According to political scientist Armen Grigoryan, a mindset change is necessary to overcome the dependence on Russia
– Depreciation of the Armenian dram in December led to a sharp price growth in Armenia. Why the dram was depreciated? Which steps could our government take considering the situation Russia?
– Sharp devaluation of the local currency in December once again highlighted the dangerousness of dependence on Russia. The matter is not only the outflow of hard currency from Armenia to Russia. The greatest evil is the structure of Armenia’s economy in general and the government’s policy. Let’s analyse the dependence on remittances. In 2013, the total amount of remittances reached about 1.87 billion dollars, of which more than 86 % was received from Russia, and many people could assume that it would be approximately the same in 2014. Meanwhile, at least those engaged in public policy planning had to realise that the possibility of a downturn of Russian economy was quite significant, and that would result in a reduction in remittances.
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Already in September 2013, I noted that the planned cut of budget expenditures in Russia, particularly of education, health and social spending, as well as the growth of oil production in the U.S. and decreasing volumes of import and in the near future, and even a possibility of export, allowed to assume that a significant economic recession was going to happen in Russia. Its likelihood was also growing due to other factors such as the slowdown of economic growth in China and, respectively, reduction in the volume of oil imports, while at the same time, China is developing shale technologies with a prospect of reducing import even more. There is also the factor of gradual reduction in volume of Russian gas imported by the EU.
So, if we follow the decrease of the amount of remittances, it is apparent that is began already in spring 2014, when the oil price had not fallen yet, and since June the decrease became quite significant. Between June and September, the remittances dropped by, respectively, 6.2 %, 8.7 %, 9.1 % and 8.6 % compared to the same period of the last year.
Those responsible for state management had to assess the situation and to take measures to cut the dependence on remittances, and on Russia in general. Yet, they conducted an irresponsible and, moreover, malevolent policy, including the hasty accession to the Eurasian Union (we can recall how some officials boasted that the Russians were ‘amused’ by the pace of the preparations), the continued destruction of small and medium businesses, the actions aimed at strengthening of monopolies (recently, the minister of economy again justified the existence of monopolies), and the waste of currency reserves (to not allow devaluation of the dram, the Central Bank sold about 714 million dollars between January and October, and later continued interventions, up to 31 million dollars in one day).
Obviously, the possibility of live off the remittances this year will continue to drop due to the significant reduction in employment caused by low exchange rate of the ruble and the poor state of the Russian labour market. Now more than ever, development of small and medium business is a vital necessity as job creation would let to alleviate the condition of citizens deprived of incomes due to the growing unemployment in Russia. But, it is impossible to expect any responsible action from the government, and in general, there is little basis for optimism. In 2015, a significant decline in the standard of living is going to happen in Armenia. Hoping for improvement of economic situation in Russia makes no sense, given the condition of the energy market and the improbability of adoption of a responsible policy by Russia.
– Under these conditions, what benefits can Armenia expect from EEU membership?
– Armenia’s accession to the Eurasian Union will not bring any economic benefit, moreover, it may also become a cause for regional destabilisation in the near future – more specifically, a new wave of Russian aggression. It is obvious that Armenia’s accession is of no economic interest for other member of the union, and Russia had coerced Armenia to join the union because of a political interest. It does not matter that Russian and Armenian officials, as well as other supporters of membership, claim that the union is simply economic. It is likely that Armenia’s membership will be used as a pretext for extra pressure on Georgia. The Russian side does not conceal that secure a transportation route to Armenia may be a pretext, whereas the true objectives are to have a land connection with the Russian military base, as well as to prevent the establishment of (NATO) military infrastructure in Georgia as well as Georgia’s deeper economic integration with the EU. Signing of the Russian-Abkhaz and soon also Russian-South Ossetian treaty is aimed at the fulfilment of the latter objective.
– Which actions are needed to reduce our country’s dependence on Russia?
– To overcome dependence on Russia, a change of mindset is required, that mindset that is often attributed to a collective character of ‘taxi driver’. That includes, so to say the ‘presumption of Russia’s invincibility’, according to which ‘no one can bring Russia to her knees’, Putin’s personality cult, including the faith in analytical skills of a former KGB operative and so on, the list can be quite long. The problem is that such a mindset is widespread not just among ‘taxi drivers’ or ‘migrant workers’. Many of those who ex-officio must deal with analysis and development of public policy, as well as many of the politicians think likewise.
It’s also easy to notice that the so-called ‘Armenia-centric’ political actors who saw no difference between the EU Association and the accession to the Eurasian Union, and alleged that we would relinquish our sovereignty to some extent in both cases; who put Russia and the West on the same scale and demanded that had to stayed neither with one nor with the other, actually contributed to weakening of ties with the West and willy-nilly promoted Russia’s plans.
– Russian President Vladimir Putin has signed a decree defining the conditions of foreigners’ contracted service in the Russian Armed Forces, according to which, in case of warlike situations, they can also be engaged. In your opinion, what is the purpose of this move?
– Foreign mercenaries have already been used by Russia, particularly in the eastern regions of Ukraine. But now, Putin tries to solve several problems. Apart from the demographic crisis in Russia, a significant part of its citizens is reluctant to serve in the army. There is a lack of willingness to engage in battle, and also refraining from military service because of hazing, and besides, there is scepticism towards professional service of remuneration issue and other problems. Meanwhile, a significant outflow of foreign labour force from Russia occurs, and some of the citizens from underdeveloped countries may be tempted by offered wages, as well as an opportunity to meet the Soviet nostalgia and criminal inclinations. We need to understand that the Russian authorities are conducting a negative selection, giving an advantage to stay in the country not to more honest and hardworking, but to less educated immigrants with lower moral standards and susceptibility to Russian propaganda. Remarkably, Putin’s degree allows foreigners also to serve in the internal forces. Thus, if the Russian population tries to rebel because of the falling living standards and the nerves of local law enforcement officers give way, the ‘janissaries’ units can be put into operation.
