By Atom Markarian in Yerevan, Harry Tamrazian in Prague
Visiting the Nubarashen Textile Factory today, Armenian President Robert Kocharian gave an upbeat assessment of the Armenian economy and questioned a World Bank evaluation that despite economic growth, the poverty level in Armenia remains high. "How is it possible that the economy is growing, new jobs are added, exports are growing and at the same time poverty is not declining?" Kocharian asked. "Of course poverty is declining, maybe not that fast, but I have no doubt in my mind that the result of all these processes [privatization] will be first of all the reduction of poverty," Kocharian continued.
The World Bank's Country Assistance Strategy (CAS) report issued last month urged the Armenian government to improve the business environment, strengthen public sector management and reduce corruption. "Despite strong macroeconomic performance, the country has not benefited from commensurate job creation or poverty reduction. Human capital has deteriorated, in part through migration," the World Bank's CAS report stated.
The Armenian President did not agree with the CAS assessment, saying that exports of rmenian products have grown by 20 percent this year, which means that Armenians produced 20 percent more products, and therefore people receive more in salaries. "Everything is tied together," Kocharian said. He expressed the hope that the planned process of privatization that is underway in Armenia will solve these problems. According to the president, substantial number of jobs will be added to the economy as a result of the privatization process, because now the government demands from a would-be owner to keep privatized companies operational and to assume the responsibility for solving workers' social problems.
Kocharian also spoke about the need to speed up the privatization of large state enterprises. He said that it is useless to keep these enterprises under government control, because not a single state enterprise is working efficiently. All of them have huge debts, he said. The directors of these enterprises are not searching for new markets, despite the existing export potential. "The directors have prestigious cars, they build palaces, but the workers at these factories are suffering," Kocharian said.
Kocharian defended the privatization of the Armenian Telecom company and the Armenian Brandy Factory, saying that these two companies have improved the quality of their product and services and substantially increased the production levels. The sell-off of these two largest Armenian companies was initiated by the previous regime of Levon Ter-Petrossian. Robert Kocharian, who was then the prime minister of Armenia, signed the agreements on privatization of Armenian Telecom and Armenian Brandy.
Some parliamentary parties have accused the Armenian government of creating a monopoly in the country's telecom industry by selling the exclusive rights to the Greek Telecom Company OTE. The French company Pernod Ricard acquired the famous Armenian Brandy factory. Both companies were privatized in 1998.