Even the high level of corruption within the state machinery contributed to the emergence of this difficult situation. The Ter-Petrosian administration, just after the independence, had started a massive privatisation of the Armenian economy. But this privatisation resulted in the fact that the majority of the persons who won the largest contracts were persons with contacts within high governmental circles or their closest men. 32 The idea was to sell out shares of the state-owned industries in regard to the then amount of the production of the factory or the company. But often it happened that the company leader or the buyer, with inside help, managed to manipulate the production of the factory in order to reduce its productivity or margins of profit in order to be able to by the company to a much lower price. 42 In 1997, around 60 percent (approximately 6,000) of the small companies and 60 percent (around 1 250) of the average companies had been privatised. 44
This wave of privatisations resulted in a number of consequences within the Armenian social and economical life. First of all the welfare worsened rapidly and was redistributed in a much disproportional manner among the population, to the advantage of the rich. 57 Secondly, this meant that the new owners, who had bought these companies for almost negligible amounts, did not feel obliged what so ever to invest in them. Neither had they any interest in investing in newer equipment or in modernisation of their equipment, e.g. by cooperating with foreign partners. 58 Instead they chopped up what ever they could sell, including the machinery, for junk prices and sold them to Iran and other countries. Caravans of trucks transported tons and tons of industrial machinery from closed factories over the Iranian border and left behind several ghost like empty factories.
The privatisation, which was supposed to get Armenia of its feet again and which was welcomed by the western world and IMF (International Monetary Fund), was undermined by favouritism and corruption. The fact that the two brothers of Ter-Petrosian, as well as his closest ministers, enriched themselves enormously on the expense of the population, contributed heavily to the decline of the popularity of the president among the general public. 61 Many of the new rich people showed off their recently acquired empire and welfare, which incited the disbelief of the general public even more towards the government. Several government members, among them the brother of the president, Thaelman Ter-Petrosian, the Interior Minister Vano Sirdaghian (later wanted by Interpol) and the future defence minister and later the Prime Minister Vazgen Sarkisian, had direct control over the different industrial sectors in Armenia.
The New Foreign Policy of Armenia
Before HHSh even had come to the power, their new ideological thoughts had started to influence the Armenian foreign policy. The intellectuals of the party argued in favour of that the leaders of the new Armenia must have another approach to the different questions than the earlier Armenian leaders. Their ideas were summarized in some fundamental essays which basically stated that Armenia had too long relied on a "third power", this power either being Russia or the West, in regard to solving its problems. 66 The title of an article called the relying of the past on a "third power" as "Our three hundred year old mistake". 67 This had led to catastrophe, they continued to argue, and especially during the period of the first independent republic of Armenia (May 28, 1918 – December 2, 1920), which was led by members of Dashnaktsoutyoun.
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