Interview with Ashot Tavadyan, economist, former president of the Chamber of Control
The group of economists led by Professor Ashot Tavadyan, head of Economics-Mathematics Chair of the Armenia State University of Economics, Doctor of Economic Sciences, conducted a research to determine which option is is economically preferable for Armenia: joining the Customs Union, or signing the EU Deep and Comprehensive Free Trade and Association Agreements.
The research group of economists concluded that Armenia’s accession to the Customs Union was more beneficial for the economy of Armenia.
In the conversation with “Aravot”, Mr. Tavadyan commented, “We estimated the risk of going by the path of the Association. And we have seen that there are very serious problems on the way to it. Of course, the experts estimates also positively affect, which is 146 million U.S. dollars was to enter Armenia in a long-term basis. However, our study showed that it would have been the case if the border to Turkey was opened, but it will not happen in the near future, we know that. The second is the issue of export. We mainly export resources to Europe: minerals, however, integration is not needed for exporting resources, finished products are exported through integration. The experience of Azerbaijan, Russia, and Iran showed that there is no need for integration for exporting resources, even Iran is capable to export resources without considering sanctions. We need to export the finished products where the added value is very high, so that people are able to work.”
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Ashot Tavadyan stresses that as a result of the Customs Union membership, our state will benefit from expected gas price approximately $ 140 million each year, in five years, the number will become about 800 million dollars. “Of course, we need to clearly explain our society where these millions are going to be used. These amounts should definitely be presented to the public, the electorates, to make people understand that yes, this our benefit, the pension increase, salary increase, which is expected since the new year, about 40 %, maybe it served as a basis.”
In case of signing the Association Agreement, according to the researches of Tavadyan’s group, we would encounter another risk. “The next risk was the gas price increase, which would reach 400 dollars, we would have a loss of $ 250 million per year, in 5 years – more than 1 billion loss. There was also another risk: control over the products could have been enhanced at the border. It is natural, because in that case it would be beneficial for Russia to develop cognac production in Dagestan rather than import Armenian cognac.”
Still, Mr. Tavadyan emphasizes that we need to find the golden mean, and to support the local producers and to meet the demand of the consumer of having high quality products. Therefore, according to A. Tavadyan, while determining the tariffs of finished goods, we need to clearly and boldly negotiate with the Customs Union, and not like we did when entering into the World Trade Organization, when everything was done on the principle of “as soon as possible. “Being soon is not important rather than our interest.”
To the question of “Aravot” of how he views the issue of the borders, if Georgia signs the Association Agreement, and we join the Customs Union. Ashot Tavadyan was optimistic, “We do not have any problem because both Georgia and Armenia are interested in the northern market. Amazing thing. Georgia is exporting 47 % to CIS, of course, including Azerbaijan, and when the relations with Russia got a bit warmer, the number quickly reached 55 %, it exports 4 % to U.S., the same to Germany, as much as to Armenia – 4 %, which is 100 times less that to USA, 30 times less to Germany. I want to say that, first of all, our economic interest indicates our economic orientation. It is natural that Georgia’s, as well as our economic interest is to export finished products, because it also solves the unemployment problem, this is the relationship with Russia. Here, of course, there might be some issues of sovereignty, in the political sense; this is another issue. But you are enhancing you economic capabilities and solve the following problems: a greater rate of GDP growth associated with the growth of export and import, the employment problem is also solved, and it is a priority for us. And what as for the agreements signed in Vilnius, you will see that Armenia would receive the same support as that of Georgia for the fight against corruption, development of the judicial system, and human rights issues. Because the country resolves these problems on their own. Do you know that Georgia has made gigantic steps forward in the fight against corruption, on the account of its internal work, being not integrated to any union? We can not wait for someone to come from the outside and solve political or human rights issues. And then, do you know that we could sign the Association Agreement and get high scores for it. We could say that the situation in Armenia regarding the right is not so good, but they could positively evaluate. We have seen it that outside assessment is different of our assessment.”
Mr. Tavadyan emphasized several times that the problem is not what is his personal approach in Armenia’s orientation, but “the economic-analysis, which they did trying to be truly objective, showing that Armenia would economically benefit, if it chooses the path of the Customs Union.” “Europe is very good, but there is no export to Europe, the European market is full, and our brands are recognized in Russia, and there is an opportunity to develop the export. In turn, Russia solves its geopolitical and security issues, it is very good for us that their problems coincide with our economic interests. And if we solve our internal problems associated with the reduction of risks of corruption, and improvement of human rights, we would become more interesting and solid for Europe, too”.
The economist finds, “The country must be flexible, be able to take its own from everywhere. I think people in Georgia are also intelligent like us, and they will try to use our abilities to the north, we will try to use the opportunities of Georgia to the EU.
Ukrainians calculated this a little late and fell into the stories. It seemed to them that they would receive the same assistance as that of Poland, an EU member country, which will receive 70 billion euros of assistance for the population of 38 million just in 5 years, if we project it on Armenia, it will be 1 billion euros annually. Should we have received that much, it, of course, would not solve our security problems, but we would have solved at least the gas price issue and not only, we would have solved some problems associated with exporting. Although, I do not see any good scenarios, because if you develop your economy only at the expense of the domestic market, and receive money as a transfer, grant, or a loan, it is one thing, and it is a lot better if you are able to develop your economy at the expense of exports growth and finished products. It is another reserve,” says the economist.
Melania BARSEGHYAN
