Susanna Petrosyan, Yerevan, exclusively to VK
Talk about the ruling elite of Armenia's need to choose between European integration and accession to the Customs Union has triggered many debates that have affected, among other things, the possibility of nationalization of businesses owned by Russia - to reduce Moscow's influence in Armenia.
In the period of Armenian independence, mostly under President Robert Kocharian, Russian companies through various transactions took control of the two telecom companies, the majority of enterprises in the energy sphere, including the fifth unit of the Hrazdan TPP under construction, the Sevan-Hrazdan HPP, 80% of shares of "ArmRusgasprom" and “Armenian Power Distribution Networks". CJSC "Armenian Railways" was transferred to the concession management of the Russian company "South-Caucasian Railways", but its owner is the government of Armenia.
A special place among Armenian-Russian transactions belongs to the treaty "Property for debt" signed in late 2001, according to which at the initiative of the Armenian side, for debt of 108 million dollars for nuclear fuel, five companies were transferred to Russia: four units of the Hrazdan thermal power plant, the "Mars" plant, the Institute of Automated Control Systems, PLC "Yerevan Research Institute of Mathematical Machines" and the Materials Research and Production Enterprise.
Although experts and opposition politicians exposed the agreements to sharp criticism, the question of nationalization in the Armenian political expert and journalist community has never been raised. Nevertheless, the issue of the need for and adoption of the law "On nationalization" was discussed so that negligent owners of former state property were made clearly aware that in case of economically-inefficient management, the property would revert to the hands of the state.
Some radical observers who have expressed today the conviction of the need to nationalize Russian enterprises in Armenia do not understand many things and confuse nationalization and confiscation. But how can you take away their property in Armenia from companies representing a huge country?
It is known that many countries, including developed ones, have made decisions about the nationalization of some strategic enterprises and nationalized sometimes entire industries, such as the UK coal industry being nationalizeds under the Labour Party. But nationalization was often a harbinger of debt restructuring, introduction of investment, and then a new stage of privatization of nationalized enterprises. World experience shows that nationalized enterprises are not always successfully managed, and in some countries management is accompanied by corruption.
The main reason for nationalization in most cases is the inefficient economic activity of certain companies or industries. The bankruptcy of some large enterprises or industries may leave tens of thousands of jobless people, which will lead to social riots and political instability in any state.
Nationalization may be total or partial, but in all cases, if the government nationalizes the company, it pays for that a huge amount of money to the owner, based not only on the net asset value, but also on investment. Speaking of Russian companies in Armenia, we should use a differentiated approach, as the situation is different for them in matters of governance and in attracting investment, as well as generally in terms of the obligations and commitments of the Russian side.
The most successful aspect is now the work of the communications sphere, where the Russian company Beeline bought the company "Armentel", and the majority owner of the mobile operator "VivaCell" is the Russian company MTS. Experts estimate the management of the Russian owner of the assets of the 5th unit of the Hrazdan TPP, which received sound investment, to be highly effective. Regarding the activities of "ArmRusgasprom", 80% owned by the Russian company "Gazprom", it should be noted that this company operates at a profit, considerable investment is invested in it, in particular, the country is 95% supplied with gas, but the effectiveness of management raises questions. As for the Sevan-Hrazdan cascade, here the Russian side has not made any tangible investments.
The activities of the company owned by Russia "Armenian Power Distribution Networks" (RESA) generally receive restrained assessments by experts in the Armenian power sector. According to local experts, the owner of RESA, the Russian company RAO "UES" ,has improved its work, but it was done through foreign loans and by increasing electricity tariffs. This could be done by the Armenian side, especially as RESA at the time of the transfer to Russia was in better condition than the Russian distribution networks.
Initially, RESA acquired at a very low price a little-known company "Midland Resources", registered in an offshore zone. And then RAO "UES" acquired its power grids. Thus, Russia gained control over RESA not directly from the Armenian side, but after a few years when RESA was ruled by a company registered in a British offshore territory.
A similar situation occurred when the Russians bought the company "ArmenTel" from the Greek "OTE". The latter initially offered to sell "ArmenTel" to the Armenian government, and only after a rejection did it sell it to the Russian side. Most of the transactions were not transparent and have caused a lot of issues, including in terms of compliance with the laws of the Government of Armenia. There is no doubt that the majority of these transactions contained elements of corruption.
To be continued
