Alec Yenikomshian

See also: The Looming Demographic Catastrophe, the Ruling Regime and the Question of Armenia’s Future Existence – Part II

II. The Ruling Regime

The present demographic reality and tendencies in Armenia and the diaspora present us with a very bleak picture.

This can lead many to despair and disappointment. While perhaps understandable, it remains a not totally substantiated reaction. The picture is not hopeless. It will become so only when conscious and responsible Armenians, in Armenia and the diaspora, don’t wake up to the reality confronting them and fail to undertake a campaign, utilizing all their forces, to make changes.

The first necessary step is to objectively comprehend the bitter reality facing us with the minimum of emotionalism. In the current stage, to consciously or unconsciously avoid seeing this reality, will lead to the unhindered continuation of these extremely dangerous tendencies Except for a minority that understands the situation, but pretends not to see it due to personal interests, it is clear to all that the main reason for all the problems confronted by the nation and people, including the looming deadly demographic calamity, is the established system in the country, represented by those individuals and their groups who created and constantly nurture its reproduction. We must strive to diagnose this system and expose the internal relationships of its components. This is also vital in terms creating a basis for a new system, for which there is no alternative and cannot be delayed.

1. Essence of the system

The dominant reality in Armenia is clear to all. Nevertheless, the evaluation of the system that gives birth to it, the system’s essence, modus operandi, internal logic and mechanisms, as well as an analysis of the existing objective reality, can differ. The essence of the present system is comprised of two components.

The first lies in the fact that a group of individuals has concentrated in their hands practically all the resources and almost all the significant means to create new wealth, as well as the fact that the majority of the working class is mercilessly exploited. Here, the objective of these people and their groupings is nothing other than to satisfy their avarice and their unquenchable thirst to accumulate more material possessions.

This objective is accomplished not only at the expense of the well-being of a majority of the people but even by endangering the basic physical reproduction of a large segment of the populace; with all its destructive consequences for the nation.

The second component of the system’s essence is the concentration of the levers of political and security power in the hands of the same group mentioned above; levers that are necessary to guarantee the continued success of the first objective mentioned above. Technically speaking, the second component is an appendage of the first; but it is so important in maintaining the system, that it’s an inseparable  part of it.

The remaining components of the system, foreign political orientations, policies being conducted in the educational, cultural and other fields, even positions regarding Artsakh, relations with Turkey and the diaspora, are appendages to the basic components making up the system. Other manifestations, like the dominant value system and the reigning moral/psychological environment, have partially been created on purpose and are partly the logical result of the overall system.

2. Birth of the system Is it true that the current destructive system only formed in 1998 or 2000? Can a new regime, established on the professed ideology of Armenia’s first president, Levon Ter-Petrosyan and his practical experience, serve as a remedy for the problems that have appeared in the country?

The necessity of providing an answer to these questions does not only stem from the dictates of correctly interpreting and evaluating our contemporary history. A change of the current system will be senseless and a loss of precious time if the new system is not freed from all its sicknesses and does not correspond to all the necessary conditions for a healthy existence of the country and people.

The answer to the above two questions is clearly negative. Not only the bases, but also several cornerstones of the current system, were put into place and arose during 1992-1998. The process of concentration and consolidation of the country’s economic, political and power levers, which comprise the essence of the system, began and partly terminated during this period. At the start of the 1990’s, on the one hand, in a search for an exit from the deepening crisis from within, and, on the other, with the aim of taking advantage of opening new markets resulting from the ongoing collapse of the Soviet union, the upper echelons of the international capitalist system “perfected” and put into practice on a global scale the theory and ideology of “neo-liberalism” proposed years ago, nicknamed at the time as the “Washington consensus”.

This “consensus”   demanded that all nations practice foreign trade liberalization, the removal of restrictions on imports, the privatization of public sector enterprises, deregulation of laws regulating economic enterprises, fiscal policy “discipline”, so that budgetary expenditures do not exceed revenues, that public expenses were cut and that they be earmarked not towards subsidies but to other services like primary education and primary healthcare (in reality, as experience has shown, this was a directive for the government to step back from its social responsibilities), and an expansion of the tax base, etc.

The new leadership of Armenia welcomed this assignment with open arms, which many of the time were convinced, was nothing more than an attempt to guarantee the greatest possible profit potential at the expense of the welfare of the bulk of the people.

Those who held this belief were later proved correct. The drafters and executors of the new economic policy of Armenia were ardent supports of economic liberalization, the “free market”, neutralizing the role of the state, and the development of a “vibrant” private sector and entrepreneurial class. In several stages, they privatized a majority portion of state and public property. The last and the most “perfect” of these stages was that of the privatisation through “Vouchers”.

People who had, through  unscrupulous means, amassed money during the soviet days and also in the first years of independence, became the owners of a major part of the national economy paying ridiculous amounts of money.    In essence, an agreement was reached amongst certain representatives of the new leadership and the strata of “successful” and cunning directors and bureaucrats of the old regime that lead to a small number of groups both desiring monopolization and in realizing this desire in the conditions of the day. In reality, conditions in Armenia after the collapse of the USSR, no matter how difficult, offered the possibility of utilizing existing reserves, creating new ones, and to put all of it into serving the needs of the entire population and, by extension, creating the prerequisites of having a desirable and attractive country. But such an outcome precluded the rise of a monopoly class. Existing reserves and resources were immediately appropriated by a group of individuals.

This fact deprived a large segment of the population from the right and possibility to live in the country at the bare minimal of levels. This could only result in the exodus of large numbers of residents. Perhaps the most correct analysis of the intentions and objectives of the economic policy being conducted at the time was presented by Mikayel Kotanyan (who later became one of the victims of the October 27, 1999, assault on the National Assembly).

Back in 1993, when this economic policy was in its formative stage and when only a few properties had been privatized, the talented economist made a number of observations and forecasts appropriate both for  the remaining years of the 90’s and the past decade. Pointing out that, according to those in control of the economic sector, unavoidable sacrifices were necessary to achieve “the blissful market economy”, Kotanyan continues: 

“Those burdened with these sacrifices will logically be wide segments of society already dispossessed, and the entire denationalized and privatized property of the state (…)will, through the crafted theory and practice [of economic policy makers] largely become the property of that segment of society that today has become the owner of financial capital, without discriminating amongst ways to accumulate it: (…)

The measures taken by the government establish the unrestricted control of that speculative capital: (…) Today, when the economy of our independent republic is experiencing a accentuated drop, banking capital does not realize its function of financing industrial investments.

Deprived of its own loan resources, it essentially is engaged in usury, with high interest rates, financing speculative commercial transactions. The compensation for those high rates, in the end, is guaranteed by   mechanically raising prices of goods being sold to people. In essence, loan capital, by charging speculative lending interest rates, becomes the owner of a large amount of financial capital, and their owners, according to the amounts of their capital, will become the owners of the nation’s property according to the law of privatization: (…) in [this] process, each citizen will own as much property as they have been able to amass money.

And those amassing money are not the ones who have toiled diligently during difficult years but the Mafiosi groups of today, those conducting large speculative commercial transactions, contemporary “bankers”, as well as their various groupings who have intimately grown up with the state apparatus, various parliamentary groups, with law-enforcement and other regional and urban bodies: (…) In deficit economies, property privatization, rather than forming a market economy, gives rise to Mafiosi-type gangs and monopolists whose aim is far from developing our country or its economy, or a competitive struggle, but rather to artificially grow the deficit and raise prices.” (“The road not begun from our country will take us nowhere”, Mikayel Kotanyan, Droshak, April 7, 1993)

Kind of says it all; no?

Hrant Bagratyan, a former prime minister of Armenia and vociferous on-target critic of the current leadership, likes to say that the oligarchy is a manifestation that has surfaced during the days of the current authorities, that about forty families presently control about 52% of the GDP and that during his tenure there was just the one oligarch that only controlled under 1% of the economy. First, it must be stated that even controlling less than 1% of the economy is a big number for just one family. But what is more important is that back then it was impossible for forty families to control more than 50% of the economy.

The consolidation and monopolization of the economy are gradually developing processes and aren’t completed from one day till the next. What is important here is that the bases for these processes were put in place during the tenure of the leadership of the 1990’s. In the final analysis, many of the oligarchs of today, the Samvel Aleksanyan’s and the Gagik Tsarukyan’s, didn’t just appear on the scene from nowhere in 1998 or 2000. Hrant Bagratyan also severely criticizes the current leadership for the sickly state of Armenia’s agriculture. Yes, due to the criminal policies of the current government, agriculture and rural residents of Armenia find themselves in a state of calamity. 

This situation is rife with a number of dangerous consequences for the country as a whole in various ways. But who doesn’t know that the roots of the current situation faced by Armenia’s villagers are also to be found during the tenure of Bagratyan. Who today does not remember the saying, “They didn’t hand over land to the villagers, but rather handed over the villagers to the land.” Negative results from the willy-nilly privatization of the land were soon in coming. Average crop figures and crop yields from one hectare of land in 1997 had dropped well below 1986 numbers.

The shadow economy, most of which is the handiwork of the country’s large capital holders, is at a very high rate today, just as it was during the previous administration. Finally, the policies of that prior leadership regarding the Artsakh issue can be considered a logical result of the overall system in place. To transform the gradually consolidating and monopolized economy that much more inviolable, the political and enforcement sectors were also monopolized.

This occurred during the 1995 parliamentary elections and the presidential elections of 1996. The newly hatched system had already been formed. What occurred in 1998 and 2000 were merely modifications to the very echelons of the constituted system. (

Next installment – The Existing System)