Sep 26, 2012

Strategic Sellout: News of national air carrier’s purchase by foreign company raises concerns in Armenia

Armenia’s national air carrier Armavia will soon have a new foreign owner, which, according to some experts, is “dangerous and unadvisable” from the national security point of view.

Armavia’s current owner Mikhail Bagdasarov confirmed the information about the airline’s sale, saying that at the moment there are two main likely buyers – one of them is an Italian company, the country of origin of the other likely buyer is not mentioned yet.

In the last year or so Armavia has been on the verge of bankruptcy and the Zvartnots international airport on several occasions had to discontinue servicing the airline’s regular flights, which created inconveniences for air passengers.

Armavia officials said still in 2010 that the company was working in very unfavorable conditions imposed by the consequences of the global economic crisis and that the prices for services set by the Zvartnots were rather high.

According to Armavia, Zvartnots charges about 20 euros per passenger for its services, while in Georgia, for example, the country’s national air carrier enjoys a discount and pays a fee of only 4 euros per passenger and Armavia there pays 12 euros.

The sellout of another strategic facility of Armenia to a foreign company has raised more concerns in the country that already has its major strategic sectors (such as railway, communications, electricity and gas, water supply) owned or run by foreign companies, mostly from Russia.

Political analyst Hrant Melik-Shahnazaryan described it as regrettable that Armenia is losing control of another strategic direction.

“I have always been against the sale of strategically important sectors of the economy to foreign companies. Gaps in the legislation should be revisited so that the state should remain in control [of such sectors]. Otherwise, it will always involve risks,” he told ArmeniaNow.

Management expert Harutyun Mesrobyan, too, believes that “the sale of a strategic sector is dangerous from the point of view of national security”, but he stresses that Armavia has never been a ‘truly national’ air carrier.

“What is given to oligarchs’ control cannot be national, because the top priority for oligarchs is to rake in excessive profits,” Mesrobyan told ArmeniaNow. “It was for these excessive profits that Armavia worked outside the competitive field.”

Mesrobyan also stressed that in any case in strategic industries the government should either share in the capital or have control instituted by law.

“But since we are not a ‘national’ state, since oligarchs and ‘the national’ are incompatible, it is pointless to talk about any progress in the oligarchy-based economy,” Mesrobyan concluded.


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