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Fundamental Reform Can Secure Armenia’s Long-Term Future

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In the past year, the world has changed an unfathomable amount; every country has faced new challenges in the face of the Covid-19 pandemic and the subsequent economic recession. The new global situation presents not only challenges but also the opportunity to think about new ideas, to work out how our energy and focus can be used to create a better future for individuals across the world.

Armenia is one country that has faced existential crisis in the past year; the pandemic, the economic crisis and of course the war in Artsakh. The war has exacerbated socio-economic issues, aggravated social division and resulted in ongoing political instability –all factors that have raised questions about Armenia’s future as a nation and on the global stage. Despite the pain of the last year, it has also given us the opportunity to reflect and rethink our model for fundamental reform in Armenia.

I have long argued that for Armenia to be truly successful, we need to unite and focus on the country’s future. We have a historic responsibility to our ancestors, those who faced persecution, to heal from the past and build a successful country for our children. By building on our unique identity and historic experiences, we can use them to guide our future. However, first we must face up to serious questions on how we would like Armenia to look in twenty to thirty years’ time.

Currently, lack of opportunity is causing Armenians to vote with their feet and leave the country, with an estimated 200,000 intending to leave Armenia this year. To stop this, we must together provide a future of opportunity and belief in success stemming from a change in mindset.

I do not believe that all of the problems we face can be solved by the Armenian state. Instead, both the Armenian authorities and the diaspora should leave political disputes aside in order to consolidate and, alongside international specialists and humanitarian organisations, assist in the building of new institutions, good governance and the development of the country. Engaging with international partners is critical to raising standards and finding effective solutions.

So far, attempts at developing Armenia have been blighted by a failure to unite and mobilise both the nation and diaspora. It is not an easy task, currently there are roughly 10 million Armenians living in over 100 nations. However, we must transform the relationship to one of interdependence and trust.

Until now, members of the diaspora have largely been viewed as a source of charitable aid – this causes disconnect and indifference. Instead of charity, which I believe is detrimental to Armenia’s future as it prevents organic, conducive reforms, the diaspora should invest in long-term projects with meaningful impacts. I believe a shared vision and hope for Armenia can be created through collaboration and the implementation of impact investment. However, a strong Armenian diaspora must become more aware of their responsibility in helping the Armenian nation develop, and by updating and strengthening their institutions, enhance and ensure the preservation of Armenian worldwide heritage.

Commitment and shared responsibility will encourage desire for success and provide a crux for wider development. A blend of commercial, social and philanthropic projects will help build a better more sustainable future for Armenia. Multi-purpose anchor projects – breakthrough projects used to serve the interests of the nation and its people – will help societal evolution.  Anchor projects in the education, technological, scientific and tourism sectors will serve as a way to unite a fragmented nation, by drawing people together through communication and exchange of ideas. Long-term investment and visionare necessary, as social impact investments slowly manifest themselves over 20-25 years. Therefore, close working relationships are essential, investors need to want to be part of the conversation and want to see the projects evolve to impact the wider community.

Re-establishing Armenia as a hub of excellence in education would not only aid development and attract investment, it would attract others to the country. Investment into educational projects is investing in Armenia’s future, and promotes talent, trust, collaboration and multiculturalism –in doing so educational projects have wide-ranging personal, local and global impact. Armenia has already shown it has the potential for success in the educational sphere; with the Tumo Centre, American University in Armenia, Russian-Armenian University, French University and United World Colleges movement all having centres in Armenia. We must utilise the opportunities we have for the implementation of further educational projects.

Additionally, investment into the science and technological space would have wide reaching effect. The development of science and technology is both tangible and lucrative.It will also drive explosive growth in the health, environment and knowledge economies. The FAST Foundation is leading the way in innovation in Armenia, numerous projects support budding scientists, technologists and innovators in Armenia and the global stage. It will amplify and empower scientific advancement in the country, aiming to position Armenia as the technical and scientific hub of the region.

By fostering a competitive economy in Armenia, we can attract further foreign direct investment and also immigration. Additionally, we need to encourage good governance by developing effective and accountable governmental and societal institutions, which commit to excellence and professionalism. Impact investment and the championing of good governance will create an attractive Armenia, where not only Armenians want to live, but also the diaspora, international students and businessmen and women. This would bolster demographic security by dampening the desire for emigration and creating the social and economic atmosphere needed to raise the birth rate in the country. A growing population would mean a larger workforce, which would allow Armenia to become a self-sufficient global player, one that can build regional and global alliances.

Whilst our geographical location at the crossroads of civilisations brings many benefits, we also face regional security threats, which was painfully evident during last year’s 44-day war. In order to bolster Armenia’s position regionally, we must first acknowledge our security situation and construct a more effective and forward-looking defence system. This will take a shift in thinking and a significant increase in spending, but more modern military thinking is needed to protect our borders and people. A reinforced and innovative security system will allow us to look forward and act to guarantee Artsakh’s physical freedom and security.

Armenia faces many challenges, but it also has a number of strengths and competitive advantages – which we must use; not only do the diaspora provide resources and experience of other systems, we are bilingual nation and a nation located at the cross-roads of four civilisations. Armenia’s geography between the Middle East, Europe and the Caucasus means we can take advantage ofa working relationship with the European Union through the Eastern Partnership whilst being a member of the Eurasian Economic Union and Commonwealth of Independent States. Russia in particular is interested in Armenia being competitive, and at the same time is the right ally to ensure regional security.

If we build on these advantages and focus on inter-dependency and responsibility, Armenians and the Armenian diaspora, in collaboration with international partners and humanitarian institutions, can build a successful country. By developing on a local level, we can look to eradicate inequality and push for a fairer more open society, one that is beneficial for all Armenians.

A strong Armenia with modern institutions and a well-educated society will improve the country’s position regionally and on a global scale; allowing Armenia to become a bridge between cultures and organisations.

Ruben Vardanyan is an impact investor, social entrepreneur and business leader. He is the former CEO of Troika Dialog which became the pre-eminent local investment bank in Russia, and has co-founded a number of global initiatives and charitable organisations, including Moscow School of Management SKOLKOVO, the United World College (UWC) in Dilijan, and the Aurora Humanitarian Initiative. Through his family's charitable foundation, RVVZ, Ruben and his partners have invested more than $600M in projects in Armenia.

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Eastern Europe

Is a Marshall Plan for Ukraine possible?

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Photo: © UNICEF/Ashley Gilbertson

Reflecting on Ukraine’s future beyond the current conflict, many politicians and experts speculate about the expediency of a new Marshall Plan for the country. Although the old Plan (officially known as the European Recovery Program) was designed and implemented by the Truman administration some three quarters of a century ago, it is still considered one of the most successful large-scale projects of post-conflict reconstruction. The experience still represents a certain value today. Leaving aside the political aspects of the U.S. aid program to Europe, which is a separate subject to discuss, we will confine ourselves to some relevant technical features of this initiative.

First of all, it would be wrong to think of the Marshall Plan as some bottomless source of financial resources that poured by the United States into the economy of Western Europe. In 1948–1951, Washington invested in Europe just over $13 billion, which is about $115 to $150 billion at today’s rate. Recall that at the end of the summer the Ukrainian leadership estimated the needs for the post-conflict reconstruction of the country at $600–800 billion—by the results of the autumn hostilities with a lot of new damage inflicted upon the core economic infrastructure, these needs were to increase even more, measuring now in trillions of dollars.

Since financial resources under the Marshall Plan were distributed among 17 countries and territories, even the largest recipients did not receive much: Great Britain — 3.3 billion, France — 2.3 billion, West Germany — 1.4 billion, Italy — 1.2 billion, etc. Most of experts believe that the money received from the U.S. directly boosted the growth of European economies by about 0.5% per year on average. However, this does not mean that the Marshall Plan played a merely marginal role in the post-conflict reconstruction of Europe. The importance of the Plan was not so much in the absolute amount of aid, but rather in the fact that this mechanism helped launch the natural process of Europe’s economic revival, namely the recovery of the private sector, the accumulation of trade between European countries, the rise of national investment activity, and the establishment of new economic institutions. The Plan also acted as a kind of guarantee granted to European nations by the U.S. government, allowing the gateways to open for the flow of American FDIs into Western Europe. It also became a catalyst for the fast growth of domestic investments in most of participating countries.

Applied to the current situation, this suggests that foreign aid as such is unlikely to be the only or the main driver of the post-conflict development of the Ukrainian economy. Ukraine still needs to make decisive progress in such areas as combating corruption, the independence of the judiciary, and improving the quality of public administration at various levels. The challenge is to unleash the creative potential of the Ukrainian society and to make full use of the many comparative advantages that the nation can demonstrate integrating itself into European and global economies. In other words, any potential Marshall Plan for Ukraine is not a substitute for still incomplete domestic reforms, but only one of the possible tools to facilitate them. But just as three-quarters of a century ago, large-scale government or international aid programs should stimulate private sector investment, both external and domestic.

The source of funding for the reconstruction of Western Europe in the late 1940s – early 1950s was obvious, since the U.S. was at the peak of its economic and financial power and could therefore allocate 13 billion to European countries relatively painlessly. Moreover, a significant part of these resources was returned to the U.S. in the form of purchases of American goods and services by Europeans. Even in those days, though, Washington began to cut aid to European partners as soon as money was needed for the Korean War.

Today, the U.S. is burdened with much more serious financial problems, and one should no longer expect Washington to be that generous. Especially since the U.S. has already taken the lead in providing unprecedented military and technical assistance to Kiev. Given the importance of Ukraine to the states of the EU, it would be logical to assume that Brussels rather than Washington would be the main donor for a post-conflict Ukraine. However, today the financial standing of the European Union, including Germany as the main potential sponsor of the new Marshall Plan, leaves much to be desired.

Perhaps, architects of a new Plan could rely on the reserves of the Russian Central Bank, frozen by the West after February 24, 2022. Making a decisive move from freezing to confiscation is not yet possible, but it will probably be done in the end. However, there are many other contenders for these Russian funds. For example, countries that have sheltered Ukrainian refugees, as well as those most affected by the sanctions war with Moscow, would like to receive financial compensation. So, in fact, $300 billion of frozen Russian reserves is not a bottomless pit where you can get money at will. Even if all of this money ends up in Ukraine, it is not likely to cover all the costs of the post-conflict reconstruction.

Only in case of complete and unconditional surrender of the Kremlin could it be possible to pull significant funds from Russia to add to the declared level of $600–800 billion. Today, such a surrender does not look as a likely outcome of the conflict. However, if we assume a scenario of such surrender for a moment, we then have to conclude that a depleted and bloodless Russia, capitulated to the Collective West, simply won’t have the necessary resources it could promptly transfer to the reconstruction of Ukraine. Paying reparations has never been easy. For example, after the end of World War I, Germany could not pay its war debts to the victorious countries in full as late as the end of the Weimar Republic, and in 1933 the Third Reich simply unilaterally refused to pay any further reparations afterwards.

Apparently, Ukraine’s recovery will take a long time under any scenario for the end of the crisis. It might go faster in agriculture, in residential construction or in services, it is likely to go slower in heavy industry and in hi-tech. In the case of Ukraine, it is probably not quite correct to talk about “recovery”, because the task will not be to return to the old economic structure that the country had in the beginning of the century, but to create an entirely new economy, which could organically fit into the international (global, not just European) division of labor of the mid-21st century. In this process, the role of external sources of funding will be significant, although not decisive. Much more will depend on the strategic economic decisions made in Kyiv, as well as on the long-term vision that the European Union might or might not develop regarding a unique future role of Ukraine in the Forth Industrial Revolution, which is already sweeping across the continent.

Another feature of the Marshall Plan should be noted. The program was launched two years after the end of World War II, when not only the military actions in Europe were completely stopped, but the post-war European order was defined as a whole. If we draw an analogy with the present, a successful Marshall Plan for Ukraine can also be possible only once the conflict is over and when minimal stability is restored on the European continent. This, in turn, means that each new day of the conflict results in new human casualties and causes greater damage to the Ukrainian economy, pushing the prospect of the beginning of the post-conflict reconstruction farther away.

From our partner RIAC

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Azerbaijan is to open an embassy in Israel: timely or little late?

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Image source: twitter @GeorgeDeek

Time to open that bottle!” tweeted with joy George Deek, Israel`s Ambassador in Azerbaijan on November 18, by posting a photo of wine flanked by the flags of the two countries. What lit him up was the decision of the Azerbaijani parliament to (finally) open an embassy in Israel.

The joy was shared by Israeli officials and media outlets: for instance, Prime Minister Yair Lapid praised the decision, calling Azerbaijan “an important partner of Israel and home to one of the largest Jewish communities in the Muslim world”. The Jerusalem Post, in its turn, referred to Azerbaijan as the first Shiite country to open an embassy in Israel.

The two countries have established and been successfully leading one of the unique, if not strange, case of partnership since the early 1990s: a Shiite Azerbaijan plays an incredible role in the energy security of the Jewish state surrounded usually by antagonistic states: according to some estimates, Israel receives 40-50% of its oil imports from Azerbaijan.

Another, no less important, director of the bilater relations is security-oriented. Israel has managed to become the largest supplier of weapons to Azerbaijan. SIPRI estimates that some 60% of Azerbaijan’s defense imports in 2015-2019 originated in Israel, while in 2020, that number jumped to almost 70%. This partnership benefited Azerbaijan, who successfully used the Israeli-manufactured state-of-the-art military technology during the 2020 Karabakh war to defeat its arch-nemesis Armenia and liberate the formerly occupied territories. The contribution of Israel to the historic triumph was acknowledged both by political elite and general society in Azerbaijan: seeing Israel flags, along with Azerbaijani and Turkish ones, across the entire country is therefore not uncommon nowadays.

Last May, amid regional tensions with Iran, reports emerged on Azerbaijan buying Iron Dome missile defense batteries. Then in October 2021, Azerbaijan reportedly considered buying Israel’s Arrow-3 missile defense system. Neither Israeli authorities nor Israeli defense firms commented on the news.

Another sign of deepening ties and mutual trust came to light lately when the Israeli government approved an emergency plan to receive Jews fleeing from Russia. The plan involves possible transition camps for Russian Jews in Finland and in Azerbaijan ahead of their arrival to Israel.

Add to this, Azerbaijani-Jewish diaspora who naturally forges the warm relations between the two countries. While the Jews were persecuted, oppressed and driven out both in Christian and Muslim worlds in the Middle Ages, Azerbaijan always served as a safe haven for them: an all-Jewish town just outside of Baku, Azerbaijan`s capitol city, Red Town is home to at least 4,000 people and is sometimes referred to as Jerusalem of the Caucasus. This fact also boosts the image of Azerbaijan as a reliable and amicable land in the Jewish perception. According to historians, the indigenous Mountain Jews have been living in geography for at least 2,000 years. A unique sub-group of the Jews, they now protect the interests of both Azerbaijan and Israel.

Despite the nearly perfect ties between the two countries, Azerbaijan had for decades avoided opening an embassy in Israel, although the latter has been diplomatically represented in Azerbaijan since 1993. The reason could be related to the assumption that such a move could alienate the huge Muslim world, most of whose members had been quite hostile towards Israel. However, things started changing with the signing of the Abraham Accords. The thaw between some Gulf countries and Israel heralded a new era in the Middle Eastern geopolitics and Azerbaijan had to rethink its relevant policies.

The signs of Azerbaijan`s intention to finally set up a mission in Israel had been observed for some years until when Baku opened Trade and Tourism Representative Offices in Tel Aviv in the summer of 2021.

While elevating its diplomatic presence in the Jewish state, Azerbaijan, known for its skillful balancing, did not forget Palestine and passed a parliamentary resolution on opening a representative office in Ramallah as well.

Yet, Azerbaijan`s historic decision amid its tensions with Iran and the comeback of Netanyahu, who is expected to resume Israel`s assertive policy especially in the Iran direction could not be only a coincidence. Intriguingly, in early October Israel`s Defense Minister Benny Gantz paid a visit to Azerbaijan, where he met not only his counterpart but also Azerbaijan`s president Ilham Aliyev. This visit overlapped with the attempts of Israel and Turkey to finally overcome their past disagreements and open a new chapter in the relations, something the Azerbaijani side had for years desired for and worked on.

It can be predicted that Azerbaijan`s foreign policy priority for the next period will be focusing not only on cementing bilateral ties with the Jewish state, but helping to establish what some Azerbaijani experts see as Azerbaijani-Israeli-Turkish triangle, a geopolitical constellation, which would also determine the regional picture in the coming years.

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Kiev is not interested in preventing war crimes

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Image source: war.ukraine.ua

The video of the execution of Russian prisoners of war by Ukrainian troops, which circulated in the media and social networks, is far from the only video recording of war crimes by Ukrainian army. Since the beginning of the Russian-Ukrainian conflict, videos of beaten and stripped prisoners of war and civilians suspected of collaborating with the Russians have appeared on the network. Records of torture also circulated widely.

At the same time, experts admit that there is a lot of cruelty on both sides, during the clashes almost no prisoners are taken, only Moscow does not promote violence, and Kyiv does not care about the promotion of war crimes. What are the reasons for such “public violence”, which can greatly compromise both the Ukrainian military and President Zelensky himself?

We could assume that the Russians commit many more war crimes, but due to the large number of military police and counterintelligence officers, they simply do not film them. It would seem that the answer lies on the surface – Russia is an authoritarian state, where phones are taken away from soldiers, and Ukraine is democratic. However, the reality is different, there is no democracy in the war, smartphones of military personnel in the conflict zone are trying to remove both sides. Moreover, as we have already pointed out, it is precisely in “totalitarian” Russia in the war zone that there are dozens of war correspondents who freely visit military units and could shoot such videos. It is true that a significant part of those journalists is under the control of the Russian army, however, they cannot control all of them. This is evidenced by the fact that more than once, due to journalists filming and revealing the positions of the Russian army, there have been losses of men and equipment in the Russian army.

But Russians are not characterized by cruelty. The main difference between Ukrainian nationalists and Russian fighters is different cultural traditions. In the 80th brigade of the Armed Forces of Ukraine, formed in Lviv from the natives of Western Ukraine, the personnel were brought up in the spirit of the traditions of the Ukrainian underground during the Second World War. Recall that then the supporters of Stepan Bandera shot back pro-Soviet and pro-Polish activists, including doctors and teachers sent to western Ukraine, and also massacred entire Jewish and Polish villages.

In the Russian mentality, mockery and mistreatment of prisoners is unacceptable. You can kill the enemy, but not torture. Russians in their ideology have always opposed themselves to the German Nazis with their concentration camps and gas chambers. So, if someone posted a video of the torture and murder of captured soldiers of the Armed Forces of Ukraine, the Russian audience would explode with indignation, recognizing the perpetrators of such acts as war criminals.

However, the true reason for the appearance of such videos lies not even in the different mentality of Ukrainian nationalists and Russians. In fact, Kyiv propagandists deliberately give the green light to such videos. This is primarily done to scare Russian soldiers and reservists. And official Kiev does not pay much attention to these crimes.

Take for example the recent Ukrainian war crime in Makiivka. The Ukrainian army immediately began to claim that the video was staged and fake. However, it was the Western experts who confirmed the authenticity of the video and the Western media exerted pressure to launch an investigation.

However, such video propaganda of cruelty actually has a much more serious purpose. Its main task is to form a stable feeling of hatred between Russians and residents of Ukraine. EU residents have little idea of ​​the mentality of the average Russian. The fact is that many in Russia sincerely consider the current war to be a civil one. Almost all Russians treat Ukrainians either as a very close people or as southwestern Russians. Half of the inhabitants of Ukraine have Russian surnames, relatives in Russia and use Russian as their main language. However, each such video should, according to the plan of Kiev radical propagandists, change the mentality of Russians more and more. They must hate all the inhabitants of Ukraine, stop treating them as “their own” and recognize that reconciliation with Ukraine and a new reunification with it is impossible. Peace will come sooner or later, but a steel wave of hatred will fall between the future Ukraine and Russia. At the same time, Russia’s desire to punish the killers of defenseless prisoners of war and civilians will also prevent the settlement of relations between Moscow and Kyiv for many decades.

The line of military contact between Russia and Ukraine is lengthening, fresh troops and new weapons are coming to the front from both sides. Obviously, the execution in Makiivka will not be the last video demonstrating the complete disregard of Kyiv, for “democratic values”, the Geneva Convention and human rights. The question involuntarily begs itself, does a united Europe need such a Ukraine, proud of the massacres?

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