Armenia

By Vahan Papyan

The Republic of Armenia is one of three internationally recognized states (Armenia, Azerbaijan, and Georgia) in Transcaucasia, the southernmost area of the former USSR. It is 11,620 square miles in area, slightly larger than the state of Maryland. It has a population of about 3.3 million (with an additional 400,000 Armenian refugees from Azerbaijan and Karabagh), of whom over 93% are Armenian, 1.5% Russian, 1.7% Kurdish, 3.5% Assyrian, Greek, and other. Armenia, accordingly, is the most ethnically homogenous state of all the former republics of the Soviet Union.

On Sept 21, 1991, Armenia held a referendum on independence and 94.05% of all eligible voters voted for it. Two days later, the Armenian Parliament declared the independence of Armenia from the USSR.

The first free presidential election was held in Armenia on October 16, 1991. Levon Ter Petrosian was elected president with over 80% of the vote, demonstrating his wide acceptance.

President George Bush recognized Armenia on December 25, 1991. Former Secretary of State James Baker visited Armenia on February 11, 1992, and the U.S. State Department established an embassy in Yerevan, the capital of Armenia.

Over 120 countries have recognized Armenia as an independent state, and over 70 countries have established direct diplomatic relations with Armenia. Armenia is also a member of the United Nations and the Organization on Security and Cooperation in Europe (OCSE, formerly the Conference on Security and Cooperation in Europe).

The United States has sent a substantial amount of aid to Armenia and is currently actively engaged in encouraging and developing manufacturing and trade there.

On January 4, 1992, Armenia began radical free-market economic reforms. President Bush and President Clinton fully supported and encouraged Armenia on its road to a free economy and the practice of democracy.

The recently formed Armenia-U.S. Economic Task Force, created to coordinate and improve the efficiency of U.S. economic assistance to the country, convenes its first meeting in Yerevan. Delegations led by Armenian Finance and Economy Minister Levon Barkhudarian and U.S. State Department coordinator William Taylor review plans for improving the investment climate in Armenia and discuss the need for liberalizing the country’s tax and customs regulations.

Armenia is the only former Soviet republic that is governed by a democratically elected leader who had no ties to the Communist Party in the past. Armenia was the first former Soviet republic to privatize agriculture and continues to privatize small businesses and state-run enterprises, providing opportunities for local and foreign investors.

Independent Armenia, however, received a harsh legacy. The earthquake of 1988 had a devastating effect on the national economy. The conflict over Nagorno Karabagh also affected the economic priorities of Armenia. Furthermore, the subsequent blockade and energy crisis added to the hardships Armenians had lived through during recent years.

All this, of course, had negative impact on the main economic indicators. It is enough to mention that in a few years following 1989, the gross domestic product decreased by more than 40%, the volume of foreign trade fell dramatically.

This was probably the reason why in 1993 Armenia adopted the policy of economic stabilization that is closely linked with the introduction of national currency in the same year.

Armenia is not rich in natural resources. However, the management of the available resources has been extremely inefficient since the energy sector was neither transparent nor predictable and lacked efficient management strategy.

The government is ready to withdraw from the management of the energy sector. By providing the natural mines to investors on a long-term lease (with subsequent ownership rights) and maintaining the regulatory function, the government will establish one requirement, i.e. consistent increase of export of the goods produced from the natural resources.

Armenians have a behest from their ancestors: to create an independent Armenian state, build and produce, and embellish the Armenian House – free, modern, democratic. They are obliged to have enough willpower to overcome the current difficulties, and jointly take the road of reforms. The reward will not be late to come.