– Do you think the cargo transportation rates may be decreased after the opening of the Armenian-Turkish border?
– We should not expect a big change in the beginning. It does not mean that instead of using the Georgian territory and the ports we will have better conditions offered by Turkey. We know the price policy of the Turkish ports and railways. We know the price policies of the Iranian ports as well. When we study and compare all this information, we don’t see any significant difference. However, it is about diversification and if we have another choice these countries will be interested in transporting our cargo through their territory. As a result of competition there will be some reduction of prices. There were pretty serious discussions in Georgia concerning the opening of the Armenian-Turkish border and they were discussing whether they would lose much. I believe it will result in competition between these three countries because several years ago I saw a situation when Georgia wanted to encourage the transportation of cargo through its territory suggested an unbelievable rate to Kazakhstan to transport oil through its territory (5 dollars for one tone). This is in case when we are paying 20-25 dollars. Georgia and Azerbaijan understand that if they don’t offer low prices, the oil will go from Kazakhstan to Novorossiysk through the Russian ports and railways. In order to make this cargo go through the South Caucasus, Georgia and Azerbaijan suggested low prices.
– What do you think the financial effect may be resulted from the opening of the border?
– Anyway we will appear in a very beneficial position. There will be other situations as well, which will change the geography of our business as well. When the ferry boat from Ukraine to Georgia did not exist, the cargo transportation capacity from that country was very low. When this ferry boat appeared, this business flourished. We import metal and sunflower-seed oil mainly from this country. We will also use the Turkish ports and will have the ports in the Black Sea as an alternative. We will use the Turkish ports, but will use the Mediterranean one which has 2-3 times more potential than the port of Poti. It will help us to go out to the Mediterranean Sea. It is a good opportunity for Georgia as well because it does not have a railway connection with Turkey and may use this opportunity to go out to this direction through Armenia’s territory. In this case the rates may not matter too much. The most important thing is the geography of the business. There are ten large worldwide companies operating in Poti, and we developed good business relations with them and due to these efforts build a business network in the entire world. There are more ten companies in the Mediterranean port. This means that there will be twice more opportunity to be integrated with the international network of cargo transportation. Is it more beneficial to transport the mineral water to Lebanon through Georgia bypassing the Black Sea or send to the Mediterranean port by railway? Another opportunity is the fact that economic development rates in the Middle East countries are faster than in Europe and these countries are having more participation in the economy of our country. The Turkish port may give us an opportunity to reach out to these countries.
– You can reach them out through the territory of Iran as well.
– Yes, but the Iranian territory has some difficulties; the vehicle transportation is too much, which is very expensive and difficult due to the relief and weather conditions.
– What type of products does Armenia have to interest and export to those countries after opening the border?
– Turkey may be an unlimited market for us. We have transported a lot of cement to Iraq by car in case when it is easier to go to Turkey directly from Ararat by car. Turks are interested in the cement as well. We have a good potential to export electricity as well. Armenia has always had difficulties with selling the energy. This year Turkey had 10-15% deficit of energy. When we have an opportunity to export, the business will adapt to that situation. We can go to Syria through Turkey. The access to the Mediterranean Sea will open a new window to North Africa and Europe. Recently the copper-molybdenum company of Agarak exported the hard material of copper to China as well. They have taken it to Yerevan, Poti, and through bypassing Turkey sent it to China through the Suez Canal. It is a huge distance and this cargo could be sent directly to China through the port of Mers.
– What will be the economic benefits on part of Turkey as a result of opening the border?
– If you mean Armenia only, I don’t think there will be much interest. I think that Turkey has political goals. The opening of the border may be interesting as far as the Kars-Akhalkalak railway has not been built. If they can go to Russia through Armenia’s territory, there will be more interest. From the economic point of view Turkey is interested to have a transit country. The open border is not enough yet and the railways of Abkhazia or Azerbaijan should operate as well. Anyway I think the first step should be done and the borders should be opened. Turkey believes the development of the Eastern part of the country is connected with the railway. A country, which has ambitions to become a member of the EU, cannot have so much difference between the economic development level between Istanbul and this remote region. In case of having open borders the citizens living near the border will benefit from that fact.
– Is the Armenian economy ready to have open borders with Turkey because this country has a very aggressive economic policy?
– People are afraid that the Armenian market will be filled by the cheap Turkish goods. Even if it is true, people will be able to pay less for the same goods. Should we pay more only for the fact that certain goods are produced in our country? It is not the society’s problem but the problem of the businesses.
– If businesses suffer the state will suffer too.
– Of course, but businesses should be interested in being compatible. The USSR used to have a close economy and did not compete with the American and European markets. It resulted in economic collapse. Such economies cannot develop. If we did not compete with the foreign markets, we would face the same problem. The USSR collapsed due to economic reasons first of all, thus we should learn lessons and compete with the Turkish products. First of all we should be able to compete with the Turkish goods.
– The production capacity is high in Turkey, which results in low prices. Will the low capacity of Armenia production be able to compete with this economic giant?
– Yes, if the quality of our product is better we will pay more for it. The ones to be afraid of it first should be us, the cargo transportation companies. Armenia has only 300 vehicles doing international cargo transportation. There are several cargo transportation companies in Turkey, each of which has more vehicles than we do. It is an established fact that you cannot resist if you don’t compete. It is better that our businesses get low profits instead of super-profits but be compatible. Turkey is not afraid of competing with the high quality European products, why should we be afraid of competing with the Turkish ones?
– Do you agree with the opinion that as a result of opening the border the monopolies will be fought out?
– If the oligarchic system of monopolies is not backed by the state representatives, certainly it will be dissolved very fast. But if businesses are still backed, they will not die out.
– Is the private sector of Armenia’s economy ready for opening the border with Turkey? Do they really understand what competition there will be and are they ready for that?
– I think that any businessman should be happy about the opening of the border because we have a problem with selling our goods in the domestic market. Do we have an opportunity to produce more in the sectors of dairy products, water, agriculture, cement and brandy? Yes we do. Even these products have better quality in Armenia and are quite compatible. I often visit European countries and Turkey as well. I assure you that the quality of the products I said is better in Armenia. The Turkish products are cheaper. The competition will be between the quality and price, and each of these items should find its consumer. There is Turkish tomato in the Armenian market as well, and the Turkish one is cheaper. But we prefer the Armenian tomato not because of patriotism but because of the quality.
– There are negotiations around opening the Lars border passing point. Is it an opportunity for Armenia to multiply its external access points?
– If the Turkish border is open the Lars will be one of the ways for us and I don’t think hence it will be so important for us anymore. Lars is used for vehicle transportation, which is more expensive than the sea transportation and it is closed for certain time starting from November. This year we had a good harvest of apricot and the ferry boats were not able to transport the trucks with apricots from Georgia. And there was a situation when the Armenian trucks with apricot drove to Turkey and used the Turkish ferry boats to transport the apricot, which actually was even cheaper by 10-15%. Plus, if from Georgia the ferry boats go to Russia once a week, the Turkish ones, which are cheaper, work once every two days. By the way, the ferry boat going out from Poti is the only one, the owner of which is a monopolist in that sector. The Bulgarian owner makes money and you can’t do anything with it.
– The biggest trade capacity we have is with Russia. How much is the difference the Turkish and Poti ferry boats are offering to this direction?
– Simply there are more ferry boats in Turkey, and each of them is interested in offering compatible prices to attract clients. The Turkish ferry boats ask for 1300 to transport one truck to Russia, and the one from Poti takes 2500 dollars. I will be very surprised if the ferry boat of Poti manages to keep the price the same after opening the border. I believe it will not happen.
– One year ago you said that Armenia had to diversify its transportation and in parallel with using the only Bulgarian ferry boat Armenia would be better to have its own ferry boat too. Do you think that it is still important after opening the border?
– Armenia needed a ferry boat at that time when we were depending from that only boat. However having a separate port or ferry boat despite being a political dividend is also economic diversification, and a guarantee for security and communication. No one may prevent you to invest in such business. When Mr. Khakim Matchanov was able to come from Uzbekistan and make business in the Black Sea, it means that we can find a place in that market as well. Simply we should make investments; it is something that we could not make neither the government nor the businessmen understand during these years. When several places in the ports of Poti and Batumi were given for rent, Armenia did not show any interest even though it had been informed in advance. We don’t understand what it can give us. I think that if someone comes from Kuwait or Saudi Arabia and invests money there, he should have calculated the risks too and does not want to lose money. Maybe we don’t have so rich people to invest in that business, but we have a state which should think of that.