Warning: This is a rush transcript generated automatically and may contain errors.
Asbed Bedrossian: Hello, everyone.
Asbed Bedrossian: On this Conversations on Groong episode, we are joined by Hrant Mikaelian. He is a political scientist and multidisciplinary researcher in social sciences based in Yerevan. Hello, Hrant. Great to have you on this podcast every time.
Hrant Mikaelian: Hello, friends. Nice to be here.
Hovik Manucharyan: Thank you for joining, Hrant. Let’s begin with some of the topics that we want to discuss. For instance, according to the Wall Street Journal, which had an interview,
Hovik Manucharyan: I believe, with Kristina Kvien, U.S. negotiators used what’s being termed as chip diplomacy or chips for peace to help secure framework between Armenia and Azerbaijan back in August 2025. that is now called the Trump Route or TRIPP. chips sweeten the geopolitical deal for Pashinyan. who is facing steep domestic and risks and might have hesitated to sign the TRIPP framework. These GPUs essentially are meant to power the Firebird data center in Hrazdan. The agreement, I think U.S. has similar agreements with Gulf states who have a lot of money.
And I think many Gulf monarchs are investing in AI for financial purposes. want to understand what’s in it for Armenia and especially since Armenia is not investing in this for financial purposes and Armenia does not I’m not sure even if Armenia has a stake in this. Azerbaijan of course did not need any incentives they simply stick to their guns they did not back down from any of their demands in fact Armenia did some of their demands are changing Armenia’s constitution, territorial concessions, including Zangezur Corridor , and more. And most recently, their officials are now talking about Syunik as if they control the territory.
They’re saying that they’re going to control entry and exit points on the so-called Zangezur Corridor. So, Hrant, you’ve been looking at this. what did Armenia get in exchange for TRIPP as part of this CHIPS deal, the AI data center that they’re planning on building and you know is it getting any foreign investment is it going to create jobs what industries and expertise will this data center start up in Armenia what can you tell us from your research, Hrant.
Hrant Mikaelian: Okay, I think, first of all, it is important that American side has stated that they were trying to, you know, somehow push Armenia for the agreement on the TRIPP, and not only TRIPP, but also the whole package regarding the TRIPP, because the current Armenian government was always stating that it’s against any corridor, and effectively TRIPP is still corridor, although it’s often compared to Azerbaijani project of Zangezur Corridor, but essentially it has the same root. Armenia made a concession. Now the government claims that it’s good for Armenia, but we need to understand in which context it is good.
I think we can fairly say that it is good compared to what condition was Armenia in beginning of 2025, when Azerbaijan was pushing with war rhetoric. If you don’t open the corridor, we will start a war. our government made Armenia completely unprepared so compared to the immediate war and losing the war obviously it is better but in the long term we understand that it is a problem and that is why they tried to push Armenia to go for this deal and now if Armenia is agreeing on that what does it get instead so this is an important thing I think part of the package makes.
And there are many, including the current negotiation on the enclaves or exclaves territories, which all of them have strategic meaning for Armenia, very high profile. Then the corridor itself, then the constitution talks, which obviously the government has agreed, and lots of other things, most likely including the resettlement of Azerbaijanis into Armenian territory. and also completely banning the Artsakh issue in Armenian public sphere so that’s what government has agreed instead now what we can take from it Americans pushed Armenia but never pushed Azerbaijan which is also important to say and I want to quote J.D.
Vance who said the following if you look at Turkey, if you look at Azerbaijan if you look at UAE, Saudi Arabia, Qatar sometimes they are not willing to say it publicly, but privately they are doing a lot of good things to help us ensure that the Iranians pay a penalty for firing the commercial shipping. So at least J.D. Vance has mentioned Azerbaijan as part of anti-Iranian informal coalition, which we all knew, and Iranians knew also, but it’s important that Americans stated it on the highest level. And this is, I think, very important.
Americans wanted this corridor first of all because it’s uh their plan from the beginning i mean the global plan and then they deal with Azerbaijan they need to please Azerbaijan because they deal with it in a Turkish context in the Central Asian context Russian and Iranian context and Iranian context is the most urgent now so we can remember how in 2018 John Bolton came to Armenia and said that Armenia might need to close border with Iran and that he feels in Armenia very well and that he supports the current government and so on and so forth. So, and Armenia needs to forget about its history and stereotypes, which is important.
And by the way, John Bolton never forgot about his own stereotypes. It’s only Armenia who should forget its history. And by the way, if you look at the further developments, we understand that everything is orchestrated all that game so uh going back to the chip for for the uh for the concessions deal I think it’s also important to
Asbed Bedrossian: I call it the chips for TRIPPs.
Hrant Mikaelian: understand chips for yeah so what is Armenia getting here uh because okay a big AI data center is being built in Armenia we know in America there is a big wave against data centers, although I need to state that this data center is a bit more modern technologies than the American ones, most of them, and it needs much less water to cool down, although it still needs lots of energy. Well, on one hand, Armenia has that energy, and that energy obviously comes from the nuclear power plant, because data center needs very stable long-term energy, and only nuclear power plants provide this kind of energy. So then there is a question.
This government refused the Russian deal and the Russian deal was the only viable option of a big nuclear power plant to be built after 2036. How Armenia is going to maintain this data center and especially given that there is another one to be built near Sevan in the foreseeable future.
So we are going to have at least two data centers and then there is another question what is the monetization of it for Armenia because we know in America most of data centers work in negative cash flow so what will Armenia gain from it because Armenian banks have invested a lot of money in that will Armenia gain from it I think this is a big question to ask because as of now it seems to be kind of a fancy thing which there is a technology not stay behind. Well, it while it looks good, we need to understand who are we in this context, and what we are getting in aside from, you know, having a data center on our territory.
So it’s just the territory or something else. That’s an issue.
Hovik Manucharyan: you said that this data center uses less water. Now, I’ve seen their press releases. They’re saying they’re going to use closed-loop systems and so forth, but I don’t think they have exactly specified exactly how much water they plan to use because even if you use closed-loop, you can still consume a lot of water as a secondary mechanism for cooling. and are you aware of any specific numbers? How much water exactly are they going to use?
Because I don’t think that that has been publicized unless I’m missing something.
Hrant Mikaelian: Well, I don’t have exact number yet, but what I’ve seen was that they will consume less than 1% of the agricultural water of Ararat Valley.
Hovik Manucharyan: Yeah.
Hrant Mikaelian: So on one hand, it still might be a lot, but not as much as could be, because in America, we know some data centers consume comparable to the arable lands amount of water. So it’s not going to be little, but it’s not going to be much. So given that Armenia lately has become problematic with the climate issue as well, and the water has become an issue also because Turkey is building several dams near border with Armenia. So reducing water flow towards Armenia through Araks and Akhurian rivers.
So we can understand that the water is a concern. But I think this case is not a major concern.
Hovik Manucharyan: Okay.
Hrant Mikaelian: The water is not a major concern. Major concern for me is that where the energy comes from. So we need a proper power plant, a nuclear power plant. And second,
Hovik Manucharyan: The benefit.
Hrant Mikaelian: will Armenian banks get a return of their investment? That’s the second area of concern.
Hovik Manucharyan: Yeah. But that’s, so, Armenia has no stake in this, right?
Hovik Manucharyan: The only thing it could get financially is taxation revenue. So, and you’re saying these companies are operating on negative cash flow, but apparently Armenian banks have invested, the main investors in this deal seem to be Armenian banks who have funded this to the tune of hundreds of millions of dollars. In the context of some talks about this AI bubble that is going to burst, we’re seeing a lot of institutional investors already starting to think twice about investing in AI. Why did Armenian banks and only Armenian banks decide to jump on this bandwagon?
Especially now we’re seeing a huge lack of balance in the balance sheet in terms of profit. profit and that seems to be going in the wrong direction right now for AI companies
Hrant Mikaelian: Well, on one hand, the AI industry is still growing. The bubble is economic, but it’s not compute-based. We still need more and more compute on one hand. So the demand will be there.
But will the demand pay off? That’s another question. And yes, there are lots of talks about bursting the AI bubble, which is not most likely is not going to take long before it happens. But still, the infrastructure will be needed.
Another question is, are Armenian banks going to get the return of their investment? Because I’m afraid for them it’s, you know, kind of fancy stuff not to stay behind or something. And also, we need to remember that many Armenian banks are foreign-owned, and they might be directed to do so. Because, for example, Ameriabank, which was one of the main investors, it’s owned by the international conglomerate, which is…
Hovik Manucharyan: It used to be on, I mean, Ruben Vardanyan had a controlling stake, right, in, you know, Ameriabank.
Hrant Mikaelian: No, no, no.
Hovik Manucharyan: And then…
Hrant Mikaelian: Ruben Vardanyan has sold his share because And he sold it to Bank of Georgia Group and Bank of Georgia Group is based in London and main investors to it are BlackRock and Vanguard and other groups.
Hovik Manucharyan: Perfect.
Hrant Mikaelian: So those are the real owners of Ameriabank right now.
Asbed Bedrossian: Hrant, can I take us back to discuss the megawattage, essentially, the amount of electricity that’s viable? Now, this Hayastan AI data center that is created, it’s currently consuming about 15 to 20 megawatts of power, and it is slated to consume about 300, and their timetable for that is 2027-2028. Okay?
Hrant Mikaelian: Yeah, yeah.
Asbed Bedrossian: Okay, where are 300 megawatts going to come from? Because as far as I can understand, first of all, there hasn’t been a discussion about which product that we’re going to buy for the next nuclear power plant. And then it’s going to take five to 10 years to build that thing. And second, I think that the government is actually talking about a small modular reactor, which will provide, let’s say, 300 to 350 megawatts.
And so if they’re going to take down Metsamor, they’re going to build something that is small nuclear reactor, which is going to be 350, let’s be generous, or 400. That’s barely going to replace what exists.
Hovik Manucharyan: But even that takes a decade.
Asbed Bedrossian: How do we power? Yeah, in a decade.
Hovik Manucharyan: Even that takes a decade to build.
Asbed Bedrossian: So in the next two to three years,
Hovik Manucharyan: Yes.
Asbed Bedrossian: how are you going to provide 300 megawatts to Hrazdan? And as you were saying, there’s going to be another data center that’s in the Sevan region. So another 300 megawatts there. Thank you.
Hrant Mikaelian: Well, the Sevan data center will most likely consume some 55 to 60 megawatts.
Asbed Bedrossian: Sure, at the start. But any time you establish the infrastructure for a data center, the expansion is just a matter to follow in a few years, right? So let’s assume a five-year
Hrant Mikaelian: Also can happen.
Asbed Bedrossian: horizon. Where are you going to get 300 to 600 megawatts of power?
Hrant Mikaelian: Well, Hrazdan Data Center is going to consume, as far as I’m aware,
Asbed Bedrossian: I just don’t see it.
Hrant Mikaelian: up to 275 megawatts. And regarding Metsamor, it is now providing with 412 megawatts of power.
Asbed Bedrossian: Right.
Hrant Mikaelian: So until we have Metsamor, we have that electricity. lately last years we had some 10 percent increase annually of production and consumption of energy and also you know Armenia is exporter of energy so basically Armenia has has energy but lately we had a big increase in electricity production also through the solar panels and And also solar panels which are owned by the population. And they are now even exceeding the…
Asbed Bedrossian: What do you mean? They’re regionally owned, you mean?
Hovik Manucharyan: Like homes on top of homes and real property.
Asbed Bedrossian: Like, oh,
Hrant Mikaelian: Yeah, on top of it.
Asbed Bedrossian: that kind. So private solar and stuff like that.
Hrant Mikaelian: Yeah.
Asbed Bedrossian: But that is, you know, I like that because it’s environmental, et cetera, et cetera. But that’s not the kind of stuff that’s going to power a 275-megawatt data center.
Hrant Mikaelian: Well, actually, they produce lots of energy. And now, as I’m aware, Armenian power grid is oversupplied in reality. But obviously, when the data center will enter into full operation, I think the more energy will be needed. But I will also add one more layer. this year Metsamor almost all time didn’t work because it had passed through the major repair and it has reopened like a couple of days ago so we have this energy you know these 300 megawatts we have it right now so
Asbed Bedrossian: You mean the current 300 megawatts that we’re talking about exists?
Hrant Mikaelian: it’s not a constant right now yeah yeah yeah even excess 300 megawatts we
Asbed Bedrossian: Okay.
Hovik Manucharyan: But, but, but, like, didn’t Armenia export only, like, 150 megawatts in 2025, when I’m looking at So, if you just look at the surplus capacity, I can, I consider that as a surplus. So, the data center needs are even more. And also, I’m looking at their marketing material right now, and they’re saying that they’re going to build up to 2 gigawatts of power capacity, by 2028 that is less than two years away so how are they in this
Hrant Mikaelian: Okay, the thing is that megawatts or gigawatts are not the same. You know, megawatt of nuclear energy is much bigger than megawatt of solar energy, let’s say, in a very primitive way, because the efficiency of solar panels is like 20% and of nuclear power plant is 80%. So because at least the sun is shining, yeah,
Asbed Bedrossian: It’s only up so many hours a day.
Hovik Manucharyan: Working half-time. Yeah, it’s working half-time, part-time, yeah.
Hrant Mikaelian: yeah, While nuclear power plant works uninterruptedly, so it provides with more energy and more stable energy, which is also important. But also, if this data center is oriented towards this region, which is most likely to have less latency and so on, then it will have consumed more in the midday. So solar panels will be somehow useful here. But anyway, what I think is, and what I know, Armenia could export even more.
The problem was market. So we did not have enough markets to export. I think this also can be considered as a part of exporting electricity, of course, locally, but to a global, you know, global stuff. So, no, we have this electricity right now, but the consumption is growing given the fact that lots of users are switching towards electric cars and they consume lots of electricity, not the gas, and also one of the major sources of electricity are stations which work on natural gas.
And then there is another question of gas price,
Hovik Manucharyan: Yeah.
Hrant Mikaelian: because if price of gas is increasing, then all of the story is collapsing, because, yeah, Metsamor provides and so on, but the thermal energy is crucial here to balance the grid, especially given the, you know, unstable solar supply. So, I think in this case, we might have a problem if gas price is increased.
Hovik Manucharyan: Yeah, the chairman of the central bank issued a very, I think, scary message about the gas prices. He used the term apocalyptic. We will talk more about it later. But yeah, that is a serious concern because on every geopolitical front, whether it’s strategic front, whether it’s gas or nuclear, Armenia has risks now, especially not developing nuclear.
But these are all things that are necessary for a data center. Before we move to other topics, Hrant, have you been following the news?
Hovik Manucharyan: I don’t want to go too much into detail about this, but this TRIPP deal also, you know, you said it’s meant to curtail Iran and block Iran. So Armenia’s ambassador was recently asked by the press whether Armenia would participate in sanctions against Iran. And, you know, he said that Armenia would consider it if asked by the U.S. So a very worrying way to respond.
And I don’t know if the media doesn’t say, you know, whether he underscored how important Iran is for Armenia. Now, we’re also seeing this back and forth between Pashinyan and Putin about the military base being taken out and essentially a full divorce between Armenia and Russia.
But at the same time, Russia seems to be interested in TRIPP regardless, you know, even if the military base is removed. and then the last piece of this puzzle I think is news that we heard last week which is that Russia and Iran are trying to set up a coordination center I think it’s within the auspices of their foreign ministries on South Caucasus do you see Iran maybe allowing do you see Russia allowing Iran to take a bigger role in the South Caucasus as a against Turkish and Azeri encroachment and Western encroachment. And what does this all mean for TRIPP? Also, one more thing.
In Azerbaijan, they announced, they were saying that we’re going to start building TRIPP this year, 2026. Then U.S. ambassador visited Azerbaijan last week. And now we’re hearing that TRIPP is postponed until 2027. So what does that mean?
Hrant Mikaelian: Well, construction works and measures and all that stuff, it will take much longer than it’s being discussed. And the funny thing is that they talk very easily on destroying the already existing relations, but they then exaggerate anything regarding the TRIPP and they say, oh, it’s already started and so on. So in reality, of course, there is a significant credibility that TRIPP will be constructed, but still significant credibility that it will never work. Regarding Russia’s positions, Russia as of now is abstaining from South Caucasus.
And in reality, despite the fact that we are not very content with Russian policies, but it is not good for Armenia. For Armenia, the more non-Turkish players in the South Caucasus, the better it is. As simple as that. You know, whoever it is, if it is not Turkey, it is better than only Turkey.
And as of now, unfortunately, the main player right now in the region is Turkey. You know, because Turkey has strategic level of relationships with Georgia. Russia has no relationship with Georgia. I mean, no diplomatic relationship with Georgia.
Of course, there is some second track and so on, and even one and a half track, but not more. Well, Turkey is effectively controlling Azerbaijan and even has the puppet regime here in Armenia. So I think Turkey is the main player in this region compared to Russia and even to the United States. So this is very important.
So whoever is here, except Turkey, is good for Armenia. Now, regarding Russia and Iran. Russia never stopped Iran from getting involved in the South Caucasus. It’s just Iran didn’t want to spend any resources on South Caucasus because it’s, you know, it’s also overstretched itself.
And but now they are realizing more and more that they have to do something.
But then there is an internal discussion in Iran between, you know, pro-Western and pro-Turkish forces who support Corridor and support Pashinyan and, you know, the conservatives who are against Corridor and against Pashinyan. and you know there is a balance there and also they don’t have very clear vision of what they should do regards United States and we have seen how some of the clashes between the president and the minister of foreign affairs and then the other part of the of the authorities have become public so some of the issues are internal here now regarding the Russians Russia, there is very active discussion that they don’t need Armenia anymore.
Armenia is not important and so on and so forth. And here is two possible or maybe even three possible explanations to this. One is that they are just leveraging their importance for Armenia and trying to get better negotiating position. Second is that they are waiting for Ukrainian war to end and don’t want to spend any additional resources.
But it’s funny how I always hear that they have a lack of resources from Russians, but never from Iranians. But Russians, in reality, have a dozen times more resources than Iranians. But anyway, and then the third explanation is that they really don’t care about this region anymore. And they are, you know, abandoning it.
So it’s not clear for me as of now, but obvious signals which come from Russia are the following. We are leaving this region. be better for them to pass the region to Iran than to Turkey and especially then to United States which is getting more and more involved regarding Russians position towards TRIPP it’s also splitted and uh you know those connected to the Ministry of Foreign Affairs they are more supportive towards TRIPP and those who represent you know security services they are against and the army is against It’s split in Russia the same way as in Iran.
So as of now, I can say that the TRIPP project is on path to be implemented, but it’s very fragile. And also, the question is when and how Americans will try to use it in their benefit. Because on one hand, if Americans say that we are just regulating the flow of cars from Azerbaijan to Azerbaijan through territory of Armenia, that’s one thing. But we understand that Americans in one day, they will try to use it in their own benefit, as they did with many other stuff and institutions and their points of presence.
And then there will be a question, will Iran tolerate that? And if Iran will remain in the same position where it is now? I don’t think so. So TRIPP, even if opened and even if constructed fully, it will still remain vulnerable.
And if through TRIPP the militarization of Central Asia will start, which is also likely, because there is such a goal, obviously, and Georgia forbid any military supplies through its territory for third countries.
And in my view, one of the main reasons for TRIPP is the military supplies, not economy. because TRIPP road the Meghri road is not capable of the big economic supply but it’s more important for military supplies because it will not be controlled fully by Armenia that’s what Azerbaijan wants that’s what Turkey wants and that’s what is needed to have military supplies towards Central Asia and if Central Asia will be supplied with weapons effectively against Russia then Russia will start attacking on one day TRIPP too so I think we will find ourselves in very unstable situation and that is why I think we need to understand that it’s not only permission to build it but it’s permission to operate it and it will not go anywhere because Russia and Iran are not going anywhere too I think, but we know.
Asbed Bedrossian: Well, I mean, despite what Armenia and Azerbaijan say, Iran just recently, a few days ago, said that they believe that the TRIPP must be militarily secured by only Armenia or currently present forces in Armenia, meaning the Russians. And I took that as a statement that anything else is unacceptable for them, regardless of what the Armenian government says. Because at the same time in the parliament, I can’t remember which MP it was, said that Iran has no problems with TRIPP.
Hrant Mikaelian: Well, again, in Iran, there are several types of statements you can hear from them, and some are, you know, not against, some are against, and the Armenian government takes the ones they support, they like, and they say, oh, we base our statements, our judgments on that statement. But you know what is the problem? You need to understand the Iranian system before understanding which statement you need to base your position on.
Asbed Bedrossian: That’s right.
Hrant Mikaelian: And ultimately, I think the core of people who are, you know, oriented towards security will be stronger than diplomats and traders. and eventually they will say we need to block TRIPP and you know Iran will have any means it needs to block TRIPP so we need to take that into consideration and even if it doesn’t today or tomorrow the next day it might happen and it’s not only about Iran the problem is for me the biggest problem is that Azerbaijan considers this TRIPP project as a Armenian sovereignty and that it might continue pushing Armenia. And then there is another risk.
Americans might sell TRIPP to third party and that this point is in the agreement base. Who will be buying it? I think it might be Turkey and Azerbaijan. That is completely unacceptable.
Asbed Bedrossian: well apparently they have already proposed that uh five percent be acquired by
Hrant Mikaelian: So for me…
Asbed Bedrossian: Kazakhstan and five percent by Kyrgyzstan that that would be coming from the 26 that Armenia owns so Armenia’s share would go down to 14 and these two countries would have five percent each
Hrant Mikaelian: Well, we need to understand. Are you sure that it’s not from American percentages?
Asbed Bedrossian: No, I think this was part of Armenia saying that they are willing to sell their share.
Hrant Mikaelian: Ah, ok.
Asbed Bedrossian: 5% to this, 5% to that. Yeah, that came, I think it was right around the time when Pashinyan was in Bishkek, that statement came out.
Hrant Mikaelian: But we need to take into consideration that for Armenia, American presence there is not a big deal. But it’s still a problem with sovereignty, but not that big deal. But the big deal is a possible participation of Turkey and Azerbaijan, which is very likely, because, you know, Americans would easily trade their share for money, and Turkey and Azerbaijan will be willing to buy it. so that would be
Asbed Bedrossian: There’s absolutely no controlling what Americans do with their share.
Hrant Mikaelian: obviously and that will be disaster for Armenia
Asbed Bedrossian: I’d like to move our topic to the next one, and this has to do with a survey that came out last week from the Organisation for Economic Co-operation and Development. This is a survey called PISA, Programme for International Student Assessment, and it highlighted some serious concerns about the functional literacy in Armenia. There are a lot of numbers, and we’ll put them in the show notes, but I just want to cut to the chase here, Hrant. And let’s say only 19% of students reached basic proficiency in reading, and 28% reached proficiency in math and sciences.
And we are talking about a survey which actually has about 91 countries in it. So Armenia’s results are being compared to the average of 90 other countries, and that includes our neighbors, Georgia, Turkey, Azerbaijan. What’s going on?
Hovik Manucharyan: And I should say that even compared regionally, Armenia is way
Asbed Bedrossian: Way behind.
Hovik Manucharyan: below our, in terms of ranking, way below our Armenian-Azerbaijan. I think it’s in the bottom 15 and bottom 20 in the entire poll on all both math, reading and science. Meanwhile, for instance, I think Georgia’s ranking in science is like 58 out of 91. So near the bottom.
Hrant Mikaelian: Okay, so the problem with this figure is that the position of Armenia is very low after eight years of this government or considering that the measurements took place in 2025, seven years of this government. now the government says the curriculum was old so the previous government is to blame who was in 10th grade in school were in 3rd grade or 2nd grade in times of previous government so the rest was during this government and claiming that after 7 or 8 years of your authority the previous government is to blame is ridiculous but at least in one
Asbed Bedrossian: Let me just say, the government did say that these guys all started under the previous regime, but the reality is that even first graders happened in 2018. The 15-year-olds who were tested were in first grade when Pashinyan took over. So this government has had the entire run of the time.
Hrant Mikaelian: Yeah, and partially they are right. Because I looked at TIMSS ranking in education, it’s a bit different, but still measuring more or less the same school children. And Armenia was already rather low during the previous government and even slightly improved by 2023. I don’t think that this government had any input in that, but the thing did not get lower.
This is also important. Armenia has problems with education for a long period already. And another problem among already adults is financial literacy. And there have been two major measurements, one in 2024 and one in 2012.
And both indicated that Armenia is ranking very low in regional standards too. So it’s matching these school children measurements. We see that there is a very big problem with education, with the system of education and with all other stuff. And this government did nothing to improve it.
And also the funny thing is that they had in their program of 2022 that by 2030, we will have four universities in top 500 list. and two days ago the minister of education has remembered that and said oh yeah by 2030 we will have four universities in top 500 but the thing is that since 2022 the only university which was you know in top 1000 has dropped out so the trend is
Hovik Manucharyan: Yeah.
Hrant Mikaelian: negative how is going to reverse the first four years the trend was negative and there is no sign it will reverse so we will have a downfall in the education system
Asbed Bedrossian: Which university was that, Hrant?
Hovik Manucharyan: Yeah, well, State University.
Hrant Mikaelian: yeah it’s Yerevan State University so we have downfall in the education system and in the academic system and the government has closed down the Academy of Sciences and I don’t think it will improve the education and then they have this you know idea of Academic City everyone and that nothing is built there and i’m not sure it’s a good idea overall but even if it is nothing has been done so far so obviously whatever they do in education is a
Hovik Manucharyan: Yeah, I’ll talk.
Hrant Mikaelian: complete mess and by the way they are planning to close down more than 200 schools in regions especially in bordering regions because they have a small number of pupils there but the problem is that yeah on one hand quality education in small rural place. But at the same time, if you close this school down and open another one in another settlement, and even if you bring the children there, the settlement, the village will start becoming empty because you don’t have school there. And as of today, for Armenia, it is very important.
So it’s not only about education, but it’s also about demographics the social landscape and it’s very complex issue everything is interconnected and they don’t have any any proper answer to this issue so it’s i think a big mess for
Asbed Bedrossian: Yeah.
Hrant Mikaelian: Armenia right now
Asbed Bedrossian: So I still want to ask the question, exactly why is it that only 19% of the 15-year-olds in the country are demonstrating a lack of proficiency? I mean, when the rest, yeah, when you look at the rest of the survey,
Hovik Manucharyan: Illiteracy, yeah. Functional illiteracy.
Asbed Bedrossian: it doesn’t show that the students are not motivated. It seems like the students want to go, the students want to go to school, and they want to learn, and they say that they have a safe environment inside the school. All of the environmental metrics indicate that the students should be set up for some kind of success, but they’re not achieving that. I mean, they’re getting past the government issue, but where is the problem?
Hrant Mikaelian: Okay, let me… Let me bring one hypothesis, which I will not insist, but I think it is an important consideration. The salaries in education system are very low. And in schools, there are almost 0% of men participating.
Well, we know in Armenian culture, the man is a breadwinner, needs to provide the family. And the salaries in the education system are so low that men don’t go there. it’s also a problem because the children don’t have a male role model in the school. So it’s a social problem. And then there is an economic problem.
So the quality of education decreases also because not many people who are capable go there to teach. And many people who teach, they don’t have enough capacity and they don’t have enough knowledge and don’t have enough motivation because sometimes they need to combine this work with some other works to provide their families. So with this low salaries, obviously the quality of education will decrease. And I think this is one of the major factors.
Hovik Manucharyan: Can
Asbed Bedrossian: So,
Hovik Manucharyan: I add another hypothesis?
Asbed Bedrossian: because, go ahead, because I have many questions.
Hrant Mikaelian: Okay?
Hovik Manucharyan: Because, name one ministry or one area of the government where there are competent people leading the charge. These are all handpicked solely for their loyalty, including Zhanna Andreasyan. I don’t know, she might have experience in the Ministry of Education, but her views on related to state policy completely mirror Pashinyan.
Hrant Mikaelian: Superficial.
Hovik Manucharyan: So she’s just a yes person. And when you have a government stacked with yes people who don’t have their own ideas or are unwilling to implement them, we have the system that we have.
Asbed Bedrossian: Look, when you have results like this, I consider them horrible results, catastrophic results, and at the level of national security. And in fact, Pashinyan just jumped on it in full cover your ass mode and started saying that bad teachers and bad principals are going to be fired. They need better people and stuff like that. For the last many years, as far as I know, the government has been setting up these certification methodologies so that anyone who goes through the certification is offered more money to fix those salary gaps.
And second, although this is the first PISA survey that we have, we don’t really have a trending here. We only have one data point. These students were doing very well in the past. We’ve done very well in international math tests, international chess, international physics, etc.
And now suddenly we are doing terribly. I can’t find exactly how this is happening.
Hrant Mikaelian: Regarding your last question, you know, there is a big difference between the average level and the level of top students. We have several very good schools. We have some very good students in schools, but the average level is low. So this is, this ranking, this study measures the average level.
So that’s one thing. and the average level has been low for a long time and it has been decreasing since 1991. That’s the reality. That’s first thing. Second, regarding…
Sorry, what was your… You had another statement.
Asbed Bedrossian: The certification.
Hovik Manucharyan: So, well, certification of teachers and, you know, their…
Hrant Mikaelian: Oh, yes, certification.
Hovik Manucharyan: how about the certification of and also these, like, super indicators, the chat punisher, as they say in Armenian, that this government introduced and was parading in front of everyone. Why aren’t they achieving results?
Hrant Mikaelian: Well, I think to assess the quality of curriculum, I think you need the specific education experts. And the same goes for the certification. But as far as I’m aware, as of now, not many have passed certification and also not many are receiving a good salary. So the offer is, you know, a bit virtual.
So that’s also an important thing to consider.
Hovik Manucharyan: Yeah.
Hrant Mikaelian: it’s not that you know it’s not that pass the exams and you will get a good salary and you know 70 percent has used this opportunity it’s not like that so you need good expert who is in the field to understand that but regarding your last statement Hovik about the quality of government I think it is also important because people look at the top and they think okay do I need the education or is education or competence what will bring me prosperity in the future or will improve my position or whatever is a good path for me? Do I need to invest in that or maybe I need to invest in connections or something else?
And we see that not many good competent people are on the top. And this is reality. and in previous government the competent people the technocrats were minority but in this government they are absent so this is a change
Hovik Manucharyan: Extinct.
Hrant Mikaelian: so the problem is that there is no role model of really capable and competent people on the top and this is also important
Hovik Manucharyan: Can I just, yeah, can I just, I know, I know, I know we need to get off our soapbox,
Hrant Mikaelian: Good morning.
Hovik Manucharyan: but I’m going to also offer, because I cannot hide my disgust, okay, every time there is a large international conference or meeting, the Armenian government essentially cancels school for days on end in order to do PR for these meetings, in order to free up the city and the resources for these meetings. It happened with the EPC. And I think for COP29 that is coming up, which is an important conference, essentially the Armenian government has canceled all school 10 days or up to two weeks at the end of October. And instead, students are expected to have six-day schedules in public schools.
I mean, that is horrible when you are changing the schedule for the entire education system and forcing all the teachers to rearrange their teaching plans. That tells you really what the priority of education is in your country.
Asbed Bedrossian: It’s not a priority for this government, honestly.
Hovik Manucharyan: Yeah.
Asbed Bedrossian: And the thing is that the survey actually does show that Armenians do have one of the highest levels of absenteeism from school compared to, for example, the Georgians and everything. The PISA survey indicates that. But ultimately, what we’re seeing is that when the students are motivated, the teachers are supportive. According to the government, spending is going up, but I have no idea where it’s going because, you know, spending more doesn’t mean that you’re achieving better education.
I’m still concerned because the next PISA is going to be four years from now in 2030 or something like that. Four years into this government’s five-year term. We’ve already given them eight years and here we are. We’re going to trust them for another four years and then they’re just going to do more covering their butts.
And concerned that we have another four years to lose here.
Hrant Mikaelian: Okay, regarding PISA, two small pieces, two more small pieces. First, I think it is also important to note that in PISA, many major developed countries have recorded downgrade, significant downgrade, especially European countries. Asian countries did not do so. But European countries have shown a very big fall, which is important.
Of course, there is discrepancy between immigrants and locals, between good students and bad students, but the downgrade is very significant. and it is also connected to the gadgets and to the social networks and to the you know this destructive content which is produced by by some bloggers and now AI and it is a big problem for parents of small kids as of now and I think it is already affecting Armenian educational system too so even if government does something to improve even if there is another risk, which is global as of now. And how is, now let me say this, how is humanity going to deal with it?
That is another question, because last year we did not do well with that. regarding how they deal with COP. So first of all, this is bread and circuses, obviously. And they are going to spend extensively on the Independence Day, on September 21, so in four days.
It will be a very big expense and they are going to have some concerts and some other stuff and what they do here is basically they are trying to distract people from the geopolitical reality where Armenia makes strategic concessions against nothing and to distract people and make them, you know, they are overstimulating people in social networks but offline too because all this policy is bread and circuses and COP29 is part of that and they are trying to keep people busy with holidays with
Asbed Bedrossian: Festivals and concerts all the time.
Hrant Mikaelian: some concerts
Hovik Manucharyan: Festivals, yeah.
Hrant Mikaelian: festivals and distract people from the reality on the ground when Armenia is losing strategic interests and territories so that’s what they
Asbed Bedrossian: Meanwhile, when we talk about budgets, you can see that the defense budget was severely underspent.
Hrant Mikaelian: Yeah, the defense budget is being decreased by the budget on concerts and so on.
Asbed Bedrossian: They’re spending it somewhere else. That’s what’s going on. They allocate the money, but they don’t spend it.
Hrant Mikaelian: Yeah. Yeah, and so what they do is, you know, this is kind of a slave mentality. Whatever is international, foreign, they all for that. And that is why, you know, COP is so important that you can, you know, spoil the education system and spoil the schooling for children for a couple of months because of that.
So I think that as of now, the government does not prioritize education at all.
Hovik Manucharyan: Hrant, we have a lot of topics, and I don’t know how much we’ll cover, but I do want to get your thoughts on what happened in occupied Artsakh over the last week. Azerbaijan basically was able to pull off a very large international tour for diplomats, more than, I think, 150 diplomats attended, touring Stepanakert, all the occupied territories, as well as Gandzasar and Armenian monasteries. millennial old Armenian monasteries. And it wasn’t just a tour. It was meant to present that the region is devoid of any Armenianness.
They said that the Gandzasar Monastery, as well as Dadivank Monastery, for instance, Hikmet Hajiyev, was the…
Hikmet Hajiyev, who is actually the lead negotiator with a diplomat that talks to his Armenian counterpart at the National Security Council, said that these are ancient Caucasian Albanian churches and at the same time he said Armenia has no history I mean we know that this idea that Armenians are not native to the region they are somehow related to the gypsies who came to from India is a popular trope that the Aliyev regime uses and it seems like they’re now using it at the diplomatic level with diplomats and what did the What did the EU diplomats do? What did the Western diplomats do? They just giggled like schoolgirls.
What are your thoughts about what’s happening?
Hrant Mikaelian: Well, yes, that was a very ugly show, and ugly not because of the Nazi Azerbaijani regime, because it is what it is, but because of diplomats. And, by the way, not only European diplomats, shame on them, but also Russian diplomats, shame on them too. And they all participated in that circus, shameful circus, because Hajiyev was showing a blank book and saying, look, they don’t have anything, they write it there, I don’t know, that’s nonsense. And they were smiling like, oh, that’s a good story.
I mean, that’s nonsense. That’s a shameful act. And the problem is the Armenian government. Is the Armenian government problem because it does not represent Armenia, Armenian interests.
And they already declared that they are not going to respond. Neither representative of Security Council, Alen Simonyan, who has declared that he’s not going to respond. nor Minister of Foreign Affairs, Ararat Mirzoyan , or Ruben Rubinyan, Speaker of the Parliament. So these people represent Turkish interests. They don’t represent Armenian interests.
They represent Turkish narratives. Whatever Azerbaijan says, they reproduce. And they say, okay, we destroyed their mosques. Now they have the right to destroy the churches and so on.
That’s what they say. So this is pure representation of Nazi-Azerbaijan narrative. Of course, some of Azerbaijani monuments were harmed. And there is a CHW, Caucasus Heritage Watch or something, which is monitoring the monuments there.
And they found that during, well, that in Armenian Artsakh , eight Azerbaijani mosques were destroyed or severely damaged. Maybe that includes Soviet period too. but anyway yes eight yes but they’re already destroying much more of Armenian churches uh right now and uh and also they stated that the uh Caucasus Heritage Watch also stated that there was no uh orchestrated campaign or no campaign of destroying other Azerbaijani monuments so that’s completely different story maybe some locals destroyed it maybe it’s because of the weather or whatever conditions.
Hovik Manucharyan: Lack of care, you know, yeah, yeah.
Hrant Mikaelian: Yeah, but nothing orchestrated, which is…
Hovik Manucharyan: But yeah, it’s not like Aliyev going and saying, hey, this Armenian inscription on this church here, this is fake, remove it, you know, and they do it.
Hrant Mikaelian: Yeah, that’s what he did in Hadrut, for example.
Hovik Manucharyan: So that’s…
Hrant Mikaelian: And yes, again, I’m saying this is a Nazi regime. And because, for example, obviously, whoever Armenian shows up there goes to jail or being killed.
Asbed Bedrossian: Right.
Hrant Mikaelian: That’s pure Nazism. Now, regarding this show, the problem is on Armenian side. Because this government does not represent Armenian interests, did not say anything there. and Mirzoyan said, okay, we are content with Matenadaran’s response. Sorry, Matenadaran is not a political entity.
And yes, Matenadaran can make a response but it’s not a political entity. It’s a government who makes political statements.
Hovik Manucharyan: Yeah, if this was during the bad former regime, I wonder how many seconds it would take for all these diplomats to be declared persona non grata in Armenia. Instead, they welcomed Magdalena Grono with open arms, it seems.
Hrant Mikaelian: Well, you know, the thing is that those diplomats would never participate in such
Hovik Manucharyan: There. There.
Hrant Mikaelian: ugly show during the previous regime, because not only because they would be declared persona non grata in Armenia, but because these diplomats, they always look at consequences. And there are no bad consequences on Armenian side, but obviously some good consequences on Azerbaijani side. obviously they were fed with caviar and obviously they got some of course I cannot make statements which I cannot verify right now but given that I know the methodology of the Azerbaijani regime I know they pay detourments and they corrupt them and today Aliyev has made statements that European Parliament is corrupt let me remember remember
Hovik Manucharyan: He should know.
Hrant Mikaelian: who was corrupting European Parliament Aliyev himself.
Asbed Bedrossian: Let’s go to our final topic. Two days ago on Monday, the Central Bank of Armenia chairman, Martin Galstyan, raised Armenia’s monetary policy 25 basis points to 6.75. And he said that private consumption, construction, and services were causing a certain growth in the inflation. And more interestingly, he discussed that Armenia’s risk profile as a country has changed.
And while the country is experiencing increased growth and international creditworthiness and such, the economy is still vulnerable to type B and type X scenarios, pointing to a high reliance on Russia, including geopolitical risks such as the severe hike in gas prices, which you mentioned a little earlier. So can you talk a little bit about these apocalyptic warnings that we’re seeing? What can the CBA, the Central Bank of Armenia, do in type B and type X shock scenarios to help Armenia’s economy, the dram, etc.?
Hovik Manucharyan: Can I also add that Civil Contract officials, on the other hand, say that Armenia is ready to pay any price for the Russian gas increase.
Hrant Mikaelian: Yeah, look, now, here’s the interesting thing, that Russian influence is always declared as a problem, but Azerbaijan and Turkish influence is always declared as a possibility, as a, you know, future. So, the thing is that this is completely political, it’s not economic, and the central bank serves this agenda too, that’s obvious. you know, if whatever they say, we need to keep good relations with neighbors. That is why we maintain, you know, very calm tone with Azerbaijan. We do whatever is possible not to criticize them.
OK, why do you use any possibility to criticize and attack Russia? Because that has very bad consequences for Armenia, obviously. Right. And Russia is much stronger than Turkey or Azerbaijan.
So why do you do that? So the peace is not a problem. And the reliance is also not a problem because Azerbaijan and Turkey have a big track record of blocking Armenia and of using any economic leverage and any political leverage they ever had against Armenia. Not on Armenia, but against Armenia.
So whatever Russia is doing is 5% compared to what they do.
Asbed Bedrossian: But specifically, let’s say these gas prices get hiked, you know, political, non-political, whatever the situation is, suddenly they get, they triple or quadruple in price. What can the CBA do to alleviate? And for how long?
Hrant Mikaelian: Okay, now regarding the price hike, that was the second part which I would like to cover. First of all, we need to understand how big will be the price increase. As of now, Armenia gets gas for $180 per thousand cubic meters, which is approximately three times lower than the European prices,
Asbed Bedrossian: Right.
Hrant Mikaelian: or let’s say global prices, let’s call it that. So, we can say that Armenia gets subsidized gas price,
Asbed Bedrossian: They’re in the 600s.
Hrant Mikaelian: which Armenia cannot get from anywhere except Russia. The price is subsidized because of political ties between the countries. Now, if this government is cutting ties with Russia, and this is obvious policy, whatever they do is directed there. and they have improved relations with the West by a very small margin, but spoiled relations with Russia by much bigger share, which is important to note. But again, Armenia will lose subsidy.
And whatever you want, you can do whatever you want. They can say, okay, if we don’t have any special relations, you will get gas on market price. And then they will try to buy gas somewhere else. likely from Azerbaijan and they are already moving the pipe on the territory of Georgia and where Georgia, Azerbaijan and Armenian border meets closer to Azerbaijan so Azerbaijan gas can be provided to Armenia but then there is another question will that be Azerbaijani gas or it will be Russian gas re-exported to Armenia because Azerbaijan re-exports lots of Russian gas to European market as its own. So that’s another question.
But anyway, Azerbaijan will not supply it for a lower price. Maybe it will be lower than 600. Maybe it will be 500 or even 450, but definitely not lower. And same comes to Iran.
Iran might also sell gas to Armenia for a good price, but good price will not be 180, but it will be 400, 500 or 600. I don’t know. So obviously, if the price of then Armenia will spend 500 million more on gas than now so that’s a big deal
Asbed Bedrossian: Where is that going to come from?
Hrant Mikaelian: From households budgets, from state budget and wherever possible.
Asbed Bedrossian: So does the central bank have any kind of a plan on this situation?
Hrant Mikaelian: Well, now regarding the central bank. So that’s the third part I wanted to go because first regarding Russia, second regarding gas, and third regarding the central bank. Now they say that, okay, if the gas price has increased, then the prices overall will increase. So we will have inflation.
And if we will have inflation, then they need to increase the refinancing rate.
Hovik Manucharyan: Refinance rate, yeah.
Hrant Mikaelian: Yeah, so refinance rate right now has been increased to 6.75%, which is rather high. But you can understand that because the inflation rate also hiked to 4.5% in the first eight months of this year. It’s higher than average. I would not say it’s very high, but it’s higher than average during the last period.
So what we have here, inflation and the refinancing rate is not affecting each other the same way in Armenia as it does in the United States.
Because significant portion of credit and cash in circulation in Armenia comes from and goes to the foreign markets. share here it’s not only dram and also the investment money does not come from banks and from uh from credit because American investment money comes mostly from credit but in Armenia it’s not the same because the percentages in banks the commercial percentages are very high they start from 12 and go up to 24. so the percentages are very high people very infrequently to invest it in production or whatever else. So this tool, which is projected to work in American case, will not work the same in Armenian case.
So it will just increase, in the end, it will increase the burden on Armenian industries and on any enterprise or entrepreneurs who are trying to borrow money from banks. but the cash in circulation does not grow because of that. And prices, if they are increased because of gas price increase, it has nothing to do with the cash in circulation. So I think this is a very unwise move because central bank has no tool to affect the gas prices. But they have one tool and they are trying to use it whatever possible.
Asbed Bedrossian: Could it dip into the foreign reserves and essentially subsidize the prices for a while?
Hrant Mikaelian: Well, technically they can, but in reality I would not do so, because you can start spending foreign reserves, but how long are you going to do that? Because if you expect that gas price will go down in one or two months, then you can do that. But if it’s a new level, let’s say if today it’s 180 and the new level will be 450,
Asbed Bedrossian: Mm-hmm.
Hrant Mikaelian: let’s say, it’s too stable level. reason to to cover the difference because in the end you will have to increase why to spend the reserves then you need the reserves for some specific things although they never use it for that reasons but you know by the way we have a peak in foreign reserves the foreign reserve assets have surpassed six billion dollars mainly due to you know Russian circulation here and some of that stays here. But anyway, this has peaked. But is it going to grow further? That I don’t know.
Asbed Bedrossian: Okay, Hrant, interesting discussion, and as always, not terribly optimistic on a lot of fronts, and we’ll close on that. Thank you for joining us today. Thanks for sharing your insights.
Hrant Mikaelian: Thank you, Asbed. Thank you, Hovik.
Hovik Manucharyan: Thank you, Hrant.
Asbed Bedrossian: All right, today is September 16 for this Conversations on Groong episode with Hrant Mikaelian, who is a political scientist and multidisciplinary researcher in social sciences in Yerevan.
Asbed Bedrossian: We always ask you to support us morally, mentally, emotionally, in every way you can, including financially. Please go to podcasts.groong.org slash donate and become a sustaining member. Hovik.
Hovik Manucharyan: Thank you very much. And also don’t forget to like, share, and ensure you’re subscribed in the first place. This was our second show this week after the Week in Review. And we are gearing up for another show regarding BRICS and Shanghai Cooperation Organization, which we’ll record later this week.
So please stay tuned for that. And let us know also how we’re doing in the comments. Thank you. I’m Hovik Manucharyan.
Asbed Bedrossian: I’m Asbed Bedrossian, and we will talk to you very soon.
Hovik Manucharyan: Bye-bye.
Asbed Bedrossian: Bye-bye.