During the past couple of days, the chief owner and president of the
“Troyka Dialog” association, chief director of the “Rosgostrakh”, and
president of the coordinating staff of the “Armenia 2020” project Ruben
Vardanyan was in Yerevan. Ruben Vartanyan is also a member of Russia’s
bureau of industrialists and businessmen. In 2001, he was recognized as
one of the world’s 25 best managers by “Fortune” magazine.
Ruben Vartanyan visits Yerevan often but for a short while. The purpose
of his visit this time was connected with the “Armenia 2020” project
and the graduation ceremony of the students of the American University
of Armenia. He was invited to the ceremony as an honorable guest and
made a speech. During that speech, “168 hours” weekly got a chance to
have an interview with Mr. Vartanyan “standing up”.
168 hours: “You said that it seems as if Armenia is situated in a hole. What gives you that impression?”
Ruben Vartanyan: “I see that by communicating with the people. The
world is not in front of my eyes here. The lack of information, the
topics discussed by people, their comparisons with different lives,
what they dream of … You get the feeling that the main discussions
and comparisons are connected with the life inside Armenia. It seems as
if they have no idea of what is going on in the rest of the world. For
example, there are many constructions; many people are building new
homes. Even though many Diasporan Armenians are building homes in
Armenia, there are also many traveling abroad. But if you notice, they
are building typical Armenian homes. You clearly see that Armenians
compare everything with Armenia. This is not a bad thing, but there are
many phenomena, processes in the world, new styles, new ideas which are
used in modern day life which is not visible to the eye here. In
Armenia, even the success of one is compared with that of the neighbor,
friend or colleague. People here are narrow-minded.”
168 hours: “Why aren’t small and large business growing in Armenia?
R.P.: “I am amazed at the fact that small business is not stabilizing
here. We have not been a state for 800 years, yet we have maintained
the family business. When we read the “Mckinsey” analysis about
Armenia’s high-class technology section, we see that there is no
corporative governing in our country’s standards. A type of governing,
when you can take the initiative of starting a business with some
friends and equally distribute the rights and obligations. For example,
the Stock exchange requires similar standards. Not only the mentality
of the nation, but also the business-orientated culture, etc. Besides
that, in order for a company to be listed in the New York or London
Stock Exchange, it needs to have a $100 or $200 income. There are not
many companies like that in Armenia. The only ones that exist are
probably “ArmenTel” and the companies in the field of energy and mining
of metallurgical rocks near the mountains. And finally, in order to
develop in the stock exchange, it is not only necessary that the
factories be large or that there be some kind of culture, but also
there have to be financial institutions, such as pensioner funds,
insurance companies. There are few of those in Armenia. These types of
financial institutions do not last long and they have to be able to
accumulate the long-term finances. These three factors do not allow
Armenia to develop in the stock exchange. There are no long-term
payments made in Armenia.”
168 hours: “Today, the economic fields in Armenia are divided among a
group of people. If one of them goes bankrupt or decides to leave
Armenia, then the state budget will face many difficulties.”
R.P.: “As you know, in the U.S. 80% of taxes are levied from small and
big businesses. In small countries, there is always a similar problem.
They think that it is easier to control some large businessman, rather
than thousands of small and medium businesses. However, in order to
have a stable development, that needs to change. This is a very serious
problem and requires big projects for improvements. The problem in
Armenia is not monopolization. When I mentioned that it seems that
Armenia is in a pothole, I did not mean that Armenia has nothing to do
with what is going in the world, but rather that foreign large
companies are not making investments in Armenia simply because the
country is out of the eye of the world. Of course, having large
businesses in the country may have its negative effects. For example,
the large cigarette companies that can work a long time without any
profit and have other ambitions, they can move small local factories
out of the way. However, on the other hand, if there is a lack of
foreign businesses, then the local producers compete against each other
and even get a monopoly. Besides that, I have noticed that people in
Armenia look at business simply as a style, meaning that people do
business not only for economic purposes, but rather for being in style.
For example, the gas stations, restaurants, cafes, etc. As a result,
there is no money coming in to the country. Another reason for that is
maybe because of the fact that the people making investments have no
clue of the value of money.
168 hours: “But isn’t monopolization a result of politics?”
R.P.: “To tell you the truth, monopolization is not that bad, if of
course it is not permanent. It is also a road to break off from the
state. How did Americans fight monopoly? Let’s recall the case against
Rockefeller. That was not an economic issue, but rather a political one
and according to Americans, there was no legality in the case. The
fight against monopolization was in the second stage-the first stage
was the creation of a large industry. So, let’s ask ourselves: Does
Armenia need a large industry? In my opinion, we must not be abstract
about monopolization. Monopolization must be studied carefully in order
to know which field or economic issue requires the intervening of the
state. The issues are many and they need to be looked at with caution.
Each field of economy requires a thorough analysis which is not done
neither by the businessmen nor the state.
168 hours: “Many of the foreign and Diasporan Armenian investors have
tried to invest in Armenia and start a business. However, they then
felt that they had been fooled and got disappointed.”
R.P.: “I think that in order to not get disappointed, each businessman
must ask himself whether he wants to do charity or work. Many confuse
one with the other. Besides that, every developing country has its laws
and before starting any type of business, you must first analyze,
understand and come to terms with the risks that must be taken in any
developing country. Otherwise, the investor may come to Armenia, claim
that he is Armenian, he knows how to speak Armenian, thus, he knows
Armenia’s laws. That is not the way to do business. Armenia is not the
only country where that type of business doesn’t work out. The
businessmen do not analyze the total economic situation before starting
a business. Many of them think that they are serving their homeland by
opening work places and improving social life. They are satisfied with
just that and approach business half-in-half.”
168 hours: “How do you evaluate the banks in Armenia?”
R.P.: The banks are a problem for all former Soviet countries. There is
no strong banking system in any country. Kazakhstan is probably the
only country with a large, local banking system that functions on a
international level. The HSBC bank is the only bank in Armenia and the
most well-known in the world whose status has been both positive and
negative. On one hand, it helped develop the banking system in general,
on the other hand, they allow themselves to charge people money for
opening an account in the bank. This does not exist in any country of
the world. Local banks themselves get customers. There are banks in
Armenia that are slowly yet surely developing. The number of banks is
reducing, which I think is normal. For example, there are seven banks
in Estonia of which six are owned by foreigners. We must accept the
fact that many banks in the world are following international standards
and it is very hard to maintain local banks in small countries.”
168 hours: “How do you see the development of Armenia?”
R.P. : “As of today, we are highly dependent on Russia for our energy,
our closed economy is developing slowly and we do not look at the
brighter side of things going on in the world. I am certain that the
Armenian people have a unique opportunity in the 21st century. Even
though we are small in number, however, we are global in that we are
spread across the globe. We need to change our way of doing business,
our mentality and get in the “business network” of the world. Nowadays
it is not important how many factories you have, but rather how many
intelligent workers you have who can come up with something new.
Armenia has many outlooks from this aspect, in contrast to other
countries who only have oil and natural resources. If Armenia starts
serious development projects, then it may become the center of the
Caucasus. Armenians from all over the world must unite as one, however,
this does not mean that they must live in Armenia. I must add that
there are many advances being made in the field of advanced technology.”