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THE CAUCASUS & GLOBALIZATION
Yakub YAGUBOV
Ph.D. Candidate at the Institute of Philosophy, Sociology, and Law, National Academy of Sciences of Azerbaijan (Baku, Azerbaijan).
MIGRATION CATASTROPHE IN ARMENIA AS A CONSEQUENCE OF THE CONFLICT
Abstract
T
his article studies the migration situation in Armenia. It examines the economic prerequisites of migration in Ar-
menia and carries out a comparative analysis of economic development in Armenia and Azerbaijan.
Introduction
Researchers, politicians, and economists are extremely interested in the migration trends going on in the Caucasus since population flow dynamics reflect the country's development. As we know, over the past twenty years, conflict situations in the Caucasus have turned from open armed oppositions into latent forms. But this does not mean that they have exhausted their potential for influencing migration today.
One such conflict is the Armenian-Azerbaijani Nagorno-Karabakh conflict. This war based on territorial claims led to some territories of Azerbaijan being occupied by Armenia and around one million Azeris becoming refugees. And to this day they have been unable to return home. However, Armenia also suffered demographic losses.
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Economic Development in Azerbaijan and Armenia-Current Reality
After signing a ceasefire with Armenia in 1994, Azerbaijan, boosted by Heydar Aliev's economic policy, became the strongest and richest state in the Central Caucasus. Oil contracts and the policy pursued to attract investments into the republic improved the socioeconomic situation in the country. The mass exodus of the population from Azerbaijan abroad stopped. Later, the regional socioeconomic development policy conducted by President Ilham Aliev gave the country an even greater opportunity to provide the population withjobs. Moreover, some people who migrated in the 1990s decided to return. Some of them came home with a certain amount of capital, which was also invested in the country's economy. This put a stop to the negative migration trends in Azerbaijan. As of 2009, Azerbaijan took the lead among the CIS countries in terms of economic growth. For example, between 2003 and 2008, Azerbaijan's GDP increased 2.6-fold, while the poverty level in the state dropped from 45% to 11%. In 2011, Azerbaijan's economy was characterized by sustainable development—economic growth was maintained by an increase in personal income that led to a rise in solvent demand. Activation of the government's social policy and burgeoning income in the private sector promoted a rise in personal nominal income in January-November by 19.2% and in average wages in the economy by 8.7% to 355.7 manats. As a result, the retail sales volume rose by 10.3%, while the service market increased by 7.4%. The consumer market growth indices for this year proved the highest in 20 years.
Investment demand continued to increase, the dimensions of which topped consumer demand. In the first eleven months of 2011, investments in basic assets rose by 28.3%, amounting to 10 billion manats; there was a constant rise in investments in major construction projects due to the increase in construction, restoration, and reconstruction work to prepare for holding the 2012 Eurovision Song Contest in Baku.
It should be noted that 73.6% (7,373,900 manats) of the funds invested in basic assets was used to develop the country's non-oil sector. It is gratifying to note that Azerbaijan's non-oil sector had increased by the end of 2011 by 9.5%, which corresponds to the government's aims to reduce dependence on the oil-and-gas export, and thus achieve diversification of the country's economy. Stabilization of the manat exchange rate was the main trend in the financial market throughout 2011.
At the beginning of 2011, the Central Bank of Azerbaijan (CBA) pursued its exchange rate policy against the background of an increase in supply channels in the foreign exchange market and the creation of a new operating mechanism. During the period under report, there was appreciation of the manat, but in order to prevent its extreme increase, which could have had a negative impact on the competitiveness of the non-oil sector, the CBA carried out sterilized intervention. As of today, the amount of currency intervention of the Central Bank is higher than $620 million.1
The trends mentioned above do not apply to Armenia. The figures of the Armenian National Statistics Service regarding economic activity in March clearly indicate that Armenia has still not recovered from the economic crisis. After a drop to the level of 14.3% in 2009 (this was the second largest drop in level in the world), it could have been expected that two years later, after the world economy had already recovered from the crisis, the Armenian economy would undergo at least a 5-6% increase. However, it transpired that Armenia's economic growth in March 2011, compared with the same period for the previous year, was zero. There were many reasons for the country finding itself in this situation.
■ First, in 2008-2009, the government failed to realize what a severe impact the world economic crisis would have on Armenia.
1 See: "Ekonomika Azerbaidzhana: itogi goda," available at [http://news.day.az/economy/306048.html].
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■ Second, even after it realized that Armenia could not avoid this impact, it was unable to develop and implement a corresponding policy.
■ Third, the enormous financial resources hastily attracted in emergency conditions were not used efficiently.
■ Fourth, the government was unable to find the courage to carry out the structural changes the country's economy badly needed.
This all brought Armenia to the difficult economic situation it finds itself in today. The country is confronted with a long list of economic problems. However, at the moment, from the macroeco-nomic standpoint, there are two in particular that require priority attention. The first is extremely low growth accompanied by high inflation (according to the latest data—11.3%),2 as a result of which poverty has increased. The second problem applies to four indices relating to the budget deficit. These are a budget deficit of 9% of GDP,3 a national debt of 43%4 of GDP, a negative trade balance of 23%5 of GDP, and national reserves that have been steadily dwindling as the result of greater currency interventions with the aim of retaining the dram exchange rate stability.
It is a well-known fact that the ratio of national debt to GDP should be no higher than 50%. In Armenia, this ratio amounts to 43%, which reflects an extremely negative trend.6
Today there are another two financial circumstances in Armenia that hinder the country's economic growth. The first is the extremely high interest rates on bank loans, which discourage investments. The second is superfluous financial interference, which makes it difficult to acquire alternative financing. In recent years, despite the government's efforts, there has been no progress in either of these two areas.
The main reason is that the government has been unable to create a suitable mechanism for ensuring that the monetary policy pursued by the Central Bank has a timely and efficient impact on private banks. In other words, adjustment of the Central Bank's interest rate does not have an effect on the interest rates of commercial banks. Moreover, the government has been unable to create new monetary instruments that would form sources of extensive financing for investors.
As a result, two extremely negative trends have developed today in Armenia's banking system.
■ The first is that lending interest rates are continuing to rise instead of decreasing over time.
■ Second, mortgage and consumer loans have significantly decreased, while lombard credits have increased instead.
People are mortgaging their last property in order to survive.7
Migration from Armenia as the Result of Conflict-Prone Policy
After entering the ceasefire agreement in 1994, Armenia found itself in a difficult situation. The country was unable to participate in major transnational projects in the Central Caucasus and
2 [http://www.armtoday.info/default.asp?Lang=_Ru&NewsID=43718&SectionID=0&RegionID=0&Date=05/08/2011 &PagePosition=1].
3 [http://www.regionplus.az/ru/articles/view/1658].
4 Ibidem.
5 Ibidem.
6 Ibidem.
7 See: "Vardan Oskanian: Nulevoi rost v ekonomike Armenii," available at [http://www.yerkramas.org/2011/05/07/ vardan-oskanyan-nulevoj-rost-v-ekonomike-armenii/].
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its geo-economic opportunities were reduced to a minimum. Nor did the Armenian leadership take into account that the country's resources, even counting those provided by the occupied territories, could not ensure its normal development. Armenia's dynamic development proved simply impossible without establishing constructive relations with Azerbaijan and its ally Turkey. Moreover, Armenia rejected all diplomatic steps to normalize relations with these countries. As a result of this policy, the migration trends in the republic began demonstrating negative dynamics. In 2010, Armenia ranked 76th according to the human development index, which was the worst rating among the Central Caucasian states.8 In 2011, Armenia was one of the worst economies in the world.
According to the data of recent years, it is mainly able-bodied people who are leaving Armenia. Migrants primarily go to Russia, which is largely related to historical prerequisites. Moreover, it should be noted that it is easy for Armenians to find a job in Russia, while its leadership, despite the statements in the media, is not hindering migration. Armenians also take advantage of this. According to some estimates, Armenian citizens working in Russia send around $10 million in remittances home every month.9
However, recently Armenian migrants have been diversifying their destinations. Armenian women are willingly going to Turkey, where they are mainly employed as nannies and household workers. More intellectual Armenians prefer the U.S. and other Western countries. The strong Armenian diaspora in the U.S. helps Armenians to become established there. All of these trends are leading to Armenia gradually losing its able-bodied demographic potential.
The political situation in the country and lack of confidence in the government are the main catalysts of migration. When comparing their economic situation with neighboring states, Armenians are increasingly coming to the conclusion that the government is not making proper use of the country's potential, which is inadequate anyway. The upheavals of the 1990s have passed and the population is less inclined to take the problems of historical opposition with neighbors seriously. People are not very happy that the country has essentially found itself in the grips of the Karabakh clan.
As of 1 April, 2011, the population of Armenia amounted to 3,264,600 people. This was reported by head of the census and demography department of the Armenian National Statistics Service K. Kuiumjian. Furthermore, she brought attention to the negative migration balance with 458 fewer people being registered during the first quarter of the year. The figures themselves are so ponderous and fraught with consequences that they give grounds for concern. For example, whereas in 2011 30,000 people left the country and did not return, in 2012 this figure has significantly increased. K. Kuiumjian said: "On the whole, the situation should arouse great concern."10
The U.N. Development Report Migration and Human Development: Opportunities and Challenges notes that since 1991 700,000-1,300,000 people (about 30% of the population) have left Armenia and settled abroad.11 It also noted that furthermore highly-qualified specialists are leaving Armenia, which has had an extremely negative effect on the country's development, particularly on the reproduction of social and cultural capital.
According to the state migration service at the Ministry of Territorial Administration of Armenia, 65% of the migrants from Armenia chose Russia as their main place of residence, followed by the U.S. and Ukraine.
G. Pogosian, an Armenian sociologist, notes that today it is primarily Armenians between the ages of 20 and 50 who are leaving the country, whereby it is mainly men who are emigrating, which is dealing a severe blow to the workforce potential. In this respect, the expert believes that "the prob-
8 [http://www.propertyy.ru/country/armenia/].
9 See: A. Iskandarian, "Problemy migratsii i opyt ee regulirovaniia v polietnichnom Kavkazskom regione," in: Tez-isy Mezhdunarodnoi nauchnoi konferentsii, SGU Publishers, Stavropol, 2003, pp. 110-115.
10 Specialists comment on the migration processes in Armenia, available in Russian at [http://www.aysor.am/ru/ news/2011/05/26/migration/].
11 [http://europeandcis.undp.org/news/show/87B390CE-F203-1EE9-B95DF29A79F6080C].
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lem of labor force shortage will soon become acute in Armenia."12 There is also the fear that Armenia will lose its combat efficiency. After all Armenia knows that Azerbaijan will never reconcile itself to occupation of its territory, and its resources far outweigh Armenia's in every respect.
The migration problems in Armenia are so serious that the country's president himself often addresses them. Migration trends are a topic of general interest and concern in Armenia, said Armenian President Serzh Sargsian.13 In some publications, the migration situation in the country is even described as catastrophic.14
This situation provides grounds for several assertions. The mass migration of Armenians is making the country dependent on the situation abroad. The prospects for Armenia's demographic development might be very different if the so-called external factor interfered in the development of events. The matter concerns a severe change in the socioeconomic and political situation in the countries (regions) where emigrants from the republic go en masse, as well as the possibility of a major review of their immigration policy and legislation, and so on. The sudden return of large numbers of emigrants could give rise to a phenomenon that is not only fraught with socioeconomic and demographic, but also with the most severe political consequences.15
So it should be noted that Armenia entered the third millennium facing a tense socioeconomic situation. And this is also having an effect on reproduction of the population, whereby the leading trend is a drop in the size of families.16
There can be no doubt that the Armenian government is taking steps to correct the current situation. An action plan for implementing the state migration regulation policy for 2012-2016 was presented on 5 August at a meeting of the collegiate of the Armenian Ministry of Territorial Administration.17
Head of the Migration Agency of the Armenian Ministry of Territorial Administration G. Ega-nian explained that the program planned to enhance the Republic of Armenia's migration regulation legislation and bring it into harmony with the legislation and best institutional structures of the EU. A unified system of migration monitoring will be introduced, analysis and evaluation of the situation conducted, mechanisms developed for obtaining information on migration from alternative sources, and studies carried out of migration flows every 2-3 years. The action plan will also be aimed at protecting the rights and interests of Armenian citizens living abroad. There are plans to enter bilateral agreements in the international labor market, as well as ensure that Armenia joins the current international agreements aimed at protecting the interests of labor migrants.
In the next five years, the system for protecting foreign citizens and citizen-less persons will be improved and efforts to provide foreign citizens with asylum and permanent residency permits will be concentrated in a unified state structure. The action plan was discussed with the participation of representatives of state bodies and international and public organizations.18
12 See: "Migration in Armenia Has Been Replaced by Depopulation—Sociologist," available in Russian at [http://i-news.kz/news/2011/12/10/6189504.html].
13 See: "Migration Processes are a Topic of General Concern in Armenia—Sargsian," available in Russian at [http:// www.newsarmenia.ru/society/20110720/42493895.html].
14 See: N. Madatian, "Rossia i demograficheskaia katastrofa v Armenii," available at [http://www.russian.rfi.fr/ev-ropa/20110812-rossiya-i-demograficheskaya-katastrofa-v-armenii].
15 See: R. Eganian, "Demograficheskie realii i perspektivy respubliki Armenia na poroge XXI veka," in: Mezhd-unarodnaia migratsiia naseleniia: Rossia i sovremenny mir, Issue 5, Ed-in-chief, V. Iontsev, MAKS Press, Moscow, 2000, pp. 79-91.
16 See: V. Khodzhabekian, "Demograficheskie protsessy v Armenii v gorode i na sele," Obshchestvo i ekonomika, No. 6, 2006, pp. 163-173.
17 Armenia is trying to regulate migration, available in Russian at [http://www.armtoday.info/ default.asp?Lang=_Ru &NewsID=48956&SectionID=0&RegionID=0&Date=08/07/2011&PagePosition=1].
18 A five-year plan is presented in Armenia for regulating migration, available in Russian at [http://regnum.su/news/ 1446349.html].
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All of these measures are theoretically possible, but the thing is that in practice the actions of the Armenian government do not always coincide with the hopes placed on them. What is more, the Armenian leaders responsible for migration are themselves poorly informed about the real situation in this sphere. In an interview with the "News—Armenia" website, aforementioned G. Eganian said that when evaluating policy in a particular sphere, it should be kept in mind how much it contributes to implementing the tasks facing the state. Such criteria are most conducive to evaluating the success of policy in a particular sphere, including migration. But we should also remember that migration as a sphere of state administration is new for Armenia, in contrast to other spheres that have existed since Soviet times, such as social security, public health, and education. The concept "migration" is incomparably wider. In addition to work with refugees, it encompasses the system of border control, the status of foreigners coming into Armenia, labor migration, providing asylum to foreign citizens, the labor activity of foreigners in the country, visa issues, and so on.
It is still difficult to evaluate Armenia's migration policy, although certain steps are being taken to regulate this sphere. A Concept of State Regulation of population flow has already been drawn up that notes the priorities in the migration sphere and the goals and mechanisms for achieving them, whereby the necessary legislative acts have been presented. Not only is the Migration Agency guided in its work by this document, but also other state bodies engaged in migration regulation.
It is difficult to assert unequivocally that an efficient migration policy is being conducted. Many different issues require regulation. For example, Armenia has been trying for long years to bring a legislative initiative relating to work abroad to fruition. One of the reasons it is taking so long is that people are not entirely clear about the role the state bodies should play in this area. Migration is not the responsibility of only one department; various different departments are required to perform in this sphere, and it is extremely important that their work is coordinated.19
This fragment of the interview shows that Armenia's migration policy is being managed by people who have very little idea about what migration policy entails and what methods should be used for regulating migration trends.
Conclusion
So it is evident that Armenia has achieved little success in implementing migration policy. The main obstacle to implementing this policy is the unresolved nature of the Nagorno-Karabakh conflict, with affects all aspects of Armenia's socioeconomic life. And only a change in Armenian policy for the better will halt the catastrophic migration trends. The country's economy can only be boosted if relations with Azerbaijan are improved, which will require the withdrawal of Armenia's armed forces from the occupied territories of Azerbaijan. A comparison of the country's demographic indices with its neighbors shows that the time has come to change the fundamental principles of the overall political course. If Armenia settles the conflict with Azerbaijan, it will gain access to transnational projects in the region and investments in Armenia will grow, leading to an increase in jobs in the republic, which will automatically stop people from leaving the country.
19 The influence of the world crisis on migration flows in Armenia will not become obvious until the spring, available in Russian at [http://www.newsarmenia.ru/exclusive/20090213/42025895.html].
