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    Categories: 2021

Weak Rule of Law Is Holding Back the Armenian People

The Heritage Foundation
June 21 2021

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Jun 21st, 2021

Commentary By

Anthony B. Kim@akfreedom

Research Manager and Editor of the Index of Economic Freedom

Alexander Jelloian

Summer 2021 Member of the Young Leaders Program at The Heritage Foundation

| The Heritage Foundation

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rmenia and Azerbaijan made international headlines in September 2020 when violence erupted in Nagorno-Karabakh, a disputed region of southwestern Azerbaijan that claimed independence in 1992. After six weeks of fighting and more than 5,000 deaths, both former Soviet republics established a truce in November 2020.

If Armenia hopes to recover from this conflict, it must address significant institutional problems that have plagued this country and undermined its economic vitality for years.

Armenia’s “weaknesses in the rule of law and judiciary, and a legacy of corruption” challenge its investment climate, according to the U.S. State Department’s 2020 Investment Climate Report on Armenia.

The Heritage Foundation’s annual Index of Economic Freedom quantifies 184 counties’ levels of economic freedom. The higher a country scores on this index, the more prosperous its citizens become. 

Twelve variables determine a country’s overall score. While Armenia ranks high on several of these variables, its “property rights” and “government integrity” scores are low.

Armenia has clear protections for individual property rights in its civil code, but the judiciary may not give a fair and timely ruling to claims involving land, intellectual property, or business. Land ownership security trails levels elsewhere in Europe.

Armenia’s government integrity score also falls below Europe’s average rating. Bribery, grafting, and corporate cronyism contribute to Armenia’s low government integrity score.

The State Department report said, “Despite progress in the fight against corruption and improvements in some areas that raise Armenia’s attractiveness as an investment destination, investors claim that numerous concerns remain and must be addressed to ensure a transparent, fair, and predictable business climate.” 

Protecting property rights and ensuring that elected officials abstain from corruption are fundamental pillars of economic freedom. It is extremely difficult for an economy to grow when its citizens cannot compete in a free and fair marketplace. 

Thankfully, it is not all bad news for Armenians. Armenians enjoy a low tax rate and high rates of business and labor freedom. Government spending is not out of control. Despite the country’s poor government integrity and property rights scores, Armenia’s overall economic freedom score still stands strong at 71.9 compared to the United States’ 74.8 score.

While these are all good indicators, more can and should be done, starting with an aggressive campaign to rid Armenia of its dark clouds of corruption. Once this occurs, Armenia’s rule of law and economy will flourish, and so will the Armenian people.

This piece originally appeared in The Daily Signal.

Emil Lazarian: “I should like to see any power of the world destroy this race, this small tribe of unimportant people, whose wars have all been fought and lost, whose structures have crumbled, literature is unread, music is unheard, and prayers are no more answered. Go ahead, destroy Armenia . See if you can do it. Send them into the desert without bread or water. Burn their homes and churches. Then see if they will not laugh, sing and pray again. For when two of them meet anywhere in the world, see if they will not create a New Armenia.” - WS