Two interesting issues have filled the Armenian press – the gas price and another loan from Russia. The ministry of energy of Armenia confirmed ongoing negotiations with Gazprom on the gas price, while the government has not confirmed or denied rumors on a loan from Russia. According to these rumors, Armenia is trying to receive a loan of USD 800 million or 1 billion.
The issue of gas is again on the political agenda as an important instrument or lever in Russia’s hands against Armenia.
In addition, this lever is used at a very appropriate moment not only because Russia is worried about Armenia’s good relationship with the West. The case is that Armenia is moving toward the presidential elections and will do everything to ensure the gas price does not rise by then since it will be cause harm to the economy and the social situation of citizens. Plus, the presidential election is in winter, in February.
In this sense, the rumors on a loan of 1 billion did not appear accidentally. It is interesting that the information on the gas price has been confirmed, while the issue of loan is not commented on.
In fact, Russia is trying to kill two birds with one stone. It boosts the price on gas and alleviates this burden with the help of a loan.
Armenia may have hoped to do it with the help of Western donors but the donors’ conference has been postponed. Later official Yerevan explained that the date of the conference was not fixed, so the event was postponed for better preparation and more effectiveness.
The European position is that Armenia will get a donors’ conference only after the presidential elections if the election mechanism is improved, or corruption is fought better and the country activates its efforts in the Karabakh issue.
The Armenian authorities seem to have no other way because they should have thought about it earlier. This is not a matter of funding, a new source of subsidizing gas price but merely economic modernization thanks to which, Armenia could render its economy more or less resistant to gas lever.
Armenia had to think about this many years ago but many years ago they were not modernizing the economy to resist gas repressions. Instead they were selling everything to compensate for gas price increase for election reasons.
In 2006, for instance, the fifth unit of Hrazdan’s Thermal Power Plant was sold to Russia, and the money was spent on subsidizing gas bills for people and industries. Moreover, the companies owned by Gagik Tsarukyan and Mikhail Baghdasarov received huge subsidies. By the way, Tsarukyan was considered Robert Kocharyan’s friend, while Baghdasarov Serzh Sargsyan’s.
At first sight, Armenia made a brilliant deal with Russia keeping gas low for three years for both individual and corporate users. But this first step should have been supported by systemic reforms, modernization, diversification, innovation during those three years. Meanwhile, instead of these steps, in the period 2006-2008, the Armenian authorities were engaged in distributing and redistributing power, which reduced three-year gas “ceasefire” to zero.
Armenia is again facing the same issue and once again the same option is proposed. The price of gas grows but it is subsidized. And Armenia again does not have any way or resource to refuse this option because otherwise Russia can provoke serious shakes. Moreover, it seems to have succeeded in forming an alliance with the Prosperous Armenia and the Armenian National Congress.
Under these conditions, there is no doubt that Serzh Sargsyan will not run the risk and will not increase risks for the prospect of the state not even to reduce his risky state for a short time.