Armenia’s government system is rusty—the key and the responsibility are in hands of the leadership

Hearings on “Economic component in foreign policy” will be launched in the National Assembly on December 9. 168.am talked to NA RPA MP Samvel Farmanyan, member of the NA Standing Committee on Foreign Relations, on means of changing fluently decreasing foreign investments in our country.

Mr. Farmanyan, in its action plan the Government particularly stressed the issue of engaging external investments. In your opinion, what is necessary for the positive outcome?

Firstly, I’d like to record a simple reality around which there is no simplicity in the consciousness of our political and social selection. Sometimes we have the impression that our hard work, targeting is enough for big investments in Armenia. Subconsciously, it puts aside a rather objective reality—our small market and rather inconvenient geographical position. No comparison can be drawn with other countries of the region. Does this mean that we are doomed not to have foreign investments or not be competitive as a small market? It’s partially so, unfortunately, and it should be taken into consideration as a diagnosis.

Doesn’t the EEU factor function any more, that Armenia was to become a window to the West? While joining the Union, the Republicans were introducing it as a privilege.

I’ll reflect to EEU. Firstly, by what can Armenia attract investors? There is a peculiarity, on which business interest lies, however, frequently our compatriots invest in Armenia, and as much expectation for economic interest is existent, the more is patriotic motivation, i.e. we deal with impure economic philosophy. Under the existent objective condition which steps should be taken to make our small market attractive?

Investment environment in our country should be twice more, than in the neighboring countries. There are many ideas in that direction, however, they’re on the academic level. The most important is that economy should be competitive, i.e. exclusion of any kind of protectionism, monopolies, guarantee of property immunity, provision of economic competition, differentiation of business and the leadership, and etc. this is a simple reality, there is no need to invent a bike. Although, only one direction seems crucial to me—we haven’t shaped the primary economy directions throughout 25 years of independence in our public, economic and political selection, which could lead Armenia to economic development on a long-term perspective.

Singapore is being more cited, let’s not forget about the Japanese economy miracle, Germany, Chile, among which a common red thread is existent—out of geographical positions, level of economic development, natural resources, their peoples record main directions of economic development, which may provide a result on a long-term perspective. You won’t find an experience of economic development in the world, where governments, following one another, have changed courses of the country’s economic development. As that development is the result of accumulation.

Continuity is of paramount importance as when the connection of efforts exerted by the state is lost, even the most genius idea won’t give a result.

Regarding EEU a few crucial circumstances should be taken into consideration, not to face disappointment. I am of the opinion that EEU has economic content, but it’s a political initiative. And any political initiative is subject to certain developments, conditioned by change of political factors, stops and etc. This global peculiarity should be taken into account.

Secondly, let’s not forget that as an EEU member country, we comprise a part of a few 100 million market and some fields of our economy—agriculture, light industry and etc., may succeed in that big market. However, we don’t have a common border with the largest Russian market. Logistic issue in itself comprises a big component in the cost price.  It’s not known how to eliminate that component in this political environment. We don’t have a route connecting to the EEU, air transportation is incomparably expensive.

Thirdly, Russia, as a big market, has its peculiarities from the perspective of economic capital immunity, economic freedoms, politics and business relations. However, this isn’t an obstacle for the development of our economy, as regarding mentality we are closer, we have the tradition of recognizing, socializing and “solving issues.” In my opinion, when we speak of the perspectives for our economy, three is need to find a new key, we need ideas, which will lead our economic life despite government change.

You are touching upon the development priorities, however, yet former PM Tigran Sargsyan distinguished a few directions as a priority, from which—IT, for the export of outcome of which there are no logistic issues. Moreover, author of the Singapore’s miracle Lee Kwan Yew, who visited Armenia upon Tigran Sargsyan’s invitation, gave advice, “firstly, don’t take it yourself,” he said if you want to change, start from yourself, i.e. solutions are known, they’ve been discussed for decades, Republican Party has been the leader long ago, but the issues won’t solve. Why?

It should be frankly stated, that it’s not an easy target to have a dynamically developing economy by fixing European criteria of living standards. In issues, related to economy, all the governments should be frank, to develop proper expectancies. We have a magnificent school, traditions regarding IT, finding innovative solutions is given easily and cadres are competitive. For instance, recently we’ve been to South Korea and in Samsung Company we met 50 Armenians, who were all alumni of universities of Yerevan and Gyumri and were taking rather high positions in one of the world’s leading companies.

However, we shouldn’t forget that not only Armenians are gifted in IT. India and other markets rapidly leave us behind, which provide lower cost price. Government of Tigran Sargsyan and others brought forward his economic idea, however, as a historian, I may say one thing for sure: any country considering that its wealth source should be not production and export, but import and services, it can’t provide a long-term development and economic potential.

Investments are necessary for production and export, however, Armenia’s judicial system, lack of justice, is a serious preventive factor for external investors. In this regard, isn’t the key in hands of the leadership?

Yes, the key and responsibility is in hands of the leadership. It’s the law of politics. Productive state administration is one of the crucial conditions to provide success in economic life. Independence of the judicial system, protection of investments or property is a part of that system. I had the honor of taking part in a meeting with former PM of Singapore and Lee Kwan Yew asked how he imagines Armenia’s development. He singled out 2 ways—map state’s small and big issues, classify upon their urgency, and solve them by showing a strong political will.

Secondly, send students for targeted education to world’s best universities, in the first year 10, then 25, and 50 in the third, then after they’re back, appoint them in country’s highest positions, and after a decade the result we strive will be touchable, i.e. as long as state administration isn’t productive, it can’t contribute to economic development, just the contrary.  If we accept state governance system as a tube, then it should be properly constructed, not a rusty one, that despite the quality and change of administrators, when launching a correct idea in this tube, it’ll lead to a positive result. Our state administration system is yet rusty today. And any positive idea, operating in form of water from one side of the tube, we’ll receive a tasteless and rusty liquid from the other end.

By Gayane Khachatryan