ArmInfo. The Transparency International (TI) Anticorruption Center prepared a study on the topic "Privatization and Foreign Investment in the Republic of Armenia in 1997-2020", the results of which were presented by economist, expert of the TI Center Artak Kyurumyan.
He explained that the expediency of the selected period is due to the fact that the main processes related to investments began in the country after 1997. First of all, the expert presented the situation related to the transparency of the processes carried out, indicating in this vein that most of the latter were not transparent, which is why it is difficult to form an idea about the privatization of real estate or the market price. As an example, Kurumyan cited the situation with the sale of the Sevan-Hrazdan Cascade to the Russian side, certain documents of which remained secret. A similar situation is also associated with the sale of the Vorotan HPPs cascade to the Kontur Global enterprise, the initial agreement of which has not yet been declassified. He stressed that information about investors and owners is not disclosed enough. While it is still possible to find information about LLC, the situation with CJSC is much worse.
In addition, the study showed that there are shortcomings in terms of ensuring the information security of the government's database. "During the analysis, we noticed that changes are being made and it is not clear who makes them, why, on what basis," he said. Speaking about the gaps in the quality and efficiency of management, Kurumyan stressed that until 2018, there was no proper research related to money laundering in Armenia. Given that, according to the report of the American agency Global Financial Integrity, about $ 10 billion has been withdrawn from Armenia since 1997.
He also noted that over the past 20 years, monopolies have been created in Armenia in various fields, which has led, among other things, to the fact that the state has lost the opportunity to search for alternative solutions, for example, in terms of importing gas from alternative sources. In this vein, he referred to the gas agreements concluded in 2013. The study also showed that the Armenian economy is sensitive to the processes taking place in the Russian economy and associated with Russian capital. The expert noted that Russia continues to be the leader in terms of direct investments in the RA economy, however, since 2014, there has been a slight decrease both in terms of investments and in terms of transfers.
"We import more than export to the Russian market, but over the years this ratio is decreasing," he stressed. At the same time, the expert said that the share of taxes of companies with Russian capital or dependent on supplies from the Russian market in 2018 decreased to 13% from 15-16% in 2014. Kurumyan noted that besides financial-economic, there are other cells of influence, naming in this vein a number of agreements signed between the RA and the Russian Federation, including in 1997 on friendship, cooperation and mutual assistance, in 2013 - the Customs Union. However, he noted that according to a survey conducted in 2018, 92% of respondents noted that they had a positive attitude towards relations with the Russian Federation. <There are no anti-Russian sentiments. The only cause for concern for the respondents is the sale of weapons of a strategic partner to countries that are hostile towards Armenia," he stressed.
Speaking about the present, according to the research results, the concern refers to the absence of a legal basis for the PSRC's decision to ban the entry of the fourth communication operator into the Armenian market. "In January or February 2020, PSRC announced that it does not allow the fourth telecom operator to enter the market, because in 2008 frequencies were allocated and legal regulations were formed for only three operators. However, there is no reference to any article of the law, and it is not clear on what grounds it was all declared," he complained. Moreover, the study also includes recommendations for the competent authorities. In particular, TI experts recommend to the National Assembly of Armenia to strengthen oversight functions, prohibit at the legislative level the existence of monopolies in the field of gas and electricity transmission, clarify legislation regarding state and official secrets, and improve its control mechanisms, streamline entry into other areas of enterprises providing public services, exclude a conflict of interests of officials, settle the appointment of heads of foreign companies to high government positions, etc.
The Center's experts propose to the RA government to create mechanisms for obtaining information about real owners, to strengthen the capabilities of structures authorized to fight against money laundering, to develop a strategy for the development of energy, to revise the concept of "small hydroelectric power plants", to develop and implement a policy of the mining industry, to study the role of the Minister of Defense in the process sale of energy assets, work to attract cleaner capital from entrepreneurs of the Diaspora from Europe, the USA and other countries, which will bring more innovations to the RA economy, ensure and guarantee the quality and security of the database, improve the quality of media literacy of citizens, etc. In addition, the Anti-Corruption Center finds it expedient to conduct research and analysis in certain areas of the economy in terms of foreign investment, as well as research regarding the influence of other countries on the Armenian economy. "I hope our research will help today's authorities learn past lessons and ensure further development," he concluded.
To note, the study is based on the approach of the Center for International Private Enterprise (CIPE). To prepare the document, experts examined the RA legislation, decisions of the RA government, international treaties since 2000, static data, including data from the Central Bank of the Russian Federation, and a number of unofficial documents, including investigative materials from the media, an analysis of processes and institutions was carried out. The study covered mainly the following areas: energy, transport, telecommunications, finance, and industry.