by Louise Manoogian Simone
How are things in Armenia? Who can predict. As 1998 draws to a close, once again the republics of the former Soviet Union are entering uncharted territory. Recent events will surely have their repercussions throughout the region.
In the second week of August after months of rumors, Russian Prime Minister Sergei Kiriyenko announced that the ruble was stable. The following morning it was devalued 30% and then continued its free fall to a 45% loss. Within a week 36 year-old Kiriyenko was dismissed and former Prime Minister Viktor Chernomyrdin, who was responsible for six years of selling out Russia's vast resources to a handful of tycoons including himself, was renominated to the post by a desperate President Boris Yeltsin.
In early September leaders of political parties blasted top officials: Gennadi Zyuganov, leader of the Communist Party, "The causes are obvious: a lack of basic educated managers and complete irresponsibility by the executive powers"; Nikolai Ryzhkov, leader of People's Power faction, "The country is for all practical purposes defeated, robbed, degraded"; Grigory Yavlinsky, leader of the Yabloko faction," It was under him (Chernomyrdin) that the use of barter and money surrogates reached 85%, 75% of the entire economic turnover and that a semi-criminal economic system was created. Any kid in Russia can tell you the main problem of the Russian government. It's that there are thieves in it."
Meanwhile, millions of Russians lost their life savings overnight when insolvent banks were unable to meet the demands for withdrawal. Miners, railroad workers, pensioners, the military and a host of others also lost hope of receiving their long overdue wages after months, even years, of protests and strikes.
Finally on September 10, President Yeltsin relinquished Chernomyrdin's candidacy and nominated career diplomat Foreign Minister Yevgeny Primakov after a great deal of lobbying by the communist and pro-communist controlled Duma (parliament). Primakov, journalist, former spymaster and communist party member, who has had almost no economic background, could now be in position for the presidency should Yeltsin resign.
During the same period, the President of Ukraine, claiming a depletion of the country's cash reserves, gathered 1000 of the most successful entrepreneurs and industrialists (under duress) in an assembly hall and told them they couldn't leave the room until they agreed to immediately pay their taxes. Teachers in some 450 schools refused to return to work until they received their six months of unpaid salaries. This, in a country notorious for major corruption by its top government officials.
In Georgia, President Shevardnadze, who has undergone two, or is it three, assassination attempts, demanded the resignation of his entire cabinet, claiming rampant corruption and incompetence. Georgia's conflict with Abkhazia and Southern Ossetia continues, clans have control of various regions and an outburst in heavily Armenian populated sectors bodes trouble.
Azerbaijan, Turkmenistan, Kazakhstan and Uzbekistan still have totalitarian regimes. Their substantial income from natural resources has brought little relief to the average citizen. It is estimated that in almost every republic, two-thirds of the population falls below the poverty line.
It is all somewhat reminiscent of 19th Century America when presidents and government officials were corrupt, huge business monopolies were common, corporate and government regulations were manipulated and the majority of the population was barely eking out a living. Add to this parliaments composed of individuals who represent no constituency except their own parties or themselves, diverse ethnic and religious conflicts and you have the condition of the Commonwealth of Independent States today.
During the March presidential elections, two new English words entered the Armenian vocabulary; transparency and professionalism. As usual, no matter how difficult life is in Yerevan the humor continues. One minister told a caller who asked for an immediate appointment, "I can't, I'm busy now. I have a meeting with the "professionals." (true story). Another top official had us laughing (or crying) at dinner with a joke of Armenian-style transparency. An Armenian travels to California to visit his rich uncle who emigrated some twenty years earlier. After being wined and dined in his elegant home, the uncle says, "You know how I made my millions? Look out the window. See that toll bridge? It's mine. Every time someone crosses I make a dollar." A year later, the nephew hosts his uncle in Armenia. Wining and dining him in his palatial dacha, the nephew says, "You know how I made my millions? Look out that window. You see the bridge I was told to build?" The uncle responds, "Where? I don't see any bridge." The nephew smiles and says, "That's how I made my money."
In his campaign and after his election, President Robert Kocharian has stressed the economy as his first priority for Armenia, a positive step forward. In June, Kocharian's plans for a new transit corridor in Armenia drew the attention of one of America's most successful businessmen. Excited by the prospect, Kirk Kerkorian agreed to invest $85,000,000, just hours after his first visit to Armenia.
A great deal of controversy (mostly by political opposition parties) surrounded the recent $30,000,000 sale of the Cognac factory to a French firm. Parliament is demanding a vote on the issue. Assemblypersons might take into account that even in America some of the largest corporations now have Japanese and German partners or owners. The largest landholders in New York City are British and Norwegian. As this paper goes to press, another controversy has suddenly erupted with the buyer claiming that special aged Cognac has been secretly sold since the agreement was signed and which should lessen the sale price.
The new proprietors of the distillery have already outlined their plans to introduce the brandy into worldwide markets, along with expanding the product by introducing a variety of flavors which will be advantageous to local fruit growers, something previous managers were unable to accomplish in a 100 years. Even local entrepreneurs and industrialists have found their success rate higher with foreign or near abroad participation and partnerships. Most important, the blockade by Azerbaijan and Turkey no longer seems to daunt foreign or local investors as they find alternative air and sea routes for their products. Delivery by ship to Georgia then by rail to Armenia from as far as the United States is now quite dependable, arriving in six to eight weeks.
The after-effects of almost a century of communism, however, still stymies any hope of rapid progress. As some have always said, it will take two generations. The only consolation is that all the ills that plague Armenia are common to every republic. There is still too much jealousy and intrigue by pre-independence factory directors and middle management (government and private) who have failed to adapt to the new era. Tax regulations are so complicated and in a continued state of flux that underpaid collectors often try to assess companies less or more depending on how profitable it may be to them. Armenian businessmen often complain that they have to put aside an office and telephone for the taxmen who are constantly on their doorstep demanding payments which do not correspond with the latest law.
In recent weeks the Armenian government has begun to review the customs department, another area of frustration. A few months ago, customs officials even impounded the surgical instruments of a volunteer doctor, delaying his operations during his short stay. Agents insinuated the physician could be selling his equipment in Armenia. Customs duties and taxes seem to have been designed to get the most cash possible from every customer. When customs agents halt delivery because of complicated or incomplete paperwork or charge fees disputed by the customer, they also impose storage fees. One head of a major educational institution, having served Armenia all his life, was appalled to hear that he would have to pay 30% of the cost of a printing press which was sent to his institution as a gift by a major European foundation, and that he would have to pay $50 a day until the container cleared customs. He eventually received his press with no charge.
As the New York Times printed recently "It doesn't have to be this way. The CIS republics need only look to Poland to behold the better road untraveled." Poland now ranks among Europe's fastest growing economies. The article continues to say "former Polish Finance Minister Leszek Balcerowicz, who masterminded the country's market reforms, broke the chokehold for communist-dominated state-owned enterprises and government bureaucracies. Rather than try to convert outdated industries or drain scarce state resources to keep them barely alive, he allowed them to shrivel or declare bankruptcy. Balcerowicz invited thousands of would-be entrepreneurs to sell, within loose limits, anything they wanted anywhere they wanted at whatever price they wanted.
Russia in early 1992 started on the same road, but then anti-competition oligarchs and local governments began imposing unrealistic licensing and other requirements, eventually strangling start-ups. In Armenia it's not unusual for manufacturers or entrepreneurs to limit their growth in order to avoid a sudden onslaught of bureaucrats, tax agents or dangerous competitors. Statistics are sometimes very revealing: in a typical Western economy there is one business for every ten residents, in Russia the ratio is one for every fifty-five. It would be interesting to learn Armenia's ratio.
Expanding the economy demands the energy, commitment and good will of government officials, the parliament, the business sector and the general public. But as one young Georgian official commented recently "Soviet style curricula and Soviet style teaching staff continue to yield Soviet style results." Probably nothing is as important for the future of Armenia as education. One rector of a leading Yerevan university said that during a class meeting, one student asked why, since they are now paying tuition, do they have to put up with professors who are not well-versed on a subject and who do not know how to teach (up to three years ago, all higher education was free). Progress also demands the hard decision of laying off personnel who cannot meet the standards necessary for advancement. It will be difficult, and often painful, but all the former Soviet republics will no doubt eventually find there is no other way.
A Few Random Observations
Emigration has deeply affected the country. Among the republics, per capita, Armenia, particularly Yerevan, may have suffered the worst loss of some of its best "professionals". And as more and more young adults study abroad, they too are reluctant to return home, discouraged that they will not find opportunities to further their careers. Two reasons prevail: one, it is often who you know not what you know that assures a job; second, even in the communist period-and not much has changed in recent years-graduates from Russian or Western universities or those who temporarily worked abroad returned to promising or former positions with new skills only to be told "we don't do it that way here."
Even 35 to 45 year-olds who have excelled in their field find they are unable to utilize all their expertise because so many institutions, medical, legal, educational, economic and a variety of others, are still under bureaucratic control or an outdated generation who has yet to appreciate competence or to accept the changes necessary to advance. Sometimes it's even a younger element who strangles initiative, finding the competition too threatening. These drawbacks are also common elsewhere in the world, but so many opportunities are available that the "professional" can simply move on to another opening. The Western concept that the most successful leader is the one who gathers the brightest and best staff has yet to be accepted in most institutions in Armenia.
State television is a perfect example. Recently there was a wonderful two hour documentary by a young producer/ director on the failure of the station. I was amazed by the honesty and openness of some five government appointed directors who headed the station over the past seven years (that too is destructive-five different managers in seven years). They not only admitted the many pressures that were brought to bear by influential government officials but also their own mistakes in judgment, administration and in accepting government edicts which they knew were wrong: most important, their inability to cut bloated staff (1200) and to replace the old with new talented individuals who were eager to modernize the network. Actually, it was admirable and another very positive step forward that the documentary was even allowed to air.
Similarly, it is encouraging to see newspapers now freely printing articles without government interference. Unfortunately, a good number are subsidized and controlled by political parties which does not make for independent journalism. There is also a strident, satirical tone in much of what they publish and a total lack of objective, investigative reporting which editors claim results from a lack of funds. Unlike the old days when you could find the daily paper in every village home from one end of the country to the other, inadequate income has resulted in a few thousand to at the most ten thousand copies printed, a number which hardly covers Yerevan let alone the countryside.
Next to crucial increased investment and employment opportunities, one of the most important avenues to progress is the media. In this information age, from the youngest child to the oldest adult, much of our outlook, education and passion has come not only from our personal endeavors but in great measure from the television and newspapers.
There is much to be learned from the recent economic and political chaos in Russia. As the largest, richest, most sophisticated republic, their leaders can set a new standard for fiscal and social responsibility or they can revert to the old command system. "Nationalism" in the entire region has almost disappeared as politicians vie for power and the general public, so long used to government control, passively endures all that befalls them.
Maybe Yuri Zarakhovich sums it up best in a September 21st Time magazine article entitled A Russian's Lament: Democracy must mean much more than sausage*, "I wonder how much more suffering we have to inflict upon ourselves before we start thinking in terms of fundamentals such as ethics and law, such as building functioning and controllable institutions, such as selecting honest and accountable leaders. But to achieve this, we must first change our moral fiber."
* During the March elections in Armenia, voters for presidential candidate and former Communist First Secretary Karen Demirchian emotionally expressed their nostalgia for "the good old days." The byword became "Yershikee hamar garodakht em" (I'm sick of longing for sausage), a statement symbolizing the higher standards of daily life when wages guaranteed cradle-to-grave financial security. (AGBU News March 1998 issue).
