Friday, 2 July 2010
“Azg” daily
“Orer” magazine editor-in-chief Hakob Asatryan’s questions are answered by Armenian Prime Minister Tigran Sargsyan
- Let us begin with anti-crisis efforts. In one of your latest statements you said that Armenia was in process of recovery with 5.5% growth recorded in economy. How can this affect ordinary citizens? Figures and everyday life are different. How would you explain the recovery?
- I agree with you that what matters most is the negative impact the economic crisis of 2009. In spite of the fact that in 2009 we had significant fall in the GDP - about 14 % - we continued with our anti-crisis program aimed at mitigating the welfare problems of our citizens.
We raised pensions by approximately 16 %, and increased family allowances which proved impossible even in the developed countries. We also increased lump-sum child benefits.
About a 10 % rise was registered in public sector wages, which went up 11% in the private sector. This was made possible due to essential increase in external and internal indebtedness of the State. We had sufficiently high GDP gap - about 7.7 % - which was unprecedented. The resources committed from the World Bank, the IMF, the Asian Bank, as well as the EU grants and credits enabled us to achieve a by 14 % increase in budget spending in 2009 as compared to 2008.
This of course has helped mitigate those negative consequences of socio-economic factors caused first of all by reduced private investments and remittances. Starting from September - October 2009, we could notice that our anti-crisis program was taking effect as economic performance continued improving. In the first quarter of 2010 as compared to 2009, we recorded 8.8% growth in economy. Similar growth was stated in private-sector wages which is quite important to welfare policy. We have already decided to raise benefits by 15 % for vulnerable layers in 2010. As of this November, pensions will rise by 10 %. Note that average pension is today 28 thousand drams.
- The need in ensuring higher level of fiscal enforcement for major businesses and oligarchs has been central in your recent statements. How well have you managed to cope with this task considering that even in European countries it seems to be quite difficult to combat the oligarchs? What kind of assistance is provided on the part of the Government, the President and the ruling party? How successful is this fight?
- Systemic reform needs to be carried out in the country. A key lesson of this crisis is that our economy is poorly diversified. And the best way to this end is the betterment of the home business environment with equal conditions offered to everybody by protecting the interests of small and medium-size businesses and providing for transparency in the activities of large entities.
The first serious step we carried out last year was the passing in the National Assembly of a law according to which those organizations with over one billion dram turnover will have to publish external audit-based financial statements enabling the society to supervise large entities. On the other hand, it will be of great assistance to the committee on public revenue in terms of added trust in such enterprises and, accordingly, equal competitive conditions. In general, we deem that transparency is of paramount importance as thereby we can bring the major business under tax control and, what is more important, have it enjoy the confidence of the Armenian society. We are convinced that it will work.
The second step is to improve tax administration. We have a complex program of reforms supported by international organizations and approved by the Government and we hope that it will yield positive results within the next three years. Approved by the coalition government, these programs are kept under the President’s immediate control.
- Very often small and medium-size business representatives not only from the Diaspora, but also from Armenia complain about interventions coming from various clan groups. For instance, Vivasell-MTS CEO Ralf Hirikyan used to say that a sponsor was needed to set up a business in Armenia. Here, I have two questions. Is there a difference between Diaspora and local businessmen: are you urging Armenians from the Diaspora to make investments in Armenia? What kind of assistance is provided to small and medium-size entities in mounting an enterprise in Armenia?
- Your question has two dimensions. It is not a secret that the problems faced by many transitional countries are as much the same: shadow economy, corruption. The policy line embraced by the Government and the President of the Republic of Armenia is as follows: any problem should be talked about in public. We must reveal the existing problems and solve them.
On the other hand, tens of business environment-targeted laws and legal acts are in place seeking to create a business-friendly environment for the development of small and medium enterprises. Secondly, we abide by the following key principle in shaping the economic environment: no difference should be made between Armenian and foreign investors, including the ones from the Diaspora. Equal regimes are established for everybody. All of them avail themselves of those opportunities offered by Armenian laws.
A 3-year holiday is granted to foreign investors in case of legislative austerities. Thirdly, we have created the Ministry of Diaspora in order to strengthen social, economic, cultural and other ties with the Diaspora.
Associations are being established, inclusive of business associations to stimulate private investments.
- What is the percentage of Diaspora involvement in the economy of Armenia? Is there any statistics to that effect?
- We have estimates concerning foreign investments as a whole including Diaspora investments. This indicator keeps growing. Last year we experienced a sharp decline in those investments coming first of all from Russia and the USA which host the largest Armenian communities worldwide. As much as 30%, the stated fall affected our GDP indicators escalating the impact of the global crisis. This means that the Armenian Diaspora plays quite an important role in Armenia’s economics.
- Which are the most prospective branches of Armenia’s economy?
- Our banking system was able to check the first tide of the global crisis boasting a great resource of resistance as compared to many other countries, inclusive of developed ones. Not a single pennyworth assistance was provided to our commercial banks. They were sufficiently capitalized, with adequate liquidity to serve the accounts of their clients. Guarantees were applied to deposits. No problems were faced in this area unlike the Western countries where commercial banks were given billions of dollars to cope with the crisis-generated bottlenecks. This went a long way toward enhancing our nation’s strength. We thereby managed to meet the challenge, and our banking system took the test.
The second key task was to keep up the 10-year-long government focus on information technologies. In 2009 as the economy declined as a whole, we stated a 17% growth in the sphere of information technologies, with new companies and new jobs created. The share of information technologies in the GDP rose to about 5 %. On the one hand, this promotes economic diversity and, on the other hand, it has great export potential. Now, we want to carry out programs in the spheres of tourism, food processing, chemical industry, etc.
- Our neighbor countries, especially Turkey and Azerbaijan, are making huge media efforts to advertise local tourism. Armenia used to do so once, but currently nothing seems to be done in this field. Do you mean again that the crisis is behind this failure?
- Of course, the financial and economic crisis forced us to reconsider and cut back the expenditure side of our budget. But we set up a national competitiveness council to develop a concept on public-private sector cooperation with a special focus on tourism. These programs will help develop inland tourism in Armenia. Tourism did not shrink last year. Instead, it went up 3%, and if we look at the first quarter of 2010, we can see that 5.5% growth of passenger traffic was recorded, including tourists.
- The opposition often criticizes the Government’s economic programs. Do you see anything useful in such criticism that can be used and implemented?
- In general, oppositions exist to criticize authorities. They play a useful role in public life by revealing even the smallest shortfalls, forcing the government to work in a targeted manner.
Of course, we follow up on any sound criticism addressed to the government trying to take advantage of their positive side. It should be noted that the government’s and the opposition’s programs often have common underlying principles, say major business working transparency, fight against oligarchs, creation of favorable conditions for small and medium-size enterprises, implementation of reforms, diversification of the economy. Indeed, opinions may vary on such points as are unacceptable to us. Notwithstanding, the opposition is welcomed to criticize the government’s programs.
- People in Armenia are concerned about the settlement of Armenia-Turkey relationship and the process of Genocide recognition. We seem to be entering in a new stage after President Serzh Sargsyan’s recent statement and the question arises: what will happen next, what are we in for? Will Genocide recognition efforts continue to be the privilege of the people of Diaspora? Isn’t it high time for the Government to seek legal assessment of the Armenian Genocide with international instances? In general, what are the lessons drawn from the process of Armenia-Turkey rapprochement?
- First of all, I shall try to assess the results obtained from the President’s initiative on improvement of relations with Turkey. Here, it should be noted that the international rating of Armenia went up considerably. We were backed by the United States, the European Union, the Russian Federation and other States. All major global players in the political field expressed high opinion of our principled approach and the protocols signed as a result. We have shown to the world that we are open to a comprehensive dialog with Turkey, to improvement of relations without preconditions, and we kept by this principle to the last.
This is an extremely important circumstance. Over the past two years, the international community and international media outlets provided a detailed coverage of the Armenian Genocide and those delicate issues inherent in bilateral relations. These issues became international diplomacy agenda highlights as they bore on other questions as well, including the global vision of the future world, as well as the system of values and the role to be assumed by different stakeholders: Armenia, Turkey, the USA, the European Union and the Russian Federation. The process demonstrated Turkey’s weak readiness to adhere to the principles proclaimed by this country itself.
Thirdly, Genocide recognition is not an end in itself. We advocate the right of the Armenian people to live in safety in this region. By denying the fact of genocide and taking such steps as can at least cause Armenia’s concern as to the reliability of a partner which fails to observe the generally accepted norms of diplomatic behavior and practices, Turkey cannot be deemed as a reliable partner for Armenia. Turkey’s policy line, especially its unilateral support of Azerbaijan in the question of Karabakh and its closing of borders with Armenia testify that we have serious problems in this area. The President’s initiative forced the international community to take note of these issues.
The settlement of Armenia-Turkey relations soared high on the international agenda: it was the center of superpowers’ attention allowing that Armenia’s security and the peaceful settlement of relations was a focus for the world community. To my mind, this fact alone can create additional incentives for a negotiated settlement of the Karabakh issue. Thus, we have benefited in these 3 areas.
There is also a fourth aspect, namely that the Armenian society, the citizens of Armenia and Armenians in the Diaspora should be prepared to the next stage of relationship settlement.
We should build relations in a pragmatic way, facing the outer world and proceeding from the interest of the Republic of Armenia. We have no right to proceed from an anti-Turkish standpoint in foreign affairs. Our foreign policy should be pro-Armenian, based on careful estimates. Today’s estimates evidence that the settlement and improvement of bilateral relations is in the best interest of our State and people. What is important now is which way these relations are to be settled and not whether they should be normalized or not.
- And what about the presentation of the question in the international instances?
This is a separate and serious problem: the Genocide of Armenians must be dealt with in a purely legal field. Much has to be done to fill the gap in this area.
- A group of lawyers from the Diaspora is already engaged in this process.
- I think it to be the right strategy. Armenians in the Diaspora should be given the possibility of struggling not only in the political, but also in the legal field trying to make use of modern jurisprudence. Greater attention should be paid to these questions.
- The Karabakh problem is connected to this question. NKR’s involvement in the process of negotiations has been talked about much recently. Is the matter discussed during the talks?
- This question has always been the center of our attention and is periodically discussed in the framework of the Minsk group since it is obvious that any decision implies NKR’s participation. It is inevitable. The opinion of the NKR and its people will be decisive in taking a decision. We abide by a political standpoint, which was endorsed by the Supreme Soviet of Armenia according to which the Republic Armenia cannot accept any settlement unacceptable to the NKR.
- Do you see a possibility for settlement in the near future?
- Let us wait and see which way the talks will go.
- One can wonder what the politicians look like at leisure. You are too busy as head of government with very little time allowed for your children and family. What are you interested in most of all after work?
- If I have spare time after work, I devote it to my family, my children who miss me very much and I miss them in turn. My younger son will be two and the elder one nine years soon. My daughter presented us with our first grandson this year.
- So, you are a grandfather?
- Yes, of course, we are very happy. Setting up a family is mere happiness. We try to take pleasure in our family happiness.
I am also a passionate of philosophy. For many years now, I have been busy with methodology which is key branch of philosophy. I try to find time for seminars which we organize with our partners. I love also music and literature.
- What kind of music do you love?
- In general, I am fond of any good piece of music of any style. We have been stimulating the development of rock music in Armenia in recent years. We are trying to create an association of rock music fans. You may have noticed that throughout last year Armenia was visited by such international celebrities as Uriah Heep, Jan Gillan, Deep Purple.
We think of holding an international festival of rock music in Armenia, referred to as “Rock against Genocide.” This concerns not only the Armenian Genocide, but also other genocides as well. I have personally negotiated with all these groups to obtain their consent. I think it to be an exclusive opportunity for those citizens of the Republic of Armenia of my generation to communicate with the rock stars who used to be inaccessible in Soviet era. During a recent visit to Armenia, they were presented with RA President’s and Government’s high awards.
