EurasiaNet, NY
Jan 5 2007

THE ARMENIAN SCIENTIFIC SECTOR RECEIVES A BOOST
Haroutiun Khachatrian 1/05/07

With an eye toward attracting foreign investment, the Armenian
government is trying to update and overhaul Armenia’s scientific
sector for the first time since the collapse of the Soviet Union.

During the Soviet era, Armenia was known for its scientific edge –
aside from academic pursuits, the country excelled in applied uses of
physics, chemistry and materials sciences. As in other former Soviet
republics, though, the end of Kremlin subsidies for research
institutes involved in the development of technologies for the Soviet
military left many scientific professionals without work, prompting a
brain drain that still continues. Those scientists left behind
continue to work under difficult conditions, with almost no funding
for scientific projects and salaries barely over the minimum of
$40-$50 per month. Scientific research and development accounts for
less than 1 percent of Armenia’s Gross Domestic Product.

The government is now trying to correct that situation. In May 2006,
the Armenian parliament adopted a law for the state support of
so-called "innovative activities." Four months later, the government
adopted a five-year program outlining specific measures to encourage
scientific innovation.

"This program is the first serious attempt by the Armenian government
to show that Armenian scientific products are interesting to
investors," commented Ashot Khandanian, head of the Science,
Technology and Investment Policy Department at the Ministry of Trade
and Economic Development. Both the United Nations Industrial
Development Organization and the United Nations Development Programme
have pledged their financial and technical support for the
government’s plans.

Under the program, an analytical center, housed in an existing
scientific institute, will evaluate promising scientific projects and
developments and then promote the findings with outside investors. In
a complementary move, the government intends in 2007 to adopt
legislation to establish venture capital funds that would use both
state and private monies to encourage development of privately run
scientific projects.

The lack of such financing has already tripped up some scientific
institutes from securing foreign investment. In one such institute,
according to Khandanian, a proposal from a leading European
consulting firm for mass production of nano-batteries with highly
improved parameters fell flat after the institute failed to secure
the $15,000 needed to produce a trial run of the batteries for
testing and certification. No legal basis existed for the government
itself, in the absence of private funds, to back the project,
Khandanian said.

Meanwhile, a draft proposal on restructuring academic scientific
research was released in October 2006 for public discussion; reforms
are expected to start in 2007 once a final policy paper is adopted.
As an initial step, the monthly salary of scientific workers in
state-run institutes, which averages about 22,000 drams, or $60 (the
national average is 60,000 drams or $140), will be doubled in 2007.

The private sector is also getting involved in developing Armenia’s
research potential. The privately funded National Foundation of
Science and Advanced Technologies (NFSAT), together with a team of
business consultants, recently sent out promotional materials on 16
peer-reviewed scientific proposals to potential investors worldwide.
The Washington-based Civilian Research and Development Fund — an
NFSAT partner that tries to reverse the outflow of scientific
specialists from former Soviet republics — provided $36,000 for the
initiative.

The program has already had one success. Plans are now underway for a
joint venture between an Armenian researchers’ group and an American
firm interested in a vibration detector developed at Yerevan State
University that can be used in seismic devices.

"These successes are important not only by themselves, but also as
evidence that Armenia is still a country with a scientific sector
which is interesting for investors," commented NFSAT Chairman
Haroutiun Karapatian. "The problem is that many people, both in
Armenia and abroad, do not believe this. Skepticism is still high
about the potential of Armenian science and its ability to create
viable products."

The government’s Khandanian shared NFSAT’s optimism. Having one
successful proposal out of the 48 received by NFSAT is not a bad
result for a country like Armenia, he said. "With start-up
businesses, three, four or five successful results out of a hundred
are considered normal," he said.

Whether similar results can be obtained elsewhere remains to be seen,
but the government maintains that Armenia has the wherewithal for
other joint ventures as well. More than a dozen Armenian institutes
of applied science continue to work successfully and regularly
cooperate with colleagues in Europe, the United States and China,
stated Khandanian.

Editor’s Note: Haroutiun Khachatrian is a Yerevan-based writer
specializing in economic and political affairs.