Armenians wary of Turkish trade
By Hasmik Hambardzumian
YEREVAN - Economists have welcomed the progress Yerevan and Ankara have made
towards normalizing relations, anticipating it will open up vast new markets
for Armenian producers.
There is currently a near-total blockade on Armenian goods going to Turkey.
Less than US$2 million worth of Armenia products were exported to Turkey last
year, against imports from Turkey worth $250 million, according to Armenia's
National Statistics Service,
Correcting this imbalance could prove revolutionary for Armenia, which depends
on exporting most of its goods to Russia via
Georgia, since its borders with both Turkey and Azerbaijan are closed.
"A significant growth in the economy is expected, with an increase in the
volume of exports and a growth in investment, as well as an improvement in the
population's living conditions," said Mark Lewis, the head of the International
Monetary Fund's mission in Yerevan.
Since soon after Armenia gained independence from Moscow, it has lacked
diplomatic relations with Turkey. Ankara cut ties in 1993, in a mark of support
for its allies in Azerbaijan, who were fighting Armenian forces for control of
the region of Nagorny Karabakh, and has not restored them. Armenians still rule
Karabakh, and the Azerbaijan-Armenia peace process is mired in difficulties.
Armenia and Turkey, however, have made significant progress since the two
presidents met at a football match between their national sides a year ago.
They issued two protocols at the end of August, pledging to sign them after six
weeks of public discussion. Appropriately, the six-week discussion period,
which should end with the border being opened, is due to end just before the
return fixture.
The initial meeting also featured a deal between the Turkish UNIT company and
High-Voltage Electric Networks of Armenia to sell 1.5 billion kilowatt/hours of
Armenian electricity to Turkey. The size of the contract is a clear sign of the
potential for cooperation.
Harutiun Khachatrian, an economic analyst from the Noyan Tapan agency, did not
believe the official explanation for why no electricity had been sold so far.
Officials say technical complications have prevented progress being made, but
Khachatrian said its failure was linked to the progress of the peace talks.
"The fact that the project is not yet completed is obviously political," he
said. "You cannot even imagine how beneficial this cooperation will be for
Armenia. Completely new possibilities will be opened, joint ventures will
appear, products will be exported."
Some economists have predicted, however, that the businessmen who currently
dominate the Armenian market will object to the border with Turkey being
opened, since it would let in a flood of competing products and services that
could undercut them on price.
Few of the so-called Armenian oligarchs have actually expressed a negative
opinion of the peace process, with just Hrant Vardanian, president of the
tobacco and confectionery company Grand Holding, being quoted in April as
saying he looked on it "without particular enthusiasm". oligarchs Hrant
Bagratian, a former prime minister and an economist by training, said, "The
opening of the Turkish border means an end to monopolies. This is a significant
step."
Bagratian said some reluctance to open the border to competition from Turkish
operators was natural, since Armenian businesses had faced little competition
since independence.
He said Armenia just had to exploit its strengths and trust its producers to
become efficient enough to combat Turkish competitors.
"Whatever they do in Turkey, they won't have the same harvest of tomatoes,
apricots and grapes that we have and in this sense, I think the opening of the
border won't do much harm to our farmers. It's possible that there will be a
temporary shock, but within one or two years we will see that we have good
chances for development," he said.
Other businessmen agreed that Armenians should not be concerned, and should
just rely on their country's natural advantages. Besides the agricultural
sector, the energy business, is one where Armenia has a clear advantage, thanks
to the Soviet legacy of decent infrastructure.
"With the correct implementation of international standards, there is no cause
for concern, since in Armenia the industrial base, the infrastructure and the
workforce are cheaper than in Turkey, where there are high salaries. It is
necessary to occupy ourselves with increasing the productivity and efficiency
of our production methods," said Gurgen Arsenian, founder of the Arsoil
company.
Hasmik Hambardzumian is a correspondent from www.panorama.am. IWPR
country director Seda Muardyan contributed to this report.
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