Every foreigner working in Armenia has heard the words “Kamats, Kamats" as they attempt to push a new project, program or idea forward. “Kamats, Kamats “(gamatz, gamatz) is literally translated "slowly, slowly." In reality, it can mean "be patient" or "it'll happen one day" or it can connote "we'll see", leaving one totally in the dark as to whether any action will ever be taken. It has long been a way of life in Armenia.
In the Soviet period, there was no question why. The final answer had to come from Moscow. And by the time the answer reached every layer of the bureaucracy, for sure something was lost in transition as each department hesitated to act or, in other cases, looked for personal gain. One year after the earthquake, I came upon, by mistake, correspondence to a home office from a U.S. representative of a New York humanitarian agency working in Armenia, "Construction of hospital in Gyumri stymied. Even going to the top doesn't help. By the time order trickles down middle management changes conditions or undermines agreement."
While Armenia's foreign policy has been clearly defined, targeted and on-course since the first days of independence (no doubt because the entire bureaucracy is not involved), economic progress has been moving at a “Kamats, Kamats” pace and sometimes, even then, to the detriment of the general public and foreign investors. The heroic endurance and determination during the years of blockade, war and traumatic shortages of fuel and food united a nation and its government but the past two years of relative calm have produced frustration and bitterness, particularly in Yerevan. Visitors, including myself, in late 1995 and most of 1996 sensed a palpable malaise and discontent which was clearly a decisive factor in the results of the September presidential elections and its violent aftermath. It isn't simply low salaries and unemployment affecting the general population but too much “Kamats, Kamats “in reforming the system.
Before this report gives a totally wrong impression, I must add, with all the difficulties, complications and " Kamats, Kamats ", my trip in mid-January gave me renewed enthusiasm and a great respect for the courage and innate intelligence of the Armenian people.
The need for new thinking, direction and positive action is growing. The government knows it and the population knows it. In many sectors I found surprisingly renewed energy after months of stagnancy. A sense of urgency is in the air. Once again I am reminded just how awesome the resiliency of the citizens of Armenia can be.
President Levon Ter Petrossian's appointment of Prime Minister Armen Sarkissian, Ambassador of the Republic of Armenia to Great Britain and a physicist by profession, is considered by all a positive step forward (with this approval, however, always comes the concluding sentence, if "they" let him make the changes necessary for future economic success). "They" includes the government bureaucracy and a number of entrepreneurs who have too long controlled industry and trade for their own advantage. Most think the next six months are crucial: a step backward or even no steps at all will jeopardize any meaningful progress in the coming five years. “Kamats, Kamats " will not work.
Some things in Yerevan have improved considerably over the past year. Transportation is working: it is amazing to see functioning trolleys and busses filled with passengers and countless private jitneys lined up on main streets. The days of thousands of people waiting endlessly for transportation are over. Gas, for private cars, although expensive is readily available. Individual meters have been installed for each apartment and house in Yerevan, providing electricity for all who pay. Streets, stores, restaurants and private dwellings light up the dark nights, totally changing the dismal, dire atmosphere of the past.
Stores have expanded, selling everything from clothes, electronic equipment, jewelry, food and almost every imaginable household and personal need. Outdoor markets, like Middle Eastern bazaars, line a number of streets, offering similar products at lesser prices (depending on your bargaining expertise). For those who can afford the monthly fee, cable TV offers three Italian channels, NBC, CNN, TNT and Euronews. For free, Moscow television offers news and nightly Hollywood films, translated into Russian, like "Casino", "The Rock " and " Independence Day", all of which are obviously pirated videos (one actually had written on the bottom of the film; "This is a demo tape. It is illegal to view publicly or privately").
Everyone was amazed to see, for the first time in years, lavish tables prepared at home to celebrate New Year's day, a major holiday in Armenia. Last minute, many decided it was imperative to offer Coca-Cola to their guests. Of course, in Armenia, no one would think to buy a six-pack, everyone had to have a case (24 bottles). Stores were sold out and the plant, having run out of syrup, had to place ads on television, apologizing to their customers.
There is no doubt, the upper and middle class in Yerevan is growing at a rapid pace if one can judge by the buyers in the stores, the expensive cars in the streets, the construction of new homes and the appearance of an increased number of well-dressed residents, including fur-clad women.
More important, seven years have passed since the revolution began. A younger generation is forgetting the years of Soviet dominance and philosophy. They are free to determine their future and to voice their opinions and they know it. Whether democracy is in full force or not, it is what people, old and young, are striving for. Others, and they are decreasing in number every day, who are still in the Soviet-mode are becoming more and more outdated as each day passes.
That is the good news. While commercial ventures like restaurants and stores cause excitement and pleasure and spawn many small businesses to serve them, they will not provide jobs for the substantial number of unemployed throughout the country. In some regions, where industry, i.e., cement plants, flour mills, stone cutting, etc., is operating, 50% of the population may be employed. In other regions, where large Soviet factories once employed 5000 to 8000 workers (profit was not a consideration), 10% may now have jobs. The rest of the population ekes out a living by trade, odd jobs or simply exists below the poverty level. It will not be easy to revive this work force: modem industry is not labor intensive. The Coca-Cola plant in Yerevan, established by the Greek Firm, Tria Epsilon, with plants in Rumania, Greece, Bulgaria, Russia and Georgia, is extremely pleased with sales in Armenia. The entire plant, however, which presently produces 8000 cases a day, close to 200,000 bottles, has about 10 people on the production line. During Soviet days, it would probably have been 200.
There is very little construction outside of Yerevan, diminishing even more jobs. Here and there, in the old days, leisurely restaurants and hotels in the countryside catered to Yerevan residents or local party officials who were looking for a relaxing time. Even that is finished as government officials or wealthy individuals fly around the world. One restaurant owner in Hrazdan said he used to take in 18,000 rubles a month, a substantial sum in the old days, employing 30 people. Now he barely makes it through the month, even with minimum staff. His best customers were directors and well-paid executives of the enormous 8000 employee Hrazdan industrial complex, now down to a minimum force.
Even privatization of the land has not expanded the horizons of the small farmer. In poorer regions, new land owners do not have enough money for kerosene to burn the land (a primitive form of fertilization) or money to rent tractors or to buy the kerosene to operate them. In other areas, small farmers make enough to keep their families through the summer and fall but not enough to last through the winter. On another note, in all these regions, each village is on one electrical grid. If all residents do not pay their share to have lines brought in, no one has electricity. Now and then, wealthier villagers provide the $1000 or $2000 necessary, subsidizing everyone's electrical costs for the difficult winter.
This is a simple overview of life in Armenia today. The reality is much more complicated. The average salary of a teacher, nurse or government employee is about 35 to 45 dollars a month, higher than last year but well below the minimum $150-$250 needed to exist decently. Many with initiative are working two or three jobs, sometimes neglecting one or the other, but happily taking home an adequate monthly wage. If the same is true with two or three people in the family, the household is doing well. Others, in universities, hospitals, government jobs, etc. manage by taking money under the table for passing grades, enrollment or services rendered. It is rumored that $5000 is the going rate for entry into law school, $15,000 for acceptance at the Medical Institute and who knows what sum to receive a certificate to practice medicine. Some even pay to get government jobs in various ministries, knowing full well they will profit in their job. This is not just Armenia, but a way of life in every former republic of the Soviet Union.
There is no quick solution to this black market economy which totals hundreds of millions of dollars a year (in some ways it is comforting to know that this much money circulates in Armenia). Why should anyone live on $35 a month when hundreds or thousands of dollars are at their fingertips?
As an example, for over a year and a half the government has considered instituting fees for medical care, with certain hospitals designated free for needy patients. Today, as in the past, almost every patient enters with a pocketful of drams or dollars, knowing they have to pay unofficially the doctor, the anesthesiologist, the operating nurse and the floor nurse if they want service. Some 100,000, in Yerevan alone, are employed in the medical sector, all of them receiving low government salaries but earning most of their wages unofficially. The unofficial price of this medical care ranges anywhere from $100 to $800 plus per patient (depending on the doctor's fee). The hospital and the director certainly get their share from the staff. AGBU's Plastic and Reconstructive Surgery Center, located in one of the leading hospitals, did a survey of some 100 patients recently treated (service is free in the AGBU unit). It was estimated that 60 to 70% could pay $100 to $500, the cost depending on the extent of the surgery. With this income, the unit could serve 30% plus free, pay all salaries (equal to what others are getting under the table) and taxes, upkeep of the unit (excluding medicine which most patients throughout Armenia now pay for) and pay the hospital at least 30% of all income for maintenance and utilities. In addition, the hospital continues to receive income from all diagnostic tests which have for some time been on a fee basis (our new AGBU donated Ultrasound equipment provides close to $300 a day, $6000 a month, in income to the hospital).
Since this plan is expected to be implemented any month now (or so they say), I asked if official notice would be given to patients that no extra payments should be made to medical personnel. If not, the cost to the patient would now be double; official and unofficial, generating even more discontent. The answer was, "Kamats, Kamats”, we can't make the changes all at once." Worse yet, no one has even done an income and expense analysis to estimate profits or losses for either the hospital or the employees. Our estimates show, that in time, enough income would be generated to buy equipment, lessen the budget allocations necessary from the government and best of all, set a precedent for honest, responsible management.
It is a vicious cycle because no taxes, which ultimately benefit the country, are being paid in this black market economy. Individual and corporate taxes are too high: whether you are making $45 a month or $4500, you have to pay 35% in taxes. Those not on the government payroll prefer to be paid in cash and thus avoid taxes. At the same time, employers are just as pleased because they too are not eager to increase salaries to cover taxes. One foreign investor told me that if you add up employee taxes, pensions, benefits and corporate income taxes, it comes to 98%. The government knows this is unreasonable and hopefully the problem will be addressed in the coming months, “Kamats, Kamats" will cost the country a fortune in lost revenue.
As each month passes, foreign companies are taking a greater interest in investing in Armenia. During my two week visit, a major investment firm from New York City, a Japanese bank, an international aviation company, a gold processing firm, an oil company and a fortune 500 technology company were exploring business opportunities. Tourism, international airlines, new hotels have to be encouraged. In many ways, tourism in Armenia, a land of welcoming people and extraordinary historic sites, is one of the best ways to bring industry to each and every region, eventually employing tens of thousands.
But to do this, investment laws must be clear, taxes fair, government ministries cooperative and certainly individual entrepreneur’s cannot continue to monopolize their "territory." The stories of discouraged foreign investors who have given up in the past are appalling. A businessman will not make six trips to Armenia just to negotiate or revise a contract. He will lose interest if he suspects he is being fooled or just when he thinks all is wrapped up, another problem suddenly emerges to void the deal. “Kamats, Kamats" is not their way of life.
Armenia has come a long way: business is no longer a derogatory word, profits are no longer frowned upon. But, both have been isolated to only the small private sector or individual initiative. It's time for another blow to the long entrenched passé Soviet system. The government, still the owner of countless educational, medical and industrial complexes, has to set the pace for reform. Income, Income, Income. Some segments of the population will suffer during the process but there is no other solution in building a nation.
