Friday, 8 October 2010
Prime-Minister Tigran Sargsyan’s interview with the Ukrainian “Profile” magazine.
The large office of the prime-minister of Armenia Tigran Sargsyan, with a high ceiling, would seem as awkward as the soviet ones, if there wasn’t this table full of papers. Even a glance is enough to ensure that the work is in full swing here. The conversation with the head of the government confirms the words of the partners in Yerevan, who are pleased to say, that the prime-minister took the position because he is really well aware of the economy, but not because his appointment was appropriate or beneficial for anyone. By the way, the prime-minister is a fan of rock music and he tells about the world-famous stars’ concerts in Armenia even with pride, as well as about the development of tourism and large projects aimed at the economic growth.
In the interview with “Profile” he spoke about the secrets of the country’s development while being blockaded by the two neighbors and presented a number of proposals to the Ukrainian businessmen. Our conversation began with the subject that unites Armenia and the Ukraine – the close cooperation with Russia. In the beginning of 2000, Armenian enterprises of strategic importance were transferred to the Russian owners as a public debt.
-To what extent have the Russian owners demonstrated themselves as good managers, to who the main part of the enterprises of strategic importance of Armenia have been belonging for quite a long time?
-In Armenia operate 1,4 thousand companies with Russian capital, which is relatively not a large number, considering that there are more than 150 thousand economic entities in Armenia. But the Russian investments in the energetic sphere, infrastructure, as well as in the informative technologies are essential for Armenia. One of the largest investment projects is “ArmRusgasprom”, 80% shares of which belong to “Gasprom”. The level of gasification in Armenia is 94% today, which is quite a good index. We also have a very effective contract about the management of the nuclear station of Metsamor with the Russians. As a result of the investments of the Russian companies in the telecommunication sector, the Armenian customers get benefits, because there are three competing cell-operators here nowadays. Generally, we find the Russian investments quite effective, and we try to create a favorable environment for the foreign investors to feel comfortable in our country. I hope that the Ukrainian investors will feel comfortable in Armenia as well.
-Russia will increase the price of the gas for your country, which, naturally, receives sharp reaction from the society. How serious is this challenge for the Armenian economy?
-Armenia is one of the first among the CIS countries that made its market independent: we personalized all the agricultural lands in 1991-1992. We managed to minimize the areas where we intervene to regulate prices. Energy is one of the branches, where the prices are regulated. In the recent years a steady increase of gas prices has been recorded. We follow that these trends are consistent with international trends and that there is no non-market approach. The main debate with our Russian partners is about the price determination methodology. It’s necessary to ensure predictability, because gas prices affect many sectors of industry. The businessmen and of course the society must be ready for the price changes. We are working on that with our society and businessmen as well as with the Russian partners.
-Can we say that there are market pricing mechanisms of Russian gas for Armenia today?
-I think we can. This is proved by the fact that there was a stable increase of prices along with the international prices.
-In what sectors of economy would you like to see Ukrainian investments?
-We would like to see investments in all the spheres that are considered major according to the project of government. Particularly, IT sector is developing in Armenia quite dynamically. Armenia has quite serious resources of metallurgy, and taking into consideration that Ukraine is well developed in metallurgic industry, we are interested in cooperating in this area. There are large Metallurgic plants’ construction projects in Armenia, and we offer the Ukrainian partners to get acquainted with them.
Other possible areas of cooperation are the non-metal sources of Armenia; basalt, building materials, as well as the machinery.
Today we are thinking about creating export oriented collective production in Armenia. I think we can cooperate with the Ukrainian partners here. In the soviet period, we had numerous tourists from Ukraine. Nowadays Armenia is restoring the traditional tourist schemes which the soviet tourists were familiar to, and this can interest the Ukrainian tourists. The number one issue for us, especially after the crisis, is the diversification of the economy. We believe that a new impulse should be given to the Armenian-Ukrainian intergovernmental commission, so that we could be able to observe the whole spectrum of economic relations and be able to find potentially interesting projects. I talked about it to the prime-minister of Ukraine Nicolay Azarov in St. Petersburg, I also had telephone conversation with him and we have a plan to reactivate the partnership.
-Armenia, like all the other countries, faced the global economic crisis. What did you put the stress on when fighting against the crisis?
-The crisis affected our economy greatly, last year the amount of the decline was 13% first of all due to the low diversification of the economy and the high share of the construction. The 40% decline, recorded in the construction industry, resulted the sharp reduction of GDP. But by the end of 2009 we’ve noticed that the economy was gradually recovering. A few factors had a role in the recovery.
First was the anti-crisis program of the government, which included quite large-scale projects. We increased the expenses of the state budget, first of all by increasing the foreign debt. In the last ten years we have implemented a solid monetary policy and the foreign debt did not exceed the 18% of the GDP. Thereby, we’ve been able to take loan credits from international financial institutions. We’ve built a great number of roads, pipelines, and restored the irrigation systems.
Second, the retreat of the crisis was noticed in the world. The results of our partners improved compared to 2008-2009. The prices of copper and molybdenum, that play the main role in the Armenia exports, started to restore, which helped to improve our mining results. By the way, despite the crisis, we had a 17% increase in the IT sphere, which is one of the essentials for Armenia. New investments have been made here, and it’s satisfying that this sphere is growing quite rapidly. Its economic significance in the industry today is comparable with the mining industry.
Since the 1993 we’ve been living blockaded by Turkey and Azerbaijan and had open borders with just Georgia and Iran. In such situation some branches of economy lost their competitiveness, and, on the contrary, the sectors that don’t depend on transporting have been developing actively. Taking into account those objective factors, the government has chosen the economic development priorities, particularly the IT industry. In the recent years we have had a dynamic development of traditional branches, such as the jeweler and diamond industry. In 2004-2005 these branches have been declined, which was due to changes in the global conjuncture and the serious competition in the foreign markets, however we are now trying to restore these branches.
On October 16th, the ropeway of Tatev monastery of almost 6km will be opened, which will be the largest ropeway in the world.
-What other large-scale projects will Armenia surprise us with?
-We established a National Competitiveness Fund, which includes the prominent representatives of the private sector of Diaspora and Armenia on the one hand, and representatives of the Armenia government on the other. Strategic plans on Armenia’s development are being carried out within the council: the tourism development concept and comprehensive regional plans have already been developed. The reconstruction of Tatev monastery and the contraction of the ropeway is a result of the public and private cooperation. The state has undertaken the problems of development of infrastructure and communication, and the entrepreneurs have made investments in the construction of the ropeway and the hotel. The charity fund of the restoration of Tatev monastery complex has been created. By the way, Tatev monastery and the ropeway intercommunicate with Jermuk, which has been a popular resort in the Soviet period. It is developing quite dynamically today: private investments are being made in the resort and hotels are being built.
Tatev and Jermuk are the southern direction of the development of tourism. There is also the northern direction, Lake Sevan, where it has also been planned to build powerful sport and resort complexes. Particularly, McKinsey consulting company has developed an interesting construction project for a sport-industrial complex in the Lake Sevan Basin by the order of the board of trustees of the National Competitiveness Fund. Tsaghkadzor, which is situated not far from Lake Sevan, has been famous as a training center for sportsmen involved in winter sports in the Soviet period. We’ve made serious investments in Tsaghkadzor today, and tourists visit it with great pleasure.
-The project of the ropeway proves that Diaspora has as active participation in Armenia’s life as it used to have in the past.
-Of course. The population of Armenia is a little higher than 3 million, and over 6 million Armenians live abroad. And although the 95% of the representatives of the Diaspora have never been to Armenia, our people are a united organism. Diaspora supports all of our programs; it identifies itself with the Armenian state and makes large investments.
-You are a fan of rock music. Is there something nowadays that makes you want to listen to rock, because it’s not appropriate for the prime-minister to express his rebellious emotions in any other way?
-If we approach this question philosophically, then I would say that the world is very unfair. Each thinking man gains a certain amount of rebellion in himself. Overwhelming emotions are always needed and from that point of view rock has its own philosophy.
Recently we’ve created an Armenian association of rockers and we plan to implement a number of interesting events. In the last two years Armenia has been living a rich musical life, primarily in the rock genre. We’ve hosted famous musicians and bands like Deep Purple, Jethro Tull, and Uriah Heep. Warm and friendly relationships have been formed between us. They liked Armenia, the Armenian audience and Armenian rockers, and we’ve agreed on the idea of a long-term cooperation.
Particularly “Rock against the Genocide” festival has been held in Armenia, that included the concert of the band Jethro Tull on September 24th.
We will continue this cycle and will conclude with the gala-concerts of all the rock-bands that will visit Armenia within the festival.
We have not received any suggestions from Ukrainian bands yet. We should observe, which rock bands ate famous in Ukraine and establish contacts with them.
