Living On

Armen is heavily missed. His absence left a hole in independent observation of the political and economic risk situation in Latin America. Beyond the merely analytical though his work was wide-ranging from Armenian philanthropy and social observation of Latin and European lifestyles through to being a "fly on the wall" at the Cannes Film Festival every year and reporting back on the more exotic foibles of the international jet-set.

We miss his wit, his sense of history and his bon mots (in French, Armenian and, even, Turkish). Armen was very much a product of the Levant but then, like so many other Levantines, converted to an international stage where they offer insight into all around them. This record tries to humbly accumulate his collected writings for public consumption so they can be preserved and appreciated for the urgency of the moment in which they were written to the timelessness of the observations.

How best to categorise the uncategorisable? Maybe Armen could be described as an Armenian/Anglo/Franco Samuel Pepys for our times.....

It is ironic that ultimately it was the very mediocrity and self-satisfaction of the Chilean "system", which he documented so thoroughly, that brought about his tragic end.

Saturday, June 5, 2004

IMPRESSIONS FROM ARMENIA Comments on a May 2004 visit

I went to Armenia last May for the sixth time since 1998. I was there for a week, and contrary to previous trips which had been consecutive, this one took place after a gap of nearly two years. Statistics and press reports, even with the added speed of internet, are one thing. Seeing and feeling for yourself is another.

I was lucky to the extent that I extended this time the scope of my contacts, meeting up with think tanks and academic groups involved in activities close to what is my real profession, but that hitherto had been absent from my usual activities in Armenia. This continue to be centered around the Avemaria girls' choir, which I have been sponsoring since 1997, and a few other people met separately and with whom I have kept up contact. I even gave a talk about the methodology of Country Risk Analysis to the Caucasus Resource Research Centre (financed by the Eurasia foundation).

The first impression of arriving somewhere is always the airport. Yerevan's Zvartnots airport was concessioned out to Mr. Eurnekian, an Argentine-Armenian, who also runs Argentina's terminals. His stated idea was to make it a regional air freight platform. Some two years into the new management, it is hard to see any change, apart from a few overpriced Duty Free boutiques and coffee shops, in the visible aspects of the terminal. Immigration procedures were quicker, but that is a government matter (and the system whereby you can obtain an Armenian visa on the Foreign Ministry's website worked perfectly). Luggage delivery was quicker, though the swarm of (also overpriced) porters accosting you on the belt-side was a nuisance. The public address system is mostly unintelligible.

It was interesting that my usual hotel (the highly recommended Hy-Business
Suites) had reduced its rates by some 20 % since my last visit (U$ 75 a
night for a comfortable fully equipped apartment, including breakfast, and
more importantly, a constant water supply. The shortage of water, about
which more later, is a permanent problem in Yerevan, and not even the
refurbished Marriott Armenia, at twice the price, is immune from it). There
is now an oversupply of hotels in Armenia, particularly at the top end.
Unfortunately, and despite laudable isolated efforts, this is not the case
outside the capital, though the main problem for tourism continues to be
the limited air services from the West, and their high cost (it costs twice
as much to fly from London to Yerevan than to New York). The national flag
carrier, Armenian Airlines, passed away after a long illness, giving birth
to two newcomers, the health of which is unclear (Armenian International
Airways and Armavia). Another handicap is the shortage of English-language
tourist material.

A glossy publication called Tour-Info is full of interesting information,
but strangely most of it is in Armenian. This being said, it was reassuring
to see on a Sunday morning, in the lobby of the same Marriott Armenia
hotel, a group of elderly Japanese tourists preparing for an excursion.
They were obviously not part of the Armenian Diaspora.

The question everyone asks or will ask is : is Armenia doing better ? As my
stated profession is that of Country Analyst, I have a very precise
criteria for answering that question, irrespective of statistics, rating
agencies or comments from Wall St. Analysts or multilateral organisations.
This consists of finding out if the majority of people are, and more
importantly feel, better off, materially and morally, than before.

Arriving in the middle of the night, one can only notice that there is much
more street lighting and illuminated buildings and monuments. Daytime
impressions are that of more and better cars in the street, a wider variety
of shops and new restaurants and cafés. More people have cell phones in
their hands and computers at home. New apartment buildings and office
blocks are also clearly visible. Another noticeable change is the repaired
streets in Central Yerevan (unfortunately, only in Central Yerevan), as
well as the refurbished public buildings.

The latter is the result of a generous programme financed by the Lincy
Foundation, the charitable arm of Las Vegas multi-millionaire (and MGM
shareholder) Kirk Kerkorian. A selfless donor for years, the foundation's
refurbishment programme, at a cost of some two hundred million dollars, not
only had a noticeable impact on GDP and employment, but contributed to give
back to the citizens the pride of enjoying in their full glory buildings
they were proud of, but which had fallen in a sad state of disrepair. I can
quite believe, as would happen in any country, that such a major public
works programme may have included corruption, but in any case the results
are there to be seen. Unfortunately, it is nearing its end, and though
private construction (mainly of apartments for Diaspora members and the
minority of locals who has made good) may continue, it is bound to reflect
on future growth and employment.

Another source for growth is remittances from the Diaspora and those
working abroad. This was officially estimated at some U$ 550 million last
year, and makes a big difference to the recipient families whose members
would be unable to survive on pensions of U$ 15 dollars a month (if that)
or salaries ranging from U$ 25 to 80 dollars, when they are paid. The
apparent affluence has had a negative corollary, that of pushing up prices,
from housing to food, for all the population. The 51 % of the population
classified as poor therefore suffer even more. Statistics for GDP make
China appear to be in recession (I saw a figure quoting 22 % growth in the
first quarter of 2004), but the reality is that of a two-speed economy,
with a small minority (albeit increasing, particularly if they have foreign
help, have found a useful business niche or have worked abroad and saved
money), doing better, but the great majority feeling as helpless and
despondent as ever.

There is a substantial increase in the number of banks, many with
impressive buildings and banking halls. It is not obvious what sort of
business they are catering for, with such a narrow deposit base, and lack
of quality lending opportunities. Up to a year or so ago, high interest
rates on government paper with low inflation, meant that you could make a
good spread at little risk. With interest rates falling sharply, this is no
more an attractive business proposal. Much of the new banking presence is
said to have Russian money behind it. Some Armenians regard this as a sign
of quality and security, ignoring what happened to the Russian private
banking system just a few years ago. The market leader continues to be HSBC
Bank Armenia, the only "Western" affiliated banking group present on the
local market. It is however abusing its dominating position, and not just
by offering the lowest interest rates to depositors (Citibank also does
that in Chile).
It provides an inefficient and arrogant service. I closed my own account
there less than three years after opening it, because they were unable to
carry out a simple local remittance instruction from my current account to
a local beneficiary without long delays and constant chasers. As I
commented my decision around Yerevan, I was overwhelmed by the negative
stories I heard about the bank's services and reputation, including from
several of their local clients. Apart from the inefficiency and arrogance
in refusing to accept mistakes, which I myself had experienced (not
forgetting the 2 % above market rate I was charged when reconverting my
local currency into Sterling), I heard horror stories about "disappearing
deposits" , "missing bank notes" in the hands of the cashiers, and
"surprise" charges and commissions applied without warning or notice to
clients. The local currency has been solid as a rock, slightly appreciating
against the dollar though not as much as the Euro.

It is no accident that shortly before my arrival, there were a series of
anti-government demonstrations, some repressed with a heavy hand. Though
these were called for by opposition groups, the impression was that behind
the movement was a "fed-up" attitude. Fed-up with poverty, fed-up with bad
and expensive public services, fed-up with the lack of jobs for the
unemployed and the lack of job security for the nominally unemployed,
fed-up with the corruption at high level (and low level), and fed up with
the lack of proper legal redress. Students of Latin America, like myself,
are in familiar ground. But there is a difference. Whereas most of Latin
America's poor (the impoverished Argentine middle classes excepted) have
been so for generations, the inhabitants of Armenia who now find it
difficult to pay U$ 500 a year in university fees could afford two holidays
a year on the Black Sea less than a generation ago, whilst living in decent
accommodation with affordable heating, electricity and water.

One immediately noticeable illustration of the current situation is the
exponential increase in the number of beggars. In a single day in Yerevan I
was accosted by more beggars than in all my previous trips put together.
Whereas this may be impressionistic, talking to people one knows reveals a
dire situation. Jobs continue to be hard to come by, however badly paid.
People are so desperate that they hang-on to jobs even without contracts,
sometimes going unpaid for months and not even knowing how much they are
supposed to be receiving. Ringing-in to say you are ill is often met with
the reply that you need not come to work, today or ever. Even in the
better-run foreign organisations, people are afraid to take their holiday
entitlement just in case their job disappears in their absence.

The privatised utilities were sold to unscrupulous operators who have
increased rates but invested little. The water distribution system,
irrespective of how much rainfall there has been, is a mess and the
availability of water throughout the day in most households is a constant
lottery. The network is in a terrible state, and nobody is ready to spend
what is needed to put it right. The Greek-operated phone system is also a
mess, the subject of a legal dispute with the authorities. This has one big
development consequence. The lack of a quality telecommunications network
rules out until further notice any hopes for Armenia to play, as it could,
a role in IT activities for export. This is causing the best brains to be
drained abroad. Admittedly the brain drain is affecting all sorts of other
professions too. With continuing international pressure to do away with
the Medzamor nuclear power station, it is not clear who will be ready to
invest in exploiting the vast untapped potential for hydroelectric or other
alternative power sources.

I have always maintained that Armenia's full potential cannot be realised
without a solution to the Karabagh question, itself leading to the formal
opening of the border with Turkey. I say "formal", because despite a
theoretically closed border, there are regular air and bus services between
Turkey and Armenia. However, this falls short of a close access to a sea
outlet, which is even more urgent as recent events in two of Georgia's
separatist regions (which control much of the Black Sea coastline) have
stressed the vulnerability of the existing main trade route. Of course,
this is a necessary but not a sufficient condition, as the availability of
infrastructure, marketing skills and distribution networks is also
essential, for instance if Armenia were to export its quality fruit and
vegetable surpluses to European or Middle Eastern markets.

I continue to believe that in the pursuit of its probably vain attempt to
join the EU, Turkey will try to make some sort of amend on its denial
policy about the Armenian Genocide, accompanied by an opening of the
border. In the meantime, Turkey is also continuing on its propaganda
exercises, which consist of "encouraging" pliant academics and writers to
support their cause. Their latest recruit is Louis de Berniéres, the
author of the book "Captain Corelli's Mandoline" on which the famous film
was based. He is working on a book about the Armenian Genocide (I am sure
he does not call it that) from a "Turkish viewpoint".

Unfortunately, Armenia's civil service, and particularly its diplomatic
corps, is not up to the task of properly upholding either the Karabagh
question or the Genocide denial . They have no historical perspective nor
conflict resolution experts. Generally speaking, whenever foreign training
seminars are offered, these are grabbed by the bosses (and not just in the
Foreign Ministry) rather than the right young things. One anecdote heard
was that of a diplomat at the Armenian embassy in Washington, addressing a
number of scholarship students having just finished their term and eager to
get back home and put their newly acquired skills to the service of the
country : "Why don't you try to find a job and stay in the USA" ? he told

An even worse example of callousness was the total lack of reaction by the
Armenian authorities when the British Ambassador to Armenia, at a press
conference last January to commemorate the first anniversary of her arrival
in Yerevan, declared that the events of 1915 could not be described as
"Genocide". She tried to justify her remarks on the legalistic basis that
the United Nations definition of Genocide did not exist at the time. As
they say in French ; "Elle n'a rien compris". One has to rely on the
efficient private lobbies of the Diaspora (such as ANCA), now inspired and
backed with enthusiastic graduate organisations in Armenia itself (such as
the Club of Young Diplomats, based at Yerevan State University) .

Anyway, these were my impressions and thoughts, but the best thing is to go
and find out for yourselves.

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