In Whose Interests? The Political Economy of Armenian-Turkish Relations
By Serouj Aprahamian
Asbarez
Jan 8th, 2010
This mansion belongs to just one of many millionaire oligarchs in Armenia
BY SEROUJ APRAHAMIAN and ALLEN YEKIKAN
The Turkey-Armenia Protocols ushered in an unprecedented wave of
international outcry against the policies of the Armenian government.
Massive demonstrations took place in almost every major city of the
Diaspora; 60,000 protestors took to the streets in Yerevan; leading
Armenian academics and Genocide scholars forcefully spoke out against
the Protocols; two former Foreign Ministers of Armenia came out
against the measure; 14 political parties and dozens of organizations
within Armenia signed a statement against ratification of the
documents; and the sole opinion poll taken on the issue showed that
52.4%[1] of the population in Yerevan was against the signing.
Nevertheless, the Foreign Minister of Armenia traveled to Zurich on
October 10 and signed the Protocols with his Turkish counterpart.
Today, the Armenian government vehemently calls on Turkey to ratify
the agreement, after which it promises to immediately follow suit.
Given the widespread opposition and detrimental effects the Protocols
are deemed to have on such pan-Armenian interests as Genocide
recognition, legal claims to the Armenian homeland, and the liberation
of Artsakh, many people have been left to wonder why Yerevan has
pushed forward with this controversial policy with such vigor.
Why would the Armenian government risk going against the will of the
majority of its people and give up so much in return for mere Turkish
promises of normal relations?
Who Gains, Who Loses
To find answers to this question, it’s essential to look beyond just
technical issues about what the Protocols entail and the arguments of
both its proponents and opponents. We must look, instead, at the core
interests of those in Armenia who hold the levers of power. To put it
more simply, in order to understand how policy is formed, it is
important to understand those who form policy.
By now, it should be common knowledge that decision-making in Armenia
is controlled by a small circle of elites, who dominate the country’s
political and economic landscape. Whether we look at the President’s
administration, the makeup of the National Assembly, or the heads and
support-base of political parties in the coalition government, we find
an easily distinguishable lineup of oligarchs that have woven their
noose around Armenia’s institutions and its society. What’s unique
about this social class is the magnitude of power they command, far
surpassing the influence of any other segment of the general
population. These oligarchs also share a common set of economic
interests, living standards, values, and norms of behavior. They are,
in fact, a distinct social class with tight links to one another, who
operate on a political plane detached from the general public.
When looking into the business interests of this group of people, we
find that a large number of them have made their wealth by dominating
key commodity imports (e.g. gas, wheat, oil, butter, sugar, and so
on). These business interests of the oligarchic class reflect the
makeup of Armenia’s skewed economic landscape as a whole, with imports
making up 40% of GDP, while exports only account for 10%. Meanwhile,
70% of exports are comprised of raw materials, minerals, and stones. A
large fraction of this class became rich through controlling the
mining and exporting of Armenia’s diamonds, copper, and gold, to name
a few. That virtually all of these individuals have also acquired
large tracts of land and property throughout the country is no
coincidence either, as 40% of Armenia’s annual growth is accredited to
construction and real-estate. [2]
As such, a considerable level of power is in the hands of these
oligarchs whose monopoly over key sectors of the economy has
significantly stymied the country’s economic development.
The lifting of the Turkish blockade is anticipated to further enrich
these dominant figures by allowing them to directly bring in products
over the Turkish border, rather than the more costly route currently
used through Georgia. In turn, opening the border is anticipated to
provide new opportunities for those seeking to sell Armenia’s natural
minerals in the international market. Property values and foreign
investments are also expected to rise once relations are normalized
with Turkey, placing many of those in Armenia’s oligarchic class who
possess major real-estate and retail interests in a privileged
position to reap profits.
The majority of Armenians, on the other hand, who struggle to make
ends meet as farmers, wage laborers, or small businessmen are not
likely to see much of the gains from opening the border. On the
contrary, agricultural workers and local producers stand to suffer
greatly under the weight of cheaper imports flooding in from Turkey,
while laborers are likely to witness declining or stagnating wages
under the pressure of foreign capital. Furthermore, rampant corruption
and tax evasion ensure that whatever financial gains do accrue at the
top will not be distributed down to the majority of the population.
The chairman of the Union of Domestic Manufacturers of Armenia, Vazgen
Safarian, recently explained, `On the one hand, our consumers [and
importers] will benefit from the cheap goods, but on the other hand,
this will doom our local producers to having to shut down or to
suspend operations.’ Another Yerevan businessman, who actually imports
fabrics from Turkey, stated `Then, many people will start importing
goods, maybe the prices will go down. [T]his will hit everyone, [but]
I think my business will suffer.'[3]
Vardan Ayvazyan, the head of the National Assembly’s Standing
Committee on Economic Issues has exploited his position to secure
mining licenses for himself and his family.
Edgar Helgelyan, an expert with the Mitk Analytical Center, also
weighed in on the issue. `We are seriously concerned that the opening
of the border will considerably damage the Armenian economy. Imports
from Turkey to Armenia account for about $178 million, while exports
from Armenia to Turkey do not surpass $1.8 million,’ he said during a
press conference releasing a report submitted to the Armenian
government on the subject.[4]
In other words, the much-touted `growth in GDP’ or `improvement of the
Armenian economy’ that IMF technocrats and government apologists alike
parrot as the silver bullet behind supporting the Protocols, is likely
to provide a boom for the oligarchic elite but a bust for nearly
everyone else. This might help to explain why many average citizens in
Armenia are opposed to the Protocols on economic, in addition to
national, grounds; they fear having to bare the economic costs of the
agreement while the elite reap the benefits.
This reality also helps to explain why Armenia’s leading class has
lent its unflinching support to the Protocols, with many being vocally
in favor of the move, both in parliament and in business circles.
To give one of many examples, a leading proponent of the agreements in
Armenia is Vardan Ayvazyan, the current head of the National
Assembly’s Standing Committee on Economic Issues. Throughout his years
in government, Mr. Ayvazyan has secured various mining licenses for
himself and his family, including an ironstone mine in Hrazdan and two
mines for his brother in Syunik and Lori provinces. It therefore comes
as no surprise that he repeatedly boasts about the benefits of the
protocols, claiming that, `Opening of the border can lead to 4 percent
growth of GDP’ or that the Protocols will `ensure a new economic path
for our country.’
For individuals such as Ayvazyan, who have used Armenia’s legislative
process towards their economic gains, opening the border provides new
opportunities to capitalize on the exploitation of Armenia’s natural
resources. [5] The mere fact that the agreement has advanced this far
is itself a testimony to the backing the government – many of who
themselves make up the oligarchic class – has received from Armenia’s
wealthy elite.
Indeed, in a recent interview to an Armenian newspaper, President
Serzh Sargsyan smugly stated, `I have not heard from any serious
businessperson in Armenia that has doubts of the economic benefit of
opening the border.’
Capitalism Over Nationalism
Significant profits are surely anticipated to be made in the upper
echelons of Armenian society once the borders are opened. But at what
cost are Armenia’s oligarchs willing to pursue their pocket books?
Would they be willing to give in to Turkish conditions and renounce
Armenia’s national rights for the sake of lifting the blockade?
Unfortunately, for many of the Armenian elite, national interests such
as Karabakh’s self determination, justice for the Armenian Genocide or
legal claims to historic lands do not seem to be as much of a concern
as they are for the general population.[6]
This was perhaps most famously demonstrated by the head of the
Armenian Football Federation (AFF), well-known oligarch Ruben
Hairapetyan.[7] In the run-up to the Turkish president’s visit to
Armenia for the much-touted soccer match between the two nations,
Hairapetyan suddenly removed the image of Ararat from the AFF’s
official logo, sparking a major outcry within Armenia. Although he was
later forced to reinstate the original logo with Ararat as the
centerpiece, the inherent disregard for Armenia’s national rights and
dignity was blatantly exposed by the scandal.
It should be pointed out that such a dismissive attitude towards
pan-national interests is not a new phenomenon among the ruling class
in Armenia. We saw similar sentiments expressed during the tenure of
Armenia’s first president, Levon Ter-Petrosyan, who was the chief
architect of the system of autocracy and oligopoly we presently see in
Armenia.[8] It was, thus, not surprising to see Ter-Petrosyan’s newly
formed opposition immediately suspend their protest actions against
the government in September 2008, when they learned that the Turkish
president would be coming to town for a soccer match.[9] More
recently, despite his earlier bitter denunciations of the government,
Ter-Petrosyan has praised the Sargsyan regime’s policy on
Turkish-Armenian relations and has even expressed his desire to
establish cooperation with the ruling regime.[10]
Russia’s Backyard
In addition to the economic incentives and tendency to compromise
national rights, there is an equally powerful factor to be considered
when examining the ruling elite’s support for the Protocols: alignment
with Russia.
Most of the prominent business and political elites in Armenia have
direct personal ties to business and political interests in their
former Soviet patron. We find that they either have major business
ventures in Russia or serve as the overseers of Russian capital
investments in Armenia. As one member of the ARF Western US Central
Committee recently put it, `If Armenia is Russia’s backyard, then they
[oligarchs] are the gardeners.'[11]
Indeed, Russia itself has a controlling stake in many of Armenia’s
most strategic assets – gas, oil, nuclear power, electricity,
telecommunications, rail, and finance, to name a few. It is estimated
that Russia has over $2.5 billion of economic interests in the
country. Given Armenia’s vulnerability to any instability Russia could
potentially cause in these strategically important sectors, no major
decision on the magnitude of the Protocols could be made without the
blessing of the `Big Uncle.’ The ruling elite in Armenia must pay
special heed to the wishes of Moscow if they want to avoid any
unwanted disruptions to the state and economy. Thus, it was no
accident that President Sargsyan, during a state visit to Moscow in
June 2008, extended an invitation to his Turkish counterpart to come
to Armenia for the first soccer match.
For its part, Russia has openly expressed its support for the
Protocols, with many analysts pointing out that it would be the main
beneficiary of potential energy and transportation projects between
Armenia and Turkey. Russia’s Deputy Foreign Minister, Grigori Karasin,
was recently quoted as saying, `The Russian Inter RAO EES Company,
which has energy facilities in Armenia, is exporting electricity to
Turkey and the Russian Railway CJSC is ready to ensure uninterrupted
rail communication between the two countries through the
Dogukapy-Akhuryan checkpoint.'[12] Interestingly enough, two of the
main initial projects expected to develop following the implementation
of the Protocols are the sale of Armenian electricity to Turkey and
the opening of joint railroad transportation-both of which are
Armenian industries dominated by Russia.
The Path Forward
Of course, the West is also keen to see rapprochement between Armenia
and Turkey. The heavy dependence Armenia has on Western loans and the
desire to deflect attention away from the state’s crackdowns of March
1 is surely another motivation for Armenia’s pursuit of the Protocols.
Yet, blame for the Protocols cannot be laid at the door of foreign
pressure (whether from Russia, Turkey, or the West). As Armenia’s
Foreign Minister himself explained, `All states except for one or two
supported the process and did not pressure us. It was Armenia’s
initiative. We reached the agreement jointly with Turkey.'[13]
The responsibility, thus, lies with the ruling elite in Armenia. These
elite hold the reigns of power in the country and have obvious
motivations for seeing the Turkish blockade lifted despite its costs.
In the end, the Protocols and the ensuing establishment of relations
between Armenia and Turkey are a direct reflection of the interests of
this tiny set of powerbrokers within Armenia.
The question, then, becomes how can the people act to prevent the
ruling class from negotiating away Armenian national rights? The
answer to this question lies partly in the international public
opposition against the Protocols witnessed in recent months.
The unprecedented wave of mass demonstrations organized against the
Armenian government pointed to a potential constraint on government
decision-making. Hence, the public awareness raised against the
Protocols, the delay by Nalbandian during the signing ceremony in
Zurich, and President Sargsyan’s televised public address hours before
the signing were a direct consequence of people taking to the streets
in Yerevan and capitals throughout the world.
To date, these demonstrations have been the most serious disruption to
the Armenian government’s plans for pushing through the Protocols.
Indeed, the constant secrecy, media control, and deceptive statements
issued by the government indicate their concern over the Armenian
public’s negative reaction to their policies.
By putting into question the reality of the Armenian Genocide through
a so-called historical commission, recognizing the existing
illegitimate border that forfeits legal claims to the Armenian
homeland, and compromising Armenia’s ability to defend the freedom of
Artsakh, the Protocols pose a grave threat to the Armenian Cause-a
cause considered to be paramount in the hearts and minds of Armenians
around the world.
However, protests and negative opinion alone are likely not to be
enough to stop the regime from ratifying the agreements. Public
opposition must be translated into serious organization and concerted
action in order to raise the costs high enough to be heeded by the
administration in Yerevan. The system of centralized, elite power in
Armenia must be checked by a vigilant and organized populace in order
to restrain the wreckage of the self-interested schemes of the
oligarchic elite.
The Diaspora has a special role to play in this battle. Through its
relative freedom and more abundant resources, it has an important
obligation to stand in support of those in Armenia who are genuinely
struggling to create a more just and equitable future in the Homeland.
As in the past, only by coming together collectively and reaching
beyond artificial divisions will the Armenian people succeed in
defending their pan-national interests.
Editor’s Note: This article is featured in the Winter 2010 issue of
Haytoug, a quarterly publication by the Armenian Youth Federation. The
upcoming issue is set for release in late January. It will be
available, free, at community centers, schools and local Armenian book
stores. You can also download it in PDF or sign up to receive a free
copy in the mail at
_______________ _________________________
[1] `Yerevan Survey Finds Majority Opposed to Protocols,’ ArmInfo,
September 29, 2009.
[2] Ara Nranyan, `Neoliberalism and Armenia: 18 Years of Integration
with Capitalism,’ presentation delivered at the 2009 Armenians and
Progressive Politics conference in Glendale, CA
[3] Marianna Grigoryan, `Is Yerevan Caught in a Trade Trap?’
Eurasianet, October 5, 2009. See also Hasmik Hambardzumian, `Armenians
Wary of Turkish Trade,’ Asia Times, September 29, 2009.
[4] `Opening of Border with Turkey Will Devastate Armenian
Businesses,’ PanArmenian.net, September 25, 2009. See also the
thorough, 192-page study commissioned by the ARF Bureau on the
economic impact of opening the border: Mher Dzadourian, Pavel
Hovhannisan, and Albert Babayan, `Economic-Trade Issues Surrounding
the Opening of the Armenia-Turkey Border,’ June 2009, Yerevan.
[5] Gayane Abrahamyan, `Parliament Debates Diplomatic Normalization
with Turkey,’ Eurasianet, October 1, 2009. For a background on
Ayvazyan’s interests in the mining industry, see Edik Baghdasaryan,
`Vardan Ayvazyan’s Business Project,’ Hetq, April 2, 2007.
[6] Despite the constant propaganda meted out to the contrary, people
within Armenia consistently express their support for the cause of
Genocide recognition and reparations from Turkey. See Serouj
Aprahamian, `Armenia vs. Diaspora: The Myth of Diverging Interests
Over the Genocide,’ Haytoug, Spring 2009, 6-9. In the most recent
opinion poll taken after the announcement of the Protocols, 52.4% of
Yerevan residents rejected the terms of the agreements and 41%
insisted that they want the Turkish-Armenian border to remain closed.
`Poll Finds Turkey Deal Unpopular in Yerevan,’ Asbarez, October 19,
2009.
[7] Hayrapetyan owns several businesses and is the Chairman of the
Armtobacco Company. Most recently, he took ownership of the Bjni
Mineral Water Factory in a controversial deal following the original
owner’s (oligarch Khachatur Sukiasyan) fall out with the government
over his support of Levon Ter-Petrosyan and his alleged role in the
March 1st events. See Gayane Lazarian, `The Politics of Table Water:
`National Treasure’ Bjni Changes hands in Disputed Sale,’ Armenia Now,
September 2, 2009.
[8] See Ian Bremmer and Cory Welt, `Armenia’s New Autocrats,’ Journal
of Democracy, Vol. 8, 3, July 1997, 77-91.
[9] Marianna Grigoryan, `Armenia, Turkey Put Differences Aside for
Soccer,’ Eurasianet, September 5, 2008.
[10] `Armenian Opposition Leader Backs President on Turkey,’ RFE/RL,
November 12, 2009.
[11] Town Hall Meeting on Pan-Armenian Challenges. November 19, 2009.
Encino, CA. Personal notes.
For a more historical perspective of this same phenomenon, we are
reminded of the following quote from Armenian revolutionary hero, Aram
Manukian: `That [exploitative] class is the capitalist class, which by
descent is Armenian but in fact serves as the defender of foreign and
Russian interests. They pretend to pose as the leaders of our people,
but they consider Armenians to be only a pedestal under Russian
tutelage for them to use to advance a more vibrant life. This class
has turned into a threat to the Armenian people’s unity. They have
become bait for our neighbors to use against us. They have become a
`fishing hook’ in the hands of the Russians with which to `catch’
Armenians. Although they may possess Armenian names, this class is, in
fact, our enemy.’ Roupen Der-Minassian, Memoirs of an Armenian
Revolutionary, Vol. 2.
[12] `Russia to Support Armenia-Turkey Ties With Economic Projects,’
Asbarez, November 4, 2009.
[13] `Nalbandyan Does Not Feel `Embarrassed and Insulted”, News.am,
October 30, 2009.