Armenia: an economy run in favour of the "chosen"

Arkady Balayan. Exclusively for Vestnik Kavkaza


A week ago, the Armenian government decided to grant licenses for importing and selling drugs and psychotropic substances to Natali Pharm LLC. A month ago, it made a similar decision, granting similar preferences to another pharmaceutical organization - Alpha Farm. The Natali Pharm network is owned by well-known tycoon and member of the National Assembly from the ruling Republican Party of Armenia Samvel Aleksanyan. According to numerous publications in the media, Alfa-Pharm is owned by the wife of ex-president Robert Kocharian, Bella Kocharian.

At the beginning of the 21st century the pharmaceutical market and the production of medicines in Armenia have already been completely monopolized. The market is now in the hands of a few "elite" players. According to observers, the process of monopolization of the sphere, which was secured by the establishment of unequal competitive conditions, led to the creation of artificial conditions in this area; to be exact - to the bankruptcy of many importers and the dominance of two or three companies on the market.

The monopolization of the sphere of production and supply of medicines by the "chosen" is typical for the Armenian economy, which at the turn of the 2000s began to experience an active process of redistribution of large properties and total monopolization of the most profitable areas.

The creation of a monopolized economy was the most important component of the existing Armenian power system, its major economic manifestation. Political monopolization of power by the Republican Party, because of the "constant reproduction", has its direct reflection in the economy in the form of established monopolies.

Robert Kocharian was the godfather who created the system in which political monopolization is closely intertwined with the economic. As president, he was preoccupied with a major redistribution of property and privatization of the most profitable businesses. All companies engaged in the extraction of non-ferrous metals are now controlled by Kocharian and the drug business is just one part of the fortune owned by the former president and his family.

A report by former ambassador to Armenia Marie Jovanovich (she held this post in 2008-2011.) published by Wikileaks said that in Armenia there are two oligarchical pyramids. On top of the first is Robert Kocharian, on top of the second is Serzh Sargsyan. As an emerging third apex of the pyramid, the former ambassador mentioned the name of Hovik Abrahamyan. The report by the former ambassador in many respects corresponds to the series of publications named "Robbers of Armenia", which was published in 2010 in the Russian edition of Version. Subsequently, many Armenian media have reprinted these series, teeming with scandalous revelations that are associated with the predatory activities of high-ranking Armenian officials and their environment. Meanwhile, so far none of the "Armenian robbers" has tried to refute the scandalous reports or to sue the Russian publication.

According to the first part of the issue, which was published under the subtitle "The Property of the Presidents", President Kocharian (1998-2008) was the founder of the current system. He was able to accumulate a huge (by the standards of a small country) fortune. "During his rule and according to an agreed quota within the party, Kocharian controlled (or had a share) in the following sectors: taxation, telecommunications, construction, gas and precious stones, as well as in the field of mining and mineral processing, communications and transport infrastructures - post office, civil aviation, etc.. Kocharian's main assets are concentrated in the aforementioned sectors. According to our approximate estimates, the tangible and intangible assets of the Kocharian family cannot be less than 4 billion dollars," Version wrote in 2010.

Returning to the Government's decision to grant the license to import and sell drugs and psychotropic drugs to the Natali Pharm and Alpha-Farm companies, one should note that the current government, like the previous one, is acting in the interests of the existing oligarchical system. It is obvious that a vivid representative of this system - Prime Minister Hovik Abrahamyan - cannot act against the interests of the ruling elite. Consequently, statements about the necessity to develop small and medium-sized businesses and to create equal conditions of competition for the economy can be considered declarative. In fact, the government of Hovik Abrahamyan, since its first day in office, has taken a lot of decisions aimed at protecting the interests of big business, the vast majority of which is part of the ruling oligarchical system. This includes the cancellation of luxury tax and the abolition of the statutory audit for large companies, and a number of measures to create favorable conditions for the "elite" organizations, including the decision concerning the two drugstore chains. Such decisions confirm once again that the government prefers to address social and economic problems by taking the measures aimed at protecting the interests of monopolies, which became a stronghold of power for the ruling elite.