Policy Forum Armenia (PFA), a Washington-based international think tank, recently announced the publication of its State of the Nation Report on “Corruption in Armenia.” A product of a multidisciplinary team of researchers and practitioners, the report brings to light many peculiarities of both wholesale and retail corruption in Armenia, and offers mechanisms to reduce corruption.
The report’s main finding is that corruption’s negative impact on Armenia’s economy is substantial. Focusing on corruption faced by companies, for example, the report finds that “with an estimated cost to large companies of approximately five percent of sales per year—the highest among the comparator countries—corruption in Armenia erodes productivity and competitiveness of firms.” On the policy side, the report makes a compelling case that the design and implementation of public policy in Armenia often serve the interest of the entrenched corrupt elite, and not the country or its citizens.
“By its nature, corruption is very difficult to detect, which is why the choice of methods and areas of study was made carefully to maximize the value added of the report,” PFA’s Executive Board member, Dr. Zaven Kalayjian, noted. “The team employed both quantitative techniques and case studies to help effectively gauge the extent of corruption and bribery taking place in various segments of the economy and public life in Armenia, from the judiciary and military to money laundering and petty crime. The most striking finding was that corruption in Armenia is highly concentrated and puts in place insurmountable barriers for economic development and progress in the country.”
The overarching message of the report is that “an effective handling of challenges facing Armenia should begin by forming a legitimate authority to oversee the new policy course on behalf of the people. This can be achieved only by a political power with incentives and capacity to spearhead a systemic change. At the moment, the feedback mechanism between power and people is broken in Armenia. This makes the country’s ruling regime immune to any pressures from the electorate to perform better and fundamentally changes the incentives of individuals at the top of the ruling pyramid.”
Daron Acemoglu, a professor of economics at the Massachusetts Institute of Technology (MIT) and the author of a recent bestseller, Why Nations Fail: The Origins of Power, Prosperity, and Poverty, noted, “Some say that Armenia is doomed to fail economically because of its geography or location in the world. But like so many other countries around the world and throughout history, its failure is due to corruption, unscrupulous politicians, and weak institutions. It’s not lack of opportunities but squandered opportunities that are at the root of Armenia’s ills, and it can make progress only by confronting this fact and holding accountable those responsible for the failures. This wonderful report is a first step.”
Echoing the same sentiment, AnnaLee Saxenian, dean of UC Berkeley’s department of information, noted, “This data-rich study penetrates the realities of governance in Armenia—realities that have long been obscured. It confirms that political reform is essential to the national economic and social development.”
Going forward, the report offers a strategy of reducing corruption in Armenia, built on a principle of boosting individuals’ opportunities and freedoms otherwise restricted by corruption. It also provides detailed recommendations on how to fight corruption and mismanagement in sectors with the highest corruption risks. It notes that assistance from the international community and the Armenian Diaspora are required for the people of Armenia to improve governance while forcing the entrenched corrupt elite to either reform or leave. Internally, credible actions would be required to prosecute senior-level abuses, reform the judicial system, and institute a mechanism for re-claiming stolen assets.
On the latter, the report lays out a blueprint for the Stolen Asset Recovery Initiative. Modeled on experience of other countries and international laws and regulations that govern this area, the proposed initiative offers a framework for identifying illegally acquired assets held both in and outside of Armenia; seizing those assets; and holding and redistributing those assets (or the proceeds from their sale).
The report is intended to spur a debate on the issue of high-level corruption in Armenia and serve as a warning for corrupt officials that civil society organizations are ready to help identify and recover stolen assets—irrespective of their location—and return them to their rightful owners.
Policy Forum Armenia is a 501(c)3 non-profit think tank aimed at strengthening discourse on Armenia’s economic development and national security and, through that, helping to shape public policy in Armenia. This State of the Nation report and other PFA reports, which provide assessments of critical developments taking place in Armenia and the diaspora, are available via www.pf-armenia.org/reports.
Guest Contributor
Fake nationalist ex-KGB Armenian blood sucker oligarchs control Armenian disastrous economic activities. These worthless sub-humans, occasionally use Artsakh security, and blackmailing Armenian Nation of the world and looting the country!! Shame on them.
this is one of the most important and revealing articles ever published in AW. The blueprint for the Stolen Asset Recovery Initiative is sound, and would get rid of the current Bolshevik mentality of entitlement. Will it ever be implemented? Sadly,I’m not hopeful.
Perhaps if our “unscrupulous politicians” were more accountable to God than to their flesh we would see less corruption in high places.
Men and women of faith need to include in their prayers 1 Timothy 2:1-4 for those in authority.
Another useless report from the Policy Forum America, sounding yet another ‘Alarm’ that only they and a dozen of their closest friends give a hoot about.
None of their ‘alarming’ prognostications over the years about Armenia have materialized.
None.
Their lame attempt to influence the Presidential election in Armenia by releasing some cooked-up supposed statistical analysis – “Armenian’s 2012 Parliamentary Election” – proving something or other just prior to the 2013 Presidential elections fell flat on its face: People of Armenia ignored the hit piece. President Sargsyan walloped the BarevaChosenOne 58% to 37%; Armenians who actually live in Armenia don’t need people living in Washington DC, or Berkley, or Anytown USA to ‘teach’ them how to vote or who to vote for.
Similarly, in the Yerevan Municipal elections, silent majority’s choice, RPA, got 56%. The Barevaloser Party got 8.5%.
There is the answer to your “Armenian’s 2012 Parliamentary Election” statistical analysis.
Keep ‘analyzing’ and ‘alarming’ as to why Armenia is supposedly doomed: the doers in Armenia and NKR will continue building up the country.
Month in, month out.
Year in, year out.
And the silent majorities both in Armenia and Armenian Diaspora support them.
To wit: it was quite gratifying to see residents of Yerevan finally tell the perennial protesting cadre to go pound sand; there were three times as many demonstrators _supporting_ the opening of the Covered Market than those opposed.
The supporters even came up with a great description for the professional agitators: Գրանտակերներ. (love it, even though it’s in nauseating ArmEnglish).
Is that why people are leaving in droves?
There is no doubt that the current ruling government of Armenia are using their positions FOR PERSONAL WEALTH & GAIN at the expense of the people and the COUNTRY. And, immediately thwart any attempt to stop that fleecing when anyone challenges them by and means necessary.
US cables between the US State department and the US ambassador in Armenian, exposed by Wikileaks, stated the same points of view as in this article. Sorry Avery, there is no doubt this article is accurate.
Who are you trying to fool Avery. The level of corruption in Armenian is hurting our homeland and it needs to be reduced. A lower corruption level means better economy overall and that in turn is better for Armenia, in terms of investments and taxes.
And people are leaving Armenia. Why? This is real too.
Rule of law and planning are central to ridding Armenia or any other country of corruption. Without these there is just hope, lies, propaganda.
One thing strikes hard in above -or any such analysis-rather sounding alarm and stirring up anxiety amongst Armenians globally…
O.K. let´s admit-and I do admit-there is certain ,pretty high amount of corruption in RA.My question is :-Are all other countries except of it? including indeed where the SOUND of alarm emanates from?
It is one thing to at least at the very least SET FWD what (this at the end of critiques)THEIR REMEDY is-other than <ISHKHANAPKHUTYUN-CHANGE OF govt.Say, collaboraation in many spheres of Economic growth,Law amendments etc.
As real crude Remedy,so to say.I have now and then ¨suggested¨ that the Diaspor a have 5 permanent Delegates in the Ministry of Diaspora.Mind you I did not suggest in the foreign Ministry or any other…
Then again it would be much more pleasant if people from such Forums would decdlare their candidacy to first try to ameliorate the Diaspora Armenian structures(very fragmented)bestowing on it some sort of legitimacy,with a Supreme Diasppora council and then extend hand to RA for cooperation officially.Instead of just criticizing.That is my take on such behaviour.For I believe in work real work not beating around the bush and breasts…
I am really amazed and puzzled that there are still people who are believing the result of the elections.I think these people like to live in denial for no reason. It is really too sad to have those among us.
Anna, are you sure you do not study at USC? And I completely agree with you.
The following segment in the article is key:
“At the moment, the feedback mechanism between power and people is broken in Armenia. This makes the country’s ruling regime immune to any pressures from the electorate”
Yes, and the reason for this is what I have been saying all along: lack of democracy. In the absence of democracy, the people have no way to pressure the government to end corruption, so the ruling thugs keep plundering the country. We had this kind of disconnect between the people and the government one other time: in 1920. As a result, Armenia was destroyed because the people were too sick of the government to put up a fight against the invaders.
This is why, folks, democracy (not “unity,” a slogan repeated by the regime) is Armenia’s salvation. And that is why we all need to help our brothers in Armenia establish democracy. If they succeed, Armenia will grow powerful and prosperous. If the thugs remain in power, within 20 years there will be no independent Armenia.
Anna, I agree with you, unfortunately our middle class and poor Armenia’s population have no other choice but to vote, for a corrupted official who bought his vote from a pre-paid “free lunch” party gathering…these voters have lost faith in democracy system, and have no other choice but to vote for them …they know the new ones have more appetite, than old ones!!
Vahagn,I am positive.I graduated long time ago, but not from USC.Coming to the point that there is no democracy in Armenia,I think people need to fight for that.Leaving is easier than stay and change things around. We don’t have idealists and politically conscientious people.Money is everything in that country.That’s why patriotism and national ideals are lacking. We need new moral norms in Armenia.Otherwise things can get worse.
Your intelligent thoughts reminded me of someone I knew, Anna. Which is why I asked about USC. Thank you for your answer, and I completely agree with you.