Struggling to manage the coronavirus pandemic, the Armenian government maintained its public health vigilance while also instituting a partial easing of restrictions imposed on the population and businesses due to the crisis. The focus shifted to dealing with the negative economic impact. Tension over gas prices mounted with Russia while the latest round of talks with Azerbaijan over the Nagorno Karabakh conflict were held via video conference.
Domestic Policy
Armenia Moves to Gradual Reopening
After a concerted effort to manage the coronavirus (COVID-19) pandemic, the Armenian government defended its decision at a cabinet meeting on April 29 to begin reopening the economy partially and gradually, and weakening the restrictive measures that were introduced on 24 March as part of a national “lockdown” of the country. The decision coincided with a record-high number of new coronavirus cases, however, as the Ministry of Health reported 134 new cases, bringing the total number of infections to 2,066 and death toll of 32 by April 28. Health Minister Arsen Torosian warned that with daily increases in cases over the past ten days, health officials are expecting to no longer be able to hospitalize or isolate all infected persons. The move to lift restrictions began on April 13 with a partial easing of restrictions on economic activity, mobility and a gradual reopening of businesses and firms.
Oligarch-Linked Businessman Arrested
Police arrested Sedrak Arustamyan, the chief executive of the Multi Group holding company, on April 25 as part of a corruption-related criminal investigation. The arrest has political implications, as the holding company includes several firms owned by the leader of the Prosperous Armenia Party (BHK), the second-largest party in the parliament, Gagik Tsarukyan. Although Tsarukyan holds immunity as a sitting member of parliament, police did not rule out that he may be a part of the criminal investigation which led to the arrest and charging of Arustamyan with bribery and money laundering in a case said to involve financial transactions totaling some $20 million.
Commemoration of Armenian Genocide
Despite the national lockdown and other virus-related restrictions on movement, Armenia commemorated the 105th anniversary of the Armenian Genocide on April 24 with Armenians participating in a government-organized ceremony that included residents turning off lights in their homes and churches tolling their bells in memory of the victims.
Economic
Problems in Economic Assistance Plans
Despite an ambitious program of economic assistance for businesses impacted by the closure imposed by the virus crisis, fewer than 500 small and medium-sized businesses were able to qualify for obtaining low-interest loans offered by the government, according to figures released on April 27. With only 1,200 of the more than 70,000 small and medium-sized enterprises (SMEs) registered in Armenia applying for the three-year subsidized commercial loans, a mere 461 applications have been approved, bringing the total among of funds disbursed to a meager $10.8 million.
The move to lift restrictions began on April 13 with a partial easing of restrictions on economic activity, mobility and a gradual reopening of businesses and firms
Armenia to Receive Special IMF Funding
The International Monetary Fund (IMF) announced on April 26 that Armenia will receive some $280 million in emergency loans aimed at easing the negative economic impact of the coronavirus outbreak. That loan package, to be released in May, includes a $248 million “stand-by arrangement” that was allocated to Armenia back in May 2019. According to Yulia Ustyugova, IMF’s Resident Representative in Armenia, the country will also be able to use additional $140 million in funding to Armenia. For its part, Finance Minister Atom Janjughazyan reported on April 21 that the government seeks to borrow some $540 million in external financing to offset a major shortfall in tax revenues, to fund virus relief measures and in anticipation of a looming economic recession from the crisis. Although the emergency borrowing will trigger a sizable increase in foreign debt, the move is seen as a necessary response to the deepening economic impact of the public health crisis and from the shutdown of the economy, which the Armenian Ministry of Finance expects to result in at least 2-percent decline in GDP.
Foreign Policy
Armenian Official Refutes Russian Criticism over Gas Supplies
Deputy Prime Minister Mher Grigoryan strongly dismissed Russian criticism over gas price negotiations on April 23, arguing that not only was the Armenian government justified in seeking a reduced price for its imports of natural gas from Russia but stressing that Russia’s offer of “subsidized gas” at a discounted price was never as “generous” as Gazprom contends. Grigoryan further explained that even EU gas consumers were paying less for Russian gas imports than Armenia due to a global collapse in oil prices and a pronounced decline in energy demand.
The discrepancy, which applies to Russian gas exports to both Armenia and Belarus, is a result of gas contracts set at fixed prices. For Armenia, the wholesale price for imported Russian gas increased from $150 to $165 per thousand cubic meters after Gazprom raised prices in January 2019. The pressure is likely to only increase as Armenia’s Gazprom-owned gas distribution network is now seeking a further 11% increase in gas prices. Russian officials have also defended the bid for higher prices, also complaining of ongoing criminal investigations of reported corruption and tax evasion by major Russian companies and the operation of the Armenian national railway network managed by the Russia Railways (RZD).
Armenian and Azerbaijani Foreign Ministers Hold Videoconference
Reflecting the limitation from the global virus pandemic, the Armenian and Azerbaijani foreign ministers held a video conference on April 21 in the latest round of talks over the Nagorno Karabakh conflict. According to the official statement issued after the conversation, the Foreign Minister Zohrab Mnatsakanyan and his Azerbaijani counterpart Elmar Mammadyarov “expressed the hope that the resolve seen in the global pandemic response will bring a creative and constructive impetus to the peace process”. The official French, Russian and U.S. mediators, the OCSE Minsk Group co-chairs, also participated in the video session and reiterated calls for all parties to “strictly” observe the ceasefire in the conflict zone and “avoid provocative actions in the current environment”. The discussion was the latest round of talks since the late January Geneva two-day meeting of the two ministers. In that meeting, which was defined as “intensive discussions”, the officials focused on “possible next steps to prepare the populations for peace” and regarding principles and elements forming the basis of a future settlement.
