Vartan Oskanian was a guest on the Al Jazeera English Broadcast's weekly Counting the Cost program, hosted by Kamahl Santamaria. On a current note, the fact that Moody’s lowered Armenia’s outlook this week and put it on a negative watch, how much do you think that is a reflection of Armenia’s own economy or its exposure to Europe and Russia? I think it’s the latter. Armenia’s economy is exposed to the global economy. Although we are a small country, if the 2009 recession is any indication, I think any new slowdown or recession in the global economy will clearly impact Armenia and since this time it seems like the origins will be Europe, that impact will be even more direct on Armenia because the European Union is Armenia’s largest trading partner. Armenia exports metals, cut diamonds to Germany, Bulgaria and Belgium. The second conduit is Russia, which is the second largest trading partner for Armenia, the biggest investor in Armenia and the source of 75 percent of all remittances that come into Armenia. Armenia exports mostly agricultural products to Russia, raw and processed. Any global slowdown clearly will affect Russia and will change these elements and factors and consequently Armenia’s economy will be affected. I think Moody’s decision was based on this exposure. Bearing all of that in mind, is there any way that Armenia can, maybe, not become more self sufficient but perhaps move away from the types of things you’ve talked about – mining, agriculture, natural resources, or is it always going to be almost 100% dependent on the export market? The 2009 recession of course brought this issue home. Diversification finally became the government’s priority, not that it was not. But suddenly the government began to pay more attention because Armenia was one of the hardest hit economies. Actually we were the second hardest hit economy in 2009. Our GDP declined 14.5 percent which is huge for Armenia’s economy, so since then we’ve been questioning the reasons for this decline, when our neighbors decline was much less than ours. The answer is among many other things inefficiency in governance, structural problems, also the issue of diversification. So along with the traditional industries that we inherited from the Soviet period such as mining and agriculture, Armenia I believe has tremendous potential in other areas such as information technology, we have a well-educated population. Tourism and services, because the country is beautiful and the people are hospitable and also putting the emphasis on small and mid-size enterprises, because Armenians are entrepreneurial. Our neighbors of course have many other attractions. Georgia is a transit country, has access to the sea. Azerbaijan has oil and gas. Armenia is a land-locked country, has no natural resources, it’s small in size and population and territory. So our only attraction for foreign investment, which is very necessary to develop those areas so we diversify our economy, requires further democratization of our society, rule of law, broader justice, so that those will become Armenia’s attractions. The government recognizes that, we’ve made a lot of headway in those directions, but I don’t think we’ve done enough. I wonder if I can ask you about another issue actually which doesn’t necessarily fall under the global slowdown. It may affect you economically. This is Iran. The more that the West seeks to put sanctions on Iran, the effect that that has on you as one of Iran’s neighbors and the future of things like the gas pipeline which you’re building between the two countries. Sanctions on Iran have so far not affected Armenia. If there’re any additional sanctions because of these latest developments with regard to nuclear arms, clearly those sanctions will come to bite Armenia. There’s no doubt about it. But on the other hand, Armenia is a member of the international community. And is bound to honor mandatory sanctions. That’s why Armenia’s position has always been that this conflict with Iran be resolved through negotiations so that we can avoid additional sanctions, and also, clearly, so we can avoid military actions. That will be extremely detrimental to the region in its entirety. So Armenia’s position is that we need to have a negotiated settlement because additional sanctions will be tantamount for Armenia to having a third closed border which Armenia cannot afford.

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