Tatul Manaseryan: Armenia's Economic Diversification | Corruption | Bank Secrecy | Ep 319 - Mar 23, 2024 [EP319]

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Topics:

• Economic Diversification
• Systemic Corruption
• Bank Secrecy Scrapped

Guest:

• Tatul Manaseryan

Episode 319 | Recorded: March 16, 2024

Show Notes

Tatul Manaseryan on Economic Topics

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Dr. Manaseryan, as this is your first time on our show, would you tell us about yourself, so that our listeners may get to know you a little bit?

Economic Diversification

Over a third of Armenia’s foreign trade is with Russia, which also imports 44% of Armenia’s exports. All other trade partners pale in comparison.

Former minister of economy Vahe Kerobyan is now facing charges of corruption which he denies. His newly appointed replacement, Gevorg Papoyan promised diversification of Armenia’s trading partners, saying that this will be his highest priority.

Questions:

• Is this a realistic goal?
• What are Pashinyan’s real objectives here?
  • Note: he has figured out that he can’t accede to EU demands to do a hard “pivot to the west” without damaging his economy, which means he can’t get reelected, so now he thinks he can pivot the economy on a dime?

—-

The critical border checkpoint at Lars remains prone to frequent closures due to weather or other emergencies. In the past, Armenia had projects to supplement the transit of goods from Armenia to Russia, including a “dry port” and a ferry on the Black Sea. Both projects have failed. Kerobyan, in his interview to ArmComedy said that the ferry project was canceled when Armenia decided to “diversify” its trading partners.

Questions:

• Can it really be called diversification when you deprioritize the Russian projects at the same time?

—-

• Who is Gevorg Papoyan? Is the economy in good hands? You talked about “vision”, what do you think should be elements of a successful economic vision?
• How long would a successful project of diversification take?
• Pashinyan’s “economic pivot to the west” notwithstanding, Russia has a lot of levers to pull. Are there options to Russia, if it decides to be antagonistic? How would you compensate for a 44% drop in exports, and a 35% crash of your economy?

Papoyan and Pashinyan talk about new markets in Europe and the Middle East. Specific examples they’ve brought up are Egypt and France.

Questions:

• What is their calculus with “new markets” replacing Russia?

EAEU and Free Trade with Iran

Earlier this year, on January 2nd, Iran signed a free trade agreement with the Eurasian Economic Union, the EAEU. Armenia stands to gain greatly from this, as its border with Iran is essentially the only direct land border with the EAEU.

However, the Pashinyan government’s ambition to move closer to the EU may jeopardize its membership in the EAEU. The EU will very likely find Armenia’s membership there incompatible with its own charters, and on the flip side, Russia has hinted that it will not allow Armenia to stay in the EAEU if it quits the CSTO.

Questions:

• What are the benefits of the EAEU for Armenia?
• Can the European Union replace the Eurasian Economic Union in the Armenian economy? At least in the near future?
• Just today we learned that Armenia is going to disallow the MIR Payment system. What good can come out of this policy?

Systemic Corruption

We talked about corruption allegations against the previous minister of economy. Actually there are constant reports that the government favors loyalist providers, and often gives tenders without the mandatory bidding process, and to sole bidders. Many of these providers often are relatives or family members of ruling party circles.

Questions:

• What’s your assessment of the state of systemic corruption in Armenia and the risk it presents to the economy? What kind of progress has Armenia registered since 2018 in fighting corruption, which was the coming to power mantra of the Pashinyan regime?

Quoting transparency international report for 2023: Armenia worse (specifically related to single-bidder contracts).

Bank Secrecy Scrapped

Last week, Armenia’s parliament passed another law targeted at giving the government more access to citizen’s financial data, something which was covered under bank secrecy. Specifically, the state revenue committee - under the excuse of “more efficient” revenue collection - will get access to banking transactions of citizens.

More specifically, the total of all debits and credits to bank accounts of those individuals who fill out declarations of income (essentially every citizen eventually) - will be reported to the tax authorities. According to reports, this information can later be subject to sharing not only in Armenia but also with tax agencies of foreign governments!!!

We should note that due to changes to the legislation by the Pashinyan regime, law enforcement already has access to this data. Now, the data is being made available more widely, to include tax authorities.

Questions:

• What is the stated reason for this reform, and does it achieve that?

Alright, we’ll leave it there for today! Thank you Dr. Manaseryan for joining us!

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