19:58, May 16, 2014
It's been only a month since Prime Minister Hovik Abrahamyan has been in office, but he's begun to correct the effects and results of his predecessor's actions so consistently that many are left with the impression that he's adopted a completely opposite political course.
Actually, everything is quite clear. The former parliamentary speaker is trying to establish himself first on former PM Tigran Sargsyan's account and taking into consideration the tactical errors he allowed. Sargsyan, with his unpopular decisions and steps, which instead of improving the explosive public and social situation further deepened the crisis, acquired such a negative image that he himself embodied the depth and scale of the public's absolute distrust and repulsion of the entire ruling authorities. On this backdrop, the new prime minister's achievements are offered as rescue operations aimed at coming out of the "Tigran Sargsyan swamp". Meanwhile, a significant portion of these is not only reactionary in nature, but also more dangerous than what Tigran Sargsyan was doing.
And what is Hovik Abrahamyan doing today? Almost immediately after being appointed and under the influence of the lobbying of oligarch lawmakers, he instructed to abolish the so-called "luxury tax" which the former PM had introduced as a supposed expression of the state upholding the principle of social justice. The justification, it seems, was that this type of tax neither resolved the issue nor provided results. And Hovik Abrahamyan decided that the best solution to the problem was not to introduce new mechanisms to increase the effectiveness of the practical application of this tax, but to abolish it altogether. Attention: its claim was lowered by not the public or the state, but the local oligarchy.
His next step was the legislative initiative to abolish the audit for major companies, basically creating full opportunities to make the accounting process of major companies and organizations' financial and activity reporting more uncontrollable. And since shadow financial turnover is typical especially of big business, Hovik Abrahamyan's government, in fact, with this change further weakened the limits and levers of the state's control over them. The executive branch of government in this case as well was guided by the logic of "to treat" by cutting off the head that hurts. As for whom this was beneficial, perhaps, needs no explanation.
His next step, which also didn't receive adequate public scrutiny, was to include the necessary goods, services, and works for the implementation of food and transportation services and procedures of persons subject to special state protection in a state of emergency (that is, the country's president, the parliamentary speaker, and the prime minister) in the procurement plan containing state or service secrets, making almost the entire information about government procurement tied to those officials virtually inaccessible to the public. The government, most likely, was unnerved by the information published from time to time in the media about the illogical expensive purchases made especially by one person. In this case, what's essential is not so much concealing from the public the several million dram expenditures, but the apparent trend to restrict public oversight functions, which if it becomes a pattern might lead to very sad consequences. For example, one fine day the Armenian government might decide "for security reasons" to make also those high-ranking officials' declarations of income and assets a state secret. By the way, one of the more or less measurable positive outcomes of Tigran Sargsyan's activities was to make budgetary flows and the circulation of state documents in general as transparent as possible, which, it seems, appears to be the new prime minister's target. It's obvious that such steps increase corruption risks in perhaps the most vulnerable sector: the public procurement system.
But Hovik Abrahamyan's main "masterpiece" was recently convening a meeting of so-called businessmen, where he instructed them no more, no less to pay taxes normally from now on; that is, to bring the turnover of goods and money significantly out of the shadow (economy). He gave the "businessmen" one and a half hours to bring their work and documents to order, to begin to work with these new rules of the game, threatening otherwise to conduct far-reaching checks into their businesses. That is to say, Hovik Abrahamyan, obtaining agreements in a single gathering solely of entrepreneurs, wants to do that which the state during its entire existence and governments of all time have been unable to do. Moreover, Hovik Abrahamyan persuades us that his word actually has greater value and influence than the law, and not adhering to the law was, in fact, the rule of the previously approved and operating game. Let's put aside the prime minister's intention to provide economic amnesty. This is justified when the state decides to begin everything from a new page — on the basis of parity. Meanwhile, in this case, we are dealing exclusively with the factor of Hovik Abrahamyan himself and the oligarchy endowed with the prime minister's leverage, which means this is not about reducing the shadow economy in general, but about filling the empty state coffers on account of the funds concealed by the oligopoly that have circumvented the budget all this time — and this can be considered nothing other than simply financial assistance or debt taken from oligarchs. Because if something is regulated with the simplest of agreements and instructions, it can be revoked the same way, and there is no guarantee that if not Hovik Abrahamyan then his successor agreeing with the same oligarchs to increase the shadow economy; for example, as a form of repayment of the debt taken today. Now we simply have to wait and see how the oligarch–prime minister and the oligarch–finance minister will enter their own pockets as well as those of the individuals affiliated with them (friends and family) to solve the temporary problem of filling the emptied budget. Undoubtedly, an interesting theatrical performance is expected.
In any case, when we view these developments and actions within a single chain, a very interesting picture is created. On a public level, populist statements are made, but they are accompanied by specific procedures serving the exclusive interests of one level of society, the oligarchy. An obvious trend to legitimize shadow activities can easily be seen even beneath this initiative to wring "businessmen". Because if an extent of shadow funds are brought to the tax arena, the remaining extent will remain to the businessmen, and the state will no longer bother them about this.
It must be admitted that with these actions Hovik Abrahamyan provides proof of his being a farsighted political figure. Because his actions are de facto directed at subjecting the oligarchy, that is, the circle of ruling authorities having the most serious resources to reproduce, by providing some quotas to affect their freedom and power. And this cannot be called anything other than a practical step aimed at the gradual centralization of power in his hand. Thus, the process of Hovik Abrahamyan inheriting power is gathering great momentum. The new prime minister in only a matter of months is doing that which Tigran Sargsyan was unable to do in the full six years of his term in office: create such political capital that wouldn't allow to get rid of the prime minister so easily and turn him into a scapegoat.