THEY WILL PAY 1.3 MILLION LESS
James Hakobyan

Lragir, Armenia
Dec 14 2006

The Millennium Challenge program has set off in Armenia. Of course,
it is difficult to call the first tranche of the MCA as a start,
considering that Armenia had expected to get more in 2006 than the
Americans gave. When the Armenian officials signed the agreement and
spent 15 minutes in the office of Condoleezza Rice, after returning to
Yerevan the minister of finance and economy Vardan Khachatryan stated
that Armenia hopes to get the first tranche of 6 million dollars out of
235 million this year. Meanwhile, the Americans gave only 800 thousand
dollars, though another 500 thousand is expected by the end of this
year. In other words, Armenia will get 1.3 million this year. This
is less than the second expectation of the minister of finance who
stated about two weeks ago at the parliament that Armenia expects 2
million dollars. What Armenia got is even less than the sum mentioned
by the prime minister at the parliament. He said 1.5 million dollars.

Hence, the so-called start of the MCC program resembles a formality
rather. And the statements by the American officials in charge of the
program suggest that the program may be suspended rather than have
an effective continuation. But even if by miracle or by unsoberness
of the government Armenia complies with the political benchmarks
essential to the continuation of the MCC program, its effectiveness
is highly doubted. And the reason must be clear to everyone. It is
the revaluation of the dram. When Armenia worked out the action plan,
estimated the costs and submitted the request with the MCC, the rate of
exchange of the dollar was different than now. And this correlation
has changed in favor of the dram. It means that in December 2006
the value of this 1.3 million will be lower than in spring 2006 when
Armenia signed the agreement. Moreover, in January and February 2007
1.3 million dollars is going to have a lower value when it is spent.

Meanwhile, the program is 235 million dollars, and the dram will keep
revaluating and the dollar will keep depreciating before this money
comes to Armenia. Moreover, building materials are becoming more
expensive, which are going to be the main cost of the program. It
allows supposing that the program will undergo significant changes
because the estimates will become unrealistic, and 1 USD will be
losing its value every month. In this case, the Americans will have
to give more money, or the government of Armenia will have to cover
the missing part, or the program should be curtailed. Yet, finally,
a policy of a fixed exchange rate should be conducted. It is clear,
however, that the government will not stop the double or triple
lucrative fluctuations of the exchange rate. For the Americans
and the government is much more favorable to curtail the program,
because it is not harmful for their pockets. Besides, the Millennium
Challenge program is an investment program for the Armenian farmers
only, since for the governments of Armenia and the United States it
is only a political project. Thereby the United States is trying to
gain additional control of the actions of the Armenian government,
and the Armenian government expects to use it as election bribe in
the form of implemented programs under the slogan of salvation of the
village, and in this case it makes not difference if it is 6 million
or 1.3 million, it is important that they give, for they will spend
less during the election.