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04 June 2008

2486) Reign of the Oligarchs in Armenia by Vardan Djaloyan

The present is also a part of history, created as a result of past realities and decisions. In our case however, a mythological thought process dominates. As early as the beginning of the last century the poet Vahan Teryan characterized the Armenian printable version

As far as I understand it the ‘priestly’ way of thinking makes its case according to one simple logic - the state of affairs is conditioned by the moral factor and difficulties are God’s punishment for our sins; the sins of the Armenian National Movement during the term of Levon Ter-Petrosyan and those of the ‘Karabakh clan’ today. Perhaps the term ‘God’s punishment’ is most often only to be found within the circles of Tigran Karapetyan, the President of the People’s Party in Armenia, but it is clear that, given singular exceptions, this explanatory model fits for the majority of Armenia’s intellectuals and political actors.

In the 19th century Western Europe created the field of historical sciences in an attempt to avoid the theological model of ‘God’s punishment’, to confront God’s will with a social will. According to the historical explanation society creates itself, but in Armenia an historical secular mode of thought still doesn’t have deep roots in the social consciousness and mythology is the dominant mode of thought in Armenia. For example, the ‘cold and dark years’ are considered to be the work of ‘evil forces’, rather than a form of self-expression for a ‘cold and dark’ society. Fraud, cheating, usury and violence, in general, were considered to be just the first signs of the joyous capitalist future to come. The society was spontaneously giving rise to such social, economic and political institutions that proved to be the decisive factors conditioning today’s reality.

As an analytical example let’s take the ‘clan system’ in Armenia. Let’s note that clans arose as far back as the reign of Levon Ter-Petrosyan but they principally differ from the clans during the Kocharyan epoch.

While describing the 1990’s it is necessary to note the overall disintegration of the economy, particularly as a result of unsuccessful reforms. The first consequence deriving from that situation was that one’s personal survival became the primary issue. People started to form survival units, or clans, due to the weakness of social institutions. Such a unit could not only be economic clan but also the religious community, a large industrial plant, a creative union, a fraternal group for mutual help, etc. Conditionally, one can call all of them “taniks” (roof), a term that surfaced in the 1990’s. Particularly, in conditions of legal turmoil, the “tanik” was entrusted with protecting the clan from robbers, those involved in the rackets and those elements in the Ministry of Internal Affairs engaged in copycat activities. To be fair I must note that compared to the rest of the CIS, Armenia was one of the leaders when it came to battling street crime, the rackets and highway robbery and it was due to the efforts of Vano Siradeghyan, the former Minister of Internal Affairs now under investigation. It was only during the late 1990’s, for example, that they came to realize in Russia that one could wipe out the bandit gangs without the use of the judicial system, often with the assistance of other gangs. They came to the same realization in Georgia just a few years ago.

Many analysts of the post-Soviet system claim it is the corrupt systematic clannish pseudo-government that replaces the outlaw turmoil in the following phase; rackets are replaced with corruption.

In these conditions, lawfulness, the establishment of normal economic relations and the creation of an effective system of social security demands serious and long-term work, of course if nothing terrible happens. The ‘Armenian luck’ factor worked due to Nayri Hunanyan, the terrible happened, and for three years Armenian found itself in a deep political crisis.

Russia experienced such a political crisis from 1993-1996. In particular, before the presidential elections Boris Yeltsin signed the so-called ‘oligarch accord’ to prevent the Communist regime from returning to power. Let us point out that inside the regime they were discussing even worse possible outcomes than what actually happened. For example, Boris Berezovsky proposed to pull out of the elections and reached an agreement with the Communists to invite them into the government. This ‘ruling clique conspiracy’ scenario of Berezovsky occurred in Armenia this year. With that agreement the elections and the idea of political competition become meaningless. With the help of the oligarchs Yeltsin faked the elections and for their ‘services rendered’ he basically handed the country over to them. In both cases the road to the new system was paved with a bloody settling of the scores regarding the Parliament. Afterwards, in both countries the Parliament ceased to play an effective political role.

In Armenia the oligarchs’ accord was reached in 2001-2002 and at its core were the business friends (Karabakh clan) of Robert Kocharyan; but they weren’t the only ones. The essence of that accord was superbly expressed by Yeltsin when he stated, “grab as much power as you can”. One of them seized effective control of the Syunik Marz, another grabbed the sugar business, etc. In our country the Yeltsin scenario was repeated thanks to Robert Kocharyan, the nation was handed over to a few semi-criminal oligarchs.

The essential attribute of the ‘oligarch accord’ is that rather than initially solving the issue of power and the law, it manifests itself as an agreement to disarm - everyone goes about their business and the others don’t interfere, or simply put, they don’t kill each other off. Robert Kocharyan counteracted the survival clan with an economic/political one.

By the mid 1990’s the issue of disarming the people was already an issue, which was slowly being solved, but Kocharyan inserted a sudden change into it. From the point of view of the ruling clique the people owned more arms than was necessary and this presented a threat. The Americans have a saying that, “God created men equally while the Colt mad them equal”. The disarmament was a preparatory stage for the future creation of an unjust and unequal society. Economic redistribution was preceded by arms redistribution; arms passed to their private security personnel. The murder of Poghos Poghosyan by Kocharyan’s bodyguard at the Aragast Cafe was a dramatic and symbolic event in that redistribution which showed that they were the real law. Suffice it to say that the principles of that ‘stable system’ were borrowed from the settling of scores system used by criminal gangs.

The noted Russian economist Alexander Auzan writes that it is difficult for oligarchs not to shoot one another. It was Ivan Kiveliti, who by the way, was murdered by one of his partners, that told me this. It’s difficult because they’re all out for revenge. The situation gets more entangled if we take into account the fact that heroes of Soviet Armenian culture like Viktor Hambartsumyan and Paruyr Sevak were replaced with ‘heroes of cash’, the oligarchs that go by nicknames. The ‘oligarch accord’ transformed the individual oligarch into a player on the national level, whatever his social reputation, or more correctly, in spite of it.

The oligarch under the pseudo-government of Kocharyan was turned into the final decision-maker on the social level. The oligarch’s personal security detachment is a more expensive proposition than even the costs associated with national security for the simple reason that the ‘budget’ of the oligarch, that’s to say the amount of taxes collected, is larger than the state budget. This is the measuring stick that differentiates the pseudo-government from a normal one. In the end, what resulted from this process was that the police lost its social role, turning into the overall security force for the clans and borrowing their main qualities, impudence, brutality and a hostile attitude toward the people.

The 2001 ‘oligarch accord’ permitted the oligarchs to plunder the industrial assets, gold mines and large plants in the construction and food sectors, etc. While what was mostly being privatized in the 1990’s were non-operating plants, in essence real estate, the picture changed after 2000 with large, profitable and working plants being taken over.

These firms were purchased at nominal prices, at about 10% or lower of book value. This fact allowed the oligarchs to multiply their resources by ten and even one hundred-fold in the course of a few years. As a result they, the oligarchs, were transformed from mid-level commerce capitalists into industrial super-capitalists. In essence, the regime granted that fortune to the oligarchs in return for political support. It was an important lesson for them; there is victory if you support political banditry. It was also a defeat for capital since a victory signifies the establishment of stable rules and regulations on the playing field, which isn’t the case in Armenia. This also means that the profits derived from redistribution in Armenia are still more important than industrial efforts and if a large portion of social wealth is derived from money transfers and assistance, then the essential problem is to appropriate those transfers and assistance. Due to the oligarch-clan system in Armenia it’s much easier to appropriate the near serf-wages of average Armenians working in Russia and elsewhere than to construct and create actual industrial concerns. The process of redistribution, where one sector of the economy is taken out of the hands of one and given to another, a parasitical practice that dominates in Armenian society and the economy, simply means that there are yet no rules governing the economy, no real market relations. The segment with the most to gain in the situation is the “nomenmklatura” (nomenclature), top ranking officials from ministers on down to Regional Governors, Deputy intellectuals to showbiz stars, who survive on wealth seizure.

Sadly, to transform Armenia still means to revolutionize, to change the rules of the game, to assert that when it comes to attitudes regarding private property theft is not the equivalent of the work ethic.

The ruling elite in Armenia, driven by the survival instinct, is attempting to find compromise solutions, to postpone its ultimate demise. This is not mere moralizing rhetoric. Out of a few hundred thousand voters Artashes Geghamyan today enjoys the support of a few thousand supporters and the same will happen tomorrow for Artur Baghdasaryan. The ruling elite has lost all confidence of the people in a dramatic fashion and so it’s productive for the regime to go the route of compromise.

The West advises not to believe in the compromises of the ruling elite, but rather to enter into discussion with the opposition. It’s a piece of wisdom learned from their bloody history. The other alternative is to continue with the tyranny and spill blood again until the awakening of a mass social consciousness that will serve as a vanguard and bring forth a new mass-based ruling elite.


Source: May 12, 2008 Hetq.am




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