The USA supports undemocratic reform in Armenia

David Stepanyan, Yerevan. Esclusively to Vestnik Kavkaza

The Armenian society witnessed a weird phenomenon. The USA ambassador to Armenia John Heffern, Jean-Michel Happi, the World Bank's Country Manager for Armenia, some other foreign diplomats and experts supported the Defined Contribution Pension System which is being forcedly implemented by the government from January 1st, 2014, at the Third Annual Pension Forum in Yerevan. Previously representatives of the democratic world criticized almost all initiatives by the Armenian government, except for measures taken to pay off the foreign debt.

Speaking at the opening ceremony of the forum, Premier Tigran Sarkisyan stated that mistrust of the population is the main problem. Sarkisyan promised to make “governmental steps directed at reduction of fair indignation,” but didn’t list them for some reason. All other arguments by Premier were traditionally declarative and demagogic.

A surprise was a passionate speech by John Heffner who is sure that the pension reform will provide a guaranteed and proportional pension of future retired people, take data on their salaries from a shade, improve tax administration, reduce corruption risks, and encourage economic development of Armenia. Jean-Michel Happi, the World Bank's Country Manager for Armenia, supported the American Ambassador, stating that implementation of a new contribution pension system in Armenia is “a step in a right direction.” The economist believes that the current system doesn’t provide generous payoff to a growing number of retired people, and “if today no ambitious pension reforms are implemented, current young people and poor old people will suffer.”

The Ambassador’s behavior caused indignation among citizens who are fighting against the forced implementation of the contribution pension system. Facebook and Twitter are full of statuses criticizing Heffern’s statement. Most of them speak about unacceptable interference into internal Armenian affairs by the USA Ambassador. Activists were sure that Heffern should have not estimated a law which hadn’t been estimated by the Constitutional Court of Armenia yet. A member of the initiative “I’m against!” David Manukyan suggested the Ambassador should initiate such a pension system in the United States and look at the American society’s reaction.

There is a great difference between the Armenian and the American defined contribution pension systems. Unlike in Armenia where citizens should trust their money private foreign companies, in the USA the state takes care about saving money for a decline of life. The state guarantees return of the money. At the same time, even the USA concludes that such a system has chances to bankrupt.

Reasons for undemocratic behavior of the American Ambassador and the World Bank which is actually supervised by the United States are simple. Two private funds will manage new pension assets, i.e. 41-44 billion drams in 2014. A sub-company of Societe Generale and Credit Agricole – AMUNDI, and C-Quadrat German Company associated with Thalanks Asset Management. 40% of pension assets will be outstanding at foreign markets. Therefore, Western companies and the World Bank got their share from the Armenian government for they would support the authorities in the initiative. The question on undemocratic character of the reform paled into insignificance in the context.