THERE WILL BE NO "ARMENIAN MIRACLE"

In Armenia, appointments were announced after the inauguration of Serzh Sargsyan in the post of president. According to Yerevan media, during a meeting of the council of the ruling Republican Party of Armenia, the president nominated the acting Prime Minister Tigran Sar-kisyan to the post of prime minister.

He also proposed keeping the ministers of defence and foreign affairs, Seyran Ohanyan and Edward Nalbandyan, in their posts.

Most experts assessed the "reappointment" of Tigran Sarkisyan as a clear sign that the previous economic policy of Armenia will not be revised. But this policy can hardly be called a success: experts openly talk about an economic disaster that has befallen Armenia.

In the Armenian mass media, especially independent media, there were numerous calls for economic, financial and banking reforms. For example, ahead of Sarkisyan's "reappointment", the News.am website insistently called in a commentary for reforms in the banking sector. Analysts say that "all comparisons of the banking system to an oasis in the desert are unfounded. A comparison with a greenhouse cucumber - juicy but bland - is more appropriate." In their words, "the most striking example of the bank disgrace was the beginning of 2009, when our banking system stopped lending to businesses for almost 3 months. In no country has the banking system done such a thing at a time of crisis. One reason for the 14-per-cent decline in Armenia in that year was exactly the banking system." And today the business sector does not take into account the interests of the business, they are sure. This means that there is no reason to expect an "Armenian miracle", News.am concludes.

Let us explain: until recently, the pride of the Armenian government was exactly the banking reform. The financial sector was called not only an "oasis" - they were sure that it would become the "locomotive" that would turn Armenia into a financial centre of almost global significance and make it "the second Singapore". The father of the "Singapore miracle", Lee Kuan Yew, really paid a visit to Armenia, but the "second Singapore" failed. In any case, back in February 2011 one of the Yerevan financiers summed up the hopes for a "miracle": "... the Armenian capital market is like a toad, which has had its legs cut off, but is expected to jump." The subtext is clear: the banking reform in Armenia may be good, but a real sector is needed for an economic "leap". And its "power", alas, is not enough not only for a "miracle", but even for normal economic life.

Here the reaction of the Armenian media, especially Golos Armenii newspaper, to Azerbaijan's plans to develop the production of carbamide - a very popular and sought after nitrogen fertilizer - gives hefty food for thought. "On 14 March this year, the State Oil Company of the Azerbaijan Republic (SOCAR) and South Korea's Samsung Engineering Co. Ltd. signed in Baku a contract for the construction of a carbamide plant worth 500 million euros in Azerbaijan (Sumqayit). Moreover, SOCAR plans to build another similar plant in Georgia, in the free industrial zone of Kulevi port. The latter will differ from the Sumqayit plant by the fact that it will favour ammonium rather than carbamide as the final product," Golos Armenii explains in a dejected tone. It notes that as a result, "Azerbaijan will not only fully meet its domestic demand, but also become the largest exporter of carbamide and ammonium not only in the Black Sea, but also in the Mediterranean region, for the total production of carbamide at both plants will be 1.2 - 1.3 million tons per year."

In any case, this is not a remake of the reaction of the Armenian political elite to Azerbaijan's victory at Eurovision-2011, which one of the Yerevan opposition newspapers described with an ironic phrase: "It is not enough that I had a lot of problem, my neighbour has bought a Mercedes." Golos Armenii is concerned about something else: until recently, the exclusive supplier of carbamide in the South Caucasus was Armenian Vanadzor-Khimprom. Here, they have been trying to launch an ammonia production cycle since November of last year, but so far without success. At the same time, "at the Sumqayit plant alone, the daily production capacity is planned to reach 2,000 tons of carbamide. In other words, what Azerbaijan will produce in one day, Vanadzor will produce in one month." It is clear that the modernization of production requires money, but there is no money. Investment is needed, but foreign investment in Armenia's economy is steadily declining.

And even more eloquent proof of economic problems in Armenia is the bankruptcy of its national airline - Armavia. Formally, it could not afford the airport fees at its home airport Zvartnots, which has been handed over to an Argentinean businessman of Armenian origin, Eduardo Eurnekian. The problem is being discussed at all levels, but there is still no answer to the question of "what to do?". The Yerevan "corridors of power" speak about the concept of "open sky". It may sound important, but in real language it means that Armenia may not have a national carrier, because it simply cannot afford it.

Government reports contain quite vigorous figures of economic growth, but the publisher of Grant magazine, Sigrid Rausing, who shared her impressions of a visit to Armenia and Georgia to meet with human rights groups, paints a very different picture on the pages of the British newspaper The Guardian: "Crossing the border into Armenia, the river was still there, the litter now older, almost indistinguishable from the brown water and grey rock. Every village we drove through was half abandoned. Whole families move if they can, otherwise women and children remain while the men join the migrant labour force in Russia, sending meagre remittances home. I know there were children in these villages, because occasionally laundry - the only colour in this bleak world - hung from wires, drying in the still dusk. We saw no people, and no shops. We saw no other cars." The human rights activist also told another story: "Here is one case: an Armenian shopkeeper is visited by tax officials, demanding a bribe. He refuses, and takes them to court. Several years and many court cases later he wins his case, but by now the same tax officials have so terrorized his suppliers that he can't stay in business."

Another indicator - migration, the one that is already being called "suitcase referendum", also clearly contrasts with official data. On 15 March, the State Migration Service of Armenia published its latest data showing that during the period from January to February 2013, more than 22,000 people left the country, and in the period from 2008 to 2012 - over 181,000. This is a huge figure for a country whose population does not reach 3 million.

According to the chairman of the Republican Union of Employers of Armenia, Gagik Makaryan, "in private conversations, businessmen who work in the fields of trade, services and manufacturing do not hide their concerns about the demographic situation in the country. If the population is shrinking from year to year, this cannot but affect the business negatively, regardless of what type of business you are doing." Armenak Chatinyan, an economic correspondent of Orakarg newspaper, regards it inconceivable that, according to official data, 2011 saw a record 4.6-per-cent economic growth in Armenia, and 2012 - 7.2 per cent, but according to the same official data, 43,800 people left the country in 2011 and 42,800 in 2012.

"I know one thing - if there is growth in the economy and people's lives are getting better, they should not be leaving their homeland en masse," Chatinyan is sure.

Can the "old new prime minister" resolve the problems faced by Armenia? Alas, this is a rhetorical question, because the formation of the real sector of the economy and economic "resuscitation" require not so much economic as political solutions. The aggressive policy of Armenia has resulted in the country being "sidelined" from economic and infrastructure projects in the region. But it seems that today the Yerevan leadership simply does not have enough political will and commitment to make those difficult decisions, without which there will be no normalization of relations with economically successful neighbours and no viable economy. This means that the old policy, against which the Armenian citizens vote with their suitcases, will continue."