Policy Forum Armenia: All international organizations know about the outflow of billions from Armenia
Last year the Global Financial Integrity organization published a report entitled “Illegal financial outflow from developing countries 2002-2011,” which caused a lot of discussion among the Armenian government.
According to GFI’s experts, in 2002-2011 the volume of illegal money outflow from Armenia amounted to $6.2 billion.
While the authorities and political powers are panicking and asking where this number is coming from, and generally where did this money come from, opposition powers are sure that this information is reliable. It is an accepted fact in the world that outflow of illegal money is money laundering or an attempt of legalizing illegal incomes, which is considered to be a crime against the nation.
168 Zham has asked several questions to the PFA office concerning the Global Financial Integrity’s report. PFA is a non-for-profit organization with a goal to strengthen Armenia’s economic development and national security capacity through the implementation of good governance in Armenia.
-What is the opinion of PFA concerning GFI’s report and figures in that report?
-This report of the Global Financial Integrity is an excellent attempt to estimate a fact that everyone knows – starting from international organizations and ending up with officials that deal with money laundering in different countries. The report openly presents the methodology and information used for this analysis. This is very good because it reveals data and proves scientifically the same information that people in fact know about.
-How do the experts explain this? How could a group of people take so much money out of this poor country?
-In our report published by Policy Forum Armenia and entitled “Corruption in Armenia” we have discussed this issue and analyzed the amount of money that is spent from the budget, as well as the amount of money that is lost and embezzled as a result of wrong spending and criminal governance. The GFI’s report writes about $6.2 billion, which is not an unrealistic figure, and even it is very conservative for Armenia. According to PFA’s report, only the loss from the budget (as a result of not paying taxes and wrong spending) amounts 7% (for example, $750 million in 2012 only), and approximately 60% of the country’s GDP is under the “umbrella” of the political elite, and this is the main source of financial outflow from the country. In case of Armenia the GFI’s report does not include several specific factors (such as money transfer dynamics, emigration and tax policy), which certainly is not possible to consider in a report that covers 151 countries. We will discuss these factors and their influence on outflow of money from the country separately in the future.
-Armenian officials do not comment and discuss this issue, and they say that Armenia is a member to Moneyval Committee of the Council of Europe and cannot do such thing; they say the methodology is wrong.
-We will not be surprised if someone tells us that the officials of today’s Armenia do not understand the methodology. By the way, we have written about the low level of intellectual potential of our government institutions. In addition to low intellectual level, average officials also do their best to be good in the eyes of their bosses, as a result of which they end up with a situation when they do not understand the methodology. In fact, all officials at least subconsciously really understand how much money is fleeing out of the country and who is doing that.
-How can the dynamics be measured according to PFA’s estimation? Why did the trend grow rapidly since 2007-2008? In 2002 the outflow of illegal money amounted to $86 million, in 2006 – $386 million, in 2007 – $806 million, in 2008 – 1,124 million, and in 2011 – 1,163 million.
-Maybe the political instability in 2008 was one of the reasons, and maybe after those events the corrupt political elite started to look for ways to hide their wealth robbed from the country. This boosted the outflow of capital from the country. As it is said, robber’s heart is funky.
By Gayane Khachatryan
