Battle of loans: Russia-West fight for Armenia enters economic sphere

The Executive Board of the International Monetary Fund (IMF) on Tuesday approved the next tranche of the loan for Armenia amounting to $51.4 million, thus bringing the total amount of credit released to Armenia to $324.4 million. The three-year $408.7 million project for Armenia was approved in 2010.

Through its representative in Yerevan the IMF, in fact, endorsed the policy of the Government of Armenia, noting only that there are still problems, especially related to venture business and attraction of investments in the country. He also hinted at the fact that officials in Armenia still take bribes from businessmen.

Foreign investments in Armenia this year have fallen by 35 percent, only the Canadian and Swiss capitals have increased their share. However, these capitals have been invested exclusively in the mining sector, and it provided grounds for concerns among Armenian experts, who argue that the West has intentions to turn Armenia into a country for raw material supply.

The United States apparently wants to offset this trend by stimulating high-tech sectors. At Stanford University in California within the framework of the ArmTech 2012 congress attended by Prime Minister Tigran Sargsyan, the Armenian government and the Intel Company signed a memorandum on establishing a research center in Armenia. A memorandum on the establishment of a plant in Armenia producing integrated circuits was signed with the Corparacion America company.
U.S. Ambassador to Armenia John Heffern welcomed the participants of the Congress and said that the U.S. Department of Commerce, using a range of data of UNESCO, has published a study according to which Armenia is a leader among post-Soviet countries by the number of applications for patents for different inventions. The ambassador expressed hope that these inventions will find good use in humanitarian and commercial organizations.

Russia apparently has decided to “retaliate” to the West’s offensive with a “credit counter-attack”. The Eurasian Development Bank (EDB) is due to consider a loan of $100 million for the North-South transport corridor in Armenia. This was announced in Yerevan on December 11 by EDP Board Chairman Igor Finogenov. “We are considering the possibility of funding one of the components of the corridor together with the Asian Development Bank,” he explained.

The EDB has also received a preliminary application for funding exceeding $100 million for the modernization of Armenia’s chemical giant, Nairit. It is not excluded that Russia will provide these sums.

Armenia is likely to accept both “rival” credits, as its government needs money to cover the growing external debt and prevent a social rebellion in the country. Judging by the reduction of investments during this year, the government prefers borrowing and preventing foreign capital from entering Armenia. In this sense the flow of investments from the United States may change the situation in the country.