The Velvet Revolution, which took place in Armenia in 2018, revealed long-standing latent processes in this country. The sinister revolution was a trigger, turning the country's 'anti-Russian sentiment' into an 'anti-Russian front.' It grew into a wave of anger targeting Russian investment and business.
Nikol Pashinyan's appointment to the post of the prime minister due to the 'velvet revolution' has rapidly strengthened the position of the Soros Foundation in the country. The Open Society Foundation - Armenia (Soros Foundation), which started operating in Armenia in 1997, almost achieved its primary goal in 2018, having seized the opportunity to control the government of this poor post-Soviet country. The fact that the Armenian government is already under the Soros Foundation's influence is apparent not only in this country but also abroad. The decisions and appointments made by Prime Minister Nikol Pashinyan testify to this.
In his interview with the RBC channel, to the question 'You have good relations with the Soros Foundation. How did this happen? In the end, this negatively affects Russian-Armenian relations,' Armenian Prime Minister Nikol Pashinyan replied: 'When relations were established, no one in Russia doubted the pro-Russian orientation of the Armenian government. All these organizations were created under Robert Kocharian and Serzh Sargsyan. If the then governments were pro-Russian, then why did they not close these organizations?' So, Pashinyan did not conceal his good relations with the Soros Foundation. It is no coincidence that the George Soros Foundation, which is called the godfather of the 'color revolutions,' had carried out its activities in Armenia until 2018. The opening of its representative office in Armenia, even before Pashinyan came to power between 1997 and 2018 and provision of over $48 million to more than 200 organizations, was part of a bigger plan. In particular, one cannot but pay attention to the $5 million investment by the Soros Foundation in the Armenia media, under the pretext of developing independent press. It is a considerable figure for a country like Armenia, where more than 23 percent of the population lives in poverty. It is no coincidence that three months before the 'velvet revolution' in Armenia, the Soros Foundation supported the training of journalists and civil society representatives who are close to Pashinyan and his team. Subsequently, 50 trained journalists and 75 civil society activists served as the leading mouthpieces of Pashinyan's 'revolution.'
In general, the Soros Foundation in Armenia supports several non-profit organizations in human rights, women's rights, anti-corruption campaigns, election observation, and other spheres. Naturally, the above organizations, carrying out their activities for many years, contributed to Nikol Pashinyan's coming to power. At the moment, most of their leaders hold high positions under the country's new government. The reality is that after coming to power, Pashinyan fulfills his obligations to the sponsors of the 'Velvet Revolution' and appoints the leading representatives of this fund to high positions in Armenia. It is no coincidence that the Sorosites are already consolidating in all branches of power in Armenia. Ministries, embassies, and universities in the country come under the control of the Foundation one by one. For example, Sos Avetisyan, who was responsible for the civil society development programs of the Soros Foundation in Armenia, served as Deputy Minister of Education and Science in the early years of Pashinyan's rule and is currently one of the representatives of the 'My Step' bloc in parliament. Current Deputy Minister of Education and Science Arevik Anapiosyan for many years headed an organization, which, in turn, received a grant of $196,000 from the Foundation in 2016-2017 alone.
Another fact is the example of Gayane Abrahamyan, representing Pashinyan's 'My Step' bloc. In 2016-2017, the Soros Foundation allocated $210,000 for projects of the organization 'For Equal Rights' it heads. Tagun Ghazaryan, who is in charge of numerous projects financed by the Foundation, is in the same party in the parliament.
Sasun Khachaturyan, brother of the chairman of the board of directors of the Soros Foundation David Khachaturyan, heads the Special Investigation Service of Armenia. Deputy Speaker of the Parliament Lena Nazaryan, Chief of the Prime Minister's Staff Liana Daltakhchyan, and Head of the State Real Estate Cadastre Sarhat Petrosyan are coordinators and managers of the programs of the Regional Development Center, which is managed by the Soros Foundation and received more than $2 million from it. The press also reported on Rustam Badasyan, appointed by the Minister of Justice of Armenia, whose candidacy was supported by the executive director of the Soros Foundation in Armenia, Larisa Minasyan. Also, former Transparency International's electoral programs coordinator Armen Grigoryan was appointed head of the National Security Council. The former director of the State Control Service, David Sanasaryan, represents the pro-Western American heritage party led by Raffi Hovhannisyan. Sanasaryan was the one who threw eggs at the Russian embassy in Armenia.
An analysis of the information in Armenian media shows that the Soros Foundation has long funded the activities of 14 deputies who support Prime Minister Nikol Pashinyan. It is just the number of deputies directly related to the Foundation. The number of those who are indirectly connected with Soros is about 50. The list of 'Soros members' represented in each of the three branches of power in Armenia can be continued. But in our opinion, the provided information would suffice.
All this once again indicates that the Pashinyan government is in all respects connected with the Soros Foundation. It cannot be called a coincidence that after Pashinyan came to power, George Soros began to allocate more funds to this country. So, in 2019 alone, the amount allocated to Armenia by the Soros Foundation reached $3.6 million. At the same time, the Open Society Armenia Foundation recently directed more than $ 600,000 to the fight against the novel coronavirus. This is a message expressing moral solidarity to the new government of Armenia. Another noteworthy fact is that Armenia is the only post-Soviet state that 'has been honored' with special support from Soros. For what reason was such a gesture made not to any other country, but to Armenia's Pashinyan, who came to power through a revolution? In Armenia, the Foundation controls the government and is worried about the decline in the public image of Prime Minister Nikol Pashinyan, who is unsuccessfully fighting the COVID-19 pandemic. Currently, youth and student organizations such as Restart, funded by the Yerevan office of the Soros Foundation, are among Pashinyan's main supporters and are engaged in propaganda among young people to strengthen his power.
Studies show that George Soros made efforts to carry out the velvet revolution in many post-Soviet countries, but achieved the greatest success in Armenia. We can say unequivocally that Armenia is becoming a country ruled by George Soros. As Nikol Pashinyan consolidates his political power, important steps are being taken to strengthen the positions of Soros and his close business circle in the Armenian economy. In particular, the country is implementing a subtle and covert plan to oppress Russian business. According to this plan, in the coming years, western circles will have the final say in the Armenian economy.
Heavy economic burden, or unilateral benefit
First of all, it should be noted that the historically established economic dependence of this country on Russia stems not from mutual economic interests, but from the inability to become a mature state, both economically and politically. An overview of economic relations between the two countries shows that Armenia acts as a beneficiary. The extent to which this country unilaterally benefited from Russia is proven by the data provided in the annual report of the Central Bank of Russia' Balance of payments, international investment position and external debt of the Russian Federation' for 2020 on individual remittances from Russia to Armenia ... So, in 2018, the funds sent through official channels from Russia to Armenia amounted to $1,121,000,000. In 2019, the transfers made $1,059,000,000. Meanwhile, the transfers from the opposite side equaled $156,000,000 and $177,000,000, respectively.
Of course, money transfers are also carried out to other CIS countries. However, it is worth considering that, according to the influential Global Knowledge Partnership on Migration and Development (KNOMAD), the dependence of the Armenian economy on remittances is at least 12 percent, and according to international experts - 25 percent. In terms of this indicator, the country holds the 26th position among the countries with the ‘worst economy’ globally.
The Asian Development Bank’s 2019 ‘Country Governance Risk Assessment: Armenia’ report notes that the short-term migration from Armenia is high. This migration flow is mainly directed to Russia, and financial assistance comes mainly from Russia. In 2016, under the international crisis’s influence, the Armenian economy dropped to the ‘bottom’ of the economic cycle and faced a GDP growth scenario of ‘0 percent.’ International experts name only two factors - environmental ones and high aggregate demand - which, according to the ‘v’ trend, will help to avoid the economic downturn that followed the crisis cycle in 2017. The corresponding report also emphasizes that remittances from Russia had a stimulating effect on aggregate consumer demand, the construction sector, and, as a result, played a special role in poverty reduction in this country, in particular in the development of rural areas. According to Keynesian economic theory, aggregate economic demand growth is one of the main economic development drivers. The ‘Armenia Development Strategy for 2014-2025’ approved on March 27, 2014, also provides for payment of social expenses, prevention of a sharp decline in GDP, worsening of the social situation, and unemployment growth through international financial assistance and Russian organizations.
It is no coincidence that the CIA report also indicates that Armenia’s economy is very vulnerable concerning economic support from Russia. The CIA notes that most of the country’s infrastructure depends on or is controlled by Russia, such as the energy sector.
This country owes its economic existence to aid coming directly from the Russian Federation.
What is the basis of the Russophobic policy of the new Armenian government in this case?
George Soros has launched a large-scale international campaign in recent years, showing that all the Armenian economy problems are caused by Russia and used all the means to strengthen anti-Russian sentiments among the Armenian population.
So, the reasons for the irritation of the current Armenian government towards Russia can be found in various international reports, speeches of Armenian officials, and official political documents of the state. For example, the Asian Development Bank’s report ‘Asia Development Outlook 2020: What Drives Innovation in Asia?’ notes that one of the risk factors that will negatively affect the Armenian economy is the economic difficulties caused by the sharp drop in oil prices in the main trading partners (Russia). It is also noted that Armenia’s export of metal to China, which is one of its main export items, will decrease soon. Thus, not being a country with a ‘resource-leading’ economy, due to its unstable policy, it suffers from the paradox of the ‘resource curse.’
In Armenia, the growing anti-Russian position, embedded in public opinion, brought to a hysterical state, was reflected in economic policy and is openly manifested in official positions. For example, the World Bank’s Doing Business 2020 report notes that corruption is widespread in Armenia. The main reason is Russia’s dominant influence on the economy and regional security of this country. Such conclusions are based on official surveys conducted among government agencies, business circles, and the general public, which indicates the effectiveness of the anti-Russian propaganda carried out by the Armenian government among the general public. Another interesting point can be noted. Despite all of Armenia’s economic benefits from an alliance with Russia, the Caucasus Barometer 2019 survey prepared by the Caucasus Research Resource Center says that only 43 percent of Armenians positively or partially assess the role of the Eurasian Economic Union, which is the most apparent result of the ongoing anti-Russian public propaganda in this country.
As a result, the document ‘Armenia: Transport and Trade Facilitation Strategy, 2020-2040’ prepared within the cooperation between Armenia and the Asian Development Bank, notes that the development of Armenia’s transport infrastructure is associated not only with the economic development of the country but with ‘diversification of external trade and weakening, indirectly, the dominant position of the Russian factor in foreign trade.’ The report emphasizes the priority of the transport infrastructure for the country. However, due to financial difficulties, its development is not proceeding correctly. A part of Armenia’s loans from foreign governments and international organizations has been directed precisely for these purposes in recent years. All of the above shows that expanding transport infrastructure directly reduces dependence on Russia.
Analysis of the report of the International Monetary Fund’s mission for 2019 demonstrates the harassment of Russian investors in the country by various methods. The report notes that one branch of the government’s anti-corruption operations is to study the activities of public and private companies, including those in mining and infrastructure sectors. It is known that Russian companies and Russian capital are widely involved in these areas and that these measures were reflected in the Anti-Corruption Strategy for 2019-2022, recently prepared by the government. Thus, the continuation of the oppression of Russian investments in the coming years is expected. It is also no coincidence that in 2019 the inflow of foreign direct investment (FDI) from Russia to the country amounted to $33.2 million. In contrast, just a year ago, in 2018, this figure was $124.3 million.
The picture that has emerged can be described as follows: due to the particular discomfort created by the new government of Armenia, Russian investments no longer feel safe here and aren’t profitable. In just one year, the inflow of direct investment from Russia decreased by 73 percent. Other aspects show that the oppression of Russian assets is an integral part of the purposeful policy. For example, in 2019, direct investments were mainly channeled to the following areas: power generation and gas industry - $88.8 million, air transport infrastructure - $14.3 million, mining industry - $3.4 million. More than 30 large enterprises with Russian capital operate in gas, oil products, mining, and telecommunications. It is clear that this country, using the means of ‘moderate and hidden extrusion,’ is pursuing a purposeful investment policy to replace Russian capital with money from Western countries. After all, it is no coincidence that in 2019, when the volume of direct Russian investments in this country fell sharply, $27.1 million in direct investment was attracted from Italy, $18.6 million from Germany, $18.8 million from Argentina, and $6 million from Cyprus.
Armenia’s new government has been continuously working with various financial and investment structures in Europe and Asia for a long time to replace Russian assets. Among them are negotiations with the World Bank, the European Bank for Reconstruction and Development, the Qatar Investment Authority, the Singapore Temasek Holdings, the large Chinese holding CITIC Construction.
The analysis of Armenia’s recent economic policy also shows how the country pitted its economic allies and pursued a dubious monetary policy. Only one fact cited by the Asian Development Bank experts in the official report Eurasian Economic Integration 2019 shows that Armenia is a ‘heavy burden’ for this Union and is far from ‘principles of mutual benefit.’ Thus, according to statistical estimates of the union experts, in 2015-2018, 77 percent of Armenia’s imports (825 items of goods and products) were from countries that aren’t members of the Eurasian Economic Union, but could be imported from the countries of the Union, in particular from Russia. From this point of view, Armenia and Kyrgyzstan are the countries that most often deprive the member states of the Union of their possibilities.
Meanwhile, the data from Armenia's Statistical Service for January-May 2020 shows that the Russian share in Armenia’s exports has a specific weight, which, when compared with the total percentage of the European Union and Switzerland, is 15.1 percent less. However, one cannot say about this country’s sincerity in economic ties with the EU and Iran. So, while in the first five months of this year, Armenia imported goods and services from all EU countries for $302.978 million, the amount of imported goods and services from Iran was $98.898 million. This is while only from China, exports amounted to $233.097 million and from Turkey – $76.682 million. Given the current situation, these statistics cannot be called accidental, and it is not difficult to predict that these indicators will be even more negative in the coming period.
Another fact confirming the duopoly, that is, two-faced, nature of Armenia’s economic policy is that the Russian Federation is helping the country in financing and modernizing the public financial management system and has allocated special grants for this purpose. However, the Armenian government pursued a ‘diversification policy’ in this direction and didn’t forget to involve USAID in this activity.
On the other hand, Armenia’s inability to provide economic assistance to the Eurasian Economic Union has already been noted in official reports prepared by the organization’s think tank. For example, the report ‘On the main trends in Armenia’s integrative development in 2019’ notes that Armenia’s supplies to the Union weren’t diversified. As many as 27 goods, which make up only 1 percent of the export items’ variety, account for 77.3 percent of total exports to the Union. Some 34.1 percent of them are associated with the export of alcoholic and non-alcoholic beverages and fruits, vegetables, and fish - goods, the production, and processing of which the Union can carry out itself at the expense of internal resources. This means that Armenia doesn’t contribute to the economic security of the Union. On the contrary, it is also evident that the goods imported by Armenia from Russia are vital for the normal functioning of the country's economy. These imported goods mainly include energy (oil products, gas) and food (wheat).
By joining the Eurasian Economic Union, directly projected at Russia’s initiative on January 2, 2015, Armenia received direct access to the markets of Russia, Belarus, Kazakhstan, and Kyrgyzstan with a population of over 184 million people and a GDP of $2.2 trillion. This allowed the country to receive significant benefits in documenting trade transactions, timing, and pricing policy. These benefits are also mentioned in the World Bank’s Doing Business 2020 report.
The observed picture is as follows: the provided benefits didn’t satisfy the country. It continues to take steps that run counter to the economy’s fundamental laws and undermine the Economic Union. For example, according to the US International Trade Commission’s research, American goods and products are successfully competing in the Armenian market and outstripping their competitors. In particular, over the past five years, American investments in the energy and mining industries have grown steadily. It is no coincidence that the US-Armenia Trade and Investment Framework Agreement (TIFA) was signed in 2015, which provides for the development of an environment for dialogue and cooperation between the two countries in trade and investments, as well as protection of each other’s business interests. In November 2017, a Comprehensive and Enhanced Partnership Agreement was signed between Armenia and the EU. This agreement covers the development of the investment climate, increasing the number of jobs, and creating favorable conditions for European companies to do business in Armenia.
The agreement also addresses issues such as establishing profound economic and political ties in the energy and transport sectors in environmental protection, trade, and investments. For this purpose, the government of Armenia created a particular road map and a commission.
One of the crucial points is that Armenia’s simultaneous integration into two unions contradicts the fundamental economic laws. The current Eurasian Economic Union is an even more expanded model of integration of the Customs Union, created in 2010 by three countries - Russia, Kazakhstan, and Belarus. The Eurasian Union can be viewed not as an economic union, but as a common market. That’s because the use of common financial institutions and policies within the Union isn’t considered. Here, in addition to two crucial factors in the customs union - unhindered trade within the Union and the possibility of introducing trade restrictions for non-member countries, there is a third factor - the labor force and free movement of capital. The EU is a form of economic Union moving towards a monetary union. Its proposal to the Eastern Partnership countries is to create a free trade area (unhindered trade). The agreement between Armenia and the EU is the first step towards further integration. As a result of the contract’s implementation between Armenia and the EU after its ratification by the Union, a new situation will arise, which contradicts classical economics’s fundamental laws. This raises an interesting question, whether Armenia will choose Russia and the Eurasian Union, which for many years have provided it with cheap electricity, gas, infrastructure, and financial assistance, or the EU, which ‘as officials of this country often say, promises great opportunities and prospects.’ A brief excursion into this country’s history clearly shows that the choice will certainly not fall on Russia…
In the end, the entire world is facing the consequences of the pandemic, severe adverse shocks, and major crises. In this sense, the Russian Federation is also no exception. When a ship gets caught in a storm, the best solution is to eliminate the heavy loads. In our opinion, for Russia, getting rid of the ‘Armenian burden,’ which is a hefty and useless load, looms on the horizon as the most rational economic choice.
Author of the article - AVAND center