President Robert Kocharyan's interview to director of the "REUTERS" CIS bureau Martin Nesirsky

PRESIDENT ROBERT KOCHARIAN'S INTERVIEW TO DIRECTOR OF THE "REUTERS" CIS BUREAU MARTIN NESIRSKY 21.12.2000

Q. Mr. President, recently you attended Charles Aznavour's concert in Paris. The President of France was also present at the concert. How was the concert? A. Such concerts are becoming traditional. That was the second such concert, all proceeds of which will be used to implement school construction programs. I enjoyed the concert very much. The atmosphere at the concert was very emotional. The presence of the French President and other well known French politicians at the concert speaks of their attitude towards the French Armenian community and of the relations between our countries. Q. What were the results? How much money was raised? A. I am happy with the results: 825 thousand U.S. dollars was raised. The total amount that was raised at the concert and the following reception will be doubled by the Social Investments Fund of Armenia. This concert is a big event that will be remembered by the number of schools it will help to build, particularly in the earthquake zone. The role of the Diaspora is very important, and this is a good sign of... It is not the amount of money raised that is important. The important thing is the fact itself... People remember their roots... The important thing is the tie between Armenia and the Diaspora. But I do think that the amount of money raised is rather large. Q. What can you do, specifically, to improve the climate for the Diaspora investors, and foreign investments in general? A. First of all, it is obvious that any country in transition can hardly have significant economic growth without private investments. Today, the issue of attracting investments is the most important one. The first condition that is absolutely required for investments is the country's political stability. Economic reforms are also important. We expect investments from developed countries, and it is natural that our rules of play should coincide with the rules that operate in those countries. The following factors influence the investment climate: the laws, the legal system, the comprehensible tax system, the possibility of correlation between tax laws, and a similar business climate. And, of course, the judiciary that the investors can use to protect their rights. Q. I read that you are going to create a foreign investors' council. When will it be created? A. We are already working on it. In one form or another, such a structure has already been in existence in Armenia for a few years. I think so far the work in that direction has not been sufficiently effective. I use all my visits, both working and official, for meeting with representatives of the business community of those countries. I also make use of the opportunities presented by various international economic forums, like in Davos. A business forum sponsored by the World Bank is going to take place in May next year, in New York. Some forums have already taken place in June of this year, in Washington and in European countries. In this regard, we are working rather actively. As for the council you have mentioned, I think it will be formed in the near future. All I can say today is that I don't want to have another not so efficient structure. Q. Will it be a supreme economic council, or something else? A. It will not be an executive structure, but rather a consultative body, where we can have a free discussion of the situation; a place where we can examine what are the causes for obstacles to active business. The results of those discussions would be submitted to the President. This would be a way to get back some feedback from businesses. Q. At our last meeting last year, in June, you were going to appoint Vazgen Sargsyan as Prime Minister... And that is what you did, but there was the horrible terrorist act in the parliament in October. Of course, that was a big blow to reforms, to political stability in the country and to you personally. How did you overcome that situation? A. It really was a very heavy blow, and the consequences for the country were acute and lasted a long time. In this context, if you look at economic indicators, you will notice that up until May 2000 there was a certain economic stagnation, a drop in production. The consequences of this crisis started to be overcome only from about May this year. The situation was really very difficult... These events took place only a few months after parliamentary elections. The parliament was formed around a certain distribution of political forces, around certain political figures, and it was all objective. It took time and significant political will to preserve this political setting and to avoid new parliamentary or any other extraordinary elections, which could, undoubtedly, have been another blow to the economy, and to the country in general. I think we succeeded in doing this. Even though the country is still feeling the consequences of the October 27, but one can't compare the situation today with what it was at then. Q. Perhaps, the next year will be ...your year, so to speak, a sort of a turning point? There is the 1700th anniversary, a business forum is expected to take place in New York, then there is some large credit from the World Bank... A. The country really has significant resources, and I think next year's economic indicators will be very compelling. But we will close the year 2000 rather well, despite the fact that the beginning of the year was essentially lost for the economy. Q. What results do you expect? A. I think the GDP growth will reach five percent. And that's in the case when this May the growth was zero. There is an obvious growth in industry. There is very significant growth in capital construction; export volumes have also increased. If there was no drought and related drop in agricultural production, the total growth could have been much more significant. If we have no force majeurs next year, economic growth indicators will be better, taking into consideration the 1700th anniversary (we are hoping for an increase in the number of tourists visiting our country), as well as the World Bank credit programs (there is a rather significant number of them) and the assistance of the Lincy Foundation that we work very closely with. A number of investment programs are in the process of preparation: most of them will be implemented next year. Q. What do you estimate the economic growth to be next year? A. I can’t tell you the exact figure, but it will definitely be significantly higher than this year. Q. I read your interview in the "Vlast" magazine, where you were talking about an eight percent growth... A. That’s the minimum. Q. But next to all the reforms, credits and investments, there is a blockade, and natural limits to your possibilities because of transport, energy and other problems. It seems likely that it is not possible to have a notable and convincing progress unless the Karabakh conflict is settled and relations with Turkey improved. What further steps are expected for the Karabakh settlement when will you have your next meeting with the President of Azerbaijan? What concrete steps can we expect next year? A. I agree that the Karabakh problem hampers to some extent the economic growth potential. But the country and business have somehow adapted to the transport blockade. This means that it is the sectors that are least dependent on transport that start to develop faster. In our case, we witness development in the high tech sector. Lately, there is active development in diamond cutting industry, in jewelry, and many other sectors. I would put it this way: the business adapts to transport problems. In this regard, there is a sort of diversification that takes place in industry. For instance, if we look at Armenian exports, we can see the influence of problems related to the blockade. But still, normal economic indicators and normal growth is possible with the right economic policy, coupled with reforms, economic stability, better organization and high level of education of the population. Let’s now turn to the Karabakh settlement. Making predictions is an ungrateful business, particularly in the issue of Karabakh settlement. The overly optimistic statements by the leaders create overly high expectations in Armenia, in Azerbaijan and in Karabakh. Our meetings with Aliyev will continue, but at the moment it is difficult to give you any concrete dates and concrete topics of discussions... It seems likely that our next meeting will take place in January next year, if the issue of our countries’ simultaneous membership in the Council of Europe is solved. That will be in Strasbourg. A meeting is also possible at the next CIS summit in June. In addition, we have agreed to a possible meeting on the border. We have already had such an experience on the Nakhijevan border. Both Presidente Aliyev and I, we have the necessary will. Q. You have said already that one should be careful in talking about the issue in order not to inflate the optimism of the people... A. I was talking about excessive expectations... It is not a matter of optimism. Every one of our meetings raises the people’s expectations. In principle, we are prepared to meet with Aliyev more often more often, but I repeat that every meeting raises a wave of expectations on the part of the public. When the realization of these expectations is delayed, it causes some disappointment with, a feeling that the process has been halted... Our meetings should take us at least a step forward. Q. If the meeting in Strasbourg takes place, what influence can the other members of the organization have? How can they help? A. The international community is currently using the following formula: the main principles of the conflict resolution must be determined and implemented by the presidents, the parties to the conflict. We think it would have been much more productive if Karabakh participated in the negotiation process as a full fledged party to the conflict. I think there will be time in our contacts when further progress will become simply meaningless without the involvement of the Karabakh side. The following formula is in place: the international community is prepared to accept any solution agreed upon by the conflicting parties. This means that we should consciously find a formula for the settlement. In this case, the international community will support it and assist in the implementation of the solution reached by the parties. Otherwise, any other solution will be perceived as forced by a third party, and the implementation of such a solution will encounter serious resistance by some part of the public in Armenia, in Karabakh, and in Azerbaijan. One can say, we are trying to relieve the international community of this problem by taking the responsibility on us, the presidents. We are creating a more favorable climate for the future the realization of adopted decisions. Q. Is the same true for relations with Turkey? Or rather, the lack of diplomatic relations with Turkey? Recently, the press had reported about a decision of the U.S. House of Representatives not to vote on the genocide issue. What do you think of that decision? Do you think it helps the dialogue with Turkey, or does it make the dialogue more difficult? A. Yes, but after that decision, there were the resolutions of the French Senate and the Italian Parliament, as well as the joint communiqué with the Vatican. As for the U.S. Congress, no one doubts that in principle the genocide resolution could have been adopted if the voting had taken place. The motives for postponing the voting were not the Armenian Turkish relations, but the increased tension in the Middle East, and the possible effect of the resolution on relations between the allies. I think that at the end of the day the issue has not been removed from the agenda. As far as I know, the Diaspora will continue the work on it. Will it hamper our relations with Turkey? I don’t think it will, because there isn’t anything to hamper. We live here and we understand that Turkey is our neighbor. In one way or another, the relations must be developed. But it is not us who are the initiators of the blockade, nor is it out fault that there are still no diplomatic relations with Turkey. It was not us who committed a genocide in 1915. Q. Azerbaijan and Georgia cooperate rather closely with NATO. What’s is Armenia’s position on this issue? A. Armenia cooperates with NATO within the framework of the “Partnership for Peace” program. Within that program, we are prepared to expand our cooperation. There is no talk about a separate process of becoming a NATO member. I think that the region is still unsettled; there are active processes going on, which has to do with various countries of the region setting their foreign policy priorities. The involvement of a new military component in the region will, undoubtedly, cause a response reaction on the part of the neighboring countries, which can lead to a new arms race, new escalation, and formation of new division lines in the region. It would be desirable not to force that process, but instead let the situation get settled, and then every country will have the right to chose its own foreign policy priorities. Q. Your position is closer to Russia than that of Georgia and Azerbaijan. In that case, why is it that President Putin has decided to visit Azerbaijan first, and not Yerevan? He is planning to go there next month. A. Do you want me to comment on the Russian President’s decision? That question should be addressed to the Russian President. It has to do with Russian-Azerbaijani bilateral relations. Russia can decide for itself... Q. Is Putin going to visit Yerevan? A. Yes; there is also my invitation... Why did he choose such a sequence of visits ask the Russian President. I can say that the Armenian public is not particularly thrilled with that decision. Q. Recently, a meeting of the CIS country leaders took place in Minsk. There seem to be no concrete results. What does a membership in such an organization give? Or perhaps you don’t agree with me? A. I don’t know why, but before every CIS Summit there are some expectations raised that something extraordinary is going to happen at the summit. Very often the summits do just routine work, just like any other international organization. It is not necessary for every summit to be a milestone. The same happens in the European Union and in other organizations. The last summit that you talked about was one of them. It would be wrong to say that all of the CIS decisions work. However, many of the CIS decisions do not work for a number of objective reasons, such as different economic regimes, different levels of economic development. I think these are the main reasons for problems. The CIS agreements are designed for the effectiveness of bilateral decisions rather than for some sort of unified approach. We are rather active on the bilateral basis. Now, there is already talk of a multi paced integration. We are finding ways to describe the situations that exist de facto. Q. That is a bit like the European Union. There are some EU members who would like to see a much quicker integration, like an express train, while others would prefer to walk. A. Certainly, certainly... As I said, I think the main reason is the not so similar economic models, different approaches... There are countries that export energy resources, other countries import energy resources, and this naturally gives rise to different expectations. Thus, I think the reasons are objective, and they need to be patiently overcome. There is a need for patient work.