GOVERNMENT UNVEILS COMPENSATION PLAN FOR LOST SOVIET-ERA SAVINGS
By Atom Markarian

Armenialiberty.org, Armenia
Radio Liberty, Czech Rep.
Oct 12 2005

The Armenian government unveiled on Wednesday its promised plan to
partly compensate some of those citizens who effectively lost their
Soviet-era savings bank deposits during the hyperinflation of the
early 1990s.

The sensitive issue has long been exploited by Armenian politicians
and again came to the fore earlier this month with the inclusion on
the National Assembly’s agenda of a relevant bill drafted by speaker
Artur Baghdasarian’s Orinats Yerkir Party. Baghdasarian’s government
allies, notably Prime Minister Andranik Markarian’s Republican Party
(HHK), oppose that bill, saying that it would lead to a waste of
scarce public resources.

The government wants instead to compensate only the poorest of the
deposit holders who are among 140,000 Armenian families currently
receiving poverty benefits from the state. Markarian reaffirmed its
intention to spend 1 billion drams ($2.3 million) for that purpose
next year. “The compensation will be continuous and should be complete
in 2009,” he said, adding that it was approved late on Tuesday by
leaders of the HHK, Orinats Yerkir and the third party represented
in his cabinet, the Armenian Revolutionary Federation.

The sum pales in comparison with a total of 6.5 billion rubles ($9
billion, according to the official Soviet exchange rate of the late
1980s) which an estimated one million Armenians had on their bank
accounts when the Soviet Union collapsed. Expert estimates of the
real market value of that money vary from $400 million to $800 million.

Addressing a large group of lawmakers, Markarian proposed a complicated
regressive scale for deposit compensation whereby those who had 1,000
rubles deposited with the Soviet Savings Bank would now be paid an
equivalent of $200. By comparison, those who had 5,000 and 10,000
rubles would get only $340 and $420 respectively.

The government has yet to calculate how much money is needed for
implementing the scheme which some analysts say will cover up to
50,000 families. Markarian said it offers them a more “dignified”
solution than the Orinats Yerkir bill which calls for $83 million to
be paid to all deposit holders. “International experience shows that
such compensations can only be partial and have a particular social
orientation,” he argued.

Savings compensation was one of Baghdasarian’s key promises in the
run-up to the last parliamentary elections in which his party did
well. His controversial bill was already blocked last year by the
government in which Orinats Yerkir is represented with three ministers.

The Armenian authorities’ decision to revive the issue was
unexpected. It followed an October 1 meeting between President
Robert Kocharian and leaders of the coalition parties. The Armenian
press has since been rife with speculation that the move is aimed at
wooing the apathetic electorate ahead of next month’s referendum on
constitutional amendments.

Markarian unveiled the scheme as he formally presented Armenia’s draft
budget for next year to members of several standing committees of the
National Assembly. The proposed budget calls for an almost 20 percent
increase in public spending which would pass the $1 billion mark for
the first time since Armenia’s independence.