Author: Vorskanian Yeghisabet

And what is Armenia’s government going to do about it?

BY GARO R. MADENLIAN

We all understand the limitless promise of our young republic and especially the creative power of our youth–irrespective of ruling parties or coalitions, elections, debates and never-ending power-struggles.

We also see the grinding poverty still facing our ancient nation as it continues to improve, survive and thrive in the face of imminent danger and ongoing blockade by its neighbors to the east and west, where large portions of our historical Armenian homeland remains occupied.

Amidst this difficult geopolitical environment, we collectively acknowledge our greatest asset, and best hope, for a prosperous country is our youth. Because of this, we know that cultivating our next generation is one of our very top priorities. Developing and directing the vast energy and potential of our youth is the key to the well-educated and highly-skilled workforce that will take Armenia to the next level.

We desperately need investments in cutting-edge, world-beating education – the type of instruction and inspiration that arms our boys and girls with the skills to compete in tomorrow’s high-stakes marketplace. If we aspire to an Armenia that’s more than a museum – a tourist destination – we need major infusions of resources to drive Armenia’s progress as an incubator of innovation, a global IT hub for our vast and growing Diasporan economic network, and an international center for commerce and cooperation.

Armenia was – until very recently – powerfully positioned for a major Millennium Challenge Corporation grant for IT education, in the hundreds of millions of dollars, a potentially game-changing allocation of direct U.S. funding for instruction in information technology in schools across Armenia. MCC is an independent U.S. foreign assistance agency created by Congress in 2004 with strong bipartisan support that is helping lead the fight against global poverty. It provides time-limited grants (not loans) promoting economic growth, reducing poverty, and strengthening institutions including education. Learn more here.

MCC has projects throughout the world and in various sectors such as agriculture, education, energy, health, land and property rights, road and transportation, and sanitation and irrigation (https://www.mcc.gov/sectors), all of which are very important.  For Armenia’s future, an education sector grant – like the $140 million STEM grant given to the Republic of Georgia in 2013 would be truly game changing. As proof of concept, we can look at the successes of similar grants in Namibia, Cote d’Ivoire, Mongolia, Morrocco, and El Salvador which fundamentally transformed their educational systems, giving their students advantages and providing huge benefits to their respective economies. Learn more here.

Why then hasn’t Armenia received a similar grant to catapult her schools into the future? It’s not because Armenia’s undeserving, or that there’s no need, or that Armenia lacks support.

On the contrary, Armenia meets and exceeds nearly every good governance standard set by the MCC, whose stated aim is to alleviate poverty. There is, sadly, far too much poverty in Armenia. Armenia is also blessed to have a strong Diaspora in America – where prominent groups like the Armenian National Committee of America and their many friends in Congress have strongly backed securing an education-based MCC grant for Armenia dating back to 2016.

The real reason Armenia has not received a major MCC grant for education purposes is that the World Bank (whose main goal is also reducing poverty) suddenly reclassified Armenia as barely meeting its threshold for an “upper middle-income country,” making it ineligible for MCC funding.  They grouped Armenia with far wealthier countries like Brazil, Lebanon, Russia, and Turkey. By this standard, Armenia is now just one level below “high income” nations, like Denmark, Germany, and the United States.

This reclassification is absolutely ridiculous!

The government of Armenia must step up its game, leveraging its status as a member of the World Bank to correct this error and right the wrong to secure this grant for its own future.

Armenia can, for example, challenge the World Bank determination of its income status, formally request the World Bank change its income status, officially ask for the raw data World Bank economists used to make this unfair determination, use its own data and economists to present accurate numbers.  Or, Armenia could, on a more human level, simply invite the President of the World Bank to visit actual villages in Armenia.

With the future of our kids at stake, we should demand nothing less than honesty and transparency from the World Bank, and for the Armenian government to take the initiative and act on behalf of its youth and our common future by aggressively fighting for a major infusion of funds for Armenia’s public schools.

The Republic of Georgia’s STEM focused MCC compact valued at $140 million in grant funding began on July 26, 2013 and closed on July 1, 2019.  According to the MCC these U.S. funds were successfully used to “fully rehabilitate 91 public schools, benefiting more than 37,000 Georgian schoolchildren. In addition, 15,000 secondary STEM and English teachers, 1,800 principals and 1,400 school-based professional development facilitators received training to improve their instructional skills and management capacity. The compact also equipped more than 1.7 million Georgians with better education and training, increasing workforce capacity in fields critical for economic growth, with a particular focus on science, technology, engineering and math (STEM) fields,” according to the MCC.

Armenia’s public school students and educators especially those mired in poverty deserve the same boost that America gave to public school students and educators in Georgia and many other countries.

Let’s work together and get this done!

Pashinyan Meets with Protesters

A sit-in organized by the Armenian Youth Federation of Armenia in front of the National Assembly to protest—and sound the alarm for—the government’s proposed plan to institute a flat tax went into its second day on Thursday, with protesters voicing their opposition to a tax bill that was being debated by lawmakers in parliament.

The AYF of Armenia’s movement, known as “Ahazang,” which means alarm in Armenian, aims to send a message to lawmakers and citizens alike that the proposed flat tax will create inequality among tax-paying Armenians.

“At the moment, our sit-in protest is still underway,” said Arshak Mesropyan, a member of the “Alarm” initiative’s coordinating group. “Today the supporters of our initiative will spend the night in front of the National Assembly building.

“This sit-in will serve as our [the AYF’s] contribution to the ongoing discussion in the National Assembly. We are ready to sit as long as it takes our deputies to realize the inequality a vote in favor of this tax code will create,” said Arshag Mesrobian an organizer of the “Ahazang” movement.

“The rich are bound to get richer and the poor poorer. The initiative will continue until this tax code is rejected. We demand a comprehensive reform of the tax system that will first serve the most vulnerable of the society and not widen the growing abyss between economic classes,” explained Mersrobian.

On Thursday, Prime Minister Nikol Pashinyan stopped by the sit-in and discussed his views on the proposed changes to the country’s tax codes with “Ahazang” organizers, who did not shy away from expressing their discontent and grievance.

The country’s ruling My Step Alliance has put forth the disputed proposal that would change Armenia’s taxation laws from a progressive one to flat taxation. In the current version individuals earning more also paid more taxes. Under the proposed tax laws, all personal income will be taxed at the same rate. Proponents of the changes argue that the flat tax is more fair and more in line with the goals of the post-revolution state. The current regime is hailing these changes as revolutionary, as they will stimulate the economy, lead to GDP growth and create a simpler, more equitable system for the future. Opponents of such changes argue the flat tax is a temporary solution to a wider societal issue that in reality will only benefit the society’s most affluent members.

The flat tax is a phenomenon that has gained popularity in recent decades among many post-Soviet and struggling economies around the world. Various countries that have adopted the flat tax system have seen considerable economic growth; however, the beneficiaries of that growth remain those in the top tax tier.

Russia, being one of the early adopters of such a system, has seen some success in the area. Its economy, having recovered from the pitfalls of the wider global economic crises of recent years, is now seeing a growth in GDP and a significant increase in tax revenue. Although ostensibly this seems promising for countries looking to reform their tax systems and are considering the flat tax, it’s worth taking a closer look at how such a system would affect the average citizen.

Armenia is a small economy. The majority of the workforce—more than 65 percent–earn a monthly salary of 150,000 drams (approximately $315 a month or less). Currently, the highest tier tax bracket pays 13 percent more than the lowest. The proposed changes would give a considerable tax break to the top tax tier as the proposed new tax percentage will adopt the lowest current tax for all citizens at 23 percent. This means the lowest tax tier will receive no benefit from the new law. This proves problematic when considering the overall outlook of the new government toward the average worker. By prioritizing tax deductions for the wealthiest in the society, the ruling regime believes these benefits will somehow boost economic growth and spending among citizens as those with the most money will now have more of it to reinvest in the economy.

This trickle-down approach may prove crippling for small countries like Armenia that have a large lower-class workforce. The money saved by the wealthiest rarely gets directly invested in the local economy, and often ends up elsewhere. Although there is research to support a correlation between GDP growth and flat taxes, that growth often only benefits those who are already well-established economically, with almost no guarantees that they will use the tax money they saved to create new jobs or stimulus programs as the new regime argues. A flat tax may help to stabilize a struggling economy, but it’s important to look at who that economy will serve.

The adoption of the new tax laws will also see a significant deficit in the state budget. A problem the government plans to rectify by simultaneously implementing an increase in sales tax. In addition to not receiving any benefit from the new tax system, the average Armenian worker will now be faced with the issue of increasing expenses. Taking this into consideration, the government’s previous promises to work for the average and most vulnerable people of the society seem like empty words.

Armenia’s economy under the new tax system will be stimulated at the expense of its most vulnerable contributors: those who are barely surviving—people living paycheck to paycheck, people working more than 12 hours only to see their costs of living increase.

It is for these reasons the Armenian Revolutionary Federation in Armenia is staunchly opposing the proposed changes. The party warns that the new law would be unconstitutional as it ignores the needs of the poor and relies heavily on the good will and word of the most financially stable of the society.

The ARF believes there is no guarantee those benefiting from the new laws will actually be motivated to direct their funds toward the betterment of society. This is a legitimate concern when taking into account Armenia’s volatile history with its political and economic elite—a class previously so disliked that it was overthrown in last year’s revolution.

“The new regime is essentially asking the working people who have entrusted them to secure their interests and well-being in the New Armenia to now put their faith in yesterday’s oligarchs to do the right thing,” said the organizers of the “Ahazang” movement.

“The mere suggestion brings into question the legitimacy of Armenia’s current regime whose rule was established under the guise of freedom for the disenfranchised, who now is attempting to convince society the same people who had been robbing them for nearly 30 years deserve the greatest financial benefit,” the “Ahazang” organizers added.

The AYF of Armenia has mobilized its membership to combat not only these proposed changes, but the growing misinformation in the country. The AYF has put forth a proposal for the future calling for not only an increase in the minimum wage by at least 50 percent, but also securing a minimum cost of non-taxable income to ensure the average worker can prosper without handouts or outside aid. In addition the AYF is suggesting to keep and reform the current progressive system with four tax brackets, targeting tax breaks for multi-member families and working class citizens.

The AYF of Armenia, through the “Ahazang” movement, is determined to see Armenia succeed and create a fair and free society where all people will prosper, and refuses to allow the New Armenia to be built on the backs of those it promised to elevate. The organizers are encouraging fellow Armenians to follow the “Ahazang” initiative on social media and help them to sound the alarm.

President Armen Sarkissian on Wednesday appointed Rustam Badasyan as Armenia’s new justice minister. He will replace Artak Zeynalyan, who abruptly resigned his position earlier this month.

During a press briefing at the National Assembly, the 28-year-old Badasyan assessed his professional experience in the law as sufficient for assuming the demanding position, saying that he has already outlined a course of action for judicial reforms with Prime Minister Nikol Pashinyan.

Badasyan was forthcoming in addressing his young age, saying that he did not see it as having an impact on his effectiveness in managing the Ministry.

”I have also been successful in the private sector at an early age, particularly when I became a shareholder-partner at one of the leading law firms after working for only one year. So I think my professional experience is sufficient for running the justice ministry,” said Badasyan.

The new appointee was asked about Pashinyan’s call last month for the public to block the entrances to courthouses in Armenia, after which he delivered an address to the nation calling for widespread judicial reforms and demanding a vetting process for all judges.

Badasyan said that he believed that Pashinyan’s declaration “was not a meant to exert pressure on the courts.”

He did say, however, that Pashinyan’s demand to vet all judges was “a necessary step for having an independent judiciary, but not enough.” He did not elaborate on the further steps he would take to advance the process.

Badasyan was born on January 27, 1991 in Yerevan. He holds a Bachelor of Arts and a Master of Arts in Law from Yerevan State University and the National Academy of Sciences of Armenia, respectively, and is an alumnus of the School of Advocates of Armenia.

He has served as a leading specialist and investigator at the State Revenue Committee of Armenia, a senior lawyer at Virtulex Law Office, a partner at Concern-Dialog, Deputy Head of the State Revenue Committee of Armenia, before being appointed justice minister.

On July 6, 2018, he was became 1st Class Senior Advisor of Public Service of Armenia. He is fluent in Armenian, English and Russian.

NICOSIA (Cyprus Mail)—The foreign ministers of Cyprus, Greece and Armenia agreed on Tuesday that their respective heads of state would meet at a trilateral summit in Armenia in January, adding that the purpose for the cooperation is to promote peace, stability and prosperity through enhanced political dialogue.

They also agreed to cooperate in various areas, such as the economy, trade and investments, agriculture, education and science, IT and innovation, healthcare, crisis management, culture and tourism.

“Today’s meeting reflects clearly our joint determination to further expand and deepen our cooperation and to develop synergies that will benefit our countries and peoples,” Foreign Minister Nicos Christodoulides said.

To this effect, they agreed to share information, exchange best practices and expertise, and submit, in the coming months, concrete proposals for possible cooperation in the aforesaid areas, to be discussed in their next trilateral meeting.

Christodoulides also said that he had the opportunity to brief his counterparts on the latest developments regarding the Cyprus problem as well as on Turkey’s escalated activities in the island’s Exclusive Economic Zone (EEZ) in violation of the Republic’s sovereign rights and international law.

The three ministers, according to Christodoulides, also exchanged views on the Nagorno-Karabakh conflict and on the implementation of the Prespa Agreement, in addition to discussing relations between the EU and Armenia.

“We have assured Foreign Minister Zohrab Mnastakanyan of our unwavering support for the strengthening of EU-Armenia relations, both within the framework of the Eastern Partnership and the EU-Armenia Comprehensive and Enhanced Partnership Agreement of November 2017 and beyond,” he said.

In relation to the Partnership Agreement, he said that it was expected to be ratified by the House of Representatives in the coming weeks. “Its entry into force will set EU-Armenia relations on a new footing,” he said.

For his part Mnatsakanyan said that the launch of the platform was very important and very promising in amplifying the traditional friendship that exists between the three nations. He added that they were translating that historical friendship into cooperation to the benefit of the three nations and people.

He also emphasised that the objectives of the cooperation were peace, cooperation and stability for the three countries and the region.

Referring to the expansion of the trilateral cooperation, he said that Armenia was looking forward to welcome the trilateral summit in the near future.

Greek minister Giorgos Katrougalos said the three were very like-minded, peace loving countries, which believe that international law and respect of multilateralism form the basis of international relations and they also share a long history.

“We envisaged the improvement of both economic and political relations, the next step is going to be the trilateral summit among the leaders of our countries”, he said.

He added that Greece intended to help Armenia in its European perspectives.

They also discussed international issues and topics of common interest and concern.