Po­lit­i­cal in­sta­bil­ity hin­ders eco­nomic devel­op­ment in Ar­me­nia

Azer News - - Karabakh Conflict - By Ab­dul Ker­imkhanov

AAn in­vest­ment boom is not ex­pected in Ar­me­nia in the near fu­ture, said Ar­me­nian econ­o­mist Atom Mar­gar­ian, Sput­nik Ar­me­nia re­ported. He added that in­ter­nal re­sources, their gen­er­a­tion is as­so­ci­ated with pro­cesses in the real sec­tor of the econ­omy and the base of th­ese re­sources has nar­rowed sig­nif­i­cantly over the past decade due to the eco­nomic pol­icy.

Busi­ness­men avoid in­vest­ing due to the in­ter­nal po­lit­i­cal sit­u­a­tion, he noted. On the other hand, there were also sub­jec­tive rea­sons: for ex­am­ple, the sit­u­a­tion around Amul­sar gold mine, and af­ter all this sec­tor could pro­vide the lion’s share of in­vest­ments.

"In th­ese con­di­tions, it is dif­fi­cult to ex­pect an in­vest­ment boom to oc­cur in the near fu­ture, given that a new par­lia­ment, and a new cab­i­net of min­is­ters still need to be formed. The most im­por­tant thing is what the pro­gram of the new Cab­i­net will be for the next five years," noted Markar­ian.

Econ­o­mist con­sid­ers that it is al­ready pos­si­ble to talk about a re­duc­tion in in­vest­ment, although the re­sults for the quar­ter have not yet been summed up and there are no spe­cific fig­ures yet. In this con­text, he is con­vinced that in­vest­ment ac­tiv­ity can in­crease only af­ter the set­tle­ment of the po­lit­i­cal sit­u­a­tion in the coun­try.

Most of the in­vest­ment, as in the past year, came to the op­er­a­tion of Amul­sar gold mine. But in 2018, the flow of money here has de­creased. Min­ing work does not be­gin, as the au­thor­i­ties again check whether the mine will not harm the en­vi­ron­ment. There­fore, in­vest­ments here have de­creased from 58.9 to 20.6 bil­lion drams (about $42 mil­lion).

Ear­lier, Prime Min­is­ter Nikol Pashinyan also stated that the po­lit­i­cal sit­u­a­tion in the coun­try im­pedes at­tract­ing in­vest­ments. He noted that many busi­ness­men, in­clud­ing Ar­me­ni­ans of the Di­as­pora, are ready to in­vest in the Ar­me­nian econ­omy, but do not do this be­cause of an in­com­pre­hen­si­ble po­lit­i­cal sit­u­a­tion.

In turn, Be­ni­amin Mat­evosyan, an an­a­lyst at the Cen­ter for Pub­lic Diplo­macy, drew at­ten­tion to the fact that in­vest­ment and cap­i­tal like calm­ness, pre­dictabil­ity and po­lit­i­cal sta­bil­ity, which Ar­me­nia lacks re­cently. He noted that re­cent pop­ulist state­ments from Ar­me­nian au­thor­i­ties are un­likely to lead to at­tract­ing in­vest­ment.

A vul­ner­a­bil­ity of cap­i­tal, in par­tic­u­lar, a large busi­ness also plays a neg­a­tive role. The ex­pert also draws at­ten­tion to the fact that Lid­ian Ar­me­nia com­pany, de­spite the li­cense and in­vest­ments, can­not con­tinue op­er­a­tions at the Amul­sar field.

"If sud­denly "Lid­ian" leaves the Ar­me­nian mar­ket, it is ob­vi­ous that the com­pany will ap­peal to the in­ter­na­tional ar­bi­tra­tion court. This, in turn, will have se­ri­ous im­age con­se­quences for the coun­try, and will also mean a loss of cap­i­tal," Mat­evosyan con­sid­ers.

Such sit­u­a­tion leads to the fact that Ar­me­nia in the busi­ness sphere is con­sid­ered as an un­sta­ble part­ner. The is­sues of en­sur­ing po­lit­i­cal sta­bil­ity and, above all, the pro­tec­tion of busi­ness should be re­solved af­ter the elec­tions.

Grant Mikayelyan, a re­searcher at the Cau­ca­sus In­sti­tute, draws at­ten­tion to the fact that about $100 mil­lion of the $150 mil­lion in­vested in the coun­try since the be­gin­ning of the year falls in the first quar­ter. He con­sid­ers that po­lit­i­cal events in the coun­try in­flu­enced this sit­u­a­tion.

The de­cline in do­mes­tic in­vest­ment can be in­di­rectly no­ticed in the de­cline in the pace of con­struc­tion. He be­lieves that Ar­me­nia should not ex­pect large in­vest­ments by April 2019.

Ar­me­nia, which can­not at­tract in­vest­ments from for­eign coun­tries, is in deep eco­nomic cri­sis. The on­go­ing war, im­mi­gra­tion, lack of jobs, in­sta­bil­ity, cor­rup­tion has a neg­a­tive ef­fect on in­vestors' will­ing­ness to co­op­er­ate with such coun­try.

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