
educated and talented young men and women just starting out in life.
Rather than the administration coming up with creative policies to
underwrite opportunities for them to spread their wings (and be able
to contribute to the nation’s development), the system essentially
ignores them. These are the men and women who, in the normal course
of events, would be the foundation upon which our country’s future is
built. Having few to no options, many are literally forced to emigrate
to other lands where their talent, professional skills, and creativity
allow them to flourish. What a waste of human talent for Armenia. Yet,
there appears to be no urgency on the part of opposition leaders or
the majority of the hard-pressed citizens to confront an oligarchy
that weakens the country and is destroying their future.
The third problem is the continuing annual decrease in Armenia’s
total population. In 1991, the population of Armenia was estimated at
about 3.5 million. Assuming a closed population (no immigration or
emigration) and a slightly above replacement level fertility rate,
the population of Armenia in January 2014 should have been no less
than 3.6 million (a very conservative estimate), rather than the
present estimated population of 2.8 to 3 million. This represents a
decrease of from 600,000 to 800,000 people. How many of that number
have permanently relocated is debatable. Without a significant increase
in the birth rate and immigration, the population will likely continue
to contract. And as the population decreases with more and more young
people and families emigrating, the population will get older as the
average age of those remaining increases.
How will the needs of this expanding number of elderly people be met?
As it is, most pensioners presently live below or close to the poverty
level. A decreasing population has a wide range of serious implications
for the country’s future, such as family formation; birth rates;
the size of the work force; ratio of retirees to workers; revenue
collections; budget appropriations; the number of males available
for future military service; the loss of potential leaders in all
aspects of service to the nation; and the political status of the
country within the South Caucasus.
The approximately $2 billion that is remitted annually by Armenians
working “overseas” (outside the country) keeps the economy afloat.
However, for families separated for extended periods of time from
the husband or father, there are serious emotional and psychological
downsides. For Armenia, exporting workers is a stopgap necessity
brought about by a combination of government policies and corruption.
Unlike such countries as Egypt, Jordan, and Pakistan, to name only a
few, where serious population and resource imbalances exist, exporting
workers is an absolute necessity.
President Serge Sarkisian will complete his second term in 2018.
Armenia must endure four more years of the same failed policies. Four
more years of corruption. And four more years of favors to be
dispensed. In what condition will our country be at the end of his
final term? Of greater concern is the fact that his hand-picked
candidate in the 2018 presidential election will be elected, one way
or another, to serve until 2023. Why? Simply because it is highly
unlikely that a strong, energetic coalition candidate will oppose
Sarkisian’s alter ego in the 2018 presidential election, given the
inability of the political parties to put the welfare of the nation
ahead of their petty interests and jalousies.
No change means that Armenia’s future hangs precariously in the
balance, along with the hopes and aspirations that fall under
the rubric of Hai Tahd. The continuation of a Sarkisian-dominated
administration beyond 2018 to 2023 should be cause for concern.
Although some of the Apex predators may change (even they have to
age or may opt to retire in comfort), the policies, corruption, and
favoritism will continue. Is there another likely scenario to consider?
Obviously there are individuals and families who have no reason
to seek change. They are fortunate that life in Armenia does not
present the hardships experienced by those living below or close
to the poverty level–those who are unemployed or underemployed,
forced to emigrate in search of a better life, or have a husband
or father seeking employment outside the country to provide for his
family. If the leaders of the opposition parties and the majority of
the electorate who have legitimate reasons to seek change are unable
or unwilling to confront the issue in 2014, will it be any easier in
2018? And if the oligarchy continues to 2023, what then?