Defeating the Purpose?: Minister suggests granting monopoly to sugar importation as part of anti-trust fight

Photo: Photolure

The statement by Armenia’s Economy Minister Artsvik Minasyan about the possible official granting of a monopoly for sugar importation has deepened public skepticism regarding the government’s declared anti-trust and anti-corruption efforts.

According to experts, if the government takes such a step, it would be considered a failure of its declared fight on monopolies rather than a step forward.

Speaking to reporters on Monday, Minister Minasyan did not rule out that the lucrative importation of sugar (sugar cane) may officially be regarded as a monopoly, considering that the sugar factory in Armenia today works at only 25-30 percent of its capacity.

“Now the question is whether this 25-30 percent should not be allowed to work either? Wouldn’t it be better if you recognize it as a monopoly by law, but impose conditions, such as that it has to work at the minimum of 90 percent of its capacity and ensure a certain number of jobs, a certain amount of revenues for the state budget and ensure transparency. In that case, regardless of who the owners are, the State perhaps would help this organization in the direction of organizing exportation,” the minister said.

At the same time, Minasyan did not agree that the move was an attempt to legitimize the present state of affairs in the sphere where monopolization has long been an issue. He pointed to the example of a salt-mining enterprise in Switzerland.

“These are issues that should be discussed. In sectors where there is local production a large amount of employment should be ensured and they should be under public responsibility to provide a great economic effect. Is it right that in this part we give full freedom to import or after all the public interest in this case requires that all relations be regulated by law, even if it means recognizing a monopoly?” said the minister, who in the government represents Dashnaktsutyun, a party that, in particular, espouses socialist views.

The Akhuryan sugar mill that belongs to the extended family of ruling party MP Samvel Alexanyan was opened in 2010. It has the capacity to recycle both semi-finished product and locally grown sugar-beet.

Several months ago opposition MP Nikol Pashinyan expressed doubts in parliament that the enterprise actually produces sugar. He voiced suspicions that the Alexanyan-owned company imports granulated sugar, but in order to avoid high customs duties it formally registers it as raw material which purportedly gets processed at the sugar mill later, but, in fact, immediately enters the market.

Alexanyan denied these claims, saying that for already four years the company run by his family has been importing sugar cane from Brazil and processing it at the Akhuryan enterprise.

The pro-opposition Haykakan Zhamanak daily’s economic commentator Hayk Gevorgyan thinks that describing the legalization of monopoly as an escape from solving the problem does not properly reflect the reality. “As the saying goes, instead of fixing the eyebrow they take out the eye.”

“Of course, I don’t think that the government of Armenia will take this step after all, at least, because of the fear of pressure from international financial institutions. But the mere fact that this option is being discussed already signals the official end to the declared struggle against monopolies,” Gevorgyan told ArmeniaNow.

“With this the government does not rule out the option of ‘legitimization’ of all monopolies and oligopolies and also says that it has no other option.”

Interestingly, still a few years ago President Serzh Sargsyan also publicly admitted that sugar importation was a de-facto “natural” monopoly in Armenia. During a visit to the Czech Republic in 2014, the head of state was reportedly challenged by a local Armenian businessman on the existence of a monopoly on sugar imports. According to the Aravot daily, he then said: “And what do you want? Do you want 10 people to import sugar in a small country?”