This Article in Armenian

“One should trust the political consciousness of people. When you tell them that
“you are living in a fascist state and do not know anything about it”, people
know that you are lying. When you tell people that freedom has never been so
limited or has never been so endangered as today, people know that it is not so.
When you tell them that soon new Hitlers will be appearing, people know that it
is not the case.”

M. Foucault

The Armenian authorities are conducting certain policies, which in one word can
be defined as “neo-liberal”. There exist certain successes in Armenia, which in
one word can be defined as “prosperity”. The authorities insist that there is no
alternative to the policies they are carrying out. In essence the majority of
the opposition forces agree with this point of view and that our policies should
remain “neo-liberal,” but with certain corrections. However, in spite of
prosperity, from a structural point of view Armenia is a “backward” country. If
we look at this from a politological perspective the standard of living in
society can be high, there can be modern technologies in the country, but public
relations be primitive, based on the principle of force or authority, that is be
backward.

The contemporary world differs from the classic era. Presently, “prospering” can
be also “backward” societies, say, Thailand or Malaysia. It would not be
superfluous to compare the Armenian “economic miracle” with the far eastern
“economic miracle.”

Prosperous Armenia

Armenia’s development pace is measured by two-digit figures and there is a
certain paradox here.

For example, in 2000-2005 such Central European countries as Poland, the Czech
Republic, Hungary and Slovakia had an average annual growth of 4 % and that at
the time when the indicator for the post-soviet space stands at 9%. In Armenia
these figures are even higher, some 12% against 5% in 1995-2000. And this is the
case under the circumstances when European markets are open to these countries,
something you cannot tell about the post-soviet states.

Undoubtedly, a major indicator for the economic slump – 53% determines a
significant portion of the growth in the post-soviet space. However, it remains
a paradox: privatization, liberalization, stabilization, democracy, good
governance do not yet guarantee a large growth in the economy.

The foundations for the Armenian economic “miracle” were undoubtedly laid during
the H. Bagratyan government. It is a well-known regularity that the economic
growth is higher and more durable wherever reforms have started earlier and have
been carried out in a consistent manner. In 1996, Stanley Fischer, Ratna Sahay
and Carlos Vegh came to the conclusion that “the real GDP begins to grow after
the stabilization of depreciation, which is the consequence of the improvement
in the state of the state finances.”

Before the current regime came to power, the Government, striving to avoid a
disaster, drastically changed its policies. In the first place subsidies to
enterprises were cut down. The outcome was that those who had benefited from
their official position and had acquired enterprises sold them to more effective
“new entrepreneurs.”

Tax reforms were also of extreme importance for the economic prosperity. The tax
rates were reduced and the taxation was improved. The other factor was that the
state policies were aimed at supporting not the consumption, but the supply.
That is the development of business was not accompanied by the expansion of the
consumer basis.

The former republics of the USSR became a part of the prosperity belt stretching
towards the Pacific Ocean. It is possible to say that they began to orient
themselves according to the far eastern economic model: its low taxes, limited
social payments, a free labor market, rather than according to the European
Union model.

In Armenia, the World Bank and other international financial institutions, which
largely supported these reforms, played an important role.

A well-known Russian economist Sergey Yeghishyantz writes about the terms and
conditions that are usually attached to credits and assistance from
international financial institutions:

• Attraction of investments at any cost, even if this is done at the expense of
  social and ecological issues. The recent developments connected with the Teghout
  mine are the most recent proof of this provision.
• The reduction of social programs up to the minimum package; operating the
  educational and health systems almost exclusively on a paid basis; the
  liquidation of subsidies for services and commodities of primary necessity,
  privatization of the social system.
• Providing for stabilization of the national currency at any cost, including
  budget cuts.
• Limiting monetary policies.
• Consumption limitation in order to increase foreign currency reserves.
• Complete freedom of the capital movement, including to foreign countries and
  vice versa.
• Privatization in the area of “natural monopolies”, where there is no
  competition.
• The expansion of the taxation “base”, predominance of direct taxes over the
  indirect ones.

From the perspective of strengthening the private property institute, the above
noted policies of the international financial institutions seem to support the
development of capitalism, but private property is not capitalism per se. Yet in
his time Adam Smith noted that the main characteristic of capitalism is honest
competition. He warned that capitalists are not at all interested in prosperity
of society and strive to achieve maximum profit through the easiest way – the
monopolies. The most likely foresight is that “the interest groups” will try in
the future to conserve the system of privileges impervious to the public. It
will be capitalism for a few.

We should take into account that all Eastern European countries have been
susceptible to “the post-soviet syndrome”. This syndrome includes the following
symptoms:

1. A weak state. The inflated bureaucratic system at a time when the state
   machine is operating on the edge of its possibilities;
2. Weak socialization. The state carries out counter-distribution from the poor
   to the elite, it is parasitic.
3. Low morality. The state administration is ineffective due to the widespread
   bribery.

The first question that we have to ask ourselves is what economic and political
system is being formed as a result. The scenario is as follows.

Due to the insider (internal non-formal) privileges, “interest groups” are being
formed which “occupy” the state. Let us emphasize that not only “they occupy
power”, but also the state. The press has created “oligarchs”, an artificial and
sparing term for “occupiers”. “Stability”, that is not frequent changes in the
authorities, is especially supportive of the establishment of the oligarchic
system. In these circumstances, the economy can develop and there is a slow
increase in the standard of living. The increase in the standard of living can
undoubtedly contribute to the strengthening of citizens’ sense of dignity, and
people who have dignity can hardly wish to live under dictatorial conditions.
Nevertheless, the inevitability of improvement in the political system is not
apparent. The process can last decades. However, such development ultimately
leads to the growth of a revolutionary mood, which in countries like Armenia
means authoritarian socialism.