Tuesday, December 9 2014

 The opponents of Armenia’s accession to
the Eurasian Economic Union have already called this the key cause of AMD’s
slump. What is the real cause, in your opinion?

 

I’d rather answer your question by a
counter-question: if Armenia didn’t join the Eurasian Economic Union, would the
exchange rate be stable and wouldn't there be any speculations? Admittedly, the
experts explaining the AMD exchange rate crash by the situation in Russian
economy are partially right. Armenian economy is closely connected with the
Russian one. One should also take into account the drop in the transfers being
sent from Russia to Armenia by our citizens. In this light, it is quite natural
that the Russian ruble (RUR) depreciation and the RUR drop against USD have
reduced the amounts of USD coming from Russia. The decline has reached 30%
today and affected the currency market of Armenia immediately. So, one of the
key reasons of fluctuations in the currency market is the decline in transfers
due to the RUR crash. One should also take into account the pre-New Year demand
for USD by the entities preparing to import new lots of commodities. There are
several ways for Armenia to overcome its current foreign exchange difficulties.
The first one is to ask Russia for a stabilization loan.

 

As was the case in 2009?

 

Yes, but the problem today is that the
Russian authorities no longer trust Armenia because of its European association
double game. So, we can hardly expect them to give us one more loan so we could
spent it on currency interventions. Nor can we get this money from them in the
West as they are also suspicious. So, our only way-out is to use our own money
as we repeatedly did in 2008-2009. Then the authorities spent almost $700
million to keep the AMD rate at 305 AMD per 1 USD just to finally push it down
by 25%. During the last 15 days the Central Bank has spent tens of millions of
USD to stabilize the AMD rate but now it seems to have realized that it can't
continue its currency intervention any longer as it is not able to forecast how
long it will take Russia to solve its financial-economic problems. In other
words, by allowing the Armenian dram to float, the authorities are concerned
over possible uncontrollable processes and tangible inflation, which will have
not only socio-economic but also political consequences.  As a result, it is almost impossible to
calculate the real exchange rate today. The boards of exchange offices feature
442 AMD as the purchase price and 450 AMD as the selling price. The banks sell
no more than 1,000 USD to individuals and 10,000 USD to legal entities. This
demonstrates that the authorities cannot yet find a real and effective solution
to the problem. And the commercial banks are trying to minimize the risks.

 

In other words, our banks are trying to
minimize their risks?

 

Yes, you are right. Being illegitimate, our
authorities cannot afford telling people what is actually going on in the
economy and are taking stopgap measures only.

 

How will things develop, in your
opinion?

 

It is hard to say, at least, for the time
being. I guess AMD will continue to fall. But I don’t think anybody can say how
low that fall will be.

 

Does Armenia’s draft national budget
2015 reflect the real macroeconomic situation in the country?

 

Armenia's national budget has long
turned from a means into a goal in itself. In other words, fiscal policy in
Armenia is no longer a lever of influence on economic policy. Our authorities
simply want to collect certain sums just to be able to close off some
loopholes. They don't have a fiscal policy that can solve specific problems.
All I see is that they seek to collect more money and to put more pressure on
small and now event big businesses. So, our next year's national budget is
situational. In case of mid-term parliamentary or presidential elections, it
will become very unclear who will be responsible for this off-target document.

 

Are there prerequisites for mid-term
elections in Armenia?

 

Being not so much strong for the power
shift, the opposition forces are not so much weak to let, for instance,
reforming the Constitution by Serzh Sargsyan. In that case, vacuum will appear
within the power pyramid, taking into consideration the fact that Serzh
Sargsyan has no political successor to the presidency. In fact, there could be
no successor, taking into account the results of his two terms in office. So, he
does not have a task of having a successor but a task of reproduction, which is
rather difficult to settle in the conditions of no constitutional reforms.
Moreover, erosion of power is unavoidable in such conditions. Therefore, today
everything depends on the pressure of the opposition forces and the society
upon the authorities. The compromise with the authorities, such as the
extraordinary parliamentary, and why not, presidential elections, may become
the result of this pressure.

 

Do you see any link between the
forthcoming constitutional reforms and the significant raise planned in the
wages of political and military officials by the next year’s budget?

 

The authorities are preparing to the
referendum in such a way. But, at the same time, nobody has canceled
displeasure of the authorities with the power as well as the displeasure of the
big business and different layers of the society.

 

Then what is the resource the ruling
regime is based on?

 

Inertance,
since there is no layer in the society ready to support Serzh Sargsyan's
regime. Even the functionaries as well as all the rest, which feel their
helplessness, inflation, etc, are displeased with his policy. That’s why today
the regime relies on the force structures, which are still confronting the displeasure
of the society that has not been consolidated yet.

 

What can mobilize our society in the
near future?

 

The opposition forces are already
working with the population. The headquarters formed by the pan-national
movement are gradually developing. And soon on the basis of communication with
the society, the opposition forces will be able to analyze the created
situation, and start more actively imposing pressure upon the authorities.

 

On Dec 23 the Eurasian Economic Union
will consider admitting Kyrgyzstan. If it does, Azerbaijan will have two votes
(Kazakhstan and Kyrgyzstan) for lobbying its interests in the Union.

 

Recently
Armenia did something more dangerous: it has given up on its complementary
foreign policy. Only a political insane regime seeing no difference between
geopolitics and card game could negotiate association with the EU for four
years and join another organization in one day. It is not Russia or Azerbaijan
but our own authorities that must be blamed for the decision to join the Eurasian
Economic Union. So, we should look for threats not outside but inside Armenia,
more specifically, inside the policy of our regime. Real threats
to Armenia come from inside the country, from the policy of its ruling regime.
After years of rush towards the European Union, we have nearly escaped a
situation similar to that in Ukraine. In fact, Serzh Sargsyan's
"initiative" policy could have ended in the loss of Nagorno-Karabakh,
Syunik and the Armenian state as such. 
After all, it was because of our pro-Western policy that Russia improved
its relations with Azerbaijan – for they in the Kremlin had no other way to
pressure us. So, threats to Armenia come not from Kazakhstan or Kyrgyzstan but
from inside the country.

 

And what is the alternative?

 

A balanced foreign policy implying
avoidance of membership in any blocs and integration unions. Yerevan should
have developed military and strategic relations with Russia and friendly
partner relations with the West. We observe such cooperation in Azerbaijan's
relations with Russia and the West. To put it crudely, no one has been stiffed
in Baku, unlike Yerevan. As a result, Russians have locked us in a dark room
and have thrown the key into a river. As regards the West, it does not want to
have any relations with Armenia at all. The Armenian authorities hoped the West
would shut its eyes to the electoral fraud in 2012-2013. One should also take
into account the "big money" promised by the West in case of
"bigger integration". For the Western officials the real politic was
to legitimize the illegitimate authorities of Armenia and to use them against
Russia as a token coin. It is quite natural that Moscow perfectly estimated the
situation and exerted pressure on Serzh Sargsyan, opening his eyes to the
unfavorable reality within a day, because by losing Nagorno-Karabakh he would
lose his power. In this light, I think the change of power in Armenia is an
imperative today. It is impossible to ensure the security of the NKR and
Armenia without changing the power in Armenia. Only after that it will be
possible to consider the relations inside the EAEU, establish trust-based
relations with Europe, the United States, and other partners. Otherwise,
Armenia will have prospects neither in the EAEU nor in any other integration
union.