PROSPECTS OF ARMENIA IN THE LIGHT OF "ZONAL" ASPECT OF WORLD FINANCIAL CRISIS
Mikhail Aghajanyan
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07 May 2009
World financial crisis brings its colouring to the ongoing
developments in the international relations. The recent debates round
the supply and the transition of energy resources incrust with the
financial-borrowed elements and fluently takes the form of credit
and energetic interdependences.
The states, which used to enjoy the benefits from the additional stream
of receipts in the period when the prices on energy resources were
high, on current stage, aspire to redirect to their profit those
resources to the zones of their actual and potential influence,
forming up more complex and profound shape.
Whatever it is said from the high international tribune about
the destructiveness of the state’s zones of influence, all those
conversations, of course, are burdened with the weight of double or
even triple standards. Generally speaking the establishment of the
zones of influence cannot be separated from the current specificity of
international relations and it is important to estimate not the very
establishment of those zones, but the efficiency and the reciprocity of
the processes in the areal of their activity. Does not, for example,
the European Union have its zone of influence? Of course it has, but
the processes, which are formed within that zone, are of constructive
character and are based on the healthy and transparent principals of
political association and economic integration of European space.
Russia creates its own area of influence and makes it not only in
several directions of "zonal influence", but it combines in such a
spatial influence several resources. At current moment the mentioned
combination manifests in the symbiosis of energy and credit and
financial elements. Russia tends to expand its presence in the places
where it is traditionally and significantly represented and tries to
make that presence stable through offering the tightest resource on
international arena under the financial crisis, i.e. money.
Russia’s (which has been receiving dividends from the boom on the
energy market in recent years) argumentation and the policy, which
are built on its basis, are rather simple: there is an overstock of
energy resources and the deficit of financial resources. Thus, those
who need that financial resource have to be geared to the interests
of Russia or, at least, respect its interests.
At the same time, the previous years show that Russia has not learnt
to spend effectively its excess financial resources yet. From this
point of view we find that the observations of famous Russian economist
A.Aganbekyan are rather significant.
"It is unacceptable to face the crisis with huge debts to
foreigners. At current moment the debt of the banks, companies and
organizations to the foreign investors is more than $500 billion,
and more than a half of that debt belonged to "Gazprom", "Rosneft"
and other state structures. The most interesting is that we had
$600 billion foreign-currency and gold reserves, which were on the
shelf. Placing securities we received 3% per annum, while our banks
took credits at 7-8%. Would not it be better if we gave them those
reserve money at 6-7%?
We have not diversified economy. We were on the "oil and gas needle"
and had benefits while the prices were rising. We had developed and
shown off for 10 years. Since 2000 we had received $2 trillion only
from export.
For such money one could have built a new country. But we neither
established new petro-chemistry nor contemporary timber processing,
where we had the best conditions in the world, we did not develop
electric machine industry, which could have become our big sector; in
house building and infrastructure construction we did not reach the
level of 1989, and, at last, we did not renew the technical basis,
out-of-date capacities in the most of the sectors and now we have
the equipment with the average life of about 18 years, instead of
7-8 years, which is normal. I do not speak about the development of
innovative sectors, which we have started in the recent 2-3 years
and not 10 years ago as it had to be done.
In 2008 the capital outflow from Russia was $129.9 billion, in January
and February 2009 it exceeded $33 billion"1.
Credit and economic zonal influence managed to approve it in such
different directions of foreign policy course of Russia as Central
Asia, Eastern Europe and South Caucuses. It is interesting that Russia,
as usual, set about real approbation of new methods firstly on the
post-Soviet territory, at the points of its incontestable geopolitical
influence. Very appropriate political terminology, which corresponded
with the current realities, was chosen – stabilizing crediting.
Let us remind that the Russian proposal about the stabilizing credit
extension for the struggle with the financial crisis among the first
was turned to Iceland, which was on the edge of economic default in
the autumn of 2008. Russia offered to Iceland, which is NATO member
country (initial, by the way) with the population of 320 thousand
people $4 billion to get over the "financial spin". At that time its
Scandinavian congeners represented by Sweden and Denmark offered their
help to Iceland (it is interesting, that Norway "modestly stand aside",
though, amid the aforementioned countries, it has incomparably bigger
foreign-currency and gold reserve, taking into the account its oil
producer position on global scale).
As authoritative and at the same time exclusive European periodical
"Russian Intelligence" says Russia’s offer to Iceland caused vigilance
among the Americans, who decided that Russia wanted to strengthen
its stance in the Arctic line of its far too ambitious foreign policy
course in that direction2.
Later, Russia realistically sized its possibilities and winded up
the process of stabilizing credit extension to Iceland. It became
clear that Belarus and Kirgizia were much closer and, besides, the
domestic economic problems emerged in a crisis shape.
In Central Asia Russia made financial offer to Kirgizia ($2 billion),
which it could not merely refuse but it could not simply afford to
refuse. The result is that the issue of the US military basing on the
territory of Kirgizia is in limbo ("Manas" base) and the new president
administration is now perplexed searching new transit routs to Kabul3.
In the zone, which is "a bit eastern East Europe" Russia directed its
eyes to Belarus. The eyes were directed in time and, as it is said,
for their edification, so that their Belarus partners did not get stuck
on the political signals from Europe in the form of "invitation cards"
(though conditioned anyway), to the programme "Eastern partnership"4.
The stabilizing credits to Belarus were overgrown with Russian
conditions, which were stated by the minister of finance of Russia
A.Kudrin on March 20, 2009 in Minsk and referred not only to Belarus
but also to all the partners in the CIS. Russia should present the
consolidated stance of the CIS on the elaboration of new global
finance architecture on G-20 summit in London.
This statement was made on the backdrop of the emphasis of the
credit extension to Belarus by Russia, which has been going on since
2007. Since the end of 2007 the credit resources, granted by Russia
to Belarus have constituted $3 billion, including $1.5 billion in
two tranches in the end of 1008 and March of 2009.
The formation of the so called anti-crisis fund of the Eurasian
Economic Community (EurAsEC), which constitutes $10 billion, is
also presented by Russia as its contribution to the common financial
stabilization on post-Soviet territory (the share of Russia is $7.5
billion).
In South Caucasus the addressee of the stabilizing credits was Armenia,
which obtained modest credit (as compared to the aforementioned Russian
"generous gifts") in the amount of $500 million.
Credit and economic influence of Russia in the light of stabilizing
credit extension in general is marked with the efforts to re-direct the
planned energy flows on the track, which is profitable for Russia. The
common stance of the CIS on international forums is more valuable for
Russia from energetic than from financial point of view. What is more
important for Russia? Is it the common stance of CIS, for example,
on such definite projects like "Nabucco", "Nord Stream" and "South
Stream", or is it the common stance on very abstract speculations
about the construction of new financial architecture of the world? The
answer is obvious.
Taking into consideration that fact, the biggest Eurasian power turned
eyes towards some East European countries, which have traditional
discord between their national and cultural inclinations and political
aspirations. Bulgaria always wished to be close to Russia, but at
the same time tended to enter Euro-Atlantic structures. Today that
country preserved close national and cultural, trade and economic
ties with Russia, but at the same time it is NATO and EU member5.
Such a promising "bridgehead" for the projection of its influence
zone cannot but interest Russia. Before turning to the concrete
presentation of Russia’s credit and economic projection to Bulgaria,
let us mention that this country is, probably, the most sincere
well-wisher of Armenia among the East European countries and it
has much in common with Armenia. Among this the national sufferings
from Turkish factor in the region, the undeserved treatment as to a
"junior" partner on behalf of the historical ally, the great support
in Euro-Atlantic lobbies and many other factors can be mentioned.
On March 22, 2009, the minister of economy and energy of Bulgaria
P.Dimitrov, who conducted negotiations on March 20 in Moscow, stated
that Bulgaria had started to discuss with Russia the issue of using
Russian $3.8 billion loan for the construction of "Belene" nuclear
power plant (in January 2008 Bulgarian party concluded a contract with
Russian company "Atomstroyexport" on the construction of two ÂÂÝÐ
(Pressurized water reactor)-1000 power blocks for "Belene" nuclear
power plant).
Up to that moment Bulgaria avoided turning to Russian means to
finance the "Belene" nuclear power plant project, considering
it as an utmost possibility. Before that all the hopes, regarding
external financing sources, Bulgaria pinned on Germany, represented by
"Rheinisch-Westfalisches Elektrizitatswerk" (RWE) , which is one of
the biggest energy corporations of that country. P.Dimitrov stated
that the issue would be clarified after the Bulgarian prime-minister
S.Stanishev’s visit to Moscow. It will take place after the energy
forum, planned on April 25-25, 2009 in Bulgaria. In the light of
the current disturbances round the reliability of the Russian gas
supply to Europe, the special attention should be paid on the fact
that after his visit to Moscow P.Dimitrov offered the "Blue Stream"
gas pipeline, which is laid on the bottom of the Black Sea from
Russia into Turkey, as the alternative route for the supply of gas
to Bulgaria by "Gazprom". According to P.Dimitrov Moscow realizes
that the easiest way to Europe lies through Bulgaria, and the latest
would never refuse from "the important role of mediator between two
super giants in Europe and Asia, between European Union and Russia" 6.
Thus, receiving preliminary assurances from Russia, which regarded
very important for Bulgaria energetic project on "Belene" nuclear power
plant construction, Bulgaria gave preliminary consent to reformat gas
flows from Russia to Europe and offered its territory for transition
instead of Ukraine. One point is not clear yet. How will this group
with the intentions of Russia concerning "South Stream" gas project
(at current stage the Bulgarian Black Sea port Varna is considered as
the key point in that project). To all appearances, Russia uses one
reserve from its arsenal of argumentations towards the rejection of the
Europeans to implement "Nabucco" project. The supply rate to Europe,
which cannot be provided by "South Stream", will be compensated by
the branch line of the "Blue Stream", which is rather reliable option
for the Europeans, i.e. it is far from Russia-Ukraine border.
By the way, taking into consideration the fact that we touched
upon the "Blue Stream", the Russian-Turkish recent activity in the
crediting and energy sphere should be mentioned. Several days before
the visit of P.Dimitrov to Moscow, the minister of energy of Russia
S.Shmatko had been in Turkey and met there with his Turkish colleague
H.Guler. There are some reasons to consider those crossing visits in
interrelated context.
Russia has two nuclear projects, i.e. the construction of nuclear
power plants, both in Bulgaria and in Turkey. Russia pins its hopes
on domestic energy market penetration both in Bulgaria and in Turkey,
and this may create in perspective the preconditions for reformatting
the energy flows from Eurasia to Europe. Both Bulgaria and Turkey
suffer tight financial recourses at current stage, and this may bring
to the acceptance of the corresponding Russian suggestions.
What prospects are opened before Armenia in the light of the
aforementioned new forms of the geopolitical influence of Russia on
post-Soviet and East European territory?
It is important to view all these subjects, which affect our interests
in the region and outside, from pragmatic point of view. Under the
conditions of global financial difficulties the best way to resist
and also to get out even stronger from that financial-economic
"spin" is to view everything from pragmatic point of view. If
Armenia needs extra-financial resources and Russia volunteered to
provide them, then there is nothing reprehensible in it. Especially
as international structures expressed readiness to provide even more
financial means ($540 million). It is obvious that complimentarity
in foreign policy of the RA, which could be carried out by Armenia
during the whole period of its independency to one extent or another,
is the pragmatic background, which embodied in the diversification
of the financial means of the stabilization of the economy amid the
world financial crisis. Armenia came to the beginning of that crisis
with the experience of such a complementary policy and many of its
partners on post-Soviet territory do not have such an experience.
Besides, amid the world financial crisis the stance of the country
with large and influential Diaspora abroad, which, at the same time,
is on a rather high level of passionarity from the point of view of
private enterprise, seems to be incomparably advantageous. The flow of
the transfers to Armenia from the Diaspora released, but it is still
playing the role of a significant resource of financial feeding of
the country.
Moreover, one may say, that against the backdrop of global financial
crisis that flow can change its consuming form, it had had for recent
years, into the accumulative-stabilizing form or, may be, even into
investment potential. In other words people will spend less and will
plan their possibilities for the future.
Among other post-Soviet republics Armenia has its own "zone"
particularly of financial and credit influence represented by the
Nagorno-Karabakh republic, which exist de-facto. The common financial
and credit system, common currency and other attributes of common
economic space allow speaking about rather wide Armenian financial and
credit areal in South Caucasus, and Diaspora is one of its external
supports. In the contemporary Armenian context the zone of financial
and credit influence is transformed into the common Armenian market
in South Caucasus, where, just like within the common economic space
of the European Union, the free movement of four main elements of
integration takes place, i.e. the free movement of goods, services,
labour force and capitals.
It is safe to say that Armenia and the NKR implemented many of what was
planned by the European Union in the line of South Caucasus within, for
example, the "Eastern Partnership" programme. It is necessary to keep
trying reasonably to convince the EU in the necessity of including the
NKR in multilateral thematic platforms of "Eastern Partnership"7, so
that there are no "grey zones" of partnership left on South Caucasus8.
As lean peace is better than a fat victory, thus any influence zone is
more preferable than "grey zone", especially amid the financial crisis.