Armenia after the Nagorno-Karabakh war: foreign policy and domestic socioeconomic strategy. Meeting with H.E. Tsovinar Hambardzumyan

by Giuliano Bifolchi & Silvia Boltuc

The Armenians will remember 2020 for a long period. Last year the nation not only faced the pandemic, as the rest of the world did, but also fought a war in the Nagorno-Karabakh against Azerbaijan which resulted in a defeat and consequential domestic sociopolitical problems. After six weeks of fighting the outcome of what the media and analysts labelled the 2020 Nagorno-Karabakh War was shocking due to the high number of civilian and military victims and the Azerbaijani victory.

Therefore, when on November 10th, 2020 in Moscow the Armenian Prime Minister Nikol Pashinyan signed the peace deal with the Azerbaijani President Ilham Aliyev under Vladimir Putin’s supervision, protests erupted in Yerevan against the Government.

Nowadays the Caucasian republic is experiencing an internal political crisis as local and international media reported while the national Government is facing economic slowdown because of the pandemic and foreign policy issues related to the last Nagorno-Karabakh conflict.

We met with H.E. Tsovinar Hambardzumyan, the Ambassador of Armenia in Italy, to discuss Italian – Armenian bilateral relations and Yerevan’s foreign policy after the recent war. We also analyzed the Armenian energy strategy which has the potentiality to attract foreign direct investments (FDIs) and boost the national economic development creating more job opportunities.

Italy has always had strong diplomatic, cultural, and historical relations with Armenia but recently, due to the rise of Azerbaijan in the oil and gas sector, something has changed. What is the status of Italian-Armenian relations considering that Italy (as many European countries) seemed more interested in the Azerbaijani energy market and didn’t actively support the independence of Artsakh during the recent conflict?

“First of all, let me thank you for your interest and this interview. Frankly speaking I wouldn’t quite agree with your assessment. The energetic interests of Italy vis-a-vis Azerbaijan are there, but they in no way overshadow Armenian-Italian relations. You can hardly find any other country in the world, where so many documents were adopted supporting the independence of the Republic of Artsakh. I think there are more than forty municipalities and also two important regions, Lombardy and Piemonte, that approved motions in favor of recognition of Artsakh. We are really grateful and we will never forget this.

Armenia also appreciates the balanced position of the Italian government. Italian government is well aware of the sensitivities of the region, and we are hopeful that Italy would remain committed to its balanced position in its statements and actions on the Nagorno-Karabakh conflict.

We are determined to elevate out economic relations to the level of our political dialogue. Italian investments in Armenia are growing year by year. Currently in Armenia there are more than 170 companies with the participation of the Italian capital. The interest of Italian entrepreneurs in Armenia is growing, the investments made in the most recent period refer to the textile, ceramic and energy sectors.

Over the past three years, our commercial turnover has steadily increased. Unfortunately, due to the coronavirus pandemic, last year we recorded tiny decrease in commercial turnover of about 12%.

Armenia’s accession to the Eurasian Economic Union, as well as the Global and Enhanced Partnership Agreement signed with the European Union, which entered into force on March 1, offer new opportunities for the expansion of cooperation between Armenia and Italy in the economic sphere. By making investments in Armenia, Italian entrepreneurs will be able to access, without customs duties, a 180-million strong Eurasian Economic Union market.

Օur cultural interactions go deep into history: the first printed book in the Armenian language was published in Venice in 1512. For Christian Armenians it is of immense value that the relics of St. Gregory the Illuminator, the first Catholicos of the Armenian Apostolic Church, are kept in the churches of San Gregorio Armeno in Naples and Nardò.

One of the most important centers of the rebirth of Armenian culture in modern times is the island of San Lazzaro in Venice, where the Congregation of the Mechitarist Fathers has existed for almost three centuries. It is an important center of Armenology, which has given its invaluable contribution to enrichment of the Armenian and world scientific and cultural heritage. By the way, Italy is home to the largest number of centers of Armenology in the world. The most developed centers of Armenology in Europe are in Italy, among which the Armenian Mekhitarist Congregation on the San Lazzaro island, but also in the Ca’Foscari University of Venice, in the Universities of Florence, Milan, Bologna, Pisa, and the Pontifical Oriental Institute in Rome.

The threads that bind our peoples are so strong and deep that after Armenia’s independence from the USSR it took no particular effort to establish excellent interstate relations with Italy.”.

Brussels was not really effective before and during the conflict but after the peace agreement signed in November, the European Union started a huge investment and diplomatic campaign in favour of the Azerbaijani socioeconomic projects in Nagorno-Karabakh (for instance, the project “The European Union for Azerbaijan”). How do your country and the Armenians perceive the European Union nowadays?

 “The European Union and Armenia have constantly reaffirmed their commitment to enhance and deepen their cooperation in all possible areas. European Union has always been our main partner in the field of reforms and modernization. As I already mentioned, on March 1st Armenia-European Union Comprehensive and Enhanced Partnership Agreement (CEPA) entered into force. This agreement takes the bilateral relations between Armenia and the European Union to a new, partnership level and regulates the dialogue in the political and economic spheres, as well as sectoral cooperation.

The CEPA is an inclusive document, which creates a solid legal basis for the Armenia-EU partnership, outlining cooperation in various spheres, spanning from justice, security, economy, agriculture and infrastructures to environment and climate, education and science, culture, health, etc.

The effective implementation of the Agreement will bring tangible results to our citizens by promoting democracy, political, economic, and social stability through extensive reforms, thus improving quality of life of our citizens.

Everyone needs oil and gas, heat and electricity, no doubt about it. However, when it comes to human rights and humanitarian issues, the European Union has been very outspoken. Let me mention there have been announcements in defense of the immediate and unconditional release of the prisoners of war, hostages and other forcefully kept persons on all possible levels, the European Parliament, the European External Action Service and the European Ombudsman Institute.”.

How has the recent Nagorno-Karabakh conflict changed the Southern Caucasus territorial and geopolitical framework?

“Armenia always stands for stability, peace and cooperation in the region, however, for its effective operation, first of all, it is necessary to create an atmosphere of trust, which is clearly lacking among the countries of the region. Unfortunately, Turkey and Azerbaijan do not discriminate between means to advance their aggressive policy and they are consistently undertaking steps to turn our region into a hotbed of terrorism. The level of Armenophobia is setting new “records”. Dozens of Armenian prisoners of war are still in Azerbaijan; Azerbaijan has occupied the territories of Artsakh proper, and the destruction of Armenian historical-cultural heritage continues.

Article 9 of the trilateral statement on ceasefire of November 9 reads that “all economic transport links in the region shall be unblocked”, which itself is a positive move towards establishing regional stability, as well as the prospects of cooperation in the region. Unblocking the communications will go not only to the benefit of our region but also much wider region. However, without trust and relevant atmosphere it would be doomed to failure. How do you imagine secure movement of people and exchange of goods when there are still several dozens of prisoners of war kept in the Azerbaijani jails, subjected to inhuman treatment, tortures and sufferings on absolutely bogus charges?

Otherwise, it is natural that unblocking the economic and transport communications can create new opportunities for the economic development and integrity of the whole region. In addition, in case of unblocking of economic and transport networks, there may be an opportunity to establish transport communication between the Persian Gulf and Black Sea. Naturally, the creation of this network will serve the interests of all the states involved.”.

International and local media have emphasized the decisive impact of the pandemic and conflict on the Armenian domestic policy. Could you describe which strategy the Government has established to overcome socioeconomic and political problems?

“Armenia faced serious socio-economic problems due to COVID-19 and Azerbaijan’s aggression against Artsakh, which could not be effectively addressed through traditional means. With this in mind, the government embraced the idea of developing the Government’s Economic Response Program and putting it on a practical footing. The Program seeks to achieve at least two priority goals specified in the roadmap published on November 18, 2020 (Overcoming COVID-19 and Eliminating Its Consequences; Restoring the Economic Activity Environment).

Armenia Real GDP January 2018 – September 2020 (Source: CEIC)

The government has set two primary goals: to overcome the shocks caused by the global pandemic and the war, and then to restore and get the economy back to the track of sustainable development. The program specifies 38 activities, among which are:

  • Growing and processing high value-added agricultural crops: One such solution is the cultivation of new types of crops, in particular, industrial hemp, which is not only preferable and cheap in terms of price, but also a source of high-quality raw materials. It can be used in the textile industry, in the production of paper and construction materials, in the export of crop seeds and oil.
  • Introducing an interim emergency tool in public procurement procedures: The purpose of this activity is to promote the participation of local companies in public procurements. Through such a tool in the public procurement process, the government will subsidize local companies that will use local labor and production resources to provide their services. This will result in increased interest of local companies in public procurements and will make the process more competitive. Moreover, businesses will receive actual support from the government through subsidies. In fact, with this measure the government will also contribute to the growth of local production and the activation of the local labor market. This activity shall target the local labor and commodity resources and will seek to support the local producer.
  • Continuing and transforming the COVID-19 response program: The Armenian government has adopted 25 measures to counter its adverse impact, some of which need to be re-launched in line with today’s realities. The scope of beneficiaries will be expanded: about 8000 entities in the agricultural sector, some 500 economic entities, about 100 small and medium enterprises will be supported in different directions. In other words, the measures to neutralize the epidemic are being transformed in accordance with the current requirements, aiming at the sustainable recovery and development of certain sectors of the economy.
  • Launch of large-scale urban development projects in Yerevan and Armenia’s communities: One of the key points of the economic response program is the launch of large-scale urban development projects. At the same time, the government shows its will and readiness to launch strategic large-scale projects. This is a message in terms of stabilizing the business environment in our country, which will find a response from foreign investors, opening up promising opportunities.

With this anti-crisis program, the Government is trying to stabilize the economic situation in our country with a complex of targeted measures, to revive the public’s expectations and prepare a solid groundwork for continued development.”.

According to open sources, in 2021 Armenia will start upgrading the Metsamor Nuclear Power Plant (ANPP) to make it safer and more productive.  Is your country focusing investments only on this infrastructure or in the future the Government might build other nuclear power plants in the country?

“The modernization of the Metsamor Nuclear Power Plant is underway, aimed at extending the life of its reactor until 2026. If after 2026 the relevant studies substantiate that the further exploitation of the ANPP meets safety standards, the government plans to extend its operation until 2036. Construction of a new nuclear power plant remains on the Government’s agenda.”

Armenia has refused part of the Russian investments to modernize the ANPP. Does it mean that Armenia wants to become more independent from Russia in this field?

“Russia’s state nuclear corporation Rosatom and the ANPP signed a loan agreement in 2015 covering extended operation and the provision of components and materials. The period of the use of the funds disbursed under this agreement expired by December 31, 2019, and after that Armenia decided to re-equip the nuclear power plant with its budget funds, still in ongoing cooperation with Rosatom Service.

By the way, an Italian company Sogin has been involved in the upgrading of the safety of the Armenian NPP and has been cooperating also with Armatom Scientific-Research Institute.

Today, Metsamor not only meets about 40 percent of Armenia’s domestic electricity needs, but has also allowed the country to become a net electricity exporter in the region, despite lacking major oil and natural gas deposits. With Metsamor operating in conjunction with the country’s non-nuclear power plants, Armenia diversifies its energy portfolio.”.

Since Armenia has neither oil nor natural gas, which kind of pipeline projects might support the Armenian energy demand?

“In the Soviet times we received part of our gas via pipeline coming from Azerbaijan, but after the collapse of the Soviet Union, Azerbaijan blockaded Armenia and the only pipeline until 2007 was the one coming from Russia through Georgia, which is still functional.

The Iran-Armenia gas pipeline was inaugurated in 2007 and continues to ensure uninterrupted gas supply to Armenia. Gas exported to Armenia is processed also into electricity, which is supplied to Iran.”.