Armenia in a Region of Change
Armenia in a Region of Change


by John Hughes

Time has done little toward healing a ruptured Armenia torn apart a year ago by violence that left 10 dead, a nation shattered, and a Diaspora in woeful wonder over when the homeland would ever attain mature democracy.

The previous spring brought "Bloody Saturday," as on March 1, 2008 festering hatred convulsed into the teenage republic's worst demonstration of its vulnerability to internal unease, often stirred by men whose ambitions for power have had less to do with nation-building than with building personal empires.

This spring brought "Black Tuesday," as on March 3 isolated and insular little Armenia felt the sudden and powerful impact of the global economic crisis. The local currency, the dram, became sharply devalued, sparking panic shopping and price gouging.  Furthermore, this development revealed a lack of trustworthiness in authorities who'd said Armenia was invulnerable to the rest of the world's problems.

Domestic problems remain, as the government of President Serge Sargsyan struggles to lead, under the weight of illegitimacy born of February 2008's fraudulent election that was the tipping point of discontent.

The government's considerable task is compounded by the world economic downturn, making this an extremely challenging period for a nation that has seen more than its share of crises. Further, as Armenia has relied on the Diaspora's sympathies and support for the 18 years of its independence, the republic must steady itself against the impact of tightened purse strings by benefactors who themselves have suffered financially.

Armenia finds herself this spring in need of recovery. Unfortunately, trying to recover from a damaged image is not a new challenge, given that every election has brought its share of embarrassment and international ridicule. But for the first time in nearly a decade, the past year failed to produce another double-digit increase in the Gross Domestic Product, placing Armenia in greater need of those donor dollars that may not come as much this time, due either to the financial crisis or to Armenia's own bad behavior, or as a result of a combination of both factors.

Job cuts deal harsh blow to borderline budgets

In a cabinet meeting late last year, Prime Minister Tigran Sarkisian promised to "keep the problem in the focus of attention," referring to concerns over the loss of jobs in the Syunik region where mining companies were the first to signal economic trouble.

Some 10,000 jobs out of 25,000 registered employees in the region were jeopardized when the price of processed metal dropped due to lack of demand believed to be brought on by the global financial crisis.

By year's end, the prime minister had many more examples of an economic downturn and while the mining towns may have been kept in focus, jobs nonetheless were slashed. By February, according to one government source, the region had lost 5,000 jobs, with more expected. (Armenia's official 2008 unemployment rate was 6.3 percent. But the number is misleading, as it only represents the number who have applied for unemployment. Also, anyone who owns tillable land is not considered unemployed. Some non-governmental organizations put unemployment as high as 27 percent.)

In Kapan, a town 40 percent destroyed during the war over Karabakh in the early 1990s, the crisis feels like another attack.

"We lived with an expectation of shells to fall on our house then (during the war), and now we expect job cuts," said Siranush Grigorian, a mother of five, whose husband has been out of work since December. "We are very short of money; we hardly manage to get bread for our children. We took a loan from the bank to buy a TV set and a washing machine a year ago, but can't pay it back now and the bank says it'll sue us."

The Grigorians are not alone in Kapan; the closure of the plant has hit the employees and also middle and small entrepreneurs.

The financial department of the Syunik provincial administration said the mining plant provided the town with about $500,000 annually, and the majority of the shoppers in the town were employees of the enterprise.

A manager at one of the home appliance stores said sales dropped by about 50 percent in three months.

"No plant, no consumers. Since October, when people were laid off, we almost haven't had customers and those who have bought things with loans are unable to pay them back," a shop manager said, adding that the shop was also started on a loan so it is equally suffering, facing closure as well.

Further south of Kapan, on the Iranian border, 63-year-old Edik Baghian, a resident of Agarak, now has more time to cultivate his garden. But for 45 years he had worked as a machine operator at the Copper Molybdenum Complex.

"I am on leave," he said in early March, "but many have been made redundant, handed in their labor record books, and sent home. Will they call us back later? How will that be? All is unclear."

Tending his 500-square-meter garden is not a pastime for Baghian. It is preparation for a year that may see him have to rely on his own food production.

He recalls a time in the early 1990s when the plant suspended operations, but says survival was easier then.

"At that time the customs office was new, the loads brought from Iran were required to be placed into Armenian trucks, the workers were Armenian; we had jobs. Back then people collected scrap metal, plus they kept goats and cows.

"It's true that people lost weight, got wrinkled, but they didn't die, they were able to survive. But now there are no metals, no customs office...It's going to be very bad."

Baghian recalls with painful nostalgia the years of living in the Soviet Union—at that time the activity of the mining complex was supervised by the Kremlin, and nothing could disturb their quiet and comfortable lives then.

"Then came the long-awaited independence. At first it was not good, starting from 1992, the cold and dark years, and for years the salaries at the complex were very low. Many people kept goats and I did, too. There were four herds of goats in Agarak, and plenty of cows. Then, when the complex began to function normally, people got rid of the cows and goats," he says, in a brief history of his community.

Facing an unpredictable immediate future, Baghian considers himself luckier than his out-of-work colleagues.

"I was thinking of taking a loan, but I was afraid, and now, you see it's good I have spared myself the trouble that many have now, because they have taken a loan and are in a tight situation," he says.

The swath of job cuts moved from south to north, to Gyumri, where two plants closed at the beginning of the year. Likewise, 800 employees of a chemical plant lost their jobs in Vanadzor. Also in Vanadzor a welding equipment factory shut down, dismissing all 350 workers.

And in Alaverdi, the Armenian Copper Program Company dismissed 400 of its 1,044 employees and faced further cuts. ACP had provided about 70 percent of all the jobs in Alaverdi, a town of about 15,000.

While others in the south, like Edik Baghian, might turn to small farming for sustenance, Alaverdi does not benefit from the gift of arable land.

"We have neither land to go into agriculture, nor means," mayor of Alaverdi Artur Nalbandian says. "This problem depends neither on the state, nor the management of the company, but I can say one thing – Alaverdi will not survive without the plant."

Looking to work outside holds less promise than before

Lusine Baghdasarian, 33, turned to the Kapan Employment Center. Ten years ago she was a midwife—a job she hasn't needed since her husband's mining job paid well enough (about $250). But as health care has advanced, her skills as midwife are not needed so, like many others, this housewife despairs.

"We were able to get by, now we are waiting to see where my husband can get a job, otherwise we cannot survive," Baghdasarian says.

A 43-year-old miner who preferred to remain anonymous is in a more pitiful state. "I want to sell my kidney, I need money. I am completely unable to support my children," he says. He used to make more than $600 a month—significantly higher wages than the national average.

With his relatively high income he was able to take a loan to buy a house. His family had been renting an apartment since their house was destroyed in the war.

"Now I don't know how I'm going to pay the interest charges," he says.

Mining mechanic 60-year-old Andranik Davtian follows the international prices of metals on television, hoping to hear good news of a turnaround that might lead to better business.

The only person working in his family of seven, he struggles to pay the tuition for his son who studies at the American University of Armenia, while also supporting a son who is married and has a child.

"If the factory closes down, I, like everybody else, will be left with nothing. I will start looking for another job willingly or unwillingly, but we, those who have been working in industry, do not do agriculture or trade, and it is not clear what we can do then," Davtian says.

For many, looking for work means looking to leave.

According to a recent report by the Armenian State Agency on Migration, last year 23,059 more people left Armenia each month than returned. This is a sharp turnaround from migration figures just two years ago, when 22,000 per month more returned or entered the country than left.

Following a larger surge of migration in the mid-1990s, the agency's report found that some 230,000 people left Armenia between 2002-2007. Only three percent said they left with intentions of permanently relocating.

The overwhelming majority went to Russia. And, unlike the thousands who left in the mid-90s, due to social crisis, the "second wave" of emigration represents more people who went abroad for the purpose of sending money to relatives back home. While 90 percent who left were able to find jobs abroad, the study estimates that about 30 percent would have been jobless had they stayed in Armenia.

The researchers point out that higher migration activity is observed among 25- 44-year-old males, which affects the demographic indicators and can later lead to a shortage of work force in the country itself.

But it is no longer the shortage of work force, but the shortage of jobs that influences migration figures in 2009.

Professor Gevorg Poghosian, President of the Armenian Sociological Association, believes that the deepening economic crisis in Russia and other countries may lead to the return of a considerable number of Armenian migrant workers.

"Judging by data, the Russian market for migrant workers will reduce by 30 percent. One may assume that almost the same percentage of Armenian migrant workers, about 240,000 people, will have to leave Russia. If all of them return to Armenia, the situation will be quite grave."

Hakob Torgomian, 50, left for Moscow at the beginning of the 1990s. He says he was able to set up his own business in just a year's time from then. "At that time in Russia it was possible to live and work and even set up your own business without being a citizen. Then I got Russian Federation citizenship, I bought an apartment, a car, expanded my business. In short, things went well."

But things are not going so well in Russia now (though Torgomian says he returned for family, not financial, reasons).

Torgomian returned to Yerevan last year, but he hasn't been able to find a job yet.

"I came back because here I have relatives, friends, a house. No matter how well things went in Moscow, I always had the desire to return. But there are no jobs. That is why I have to live on the income I get from renting out my apartment in Moscow."

Torgomian represents the demographic of the survey revealing that those who do return to live permanently in Armenia are of older age who, in a matter of speaking, come back to retire.

At the end of last year, many Armenians who had left for Russia to work came back either without being paid the money they had earned or receiving only part of it, due to Russia's own economic downturn.

Armen Gevorgian, a 47-year-old resident of Nerkin Getashen village in Gegharkunik province of Martuni region, which is considered to be the motherland of work migrants, planned to go to Russia in the spring. He is sure that the crisis is not affecting the Armenians working there.

"Russians will never do the work that Armenians do there —asphalt, sidewalk borders and other unskilled labor," he says. "And if Russia does not allow Armenians to work there, in a few months they will call us back, because they cannot do that work themselves."

Nearly 100 percent of eligible workers in Nerkin Getashen (population 7,600), according to Gevorgian, go to work abroad. "It was not even January 6 (Armenian Christmas) when the first groups of migrant workers left the village," he says. "They leave so early to be able to find jobs at least before summer. They are not leaving a good life in search of better life, they have to leave. On the other hand, no matter how little they earn there, it's going to be more than what they earn in Armenia."

Zhirair Nazarian, husband of 28-year-old Roza Nazarian, a resident of Nor Ughi village in Ararat province, left for Russia on January 30 after only a month back home.

"Zhiro came back at the end of December, and he had not been paid his wages for the last month. They (his employers) told him—‘Go, we will send it'—but they never did. Now he has borrowed some money and left. And he has no job yet," Nazarian's wife said in early spring.

Nazarian had worked as a driver at a construction site. Like others, he heard rumors that Russia might impose harsher work permit requirements for non-Russians, and left in hopes of getting a job before doing so became more difficult.

"So far he has searched in vain, and I don't know how I am going to support my two children this year," the worried wife says. "With the patch of land that my parents-in-law and I are cultivating we cannot even make a normal living for a few months."

Too little too late as authorities' "audacity of hope" is myth

Danger signs of economic trouble were evident early, but heeded too late to stop the dramatic dram drop of March 3 when, in a matter of hours, the dram-dollar exchange rate went from 305 to as much as 400 – a devaluation of nearly 30 percent in some cases. Shops were nearly depleted of sugar, cooking oil and other commodities, as nervous consumers' fears of price hikes turned "Black Tuesday" into shopping mayhem.

Some stores simply closed, while others increased prices on goods in the amount of time it took shoppers to get from the shelves to the checkout.

This reaction was to that day's news that Armenia's Central Bank was abandoning its policy of substantiating a "fixed dram" and would, rather, allow the dram to "float" according to the behavior of the dollar.

Authorities had been saying that the dram's steadiness, as opposed to other currencies' fluctuation against the dollar, was an indication of Armenia's resilience against the global financial crisis. Analysts, however, had been saying for some time that the dram was being dangerously manipulated and artificially supported, allegedly to the benefit of the country's oligarchs whose trade in lower-valued dollars was more profitable and whose power rests on monopolies over key imports.

Suspicions that the analysts were right intensified in January, when news surfaced that the Armenian government had asked Russia, the World Bank and other lending institutions for a "stabilizing" loan of at least $1 billion.

Rumors that the money was intended to keep propping up the dram against the dollar appeared well founded when, after March 3, it was revealed that Central Bank had spent at least $360 million in a matter of months on keeping the dram steady to the dollar, while the dollar rose against nearly every major world currency.

Just four days before the dram deflation, Minister of Economy Nerses Yeritsian bragged that "many countries would dream of having such a stable monetary as the dram."

The minister, however, did not clarify how it happened that the dram was stable in a country where exports were reduced by 44 percent, and transfers from abroad decreased by 30 percent; a country, too, where construction—the number-one source of GDP—dropped by 28 percent. Nevertheless, a few days later, the myth about a strong and stable dram collapsed.

By March 5, the dram had dropped back to around 350 to the dollar and consumers adjusted to a new exchange reality. Economists had said that the legitimate value of the dram-dollar should be around 420, a rate it began heading toward with daily incremental increases.

In a December 2008 report, Policy Forum Armenia—a collaborative "think tank" on Armenian issues—warned that the government of Armenia should adopt a policy of a gradual devaluation of the Armenian dram.

The cornerstone in settling the situation, according to Policy Forum Armenia experts, must be "the reestablishment of trust in the policy and proper management of public expectations." That is, "the Central Bank must be honest about the controversial problems it has piled up since autumn of 2008, as well as with regard to the mistakes that may have fostered the creation of the current situation."

Among the suggested remedial measures by PFA is "the implementation of convincing political methods directed at minimizing price monopolies of the main importing companies and rapid steps to limit the well-known obstacles hindering economic activity."

Authorities here, though, continue to downplay the impact of the dram devaluation.

Days after the drastic devaluation, Prime Minister Sarkisian went on television to assure the public that Armenia's banks had been well prepared for the shift and that his government would make sure that salaries and pensions were paid properly and timely.

"We announce that we will give preference to pensions, social security benefits and salaries, so that there are no delays and our pensioners get their pensions on time," he said, stressing that pensions had gone up by 14 percent according to plan and despite the crisis.

However, those same pensioners, like everyone else in Armenia, have seen an increase in the prices of goods and utilities of up to 25 percent since March 3—leaving those pensioners facing an 11 percent deficit after their pension increase.

While more developed countries look to the middle class as a backbone for survival and a shock absorber against crisis, that demographic group remains somewhat nebulous in Armenia.

Yuliana Melkonian, a sociologist and professor at Yerevan State University, has been taking surveys among her students for the past seven years, trying to identify the Armenian definition of "middle class."

"First of all, it's interesting how the amount of money to be earned has changed: if in 2001 it was $100 per month, today a middle-class representative, according to the students, must earn an average of $500 per month," the professor says.

"As for the needs, if previously, food, a living space and at least a (mid-range) car were the main needs to be met, now (an economy car such as Lada) is not satisfactory anymore. Now the apartment has to be renovated, and a middle-class person should be able to spend a holiday once a year if not abroad then at least at one of Armenia's resorts," Melkonian says.

Public relations manager Sofi Mosinian, 27, considers herself middle class, because she says her salary is enough to cover her expenses.

"I regard myself as a representative of the middle class, because I am neither rich nor too poor. I have a permanent job, my salary covers my expenses," says Mosinian, adding that "of course I can't afford spending a holiday abroad or staying at expensive hotels."

In contrast, Armine Melkonian, 22, of Yerevan, with a monthly family budget of about $2,000 (combining her salary, her husband's and his parents' salaries) does not think she is middle class: "Because that class, besides being able to satisfy their basic needs, also travels twice a year and can go out to places of entertainment at least twice a week. And I can't afford those things. I am not poor but am somewhere between the poor and the middle class."

"The ground on which today's middle class has formed is shaky in situations like, for example, the current economic crisis," says Yerevan State University of Economics professor Zoya Tadevosian. "That class might soon become extremely poor."

For most Armenians, the "dram drama" translates into less money against higher prices. For others, who survive on dollars sent by relatives working abroad, the devaluation is a windfall. But the "Catch-22" is that, due to the crisis that is only recently being demonstrated here, fewer sources of remittances—especially from Russia—can now be found.

Meanwhile, in a report published on March 3 by the International Monetary Fund, Armenia is included on a list of 22 "low-income countries" most vulnerable to the current economic crisis. Armenia is named along with such countries as Nigeria, Mongolia, Sudan, Kyrgyzstan, Moldova, and Vietnam.

"I foresee mounting financing problems for developing countries," said Dominique Strauss-Kahn, Managing Director of IMF, in comments prepared for presentation at the Brookings Institution in Washington, D.C. "The outlook for foreign direct investment in developing countries is bleak —we forecast a 20 percent decline this year. This reflects investor uncertainty, as well as the significant downturn in commodities (where much of the foreign direct investment goes). The cost of borrowing has risen significantly – and in some cases may not be available at any price. Remittances are also likely to drop, reflecting much weaker growth in the advanced and emerging economies where workers from low-income countries have found employment. Finally, and very worryingly, aid flows are under threat, reflecting budgetary pressures in donor countries."

On Armenia's "Bloody Tuesday" IMF announced a $540 million loan to Armenia, while also applauding the move away from an artificial dram-dollar exchange.

Not all problems can be blamed on global conditions

While surely Armenia cannot be held liable for troubles the entire world is currently experiencing, she faces those external challenges at a time when her own foundations are weakened by self-inflicted causes.

On March 1 this year, an opposition gathering of several thousand strong commemorating last year's disaster demonstrated the lingering dissent widely felt by those who stubbornly reject the legitimacy of the current ruling regime.

During the rally, opposition leader and former President of Armenia Levon Ter-Petrosian told followers that this opposition would not attempt "revolution" but would "seek regime change through solely constitutional means."

The event passed calmly, and with the Central Bank news two days later dominating all conversation, the opposition action faded quickly from public concern.

For several days, when it seemed as if Ter-Petrosian had finally spent his political currency, the oppositional masses he managed to unite and hold over the past 18 months were hardly an afterthought in the wake of more pressing domestic concerns.

But the political quiet lasted only until March 15, when Ter-Petrosian announced his candidacy for Mayor of Yerevan, to be contested May 31.

(The vote will mark the first time that the capital's chief post will have been determined by the public. Prior to this year, the mayoralty was decided by presidential appointment. Under the new system, a City Council will be elected, with the mayor's spot going to a representative of the party or coalition garnering the most votes.)

"With this move, we are sending a very clear political message to the entire society: we regard the elections of Yerevan mayor … as a very serious opportunity to change the existing dictatorial system and, if you like, as a second round of the [2008] presidential elections," Levon Zurab­ian, coordinator of Ter-Petrosian's Armenian National Congress, told Radio Free Europe/Radio Liberty.

And, for many political observers, that proclamation came with flashbacks of the bitter and eventually deadly duel between Ter-Petrosian and Serge Sargsyan backers in the last presidential election.

What might otherwise have been a de facto coronation of Sargsyan appointee and current mayor Gagik Beglarian is now viewed as a renewed battle for the political landscape.

"The local self-government elections are considered to be political in any country," political analyst Yervand Bozoyan says. "It is after the local elections, when the decisions about political rearrangements are made. The local self-government elections provide a special base for further state elections. In our country people always understood ‘district quarrels' whenever hearing about the local self-government elections. But this is only how we perceive them; in fact, those elections are rather political."

Bozoyan considers Ter-Petrosian's participation in the mayoral election to be positive, saying that it will give the local election a more political tone. According to Bozoyan, this step made by the opposition should make the authorities think everything over.

"If the authorities do not nominate a political figure, they will fail at this election. I cannot say anything bad about Beglarian; he is simply a ‘district-level figure' and he does not (have the political savvy) of Ter-Petrosian."

But with the race taking on a high-profile encounter comes the dread of another democracy-damaging round of fraud.

The analyst speculates, though, that the city election will be less vulnerable to the sort of high jinks and outright lawlessness that have characterized parliamentary and presidential elections in Armenia.

"First of all, there are no villages in Yerevan, there are no village heads, who are generally the authors of falsifications. All the elections showed that it is harder to falsify in Yerevan than in villages," Bozoyan says. "It was clear during all elections that the majority of the voices for the authorities was obtained in the villages. And I am surprised how calm our authorities are. If they do not replace Beglarian, they will have a problem."

Winning the mayor's seat could give the opposition a foothold that it has failed to have in any power regime. According to the law, the mayor will appoint the 12 community heads of the capital city. It means that important sources of administrative influence would be passed to the opposition. According to Bozoyan, in this way the state authoritarian system would partly collapse.

Against such speculation, Galust Sahakian, leader of the Republican Party faction, plainly stated what has been a political reality: "Gagik Beglarian cannot fail to become mayor, because he is the candidate of the Republican Party."

Time to reap: Poor behavior leads to lack of trust in time of need

With another election looming, Armenia has not lived down its past performances which brought international condemnation, sanctions that curtailed aid (Millennium Challenge Account) and threats of losing its voting rights at the Parliamentary Assembly of the Council of Europe (PACE).

The latter is still under review since PACE has twice extended deadlines for Armenia to conduct a legitimate investigation of the 03/01 uprising of last year, and to give a credible account for the arrests of oppositionists, including the "Case of 7."

As of this report, seven prominent supporters of Ter-Petrosian, including former Minister of Foreign Affairs Alexander Arzumanian, have been imprisoned for more than a year and were at one point identified as "political prisoners" by PACE (a title the inmates still maintain, though PACE has since stopped using the term). The men have been charged with attempting to usurp state power and are implicated in the 10 deaths (for having created an atmosphere that led to violence).

Armenian authorities' attempts at an "independent" investigation into those deaths have done little to assuage opinion that the government will not accept a share of the blame. While dozens were held in custody following preliminary investigations into the disturbance, none was from the pro-government side.

Part of the current investigation centers particularly on three civilian deaths that resulted from an apparent misuse of special weapons by police.

Autopsies of victims Tigran Khachatrian, Armen Farmanian and Gor Kloyan revealed that each died after being shot with high-powered riot guns that are intended for shooting dispersing gas into crowds from a distance. Each man, though, died from wounds that appeared to have been caused by direct fire from a Russian-made "Cheryomukha 7" riot gun – a weapon of particularly devastating force.

Most horrific was the death of Kloyan.

After being rushed to the hospital with a gunshot in the pelvis late on the night of March 1, 2008, Kloyan was being attended by doctors when what turned out to be a "Cheryomukha" shell exploded inside him, sending tear gas into the operating room. Doctors and attendants were forced to evacuate, during which time Kloyan—who had been conscious—bled to death while breathing tear gas on the operating table.

Like some others who died that night or were injured, Kloyan was not an oppositionist sympathizer. In fact, he had served as a voting proxy for Serge Sargsyan during the February 19 election.

Forensic reports reveal that only four police officers were issued "Cheryomukha" weapons. Each officer is known. None has been called to account.

In November, Armenian investigators said it was impossible to link bullet fragments to specific weapons. Initially, Russian experts said that it was possible.

The Prosecutor's Office solicited information from the manufacturer of the ammunition and later turned to experts at Russia's Ministry of Internal affairs, who said that each bullet should be traceable to the specific gun from which it was fired and, thus, each officer held to account for whether he properly engaged deadly force.

On February 13, however, the Russian experts reported that "traces found on the presented bullets are not suited for identification," leading to charges that a "deal" had been struck between Russian and Armenian authorities.

"This is cynicism by which they mock not only the whole nation but also our dead sons," says Allah Hovhannisian, mother of Khachatrian.

The apparent lack of a valid investigation into March 1 events was one reason the internationally acknowledged advocacy group Human Rights Watch issued a report in late February decrying "the one-sided pursuit of accountability" by Armenian authorities.

"While the Armenian authorities have investigated, prosecuted, and convicted dozens of opposition members, sometimes in flawed and politically motivated trials, in connection with the demonstration and violence, they have not prosecuted a single representative of the law enforcement agencies for excessive use of force," said the 64-page report based on 80 interviews over three missions by HRW to Armenia.

The US State Department had more condemnation in a report it issued the same week as HRW. Included in the 67-page report:

"The government's human rights record deteriorated significantly during the year, with authorities and their agents committing numerous human rights abuses, particularly in connection with the presidential elections and the government's suppression of demonstrations that followed. Authorities denied citizens the right to change their government freely and citizens were subject to arrest, detention, and imprisonment for their political activities."

"Authorities used force, at times lethal, to disperse political demonstrations. Authorities used harassment and intrusive application of bureaucratic measures to intimidate and retaliate against government opponents."
In spite of it all, baby steps move Armenia forward (in some ways)

While contested investigations were launched and reports written chronicling the sadly familiar refrain of Armenian abuse of power and disregard of human rights —and while money madness drew attention away from such sour news, the business of building a country has at times shown forethought and progress these last few months.

Part of Serge Sargsyan's presidential mandate, ironically detractors would say, has been to fight corruption.

A recent step has been to put Armenia on a path of taxation accountability.

Toward that end, starting in January, a new law went into force requiring merchants to use cash registers for all sales and transactions – a system that was largely absent in the many public markets and thousands of "mom and pop" shops and kiosks throughout the country. Most small businesses had previously simply recorded transactions in handwriting, if at all, with practically no uniform means for determining tax requirements. The lack of a unified system has, naturally, led to hidden incomes and to incomes-via-bribes for tax officers.

In a clever scheme to get the public involved in the tax enforcement issue, a government-sponsored lottery was devised in which each sales receipt has a series of numbers on the back which, if matched in a monthly drawing, will pay from about $13 to about $13,000.

Colorful posters have been taped to shop windows by the lottery commission, encouraging patrons to demand receipts of purchase. And, a system of fines has been created to punish merchants who do not install cash registers.

The law has been met—as nearly all for one reason or another are in Armenia—by protests. Small-business operators said having to pay proper taxes would run them out of business. And at one bazaar visited by Prime Minister Sarkisian, shopkeepers said the machines would not operate in the cold, making it impossible for them to use in the thousands of make-shift stalls that are outside or barely covered.

Varazdat Mikayelian, 48, a Vanadzor merchant, has earned his living for 10 years in a small booth where he sells bags and shoes.

"My monthly taxes are about 75,000 drams (about $200) and that is normal, but with the cash control I would have to pay more," says Mikayelian, more or less admitting that his "off the books" sales are now not being taxed.

"If they at least gave a year for the economic crisis to pass and people's buying ability to increase, we would have the opportunity to pay taxes," Mikayelian says.

Like merchants rebelling against cash registers, Armenian taxi drivers have been equally resistant to new regulations on public transport which the Ministry of Transportation says will improve safety and service while also bringing more tax income into the State Budget.

Legal taxis are now required to pay about $530 for registration, an eight-fold increase over what the license previously cost. Taxis are also required to now carry meters, a severe imposition on the traditional method of "agreeing on a price," and also a means of recording driver income.

In these and other seemingly quaint developments (by standards of progressive countries) gradually and often begrudgingly becoming part of day-to-day life in Armenia, the infrastructure is being laid for a society more suited for 21st-century life.

Notably too for environmentalists, since November Armenia has its first functioning biogas processing plant, in Lusakert, where the foul smell of fowl has been a major characteristic since 1966 when chicken farming started there about 25 kilometers outside Yerevan.

The $5.2 million plant (mostly from foreign investment) turns chicken waste into energy and at its peak (currently running at about 60 percent) is expected to produce up to five million kilowatt hours of electricity per year.

Production of the plant was supported by the United Nations Development Program and is expected to turn a profit in about eight years for investors that include Norwegian, Danish and Armenian concerns.

Meanwhile, Vanadzor has been chosen as home of the Caucasus' first recycling plant.

In partnership with GTZ (an international cooperation enterprise for sustainable development with worldwide operations), Vanadzor Municipality aims at clearing the city's streets of household waste and plastics, as well as making recycling a common and useful occurrence in Armenia. As with other cities and villages of Armenia, plastic containers including cellophane shopping bags blight the landscape.

"We will reduce non-degradable wastes," says Suren Karapetian, head of the Department for Programs and External Relations, Vanadzor Municipality, adding that modern technologies and methods will be used. "Non-biodegradable wastes that otherwise remain in the soil will be recycled, enabling us to create new employment opportunities and clean the city."

Competition for the best business plan was expected to conclude this spring, with the winner getting a start-up assistance of 12,000 euro. The new enterprise will create at least 20 jobs in the plant (with more people to be hired to collect the plastic throughout the city).

And finally, too, a cultural silver lining. In the midst of financial chaos and political intrigue, the Ministry of Culture of Armenia in February imposed regulations outlawing lip syncing by musicians appearing at state-sponsored events.

Gayane Durgarian, head of public relations at the MOC, explained that the order aims to "regulate the sphere, to promote the protection of consumers' rights (by notifying ticket-buyers beforehand if the songs would be recorded and pantomimed), as well as to raise the quality of live concerts and events."

Little by little...

American journalist John Hughes is editor of ( Information for this article was reported by ArmeniaNow Internet magazine reporters Gayane Abrahamyan, Gayane Mkrtchyan, Sara Khojoyan, Siranuysh Gevorgyan and Naira Bulghadaryan.

Originally published in the May 2009 ​issue of AGBU Magazine. Archived content may appear distorted on your screen. end character

About the AGBU Magazine

AGBU Magazine is one of the most widely circulated English language Armenian magazines in the world, available in print and digital format. Each issue delivers insights and perspective on subjects and themes relating to the Armenian world, accompanied by original photography, exclusive high-profile interviews, fun facts and more.