“We will complete the year with approximately 2,4% economic growth. When the budget 2010 was being adopted by the National Assembly we were predicting a 1,2% growth. It means that the index of economic growth exceeded the index planned by us. But major structural changes also took place.”
On January 22 of the current year RA Prime Minister Tigran Sargsyan uttered these words during the 18th session of the board of directors of the national competition foundation. As you Tigran Sargsyan described the previous year with quite bright colors. He mentioned that in the structure of the economy reforms are taking place, which reduces the ratio of construction in the GDP. At this moment construction rates 15 percent instead of the previous 25 percent. He also signified the improvement of the exportation rates by saying, “We have a 40$ growth of exportation and nearly 15% growth of importation. It means that in this regard the motives of trade rates have also improved.” The Premier also spoke about the development of infrastructures; the efforts made in this regard, the anti-crisis projects, investments made in road construction and irrigation systems. He also specially signified the important tax privileges in the context of the implementing reforms of the economy. “By the decision of the government 12 enterprises were granted privileges by postponing the return of the VAT.” These are projects, which in a full volume will be implemented in 2011. Those will stimulate the growth of the GDP in the industry sector. I mean the newly established companies, which make large-scale investments in the industry of Armenia.” Why did we decide to recall of this? Yesterday the “Russky Reporter” (Russian Reporter) website, which publicizes the Wikileaks materials about Armenia, posted one more piece of important information about Armenia, in the background of which the super-optimistic speech of the Premier seems very interesting. In April the US Embassy Charge D’Affaires in Armenia Joseph Pennington sent a “secret” leak to Washington, in which he spoke about the social-economic and political situation of Armenia, the plight of emigration in the country, etc. “Even the successful middle class representatives tell that they don’t have any hopes from Armenia’s future and they don’t believe that the country may become stable and prosperous,” reads the leak. 2009 followed the crisis year of 2008 and 2010 didn’t much differ from 2009. So the situation in the leak did not only improve but deteriorated even more. And most importantly, this was only a side look of an American living in Armenia. And it’s obvious that certain phenomena are much better seen from the US. In his leak Pennington has brought concrete examples about the life of the Armenian middle class representatives. Why is this situation unusual for an Americans especially in the aspect of economic life if our government constantly speaks about improvements, reforms, about the help to the medium and small businesses? In the US they also know that the only objective of the government is to help businesses despite the fact that over there they almost don’t speak about that. Instead certain mechanisms work, which conduce to the development of medium and especially small businesses. For example, the hired employee pays more taxes than an entrepreneur. This is done to motivate the person to take the risk and start his/her business. In the US failure is not considered tragedy. It is considered a valuable experience. Moreover, this is not only a matter of mentality. We also have a saying, “trying is not a tragedy.” But in Armenia the reality is that if a person fails once all the doors are going to be closed for him. First of all, besides declarative statements the state doesn’t show actual help to the newly-established businesses. Secondly, right on the second day of opening a business the entrepreneur gets to deal with high taxes, custom payments. And finally the citizen cannot even close his business. The dissolution process is so complicated that the person gets disappointed in the middle. It becomes almost impossible for a failed business to get a credit from a bank if he has new ideas and decides to realize those. The banks trust only the successful ones. But the new starters and eclectically the ones, who failed once, appear on the black list. This means that they can only rely on themselves. The sector of high technologies is connected with this issue as well. We like to speak about the latter very much. Moreover, we develop all kinds of charters, projects. We wish to build our Silicon Valley in Gyumri. However, as the representative of the California Business Council told us, the most important thing is not the construction of buildings but the environment. It is necessary to have venture ideas, which would finance new projects. But in our country they would hardly finance venture ideas aimed at the development of future. It’s worth mentioning another important idea. The Americans are not interested in macroeconomic predictions. They are interested only in the contents of their pockets. As one of the economists of the venerable Standard & Poor rating company told us people mostly believe in what they see with their eyes. The government doesn’t convince and petition much because they understand one important thing. The consumer spends more money to buy things and services when he is sure he is not going to lose his job. Here they don’t bra. Everybody does his job. As a result, an unbreakable system is being created, which attracts the world capital and labor, including the Armenian citizens. And we thought that Armenia is a stable harbor in the stormy sea and the super rich people of the world are going to direct their funds and invest those in Armenia because we have a stable financial system. By the way, we recently asked one of the economists of this organization whether it would have been possible for Armenia to pass the crisis so that we could also benefit from it. The answer was the following, “Only the countries, which didn’t depend on the foreign capital, would avoid suffering the crisis.” As of the theoretic assumption of Armenia becoming an isle in the stormy sea he shyly smiled with lenience and responded shortly, “It is not possible.” He probably was surprised that the economists of Armenia could be so romantic. We indeed didn’t say that romanticism is the basis of our economic policy. In a certain way by getting acquainted to this country you realize that our legislation is no worse than the American. But this makes the picture even sadder because you realize that in order to do this all we need is desire and willingness. And so willingness doesn’t exist. That is why in the beginning of 2008 we still had great indexes of economic growth but Pennington represented the situation in tragic colors.