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By Emil Danielyan
Armenia continues to boast the sole “mostly free” economy in the ex-Soviet Commonwealth of Independent States despite its government’s growing authoritarian tendencies, according to an annual global survey conducted by two conservative U.S. institutions.

The 2005 Index of Economic Freedom, released by the Heritage Foundation and “The Wall Street Journal” on Tuesday, rated 161 countries of the world on ten different factors such as trade policy, government intervention in the economy and fiscal burden on businesses.

Armenia’s aggregate score of 2.58, measured on a 5-point negative scale, represents a slight improvement over the previous year, putting it in 42nd place in the WSJ/Heritage rankings -- just ahead of economic powerhouses like France and South Korea. Armenia was 44th in the 2004 index that covered 155 nations. Its indicator of economic freedom has steadily improved since 2000 when it stood at 3.21.

“The Republic of Armenia remained committed to the gradual pursuit of a democratic society and free-market economy in 2004,” reads the WSJ/Heritage report.

“President Robert Kocharian, weakened by political instability and opposition attempts to secure a no-confidence referendum, became more willing to use authoritarian measures against his critics,” it adds in reference to the government’s spring crackdown on the opposition.

“Economic policy continues to be guided by the economic and fiscal policies and the poverty-reduction strategy developed in cooperation with the World Bank and the International Monetary Fund. Reforms should provide improvements in the banking sector, transparency, and enforcement of anti-corruption measures.”

The survey primarily takes account of the legal environment for doing business in a particular country, including tax rates, trade tariffs, and government impact on prices. Many analysts would argue that the existing laws and regulations are often irrelevant to economic realities of Armenia where corruption is widespread and government connections still vital for engaging in lucrative forms of economic activity.

The WSJ/Heritage researchers appear to acknowledge this fact. “Private property is guaranteed by law, but neither legal enforcement nor the judicial system provides adequate protection,” they say.

The survey’s assessment of all other CIS countries is far more critical. Neighboring Georgia and Azerbaijan, for example, were ranked 100th and 103rd respectively, making their economies “mostly unfree.”
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