Wednesday, May 05, 2010

Unsustainable economy, Սեռժեմբերիկներ 2.

The point about the Russian language schools is not as trivial as the wishes of the former Russian educated elite or Serj Sargsian's upbringing in Azerbaijan. It's another stepping stone towards joining with Russia in some sort of a union.

This sounds like a paranoid conspiracy but there are grounds for this. The past decade has shown that the Armenian society is unwilling or unable to build a sustainable economy. The monetary policies of the successive governments have favored the importers. Production for internal markets or exports have been discouraged. The import of goods is controlled by a handful of families and it is far easier to resell something that's already been made than to actually create value.

The main export has been labor with people leaving the country to work abroad and support their families in Armenia. This, however, is not sustainable in the long run. There are a couple of reason:
- Immigrants integrate into their new home countries the longer they live there and will try to bring over their families as they learn the laws and customs of their new home;
- Immigrants lose their touch with their birthplace with time;
- Families left behind die off reducing the recipient lists.

The financial crisis exposed how vulnerable this system is and the Armenian government had to fill the plug with $1.5 billion of new foreign debt.

The solution is to enter into a union where there is an economic 'big brother' with a pegged currency or single currency. The obvious choice for a big brother is Russia and the return of the Russian schools is another step in preparing people to administer Armenia under Russian control.

No comments: