02, 2014

President Serzh Sargsyan answered the questions of the participants of the 10th Convention of the Voluntary Homeland Defenders Union

Before the question and answer session, the President congratulated all the members of the newly elected Board of the Voluntary Homeland Defenders Union (VHDU), including the President of the Union and Deputy Presidents, on the occasion of taking the responsibility once more and stressed that that it was indeed a big responsibility for them. Serzh Sargsyan wished the VHDU Board good luck and expressed his willingness to answer all the questions of the participants of the convention.

Question – Sona Rechelyan – a student of the Economic Department of YSU, a member of the “Young Homeland Defender” structure
-Mr. President, in what condition is the Armenian economy today?

Serzh Sargsyan – It is already a long time that the relevant structural unit of the Government sums up the results of 2013, and all of us will have an opportunity to discuss those results, but I should say immediately, that in 2013 the economic growth of our country is going to yield to the economic growth in 2012. If you remember, in 2012 we had a 7 percent economic growth, while this year we expect 3.5 percent. In general, this tendency is typical to the world economy and it is no accidence that after the first semester of 2013 the international structures and experts began to give more modest assessments and forecasts about the growth of the world economy and the economies of different countries. If you are familiar you should remember, if not, be aware that the International Monetary Fund forecasted 3,8 percent economic growth for the CIS. Today the real one is assessed 2,1 percent. For the Russian Federation the forecast was 3,7 percent, while the real and preliminary ones were 1,5 percent. The forecast for the European Area was -0.2 percent, the preliminary one was -0.4 percent. As you see, in every place depending on both the world processes and on the internal problems of a concrete country, the growth has stopped. Now, is this good or bad? If we compare it with others it is good, but if we compare it with our needs, it is bad. Thus, of course we should work much harder this year in order to have good results. Surely, there are troubling tendencies in our economy. For example, I am concerned with the decrease of investments. Certainly, there are specialists who explain this from the perspective of world tendencies when the investments are transferred from developing countries to developed countries, and secondly, they consider 2013 year as a year full of uncertainties in our country, and wherever there are uncertainties there are little investments. But in any case, the uncertainties are overcome, the decisions are made, and in this regard, certainly, I expect a higher economic growth in 2014. You know most people, even our comrades in arms present here, may think that if it is already so many years that we have an economic growth, then why the society is in such a mood that the situation is becoming worse. You know in many circumstances it is a matter of perceptions. Indeed, we have had an economic growth, a stable economic growth during the last six years, except for one year. The average salary in Armenia has increased vigorously, more vigorously than inflation. When I suggested that you give questions, I naturally have materials, I have all the analyses of years, and I can say immediately that if we look through the prism of six years we have had average year inflation. You are an economist and you should understand what the average year inflation means and not the twelve months one. I can tell the twelve months one as well. Throughout six years the inflation in our country has comprised 140 percent. Accordingly, during these six years the inflation has comprised 40 percent. The average salary comprised 160 percent, as a result, the average salary increases in higher rates, and, of course, in many cases it is a matter of perceptions. The people who criticize us think that they have such an invulnerable argument and always bring that argument. When we speak about favorable numbers, good numbers, they say that those numbers are pictured and those numbers are fabricated. But it is very surprising that when the RA National Statistical Service speaks about bad indicators, they say it is right. Thus, in case of bad and negative numbers they are right, while in case of good numbers they are pictured. But I do not say for this reason, I say this for another reason. I want to bring a concrete example which will have a serious importance for any economist. As you know, last year in the second half of September, we issued currency securities, that is, securities not in the Armenian Dram. Of course, we issued not alone, but together with the three world-famous companies, and during that time those ill-willing critics said that nobody would lend Armenia. As you know, issuing securities means borrowing. They said that the Armenian debt was so big that nobody would lend, and even if they lent, the percentages would ne very high. And on September 3, when we made a decision to join the Customs Union, everybody started to say that in this case nobody would lend Armenia at all. As a result, our country was offered a debt of three billion US dollars. We took only 700 million because more debt could deteriorate our economic situation and our indicators. In addition, during this period from September to February, those 6 percent securities became 5.8 percent one. Hence, they became more expensive. As you know, the more the percent decreases the more expensive the securities become. If our situation is bad, if our debts are a lot, if our economy precipitates, how it happens that the world's largest 60 investors offer us such a huge amount – three billion US dollars. Is there anybody in the hall who can say that he is ready to lend somebody knowing that he is not going to give it back. It is impossible. Who do you lend? The one who you know will give back or the one who you just want to give a hand, and if he won’t return you will not feel any regret. Could it be that the world’s largest 60 investors feel sorry for us and give money for no particular reason in order for us to spend. Our economy is healthy, our economy is firm, our economy has experienced substantial changes, and these are very good foundations to make a good economic growth in the future as well.


Question  – Karen Grigoryan – a member of the VHDU Board, the Mayor of Echmiatsin
-Good evening, Mr. President. My question is the following – in recent days it is often touched upon the issue pertaining to the pensions and the 5 percent. What is the problem?

Serzh Sargsyan – Certainly, it is spoken a lot about the pension reforms and it is obvious that it should have happened like that. There has not been a state in the world, where pension reforms have made in peace and without protests for simple, very simple reasons. The reason is that the outcomes of those reforms will appear within a long time, while people right now want that their situation improves, and secondly, it is clear again that we put people in a difficult situation for some period of time and say that, yes, you must save 5 percent in order to receive back that 5 percent multiplied. It is evident that we have discussed a lot and have knowingly taken that step since that step is directed to the future of Armenia, that step is taken for our children and for our grandsons. Nobody can say that we do not need these reforms. Even our severest critics say that we need reforms but this one thesis is wrong, that one thesis is not right or you have chosen wrong time, you should do it in six months, in one year, in five years...

You know that I have worked in the Government of the Republic of Armenia (RA) for a long time since 1993, and all the Governments of the RA, without exception, have dealt with this issue, and this issue has made them worried. Today’s Government has decided to deal with this issue right today, and I express my whole support to that solution, because this is, indeed, a necessary solution. I do not exclude that there may be complicated legal formulations in that law or some words should be changed. I do not exclude. But if somebody says he is ready to write an ideal document and to immediately take and put it to public discussion and nobody will discover any complication there, I will say that I do not believe in that. It is a large document, and I repeat, there may be failed formulations, but we are ready to correct those failed formulations. The meaning, I am sure, is not going to change, and that decision is a necessity for all of us.

I repeat once more, yes, today we put people in a difficult situation to the extent of the 5 percent of their salary. But let us notice that this year a lot of people's salaries have increased – at the law enforcement bodies by 10 percent, at certain companies by 10 percent, 15 percent, and in some companies by 25 percent. You are aware that from July 1 the salaries of all the state employees will increase by 40-80 percent. What is the problem? Think as if they have increased by 35 or 75 percent. Do not expect that 5 percent. That 5 percent will be of use by all of us, all of us.

There is the other side of the issue. Those funds will foster our economic development. Long-term and low percent money will appear in our country which is vital for our business entities. Ask any businessman, talk to the Business Union and to any non-governmental organization - what is the problem of the Armenian economy today? It is the cheap and long-term money. We must have that money in order for our economy to develop and to direct the fruits of the development to raise pensions. We will do it by all means, dear Karen, and I do not see any big problem here, yet I know that today the 80 percent of the country's population complains about that decision. We, sorry for my word, to say in a homeland defender’s language, are not idiots to spend resources on that bad thing. We spend political resources. People are dissatisfied with us, we do not have any political interest in that and do not obtain any resource. We erode resources for the time that will come in 20 years, for our children.

Question  – Anan Voskanyan – a member of the VHDU Board, the President of VHDU Artik Regional Division, the Head of Pemzashen community.
-Mr. President, I think all of us are worried about the fate of the gas treaty with Russia. Would you please introduce in a few word?

Serzh Sargsyan – Sure - at first, dear Anan, I think that that conviction should have already passed because we signed that treaty on December 3 last year and the National Assembly ratified it and that treaty has come into effect. But I totally share your opinion that there are various conversations among the public, because a lot of people, depending on many reasons, do not want to tell the truth and try to blacken that great achievement. Some people, driven by the anger that we succeeded in having such a good treaty, try to turn everything on its head and present this as unsuccessful. To be able to prove my words, let us on by one touch upon the issues which according to them are very logical. But before touching upon the issues on by one, I want all of us to see what the substance of this gas treaty is. In my opinion, the substance of the gas treaty is first of all the gas price. Have you heard during this time that those debaters speak about the price. At first, let them speak about the price and say that if it is expensive we negotiated very badly, they gave us a bad price, let them criticize us here, let them say that, in addition, this one is also bad, the other one is also bad and the other one also. If we have been able to obtain a good price, let them say that-yes, the price is good, but here, here and here they have failed. Nobody speaks about that price, because that price is the lowest which Russia gives to any state. Hence, we have gas for the lowest price inside the borders of the RA. Secondly, in that treaty the gas price is related the Russian internal price system for five years, and if there are not rises in price, and you have seen the decision of the Russian Government according to which prices will not go up, we will have a stable price for 5 years. Is this good or bad? Surely, it is good for us, but bad for our ill-willing persons. Next issue is about debts. And they give different assessments. There are people whose memory already betrays them to some extent. There are people who can’t read well and try to say that to the violation of our laws, some debts have been augmented, that those debts should be reflected in the budget etc., that as if we have run secret negotiations. I think that most of our citizens should remember that I have made at least about one dozen statements on that topic since 2011 and have always said the following that the gas price will not go up for the consumers of the RA. What does it mean? It is clear that if you say such thing, the Armenian should understand that it is possible that the imported gas gets expensive for the state and for an entity, but the gas is not going to get expensive for the consumers of the RA, and it has been like that for two years. This is in the first place. In the second place, everybody is aware that we have been negotiating with the Russian side since 2011 and have made a conclusion that the payment price of gas does not change, instead the calculation price changes, but when the negotiations are over we will made a final conclusion about the price. The negotiations lasted for three years. Taking into consideration all the aspects, the Russian side suggested that we pay the 50 percent of that calculation price. Has it treated badly? Hence, where from do those about 300 million US dollars generate? If we had not run such long and hard negotiations we would have had to raise the price since 2011 and that 300 million would have been taken out of people’s pocket, the private sector’s pocket, the economy’s pocket etc.. We are yielded to the 50 percent of that amount. Thirdly, as for the 20 percent - why did they sell, they sold for cheap price etc.. I wonder what that 20 percent gave us. If we as a state have sold the 80 percent throughout these years, we might sell the 80 percent, while the 20 percent might not be sold? Is not it strange? Let anybody tell me what that 20 percent gave us and how many pennies of dividends it delivered. Or did that 20 percent give us an opportunity to appoint a director there or to do what, to influence upon decisions? Moreover, we do not need to be able to influence upon decisions because we have a very good legal field in that sphere and it is sufficient that a company be it Russian, American, Indonesian, will act in the framework of our laws and for our interest. As for the price of the 20 percent, I can now announce that if there is anybody who will pay 100 million US dollars, I am ready to negotiate with the Russian side, take back and give it to the man for that 100 million who will want that 20 percent. They say why you have not conducted a contest, why you have not asked others. I do not have the right to say publicly but my desire to say is so big that I must say that imagine we conducted a contest, that 20 percent valued 30 million, how we would realize that 20 percent for 150 million. Then who would be responsible for that? Is not it clear that the 20 percent which has not given a penny of dividend throughout these years, can’t cost that much. Anybody who talks on different platforms from the National Assembly to the Opera Square, if he can go and negotiate with the Russian side and bring cheaper gas and with better conditions, sure, let him do, let him bring. I will nullify the treaty in one day, I will ask my party members in the National Assembly and friends to immediately invalidate all that. But is there anybody? Or they just talk? Talking is easy, so easy. Do you remember how many talkers there were during years of the war? How many fairy tales they told, how many myths they told? But when there was a need to occupy a concrete village, one of them got a headache, one of them went to his nephew’s forty days after death, the other’s car wheel leaked. Talking is so easy.

Is there anything else there? Why did you sign for 30 years? The people are so blinded by the evil that do not understand what they say. Instead of criticizing us that why you signed for 30 years and not for 60, they tell us why you have signed for such a long time. Is not it clear for any economist that the return of investments in a longer time has a much milder effect on the economy. We have signed for 30 years in order for the Russians to return their investments in 30 years. If we signed for 5 years, they would return them in 5 years. Which one is better for us?

Question  – Edik Minasyan –the Department of History of YSU
-Mr. President, I want to ask about the emigration. What is the solution?

Serzh Sargsyan – Indeed, the emigration is one our most painful and most acute problems, and nobody should not think that he is more concerned with the emigration problem then I. Indeed, it is one of the big problems which makes me worried. On the other hand, I do not accept the manipulation of this issue for political purposes and I do not accept the solution to this problem by beating the knees and crying. It is clear to all of us that this process is temporary and it displays different development trends in different periods. Although in 1992, 200 thousand people left our country that process has paced down. Assume, in 2001, 60 thousand left, but, thank god, that process slowed down during subsequent years and not only slowed down, but also transformed into immigration. According to 2013 data, the passenger transportation has decreased in comparison with 2012, the negative difference is almost 25 percent and that negative difference comprises 31 thousand people. Surely, the 31 thousand is not the right number of emigrants, it may differ by 5, 10 or 15 thousand, but is a reliable number, and that number is certainly big, it is big because there are only 3 million people living in our country. If we were at least 10 million, 12 or 15 million, that fact could not be the subject of any concern. On the other hand, the 31 thousand is no the number against which it will be impossible to struggle, decrease and nevertheless come to immigration. We will definitely reach that. But I am saying again, and all the more it should be clear for this audience that the problem does not stop to be a problem if you stop to speak about it. On the other hand, never a problem is solved by crying, by manipulation, a problem is solved by work. We should work all together, all together. Once more, I want to bring the example of the times when we or each of the present here lost one village, he did not beat the knees, did not blame others, did not manipulate, and contemplated what to do in order to occupy both this village and the one beside it. This was the thought of all of us, am I right? How much did we retreat in 1992? What has changed? Nothing has changed. Neither the performers have changed, nor the situation. You will see that we will come to a positive balance.

Question  – Mesrop Manukyan – a lecturer of the Economic Department of YSU
-Esteemed Mr. President, during the answers of one of the questions you spoke about the present condition of our economy. My question is the following. What will you predict, how will our economy develop? Thank you.

Serzh Sargsyan – I think it will be good, dear Mesrop, surely, it will be good. Why because I think that we have already entered the field of certainty. Even if we say that the membership to the Customs Union has been smooth, without any problems, nevertheless, there was uncertainty for the society and investors about what direction we would choose, to what it will lead etc. We already have certainty, have concrete programs, and this certainty and concrete programs tell us that we will be able to make much more progress. If we had a 7.2 percent export growth in 2013 on the scene of the decrease of the economic development in our partner countries, then by joining the Customs Union we will be able to make a much bigger growth because the lion’s share of that 7.2 percent goes to the Customs Union countries, the Russian Federation. More precisely, in 2013 we have increased the export to the Russian Federation by 20 percent, that opportunity has now become inexhaustible - a huge market. A 200 million market with almost same opportunities has opened for 3 million people and for our economy. We will definitely make use of it. Besides, we have programs in the sphere of technologies for this period which traditionally increases by 15-20 percent every year in Armenia. In 2014 we will finish a program, a big program on the sphere of mining on which we have worked for years which will give an opportunity to produce 80-100 thousand tones of concentrate in Armenia. And that is the critical quantity which gives an opportunity to have a copper foundry, a big copper foundry which in, its turn, is possible only by having a sulphuric acid recycling factory. If we will not have, we can’t do. Accordingly, we will have a substantial growth in the sphere of mining. If some provocateurs do not mislead the “Nairit” employees, then regardless of any circumstance, most probably this year we will start to build a new “Nairit”. At least we have the calculation works and the preliminary treaties and at the first opportunity we will set the old “Nairit” in motion. This will give us a very big opportunity as well. Next is the creation of a big fish industry complex in Gegharquniq Marz - a program which started in 2013 and will materialize in 2014. It pursues a goal to produce and recycle 50 thousand tones of fish in 2019. And this is a big economic turnover and a creation of lots of jobs. We have serious programs in the development of greenhouse construction. We had certain progress in 2013. This also helped to increase the export to the Russian Federation. In 2014, we will have sufficient growth here. We have programs in the sphere of light industry. The light industry growth has sufficient share in our economic growth and I can enumerate very long in this manner. I see good economic successes in 2014 and in the future years.

Question  – Pargev Manukyan – the retired Director of Vardenik School, the founder and leader of Vardenik’s “Gaylavaz” detachment.
-Mr. President, at this time the administrative and household employees of schools are being massively cut down with a justification that student number decreases. However, during last years the student number increased from 25 to 35 and the salary rate increased from 18 to 22. While they justify that it goes down. If those employees who are women without family and who do not have husbands, work at school as cleaners and if there are no cleaners, house-keepers, electricians and organizers, what will the school’s fate be like? I ask you to answer.

Serzh Sargsyan – I hear for the first time that there should not be cleaners, house-keepers or electricians in our schools as you say. Such thing can’t be. As you know, we always include that in the school financing and yes, what can we do, it is right, it is financed by the student number. And I should say that all of us should come to terms with the idea that we should retire on a merited pension when time comes. If we are pensioners we should go and bring up our grandsons, receive a pension, in order for young men to substitute us, in order for them not to be left without job. This is the reality and we should look on that reality with a sober glance. We can’t say, you know this woman who is a very good teacher, has a big family, let us keep her. But we keep her by hurting others. We have drastically raised the salaries of teachers throughout the recent years, but which teacher you ask says that there is not a substantial change in terms of the salary. Why is not there any? Because instead of one teacher, work two of them, three of them. Why? I do not consider it to be a right thing. The working teacher should be duly paid, should be paid as much as the state envisages and as much that he can take care of his elementary needs. We envisage new reforms in this sphere as well. We will raise the salaries of the best teachers drastically, drastically. They will receive three or four times as much as the average salary of the country. As you know, today our average salary is 158 thousand drams. I repeat that the best teachers will receive three or four times as much, but they should be the best in their school. Hence, if in this case, indeed, a position of a cleaner or an electrician has been cut down, I think that Mr. Ashotyan will inform me about the reason right on Monday.

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