In Russia's Orbit, Searching The Sleepy Economy Of Armenia

Statue of "Mother Armenia" in Yerevan
Statue of "Mother Armenia" in Yerevan
Aleksei Boyarskii

YEREVAN — There used to be trains that connected Moscow and Armenia's capital of Yerevan. But for different reasons, mostly an array of regional tensions in former Soviet republics, Armenia is no longer connected to Russia by rail.

To get to Yerevan from Moscow, you can either drive for 48 hours through the North Caucasus and Georgia, or you can take a flight of less than three hours. I chose the latter.

The entire time I was in Armenia, I was struck by how calm it was. The country has the lowest crime rate among all of the former Soviet states, and has a per-capita crime rate nine times lower than Russia’s. What’s more, 90% of the criminal activity in the country happens in Yerevan, the capital. But that is Armenia’s best statistic. In terms of its economy, Forbes ranked Armenia the second-worst economy in the world in 2011.

Indeed when people learned that I'd come here to write about Armenia’s economy, the response I got over and over again was something like, “Wait, you are trying to write about something that doesn’t exist.”

According to the 2012 census, Armenia has 3.2 million residents, 3 million of whom live in the country permanently. But according to the economist and former Yerevan Mayor Vahagn Khachatryan, Armenia has closer to 2.2 to 2.5 million residents. “Our GDP is around $10 billion,” Khachatryan says. “Private transfers — remittances sent back from Armenians working abroad — make up $1.8 billion per year. That sum doesn’t take into account the money that is brought back in cash. If you count the cash transfers, I think it would add up to $2.5 billion per year.” He estimates that 90% of that money is coming from Russia.

Cows and a factory on an Armenian road — Photo: Morten Knutsen

This total dependency on Russia is about more than remittances. Russian companies own 100% of Armenia’s electrical grid, and the majority of the power plants. All of the gas pipelines, including the one that comes from Iran, are owned by Russia. Of Armenia’s three mobile phone companies, two are Russian and the third is French. In the banking sector, 21 of the 25 banks active in Armenia are foreign-owned.

Gold, cognac and high-tech

Have you ever heard that Armenia is an international center for jewelry manufacturing? People tell me that 7% of the world’s famous jewelers are Armenian. I’m not so sure about the world leadership bit, but it’s true that after mining for copper and molybdenum, jewelry production is the second most important industry in the country.

Yerevan’s gold market is in a building that used to house the city’s public baths. It has nine floors: The first two are shops, the others are jewelry workshops. There are 800 shops and up to 6,000 salespeople and jewelers. Everything sold in the building is also made there. I see gold bullion with the stamp of Swiss banks that is going to be melted down for jewelry. The jewelers also melt down gold that people sell in the jewelry shops downstairs. You can buy knock-offs of Rolex and Tissot watches, made to order within 24 hours.

Carpet vendor in Yerevan — Photo: Nicholas Babaian

Agriculture is the Armenian economy’s third-largest industry. Most of the income in agriculture comes from making cognac. Yerevan’s most important tourist sites are two famous cognac factories next to each other: Ararat and Noi. Both factories formerly made the famous “Ararat” cognac, but now only one company has the rights to that brand. That company’s stocks have long been owned by Pernod Ricard, a French company.

In addition to “Ararat,” Armenia has another 27 cognac producers. Shakhnazaryan, one of the newer cognac producers, has a factory located near Yerevan in the city of Yeghvard. The company’s owner, Samvel Shakhnazaryan, had lived in Ukraine for years before returning to Armenia eight years ago. At first he sold liquor, then he decided to get into cognac production. The factory opened, from nothing, in 2010, and in 2014 it is expected to sell four million bottles.

Shakhnazaryan says that 95% of the sales go to Russia. I noticed, though, that although the company has only been around for four years, its oldest cognac is aged 15 years.

“Does that mean that you buy other people’s cognac to resell?” I asked the older head of wine production. “Here in Armenia, there is no ‘other.’ It’s all ours,” he responded. In fact, they do think there is no such thing as “fake” Armenian cognac. As long as it is made from local grapes, it is genuine.

Lastly, in fourth place in Armenia’s economy is the IT sector. It makes sense for a small, mountainous country without many natural resources to orient itself towards intellectual products. In Yerevan, the Tumo Center for Creative Technologies holds classes in digital technology, web development and game development, among other subjects, for children from 12 to 18 years old. The classes are open to all and are completely free, and in total around 5,500 kids take classes there twice a week.

PicsArt, a photo editor for mobile devices, is located on the building’s second floor. The company is American, but its founder is from Armenia and all of the operations are in Yerevan. It’s still a start-up, but it’s gaining traction, and now has 45 million active users per month.

Looking at Ararat

Armenia is poised to join the Customs Union with Russia, Belarus and Kazakhstan, but people here feel trepidation about joining its former Soviet States. “Until last September, when we were told that we would be joining the Customs Union, Armenia was preparing to join the European Union, along with Georgia, Moldova and Ukraine,” says Vahagn Khachatryan.

In 2013, Armenia exported $334.5 million worth of goods to Russia, $8.6 million to Belarus and $7.3 million to Kazakhstan. The total GDP of the Customs Union countries is 230 times larger than Armenia’s GDP, and the per capita GDP is 3.5 times higher. Theoretically that could help Armenia’s economy. Armenia’s economy can expect more investments and more exports due to joining the Customs Union, and it will also likely add jobs.

But there are also clear disadvantages. First of all, it will be in a different camp from Georgia, which is joining the EU, and that could complicate trade and transit. In addition, the Customs Union will cause a large number of imported goods to become more expensive — everything from food to cars. Most experts say Armenia’s decision to join the Customs Union is a tribute to history, not based on economic needs.

For Armenia, Mount Ararat is everything. It is the famous cognac brand, the legendary soccer team, the name of the hotel I stayed in. The snow-covered peak is easily visible from Yerevan, but the mountain itself is in Turkey. The loss of Ararat, as well as memories of the genocide of Armenians living in Turkey in 1915, still influences politics.

Sun setting over Yerevan and Mount Ararat — Photo: Forbes Johnston

Turkey is so close that on the road through Ararat’s valleys my mobile phone switched to a Turkish mobile network. “Do you see over there, on the other side of the Aras River (the border between Armenia and Turkey), those bright lights?” our driver asked, pointing into the darkness. “That is a NATO base.” Which is why Russian military bases in Armenia give the locals peace of mind.

In Armenia, no matter what you ask, you will get an answer that makes reference to war with Turkey or to the genocide. “There are bells on the historic gates to warn of the arrival of the Turks,” someone might say. Or, “this is a watch tower to look out for Turks,” etc. Azerbaijanis are also called “Turks,” and Armenia’s borders with both Turkey and Azerbaijan are closed.

With its other neighbor, Iran, it has a normal relationship, but Iran is also a Muslim country. With these sorts of neighbors, the small country needs a strong ally. Historically, that strong ally has always been Russia.

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Running of the Bulls in Tafalla, northern Spain

Anne-Sophie Goninet, Jane Herbelin and Bertrand Hauger

👋 Здравейте!*

Welcome to Monday, where an apparent coup is underway in Sudan, Colombia's most-wanted drug lord gets caught, and Michael Jordan's rookie sneakers score an auction record. We also focus on a report that the Thai government is abusing the country's centuries-old law to protect the monarchy from criticism (lèse-majesté) to target pro-democracy activists and protesters.

[*Zdraveite - Bulgarian]


What it means when the Jews of Germany no longer feel safe

A neo-Nazi has been buried in the former grave of a Jewish musicologist Max Friedlaender – not an oversight, but a deliberate provocation. This is just one more example of antisemitism on the rise in Germany, and society's inability to respond writes Eva Marie Kogel in Berlin-based daily Die Welt.

If you want to check the state of your society, there's a simple test: as the U.S. High Commissioner for Germany, John Jay McCloy, said in 1949, the touchstone for democracy is the well-being of Jews. This litmus test is still relevant today. And it seems Germany would not pass.

Incidents are piling up. Most recently, groups of neo-Nazis from across the country traveled to a church near Berlin for the funeral of a well-known far-right figure. He was buried in the former grave of Jewish musicologist Max Friedlaender, a gravesite chosen deliberately by the right-wing extremists.

They intentionally chose a Jewish grave as an act of provocation, trying to gain maximum publicity for this act of desecration. And the cemetery authorities at the graveyard in Stahnsdorf fell for it. The church issued an immediate apology, calling it a "terrible mistake" and saying they "must immediately see whether and what we can undo."

It's unfathomable that this burial was allowed to take place at all, but now the cemetery authorities need to make a decision quickly about how to put things right. Otherwise, the grave may well become a pilgrimage site for Holocaust deniers and antisemites.

The incident has garnered attention in the international press and it will live long in the memory. Like the case of singer-songwriter Gil Ofarim, who recently claimed he was subjected to antisemitic abuse at a hotel in Leipzig. Details of the crime are still being investigated. But there are so many other incidents that get little to no media attention.

Across all parts of society, antisemitism is on the rise. Until a few years ago, Jewish life was seen as an accepted part of German society. Since the attack on the synagogue in Halle in 2019, the picture has changed: it was a bitter reminder that right-wing terror against Jewish people has a long, unbroken history in Germany.

Stories have abounded about the coronavirus crisis being a Jewish conspiracy; meanwhile, Muslim antisemitism is becoming louder and more forceful. The anti-Israel boycott movement BDS rears its head in every debate on antisemitism, just as left-wing or post-colonial thinking are part of every discussion.

Since 2015, the number of antisemitic crimes recorded has risen by about a third, to 2,350. But victims only report around 20% of cases. Some choose not to because they've had bad experiences with the police, others because they're afraid of the perpetrators, and still others because they just want to put it behind them. Victims clearly hold out little hope of useful reaction from the state – so crimes go unreported.

And the reality of Jewish life in Germany is a dark one. Sociologists say that Jewish children are living out their "identity under siege." What impact does it have on them when they can only go to nursery under police protection? Or when they hear Holocaust jokes at school?

This shows that the country of commemorative services and "stumbling blocks" placed in sidewalks as a memorial to victims of the Nazis has lost its moral compass. To make it point true north again, antisemitism needs to be documented from the perspective of those affected, making it visible to the non-Jewish population. And Jewish life needs to be allowed to step out of the shadows.

That is the first thing. The second is that we need to talk about specifically German forms of antisemitism. For example, the fact that in no other EU country are Jewish people so often confronted about the Israeli government's policies (according to a survey, 41% of German Jews have experienced this, while the EU average is 28%). Projecting the old antisemitism onto the state of Israel offers people a more comfortable target for their arguments.

Our society needs to have more conversations about antisemitism. The test of German democracy, as McCloy called it, starts with taking these concerns seriously and talking about them. We need to have these conversations because it affects all of us. It's about saving our democracy. Before it's too late.

Eva Marie Kogel / Die Welt


• Developing: Sudan leaders arrested amid military coup reports: Soldiers have arrested several members of Sudan's transitional government as well as civilian leaders, and Prime Minister Abdallah Hamdok has reportedly been put under house arrest, in what the information ministry called a military coup. Pro-democracy protesters have taken to the streets of the capital city Khartoum where there are reports of gunfire and clashes.

• Colombia's most wanted drug lord to be sent to U.S.: Colombia's most dangerous drug trafficker, known as Otoniel, was caught after a joint army, air force and police operation and faces extradition to the U.S. He led the country's largest criminal gang, and was on the U.S. most wanted list for years.

• Xi speech marks China's UN anniversary: China's President Xi Jinping marked the 50th anniversary of Beijing's entry into the United Nations with a speech calling for greater global cooperation, adding that issues like climate change, terrorism and cyber security needed multilateral solutions. Taiwan was not mentioned.

• German ISIS bride jailed for crimes against humanity: A German court has sentenced a German woman and former member of the Islamic State to 10 years in prison for letting a 5-year-old Yazidi enslaved girl die of thirst in Iraq. The case is one of the world's first trials to prosecute a war crime against the Yazidis.

• COVID update: The Beijing marathon scheduled next weekend has been postponed until further notice as China seeks to stamp out Delta variant outbreak and return to zero cases ahead of the Winter Olympics next February. Meanwhile, coronavirus cases in Eastern Europe have surpassed the 20 million mark as the region fights against its worst outbreak since the pandemic started and vaccination efforts lag.

Goodbye, Gunther: U.S. actor James Michael Tyler, best known for his role as the barista Gunther on the TV show Friends, has died at 59 of prostate cancer.

• Sneakers record: A pair of Michael Jordan's white-and-red Nike shoes, which he wore during his rookie season with the Chicago Bulls in 1984, sold for $1.47 million — a new record price for sneakers at auction.


"The end of a boss," titles Colombian daily El Espectador, reporting on the arrest of drug lord Dairo Antonio Usuga, known as Otoniel, who had led Colombia's largest criminal gang and had been on the U.S. Drug Enforcement Agency's most wanted list for years. He was captured in a raid and will be extradited to the U.S.



A Georgia man is being prosecuted for wire fraud after spending most of his business's COVID relief loan to buy one Pokémon trading card for $57,789.


How Thailand's "Lèse-Majesté" law is used to stifle all protest

Once meant to protect the royal family, the century-old law has become a tool for the military-led government in Bangkok to stamp out all dissent. A new report outlines the abuses.

👑 Thailand's Criminal Code "Lèse-Majesté" Article 112 imposes jail terms for defaming, insulting, or threatening the monarchy, with sentences of three to 15 years. This law has been present in Thai politics since 1908, though applied sparingly, only when direct verbal or written attacks against members of the royal family. But after the May 2014 military coup d'état, Thailand experienced the first wave of lèse-majesté arrests, prosecutions, and detentions of at least 127 individuals arrested in a much wider interpretation of the law.

🚨 The recent report "Second Wave: The Return of Lèse-Majesté in Thailand," documents how the Thai government has "used and abused Article 112 of the Criminal Code to target pro-democracy activists and protesters in relation to their online political expression and participation in peaceful pro-democracy demonstrations." The investigation shows 124 individuals, including at least eight minors, have been charged with lèse-majesté between November 2020 and August 2021. The new wave of charges is cited as a response to the rising pro-democracy protests across Thailand over the past year.

💻 The more than a century-old law is now largely playing out online, where much of today's protest takes place in Thailand. Thai student activist Juthatip Sirikan says people are willing to go further on social media to expose information such as how the king intervenes in politics and the monarchy's accumulation of wealth, information the mainstream media rarely reports on them. Not surprisingly, however, social media is heavily monitored and the military is involved in Intelligence operations and cyber attacks against human rights defenders and critics of any kind.

➡️


"Children are going to die. People are going to starve."

— The United Nations warns that Afghanistan verges on a "total breakdown" as millions of Afghans, including children, could die of starvation unless urgent action is taken by the international community. The agency calls for the release of frozen assets to avoid economic and social collapse, despite concerns over the Taliban government. A recent report said that about 97% of Afghanistan's population may sink below the poverty line, and World Food Programme (WFP) Executive Director David Beasley warned that more than half of Afghanistan's population of 39 million were facing acute food insecurity and "marching to starvation" in comparison to 14 million two months ago.


Dutch cities have been secretly probing mosques since 2013

At least ten Dutch towns and cities have secretly used a private agency to probe mosques and other local religious organizations, Amsterdam-based daily het NRC reports in an exclusive investigation.

The clandestine operation — funded by NCTV, the National Security Services, the Netherlands' leading counter-terrorism agency — was prompted by the social unrest and uncertainty following multiple terror attacks in 2013, and a rise in Islamic radicalization.

The NCTV, which advises and financially supports municipalities in countering radicalization, put the municipalities in touch with Nuance by Training and Advice (Nuance door Trainingen en Advies, NTA), a private research agency based in Deventer, Netherlands. Among the institutions targeted by the investigations, which came at a cost of circa 500,000 euros, were the Al Mouahidin mosque in the central Dutch town of Ede, and the Nasser mosque east of the city of Utrecht, according to NRC.

Unlike public officials, the private agency can enter the mosques to clandestinely research the situation. In this case, the agents observed activity, talked to visitors, administrators, and religious leaders, and investigated what they do and say on social media.

All findings then wound up in a secret report which includes personal details about what the administrators and teachers studied, who their relatives are, with whom they argued, and how often they had contact with authorities in foreign countries, like Morocco.

It is unclear whether the practice is legal, which is why several members of the Dutch Parliament are now demanding clarification from the outgoing Minister of Justice and Security, Ferd Grapperhaus, who is said to be involved.

"The ease with which the government violates (fundamental) rights when it comes to Islam or Muslims is shocking," Stephan van Baarle, member of the leftist party DENK, told De Volkskrant, another Dutch newspaper.

Leaders of the Muslim organizations that were secretly probed say they feel betrayed. Hassan Saidi, director of one of the mosques investigated, said that the relationship with the local municipality had been good. "This puts a huge dent in the trust I'd had in the municipality," he told the Dutch public broadcaster NOS.


The "running of the bulls" event returns to the small village of Tafalla, northern Spain, for the first time since the pandemic started, after restrictions were eased. — Photo: Jesus Diges/EFE/ZUMA

✍️ Newsletter by Anne-Sophie Goninet, Jane Herbelin and Bertrand Hauger

Are you more Chicago Bulls or running of the bulls? Let us know what the news looks like from your corner of the world!!

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