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Tuesday, 25 October 2016


One good turn deserves another

2012-10-31 19:52

One good turn deserves another. 28613.jpeg

Armenian opposition has recently raised the issue of forgiveness and restructuring the country's debt to the Russian Federation in the amount of $ 500 million. "The Armenian government should begin negotiations on the issue with the Russian side", deputy from the opposition party "Free Democrats", the ex-Minister of Foreign Affairs of Armenia Alexander Arzumanyan said at a meeting of the National Assembly. Is there a chance that Russia forgives Armenia debts?


As a ground for his idea the ex-Minister of Foreign Affairs called the fact that Moscow has recently announced debt forgiveness for some African countries in the amount of $ 20 billion. "Russia has signed an agreement "Development in exchange for the debt" with Zimbabwe and Tanzania to write-off their debts for the development of these countries. Other African states are expecting to sign similar agreements", he said, adding that quite recently Russia has written-off the debt of Kyrgyzstan in the amount of $ 500 million

"But before that Russia forgave debts of many other countries - North Korea, Syria, Afghanistan, Iraq and so on. Since 2000, Russia has written-off debts for a total debt of around $ 100 billion", Arzumanyan said.

Then Arzumanyan spoke about the fact that Russia - the old strategic ally of Armenia - has never forgiven the debts of Armenia, and instead of this applied degrading formula "debt in exchange for the property". Under this deal, Armenia transferred Russia several companies thus having paid off the debts.

"I urge the ruling Republican Party of Armenia (RPA) to support the government in this matter to start negotiating with Russia to restructure or write-off the debt of Armenia", he concluded.

Conditions when Russia writes-off debts

"Except for isolated cases, Russia provides debt relief in case of two simultaneous conditions: inability to return the money for political, economic or any other reason, and the ability to start a new profitable business with the debtor", the head of the analytical Bureau Alte et Certe, political analyst Andrei Epifantsev said in a conversation with GTimes.

Epifantsev made an example of Iraq. In the aftermath of the defeat of Iraq the new government could not pay off the debts of Saddam Hussein, but it has agreed to allow the Russians to process the oil fields in exchange for the debt forgiveness. Accordingly, Russia had a chance to return the money that way. "There is also a separate category of debt forgiveness, motivated by political reasons. But this was mainly in the USSR. In modern Russia, as a rule, this cannot be applied. I think the idea "if you write off Africa's debts, then write-off our debts" would not work", he stressed.

According to the expert, in the case of Armenia, the economic component has no much weight. There is no option of a new profitable business worth of $ 500 million, but even if there appears such an opportunity some political constraints make such projects not very interesting. "It may turn out that like in the case with the previous practice of debt forgiveness in exchange for the company, providing these companies with raw materials and re-export of finished products in terms of a transport blockade can make this whole idea economically inefficient. We also must consider the likely negative reaction of the Armenian society that occurs in an event that a bigger part of Armenia economically belongs to Russia", Andrei Epifantsev believes.

He explained that in terms of policy the factor of Russia's interest really exists. "This is Armenia's accession into the Eurasian community and the rejection of European integration, since it's impossible to be a member of this community and at the same time to follow a course into Europe", he said.

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