Up the Down Escalator - October 1992 by Armenian International Magazine

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More like a living history than a traditional publication-that's how our readers have seen AIM for

the past two years. Crisp graphics, thorough reporting, thought-provoking stories and colorful profiles have led AIM to propel the Armenian print medium rnto the global age, With correspondents in almost every malor city around the world, bureaus in Los Angeles, and Yerevan, and a diverse editorial appeal, we thrive on the passion to be the best. That's what has made us the mostwidely read publication in theArmenian world today. That'swhat will continuetoguideAlM throughout the 90's and beyond, providing a solid medium to reach Armenians internationally.

,'UNI

Month after Month. AIM captures the spirit of the Armenian nation,

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COVERSTORY

UP THE DOWN

ESGALATOR

Democracy rings hollow without the proper economic framework, instruments and institutions to sustain it.In Armenia, where the present economic crisis is inexfficably tied to larger political processes, establishing a socially responsible market economy is an uphill battle. INTERVIEW

GEARING UP FOR

WINTER

Khosrov Harutunian, Armenia's new prime minister, discusses national priorities. EDUCATION

A CUT ABOVE

The Anania Shirakatsi Academy is an experiment in progress. The latest Jemaran may well beat the odds in its drive for educational excellence. INSTITUTIONS

MANKATUN REVISITED

A year after the first AIM report, the Yerevan orphanage appears a kinder, gentler place. SPECIAL REPORT

A NEW KID ON THE

BLOCK

Since the break-up of the Soviet Union, all manner

reference works have had to be rewritten to reflect changing geopolitical realities. Armenia, too, is enjoying a new image in reference and educational materials. PROFILE

THE UNDIMINISHED DISCORD 36 Composer Ohannes Salibian, who describes himself as a "cultural activist," is a living antithesis to the Diaspora's deepening lethargy. CLOSE-UP

CAPTAIN'S TALE

Miniature artists Mikael and Garik Ikikorian specialize in recreating seafaring traditions.

Editor's Note Focug

Books

Cover: art direction,

Comhbnw-eam of rndependent StarSJ: Si-si eime-r'iii

Sgiti;rimi:iir;

SenO

Archives

6 7

Letters

iddress ctianges to

Alt,

P.O.

iox

Faces Essay

Vah5 Fatta!; photography, Fred Kaplan

3296'

f.nhtttrn

Beach' CA 90266' U'S.A.

42 44 45

EDITOR'S NOTE At an Oral History Association Conference in Cambridge, Massachuin 1990, Samuel Shahmuratian spoke of the impact of his first-person accounts in a world interested only in politically expedient rhetoric. Shahmuratian had become an oral historian-an extension of his training as a joumalist-to observe and probe. And as an activist and a member of the Democratic Movement, he wanted to fight for his causes. Witness his setts,

death.

More than anything, Shahmuratian ( I 95 5 - I 992), member of Armenia' s Parliament and secretary of the Parliament's Commission on the Media,

was a joumalisrhistorian. Killed during the fighting in Martakert in early September, his interviews and reports in Armenia's newspapers had made him a respected member of the press even before the beginning of the Democratic Movement. Shahmuratian was aware of the power of language and writing. He knew that the good joumalist is also contemporary historian. Concemed with today's who, what, where and when,he also strove to uncover answers for how and why. But it was the Sumgait massacres which presented Shahmuratian the opportunity to practice a kind of journalism few have the opportunity orcourage to do. [n the days immediately following Shahmuratian's the February, 1988 atrocities in brand of passionate, Azerbaijan, during which Armenians activist journalism were subjected to what he called "a involved the taking bloody tragedy in Sumgait which included every conceivable human crime of risksn from and torment," reminiscent of another interviews with time in our collective memory, massacre survivors Shahmuratian, armed with a tape reto studies ol the corder, interviewed some 150 survivors political revolution and eyewitnesses of the Sumgait masfrom within. sacres, within weeks of the horrors that had numbed them and which they later would block. The edited transcripts became The S um gait Trag edy (Car atzasfZory an, I 990). Shahmuratian's brand of passionate, activist joumalism involved the taking of risks, from interviews with massacre survivors to studies of the political revolution from within. The myriad dangers-and rewards----of such commitment to the reading and making of history are evident. He will be remembered and missed.

PUBLISHED BY

Att,

trac.

EDITOB-!11-GHIEF: Vartan Oskanian EXECUTIVE EDlTOnr Salpi Haroutinian Ghazarian fANAGlllG EDITOB! lshkhan Jinbashian

EDITOnIAL CONEULIANT! Minas Kojaian EDITOn EtEBITUS: Charles Nazarian EDITOF A? I"ARGE: Tony Halpin DIFECTOB OF OPERATIONS; Michael Nahabot COilTRIBUTING EDITOBS: Vicken Babikian, Kevork lmirzian, Haig Keropian, Mark Malkasian, Taline Voskeritchian

ASSISTAl{I EDITOB! Katherine

Chiljan

ASSISTAiIT TO THE EDtTOn: Hasmik Harutunian CONTnIBUIOBS: Amsn Aroyan, Christopher Alamian, Florence Avakian, Gerry S. Graber, Yvstte Harpootian, Linda Kirishiian, Ani Klchian, Lola Koundakjian, Gilda Kupelian, Gerard Libaridian, Michael Mastarciyan, Moorad Mooradian, Nancy Najarian, Susan Pattie, Ratfi Shoubookian

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Eb.6 and a genuine interest to see Armenia as a stable, independent, democratic and economically successful country-will overcome this crisis. The question which remains to be an-

swered is whether Armenia will have an able, fair and visionary leader who will be able to navigate the independent country through these difficult political times.

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to irreconcilably split the National Church and fracture the diasporan communities into defiant factions thal exchange accusations and insults-and consequently disillusioning and largely alienating the majority of

Armenians-the inept diasporan political leaders have now moved their modus operandi into Armenia. If the diasporan ex-

Grossing Views In "Crossing Purposes," (Special Report, July) Salpi Haroutinian Ghazarian and Tony

Halpin are correct

stating that

Maroukhian had refused to leave the country (in response to the expulsion order given by the Armenian President to the ARF leader), such a move could have triggered a civil war

in the country. But most people who

are

familiarwith the ARF's goals and pastrecord know that the ARF would have never taken the irresponsible step of sparking a civil war in Armenia. Despite President Levon Ter-Petrossian's panicky and unstatesmanlike announcement, merely l0 days later, during a visit to Los Angeles, the ARF leader extended an invitation to him to forget the recent squabbles and start a new cooperation based on mutual respect and understanding. On the most crucial issue of how to resolve the Karabakh struggle, the ARF from

the start has been a firm believer in the strategy of coupling armed self-defense with diplomatic negotiations. Also, the article erroneously justifies the president's opposition to a resolution introduced by the National Alliance in Parliament, calling for the recognition of NagornoKarabakh's independence. Itargues that such

a move could obstruct negotiations with Azerbaijan, when Armenia is making aclaim on Azerbaijan's territory. How can recognition of another entity's independence translate into a claim on Azerbaijani territory in the absence of any talk of unification? As to whether the need for an Armenian

constitution has been heightened by the president's speech, the answer is a definite yes. Theseproblemscouldhavebeen avoided if the president had acted more swiftly in drafting a constitution, which would define (and possibly limit) the president's powers, among other things.

In conclusion, there is no doubt the ARF-with solid popular roots, experience

perience is a reliable measure of predictability, the move, if not checked, has the potential for grave consequences for Armenia. I was in Armenia three days after the expulsion of Mr. Maroukhian from the republic, and I could sense the uneasy political atmosphere the event has generated. A large number of Armenian individuals the and nonpolitical organizations

Diaspora continue to help Armenia with great generosity and with no political strings

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The people of Armenia are very capable of fashioning their own democratic political system to cater to their own national aspirations.

It might

be prudent for the traditional Armenian political parties to democratize their constitutions, move their head offices to Armenia and relinquish the leadership permanently to nationals of the republic. If, however, the leaders are unable to do so, they can at least do Armenians the great service of limiting their clumsy tactics to the comfort of their own homes and within the confines of their own self-congratulatory

ROGER K. DERDERIAN FINANCHLCONSULTANT

circles.

Dickran A. Malatialian Halifax, Nova Scotia, Canada The Ramkavar and Dashnak parties of Armeniaobviously are financedand get their directives from their headquarters which are

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situated outside Armenia. They promote and often try to force on the govemment policies whicb they deem appropriate for the running of the country. This. of course. is nol acceptable either to the Armenian govemment or to the people of Armenia. Clearly, the policies and objectives of the Diaspora Armenian political parties are, considering the extremely grave circumstances facing our motherland, opportunistic and unethical because they undermine the strength and unity of the Armenian nation, at a time when unity is of paramount importance. I therefore beg of my fellow Armenians

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AIM, OCTOBER I992

ARMTNIAN TTI-TI/ISION PRODUOI()l'|S, It,lC

everywhere, especially those who are members of the Diaspora Armenian political parties, to raise their voice in protest in order to force their leaders to abandon their old, illconceived policies of confrontation and deceit that can only help the Azeris, who are threatening the very existence not only of

Ihe

Nagomo-Karabakh, but of the Armenian Republic too.

index. M anhattan

h, C alfornia

What an excellent job! We hope to see more of her contributions in the future.

major point rhat

Zovinar Keledjian New York

B e ac

I would like to clarify

Phone

was incorrectly made in "Crossing Purposes."

In the constitution of the Armenian Revolutionary Federation, any decision can be reversed orany committeecan be dissolved by a democratic vote within its members. The

ARF proved this by issuing a newsletter

El8l782 4944

stating its support of H. Maroukhian. In my opinion, the Armenian president must concentrate on tuming the world's at-

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against Armenia and Karabakh, instead of creating unnecessary friction within ourselves. The ARF has been always a defender of Armenia's prosperity and integrity in the face offoreign forces. Shahi Sagherian Maple, Ontario, Canada

Gorrective medicine The article "Bill of Health: Anatomy of

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Armenia's Medical Care System" (Cover Story, July) reiterates all the information that has been available for some time. It

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Americans in establishing an agricultural industry. For research and practical, modem use

land and agricultural equipment, the University of Califomia at Davis and Fresno State University can help immensely. The Armenian agricultural community in the San

Reader.to.reader

effective.

I can't understand how the Lord's Prayer is so frequently verbalized and yet not prac-

complimentory copies of

leam from the Japanese, who do not want to give up producing their main diet of rice, and the Israelis, who got help from many

menian and non-Armenian groups have been

mention whether any of these programs have been implemented, or how he intends

Bring AIM to your clossroom

Industrialization will cause more pollu-

tion and more migration of farmers to the factories, thereby becoming more dependent on outside food supply. We should

Joaquin Valley can provide very knowledgeable advisors in this field. Ara Hovakimian

under way to improve the quality of health care in Armenia but fails to

where issues of interest to the Armenion community ond the world con be studied, discussed, questioned ond finolly, serve to focilitote mutuol understonding. Let us

About the article on computers for Armenia (Technology, July), what is so good about establishing acomputerindustry when the people over there lack the basics such as food? We have yet to see an article in this magazine about how Armenian farmers grow, harvest, store, transport and sell their products.

fails to articulate in detail how the system has changed since the declaration of independence and whether the numerous programs which have been developed and implemented by the various diasporan Ar-

In the interview, Minister of Health Dr. Ara Babloyan refers to many studies now

AIM for Educotion

I have read with great pleasure the article on CD-ROMs, "Optical Options" (Technology, March). Lola Koundakjian has successfully managed to present clearly and

meticulously a wealth of information in a two-page format. The Wish List is a wellresearched and valuable Armenian CD-ROM

Antranig Tatossian

Ihe only independenl voriely progrom in the world !(S(! - TY lnlernotiond Gmd

Food before technology?

implement them

in this difficult

economic climate. He expresses his wish to "preserve state-owned medical care and develop private medicine," but fails to dis-

will ensure that such a system not create a two-tier medical delivery

cuss how he

will

system.

Dr. Babloyan also expresses his wish to implement a mechanism where doctors will be paid for the number of patients they treat, but fails to recognize the consequences of rewarding the quantity rather than the qual-

ity of service provided. In briel the articles fail to detail.the short- and long-range plans to improve the current system and ensure that it will meet the needs ofall its residents. Houry Youssoufian Watertown, M assac husetts

AIM, OCTOBER

1992

Walnut

reek,

California

ticed. In his letter (Letters, July), Mr. Aspet Ordoubegian of Sacramento speaks on the minority issue so clearly and bluntly, and prescribes better understanding of "our en-

emies." Looking to Russia to solve the Karabakh issue years ago was futile, as we all clearly know now. Another example is Georgia's treatment of its minorities in a similar fashion. One can go on and on about haughtiness, self-righteousness and the blown-up ego factor among our people toward each other-in the social fabric. economic position, etc. Jesus Christ recognized no such categories, and if we truly believe in His message, it should challenge us to emulate and follow it. This is not an easy task, but it is better than killing each other with guns and words.

Ellen M. Ohan Groveland, California In an article you featured in the October 1991 issue, "Bleak House: Horrors of an

Orphanage," writer Jackie Abramian promised she would return and update that story. Has she? I know the article touched many Armenians and I'm sure others would like to hear about what happened to the orphans. Eileen Karakashian Paramus, New Jersey

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Abramian's update appears inthis issue.

a student of

Yerevan

State

University's two-year-young Faculty of Intemational Relations. Everyone insists that we have a promising future, but the reality is that it's not so bright. The main problem is the lack of any modem textbooks and a specific curriculum. In order to improve my English and become a qualified specialist, I would like to correspond with people in the United States. I am interested in information on recent literature on intemational relations in general, and specifically on the foreign policies of the major powers-USA, UK, USSR, etc. I believe the interpretative approach of

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Westem authors is verymuch differentfrom the viewpoint of Soviet analysts.

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I have to admit in shame that the textbooks we use today are those written in the 1940s and '50s.

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AIM, OCTOBER

1992

G LOBAL R EAGH

TERPETROSSTAN ADDRESSES THE UN GENERAL ASSEMBLY By KEVORK llf,lRZlAN

trip to the US since being elected president, IrvonTerPeftossian marked the first anniversary of Armenia's independence driring his visit to New York in an address to ttre UN General Assembly, as well as in a speech to the members of the Armenian community at a public n his second

gathering. During his stay in New York from September l9-23,TerPeftossian metwith the foreign ministers of Turkey, han and Israel, as well as with the presidents of Cyprus,Lavia,NicaraguaandCroatia. Ter Peffossian also had a private breaHast meeting with representatives of Armenian organizations on September 20 and attended u $50,000-plate dinner the same evening at the Metropolitan Club, raising $ 1 million for the newly established Armenia Fund Before his UN address, where Armenia was being represented for the first time at the presidential level, Ter Petrossian was welcomed by Stoyan Ganov, the president of the General Assembly, accompanied at the rosffum by Secretary-General Boutros Boutros-Ghali. Ter Petrossian, who read his address in French, underscored his govemment's commifrnent to "democracy, economic reform and the rule of law," noting the tremendous hardships faced in an environment dominated by blockades and an acute energy crisis. Ter Peffossian went on to outline the objectives ofArmenia's foreign policy-the normalization of relations with all of is neighbors and the development ofregional economic cooperation-while AIM, OCTOBER 1992

I I 5 E

fire as afirst step toward ending the fighting. At the conclusion of his l5-minute address, which was beamed via satellite to Armenia, Ter Petrossian was escorted outby Boutros-Ghali. The two men later met pnvately, following a lunch hosted by the secretary general foranumber ofheads ofstate. Three days before the UN address, at the Marriott Marquis Hotel, Ter Petrossian spoke to about 2,500 Armenians who had come from far and wide and filled the grand ball-

roomto capacity. The crowd greeted the president with

standing ovation as he took his place on the dais accompanied by Vartan Gregorian, president of Brown University, Senatorlarry Pressler of South Dakota and Alexander Arzoumanian, Armenia's ambassador to the I.JN. In an emotionally charged opening speech,

Gregorian saluted the president and the ac-

complishments of ttre new republic. After summing up the most salient epochs in Armenian history, Gregorian said: "It's befitting that [TerPetrossian] was bom in Aleppo. This symbolicallyestablishes anecessary link between the Diaspora and Armenia proper. We are one body with two lungs and we need

bothof them if Armeniais to suryive." Following remarks by Senator Pressler, who is a member of the Senate Foreign Relations Committee and a long-time supporter of Armenians, Ter Petrossian took the podium and spoke for about 90 minutes about the meaning of democracy, indepen-

dence,

the Karabakh issue and his

govenrment's plan foreconomic reform.

Iranian delegates, the only neighbors present in the half-filled Assembly Hall, listened intently. Following just as intently was the Armenian delegation which included Foreign Minister Raffi Hovannisian. "Armenia has no tenitorial claims on Azerbaijan," declared Ter Petrossian. "But the people ofKarabakh cannot be rcduced to an ethnic minority, they cannot be denied the right to self-determination, and they cannot be sacrificed using the principle of tenitorial integrity as a cover." The president sressed that the prorcction of the people of Karabakh should be secured through "permanent international guarantees" and called for a cease-

"I'm happy to join you to celebrate the first anniversary ofthe independence ofArmenia," began the president. "Independence was not a gift from heaven. It came as the result of years of struggle by our people. We have to underline that... we owe [our independencel not only to the present generation in Armenia and the heroes of Artsakh, but also to the entire Diaspora and all the martyrs

in our struggle for national liberation over the past 300 years."

Ter Petrossian conveyed his thoughts in clear, concise statements and was quick to establish rapport with the highly responsive

crowd, which frequently punctuated his statements with loud applause. Those who could not followthe speech in Armenian had the choice of renting headsets that provided simultaneous electronic translation. The audience was also able to see the president's magnified image on a giant screen set up only a few feet from the podium, which gave the event the feel ofa party convention. After outlining the benefits a democratic system of govemment has brought to Armenia, Ter Petrossian said: "I can also confess that our democracy is not yet perfect-nor could it have been in such a short period of time." Stressing the importance of establishing a "law-abiding state" guided by a new constitution, he addedthat the republic needed time to "institutionalize democracy" to ensure its longterm stability. "The language and the content of the new constitution will be debated by the Parliament, as I proposed, in the upcoming session," he said. With the patience of a professor delivering a routine lecture, Ter Petrossian next summed up the "objective" and the "subjective" difficulties faced by his govemment in its effarts to restructurethe economy. Among the objective difficulties, the president cited the Azeri blockade and the loss of90 percent of the republic's extemal economic ties following the collapse of the Soviet Union.

As for the subjective difficulties, Ter Peffossian spoke of the immediate need to reform the economy. " It is our top priority to have in Armenia the maximum number of proprietors in the shortest possible time," he said, before pointing to the success of

Armenia's land privatization program. Moving on to foreign policy, which he termed as another subjective difficulty, the president said: "The existence of Armenia as an independent state is contingent upon its normal relations with its neighbors." While seeing no problems in Armenia's

relations with Georgia and Iran, Ter

Petrossian advocated the establishment of diplomatic relations with Turkey without presenting any political preconditions. "The

political principle that govems our relations with Turkey is a tacit understanding, an 'agreement not to agree,' regarding the past and regarding other conflicts," he explained. "Both sides are ready to develop this relationship without touching upon political isl2

sues

orproblems."

Addressing the thorny issue of Karabakh, Ter Petrossian voiced his conviction that the

conflict wouldbe resolved at the negotiating table as soon as Azerbaijan was ready to compromise. "The flrst step should be to establish a cease-fire," he said. "And let the negotiations go on for decades if necessary regarding the political status of Karabakh."

During the question-and-answer period that followed, Ter Petrossian could not take too many questions due to a tight schedule. But one of the three questions he had time to answer, out of the dozens of written questions submitted by the audience, concemed the reconstruction of Armenia's disaster zone. "This is one of our most painful problems," Ter Petrossian said. "The central govenmentnever gave us the I 0 billionrubles it promised back then, therefore only 20 percent ofthe reconstruction has so far been accomplished." The president went on to say that the Armenian govenment had made a "fundamental mistake" by assuming the entire responsibility for the reconstruction effort. He expressed his belief that the rebuilding of northem Armenia could be accomplished through "private enterprise only." At the end of the program. as security once again tightened around the president, Gregorian called to the podium "the First Lady" of Armenia. Also accompanying the president during his visit to the US were his press secretary, Ruben Shugarian; Deputy Foreign Minister ArmandNavasartian; Chief of Staff Shahen Karamanukian; Presidential Advisor Nigol Shahgaldian; Presidential Assistant Levon Zurabian; and two bodyguards.

Two days after the president's speech, Shugarian held a press conference at the UN and fielded questions from a dozen joumalists. Beside elaborating on some of the points already made by Ter Petrossian in his speech, Shugarian said the president's meeting with the Turkish foreign minister Hikmet Cetin was "very consffuctive." Responding to a

question about Foreign Minister

Hovannisian's speech in Istanbul two weeks earlier, Shugarian saidhe would characterize it as "an emotional first" for the minister, and said "this explains to a great extent why there are some points that contradict the foreign policy of the Republic [of Armenia]." Absent from the president's speech and his address to the UN was the issue of refugees in Armenia. Asked whether there was a specific plan or policy to deal with the prob-

lem, Shugarian explained that Parliament was looking into the issue and added that compared to the past two years, the refugees were in better shape today.

The president left for Armenia after attending a reception held by the UN for 150 high-level diplomats representing some 35

countries.

AIM, OCTOBER 1992

The prcsident underscored his government's commitment to ttdemocracy, economrG reform and the rule of law."

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LR.ft THE ES$EilTIALS OF A TilARKET ECONOMY SyllAHKCHEt{lAl{

uch has been said on tfie pro-

refbrm and sffuctural adjustment in

cess of economic policy

Armenia. An equal weight mustbe givur to the creation of the necess4ry, logal, :regplatary and judicial

(tRI)

:etrvironnrcnt, which is crucial to broadbas€d ecoftomic grcrvth, whero matkels operatB compotitivcly and efftciently. This camotbbachieved,by legislation alone, but together with functioning institutions that deterrnine how the system oF erates in practice, as well as with a free press that affect the transparcncy of that

operation.

According to Peruvian economist Hemando de Soto, property rights, conffacts and extra contractual liability (torts) are the three foundations of a market e@nomy's legal system. Property rights month. The result is that few people can af-

ford to buy anything except food and cigarettes - which

is about

all those makeshift stalls

on Yerevan's sidewalks have to offer. The impoverishment of the population is intensifying the already severe problems faced by Armenia's industry. l\mentoy is probably the best knownjoint venture established so far in the republic, but today its plant stands idle. Nothing has been produced since before

give individuals a vested interest in the economic system and provide stability. Conract law allows parties to match theii preferences and maximize predictability: Tortlaw identifies wrongful damages and provides procedures for assessing theil value. It induces the market to take efficient precautions to avoid damages.

The functioning of financial rnarkets (credit, rates, timely enforcement, exchanges, reliable information); business laws (corporate, bankruptcy, secured transactions); and labor regulations (wages,

minimum safety health conditions and labor disputes) is particularly dependent on

theLRI. The LRJ environment also limits anticompetitive practices and avoids at all cost active government involvement in the market for personal gain. Public officials who are involved in business activity pose a serious obstacle to the development

of competitive markets. kgislation that regulates, for example, infl uence peddling,

could contain such comrption. Perhaps Armenian joint venture set up two years ago, did succeed at one time in gaining foreign customers for hard currency. "Now, since the Foreign Economic Bank of Armeniaexists in name only, it is impossible at the moment to convert hard currency," said Aguzumtcian. "We have no way of bringing hard currency to Armenia through conventional channels." The company has lost 30tonnes of raw materials this yearwhich

last winter, says sales manager Hrair

never made

Aguzumtcian. Heestimatesthatforthecompanytomake

Azerbaijan. It

now considering how to send

profit now after the costs of raw materials,

labor, and taxes, a toy must cost 750 rubles in the shops. "It sounds a little absurd to buy a toy for that price now that the bread problem is so acute for the Armenian people," he said. "As businessmen, we don't have the right to continue production ifthe products can 't be bought at the prices we charge. It is not that there are no customers but that there is no buying capacity among the people." The disruption of energy supplies, the difficulty in bringing raw materials into Armenia and sending finished goods out, and the primitive banking system in the republic all contribute to Armentoy's problems. "The poor condition ofbank accounting

has the most immediate impact upon our work,"saidAguzumtcian."Allthemoneywe receive goes through the banks but it sometimes takes months before the money actually reaches us." Inflation eats at the value of that money during this delay. Armentoy, an American and

through Georgia

and

13,000 toys from its stockpile to the Children's World storein Moscow intimefor Christmas. Will Armentoy stick it out? "If a man is here and does his job he must be an optimist," said Aguzumtcian. "But at any rate, although we can produce splendid toys, if we don'thave the opportunity to export them from Armenia orto sell them here, there is no great sense in producing them." Affnentoy's experience is typical of many businesses in the republic today. Another high-profile enterprise, Benetton, has had little more success. The company operates a dollars-only shop in the center of Yerevan, which closedforth-ree months last winterbecause of the energy crisis. Commercial director David Rostomian expects to do the same thing this year. "We have bought a generator which will provide some electricity but if city life fades away this winter and Yerevan becomes a ghost city, then the shop will not work," he said. "Hardly anyone will buy items forhard AIM, OCTOBER I992

currency in the hard winter conditions-the wealthy are trying to leave Armenia." The store has fared better than the Benetton

factory in Yerevan,established with 300employees to produceclothing for sale across the former Soviet Union. It has not operated for six months because the raw materials cannot be brought in by rail either through Georgia or Azerbaijan. "The Benetton fi rm, being afraidof the war situation here, is reluctant to introduce new working capital," said Rostomian. "In my opinion, the company is arriving at the thought

of shutting down in Armenia but would probably feel asharhed to do it in a rapid way, especially as they signed a two-year agree-

ment." That agreement with the Armenian authorities expires in October 1993. The atmosphere has not been improved by a wrangle over taxes-the initial deal included a twoyear tax holiday but, said Rostomian, Benetton was now having to appeal for govemment exemption from recent legislation compelling all companies to pay taxes. "The firm will not suffer so much if they impose taxes but the ethics of doing business cannot permit one ofthe articles ofourtreaty to be violated," he said.

Despite the almost overwhelming difficulties, some companies have succeeded in (Right) The Armentoy tirm's products carry price tags that stan at a surreal 750 rubles, while the average monthly salary in Armenia is 1 ,100 rubles, or live dollars.

tegrity, together with the machinery for the settlement of disputes and enfbrce-

ceptions ofArmenians as bom entrepreneurs. a World Bank mission to thc republic in February notcd that the number of cooperatives

grew much faster here than in other Soviet republics. By the end ol' 1990. its reporl said, Armenian coope ratives comprisecl three percent of total cooperative cmploymcnt in the Soviet Union. even though Amrenia's work force represented on ly I .2 percent ofthe I abor fbrcc. The SAT cooperative employs 20 peoplc

making plastic goods ranging from party buildings. Sales are booming and in l99l rcached [0 rnillion rubles. The members enjoy the fruits

clishes to toys to tirlse ceilings for

oflheir

success. Salarics vary belwecn 8.0(X) 15,0U(lrubles lr rnonlh. But they have now decided to move production oul of Amrenia and relocate in Rus-

lntl

sia. T'he reason is

simplc

scnse. "Thc diff'erence in

it makcs

economic

profit will be aboul

50 percent to work in Russia rather than ArAle k Areshian. "The main market forsclling is now in Russia." SAT is no quittcr whilc 80 percent o1 Armenian industry was closcd last winter. it was arnong the l'ew which rnanaged to operate continuously thanks to a tar-sighted purchase ol'40 tonnes of gas. "We could clo the same this winter. but therc arc so many other problcms imd all of them are connccted to the situation here in Armcnia." said Areshian.

menia," said executive rnanager

ment of judgements, which enjoy the confidence of the market.

Mark Chenian is director of the Los Angeles-based Mach Capital lnternational and an economic consultant to Armenia's Ministry of Energy. producing goods and doirtg busincss in Arrnenia. The SAT coopcrative is one of the longcst cstablished private cnterprises in the

republic. having begun operations irr 1988. soorr lflcr thc Iirrt Sor iet law pcnnitting uooperatives. Indeed. tcnding to conlirnr popular per-

Hc too cornplains about the incfficicnt bank system. which is destroyins the value ol their earnings. Betwecn May and July alone thc value of the ruble f-ell 40 perccnt against thc dollar. whiledomcstic inflation is rampant. One customer sent payment in April, he

AIM. OCTOBER I992

said. but to date thc cooperative has not rc-

ceived the money into its account. "Such things happen very ofien. A lot ol'our money comes fiorn Russiaand it's quite common tbr ourbanks to say they havcnot received it thrcc to five months latcr. When thc money linally comes. it's worth a l'ilih ot'what il was when we sold the goods."

Often. too, the bank claims to have run out ofcash ancl sinrply refuscs to allow thc cornpilny tu llkc rnonel liom its o\ n ur'c(runl. "They say we have to wait, " said Areshian. SAT's products are exported by rail in containers to Georgia, Russia and a fcw other fonncr Sovie1republics "ln Annenia, people buy only ibod, thcy don't have moncy tor other goods. " But growin-u dclays in transporting produe ls 1o cuilorn('rs lre pror irtg. costly. lt can take up to a month lor -qoods to

reach rhc Georgian capital, Tbilisi, said Areshian, becausc rail off icials don't say whcn a freight train will run. "They jusl put the items in the containers and leave thcm. One

or two years ago we

didn't have this problem

trains came and went on time. " Send-the ing good: as ba!:gu!e ()n pils\cntcr t rurnr wrrs too cxpensive. as was air transport, he said. Roads through Georgia have become uncertain because ofthe pol itical upheavals and the conllict in South Osse tia . SAT is not the only company heading 1or warnrer business climates in Russia, according to Areshian, whosc

cooperative is located in the industrial Shengavit district of Yerevan. "Tax inspcc

tors issue certif icates when companies close. saying they have no more taxcs to pay. Our

local inspector told me rcccntly that he of ten issues nine to I 5 a day. Some olthose companies havejust shut down, but others are leav-

ing Armenia. " Like Armentoy, SAT also received some foreign orders but govemment bureaucracy and a prohibitive "valuta surrender tax" made them uneconomical. "We lostmorethan wemade, " saidAreshian. The company had to apply for licenses for'nevery operation" from the foreign economic bank, the ministry of finance, and the economics ministry, which sometimes meant bribing cifficials not to cause problems. Any hard cwrency earned was then subject to a 25 percenttax. Both anlntemational Monetary Fund study and the World Bank were deeply critical of the valuta tax, the bank calling it "Armenia'sprimarydisincentivetoexport. " While the government's intention may have been to generate revenue, the cost in lost exports was nevervisible, it said. Thebank urged

swift abolition of the tax, and received indi cations from govemment officials that it wouldberepealed. Sofar,however, itremains in place. Even so, some people are still seek-

ing investment opportunities in Armenia. Armentradelnc. openedits doorsinMay as a venture capital company formed by a group

nia no longer receives money from Moscow and must finance its own spending. Govemment plans for the first quarter of 1992 indicated that it had chosen to shift the bulk of revenue collection-5l percent-to a Value Added Tax (VAT), inffoduced in January at a 28 percent rate.

The World Bank expressed unease in

VAT represented such a large percentage of govemment spending when littlepreparation had gone into implementing the new system. Collection estimates were therefore likely to be "optimistic", it said, which would force at least equal reductions in govemment spending. The bank's warning has been bome out. According to the statistics administrationreport, govemment income for the flust half of 1992, at3.2billion rubles, was only 62.7 percent of expected revenues. Of this, just 2l percent came from VAT, while profits and income taxes accounted for40 percent. The budget deficit was 665 million rubles, ornearly 20 percent, in the first six months. Unable to print money, since ruble emission February that

Toronto,

is controlled from Moscow, and without

Canada. Tatul Manaserian, Armentrade ' s managing director in Yerevan, said its objective was to fund good business proposals in the republic and to assist foreign investment. To this end, the company offered consulting services ontax, barking, andbusiness laws for a fee, as well as advice to local firms on developing business plans. "We are ready to make investments in different projects which have a shortage of money but are profitable ideas, "he said. "We have already decided to invest in one project to manufacture roof tiles." This had been chosen because the raw materials were in Armenia and did not need

sources of external bonowing, the govemment has tumed to domestic banks to bridge the gap. This amounts torobbing Petertopay Paul, since the banks'only source of rubles

Armenian businessmen

to come from outside, while the finished product had good export potential to provide hard currency dividends, he said. Both the tax issues and the cash difficulties in the republic's banks are symptoms of the same problem-the Armenian govemment's desperateneedtoraisemoney atatime when its revenue base is shrinking. In large part, this is aproblem notof the government's

making. The economic damage caused by the Azerbaijani blockade is staggering. The statistics adminisfationputthecostto Armenia's economy at l8 billion rubles in the frst half of this year alone. This included two billion in lost outputcaused when Ossetiacut off gas supplies through Georgia for two months. With Georgiaagain onthe brink of civil war, the prospects look bleak for ensuring secure supplies via that country in the near future. As recently as 1989, more than half Armenia's govemment budget came in the form of revenue transfers from the Sovitit Union's accountinMoscow.Thesepayments still accounted for a fifth ofthe budget even during the chaotic collapse of the Union last year.

Now, as an independentcountry, Arme-

theirbusiness and private depositors, who funds. Armenia's lack of economic control over its money supply has sparked intense debate over whether it should introduce its own cr[rency. Both the World Bank and the IMF urged caution, saying suchamove wouldbeexpensive and required extensive preparation. The govemment appearsfornow tohave accepted are

then have difficulty retrieving

arguments-Economy Minister I-Irand Bagratian told AIM he favored a separate culrency but "not quickly, step by step." these

Manaserian, who studied currency reform for his doctoral thesis, said it was necessary to improve Armenia's economic position before replacing theruble. "Otherwise the samething

willhappen toourown currency. "Even if we haveagoodeconomic base and introduce our currency, we should not eliminate *re circulation of the ruble. It could coexist with the new currency and the good currency will force out the bad. Life will show which is better," he said. The World Bank concluded that "painful cuts areinevitable" in public spending if the govemment was to achieve a balanced budget. The IMF agreed, saying a balanced budget"wouldclearly signal, athome and abroad,

the determination

of the

government to

maintain macroeconomic stability." Buthere the authorities face several

political dilemmas.

The govemment employs 380,000 people, many of whom would lose their jobs if drastic cuts were imposed. While this may be acceptable on economic grounds, many in the govemment consider it would place additional strain on the social fabric of Armenia. The burden of unemploymentpay would also

AIM, OCTOBER 1992

fall onthebudget, reducing thefinancialbenefit of the cuts. "The inflationary processes in our economy are still aggravated by the fact thatwehavetopaywages toworkers whomay not have produced anything for several

months," acknowledged Tigran Sarkisian, chairman of the Standing Commission on Finance--{redits and Budget. "But it is not their fault, this is the result of the blockade and the power crisis. kaving them without pay mayhaveevenmore seriousconsequences, as the social crisis could become more intense." Armenia's new Prime Minister, Khosrov Harutunian, admitted that civil unrest was "not excluded" this winter because of the growing economic crisis. With bread shortages expected to be "acute", it seems politi-

cally unthinkable to withdraw the pay of thousands of workers. Nevertheless, the blockadeandtheconsequentfinancialcrunch is already forcing the issue. Salary and pension increases announced by the govemment routinely go unpaid until much later. Some stateemployees have notevenreceived asalary for several months. The Yerevan Relay Factory, which makes electrical switches, sent 4,000 workers on forced vacation wittrout pay because ofthe disruption in supply of fuel and

raw materials. The Luys plant, which makes lamps, lost 287 million rubles of production when ithadtoclose

forfive

weeks

earlierthis

year. "Realistically speaking, we are on the verge of 300,000 to 350,000 unemployed," said Sarkisian. "That's 25 to30percentofthe work force." The second principal financial

by whichtime therublehas substantially devalued. The fintpaymentmustbe incash. "Up to 300,000rubIes, they mustpay half now and

half after one year," explained Armen Vatuadian, aprincipal specialist with the State Committee on Privatization. "From 300,000

toT00,000rubles,theypay40percentandthe rest over two years; up to 1.2 million, it's 30 percentandtherestoverthreeyears; uptotwo million, they pay 25 percent a year for four years; and above 2 million, it's 20 percent a

yearforfive years." The overwhelming majority of privatized shops and services have been bought by their workers. One such is theLuysutility storeon

Yerevan's main Mashtots Street, taken over by five of the staff in January for 475,000 rubles. Theypaid l9l,000rubles--4Opercent away and have two years to clear

-straight the balance.

General managerHakop Aristakesianhas of the business, the maxi-

a 40 percent share

mum permitted by the privatization law. He hasrunthestorefor l2years,butfeelsthatonly now does he have the opportunity really to manage it. Luys sells lighting and other small electrical goods, but has now expanded into foodretailing through a second shop opened in the basement below.

issue is the war in Karabakh. A govemmentbudget projection forthe first

quarterof 1992 shows itallocating l0 percent of revenues to defense. The World Bank estimated the actual sum 15 percentof revenue if income did not meet expectations, as it has not.

couldclimbto

It described such spending as "potentiallyexcessive"but,aslongas the wargoes on, Armeniais unlikely

to countenance cutbacks.If the situation seems unremittingly gloomy, that's because it is. But there is one potential while knight, on which the

government is pinning its hopes privatization. The experience of privatizing farm land, which has contributed to a 30 percent rise in crop and vegetable production,isencouraging. Alackof animal feed has caused livestock production to fall but, even so, the overall value of agriculture has increasedby I 5 percent in the firstyear. Privatization is proceeding much the economy. In thepast I 8 months, only 306 small shops and service compa- The plunglng Yalue

more slowly elsewhere

ot the ruble ls d$tro-ylng tho nieshavebeensoldforatotalprisesl purchaslngpowarofconsumers.Stll!,manydlasporan just over l33 mlrion rubr":.tll.:: fl,fjs*J!iid"H,i[li,i*"?"",?Ffl3*,hi,13.x5"13 get-v-eryfavorab-letems: acompany's i;diiiffi;fsefii;;ii;anirade;s Armenia representa. staffget first refusal and a 30 percent 11ys. disco-unt if they agree to buy, while'di'iy businesses costing'iess ttran |OO,OOO rublei

I I

mustbepaidforinfullatthetimeofpurchase' Otherwise, new owners pay in lns'tallrn6nts, AIM.OCTOBER 1992

"Before privatization, this was solely a chandelier shop and wheneverl appealed to the authorities for permission to sell other items I was refused," said Aristakesian, 50. "Now Ihave tumed it into autility store, sellingcigarettes andother goods which canbring profits." Not only has the store changed, but so has the attitude of the staff. "Now we get all the profits, we don't have the idea to steal from anyone because we ourselves are the owners ofthe shop. IfI now saw one ofour sales people cheating a customer for even 20 kopeks, I would punish him.'1 told all our personnel thatnow wehavetowork in adifferent way so that everyone who comes into our shop buys something," saidAristakesian. "All the staffmust be interested in selling not one but two or three packets of ciSarettes at a time-we are trying to approach normal Westem standards of business." Results have come swiftly. Employment has risen from seven before privatization to I I today, all on substrntially higher wages. Tumoverhas jumped 50 percentto 120,000 rubles a month, with profit margins of 15 to 20 percent. "It has very much lived up to expe,ctations," smiled Aristakesian. Like businessmen in many othercountries, he considers taxes to be too high and govemment bureaucftrcy too nosey.'"The state doesn'thelp us in any way,butthey demandtaxes,"he said. "The government must understand that businessmen should have more freedom to do business. It is business that makes the State flourish, but our legislators are green on this subject. I don't think much of them." Just how privatization oflarge industrial concems will fare is unclear. APrivatization I-aw waspassedbypadiamentin July,butthe

nuts and bolts of implementation have yet to be finalized.

Minister Bagratian estimated sales of companies were unlikely to begin before 1994. With the govemment keen to attract hardcunency, he said foreign investors would receive the same rights as Armenians to buy state property. But, in an AIM interview, he also spoke scornfully of the proposed method ofprivatization, which includes a voucher system providing employees with a stake in their company (See interview on page 23). Such open disdain is unlikely to fill potential foreign investors with confidence. State enterprises still account for between 80 and 90 percent of Armenia's economic activity, according to the World Bank. No meaningful market economy can be created, therefore, withoutmassiveprivatization in every sector. Though Eagratian believes Armenia can avoid high unemployment as a consequence of selling state industries, the experiences of Eastem European countries suggests thatthe number of jobless will rise sharply. Twothirds of Armenia's industrial jobs are in large firms with more than 1,000 employees. Modemization, particularly if foreign capital is introduced, will cause many of those jobs to disappear. In any case, the govemment's own estimates-that companies are over-

staffed by as much as a third-mean

refund the deposits, following the collapse of Union. The result, concluded the World Bank team, is that 45 percent of all banking liabilities in Armenia have no assets in the republic to back them. the

shakeout is inevitable. In all, around 9,000 enterprises of varying sizes remain to be privatized. For such largescale privatization to be successful, a clear legal and financial framework will have to be in place in Armenia. The World Bank team

found "consensus at the highest levels of government that the preparation and enactment of appropriate laws is of urgent, crucial, and strategic importance." But it added: "There also is recognitionthat the govemment desperately needs assistance in the formulation of a significantly new le-

gal framework. There simply is no locally available legal expertise with the requisite experience." It recommended the govemment hire as soon as possible a team oflawyers qualified in commercial and corporate law. Similarly, allkinds of legal institutions, from bankruptcy courts to a securities commission and a stock exchange, remain to be created in the repub-

lic. The banking issue is critical. There are no foreign banks operating in Armenia and the republic 's banks are so discredited that many people keep their money at home. Though

legislation on bank regulation has been passed, the principal problem is liquidity. Under the Soviet system, all deposits lodged by Armenians in the State Savings Bank, the Sperbank, were sentto the Gosbank-USSR in Moscow to help fund the Union's budget deficits.

The transfers amounted to 8.Tbillion rubles but Gosbank- Russiahas so farrefused demands from Armenia's govemment that it

"Armenians who have accounts in the Savings Bank are no longer able to access them," it said. "While one altemative would be to refuse to honor the deposits, such an action wouldcause greathardship andcould not be sustained." It suggested instead that the government consider using part of the proceeds from privatization to cover the lost deposits, and in the short term to allocate a portion of the proposed privatization vouchers according to the deposits held by customers in the Savings Bank.

A FAIR

SHAKE

A Conversation with P avel Khnltakchian, President of the Committee

Privatization By iIANGY L. NAJARIAI{

Whether privatization turns out to be Armenia's economic fairy godmother lies in

Akintoaminis-

the future. Creating adecent standardof livwill take years,just as it has in Southeast Asia for example. In many respects, a year

try, Armenia's

ing

after the final collapse of the Soviet Union, Armenia's problems are not so much economic as political. Armenia suffers many of the same problems as other former Soviet republics and enjoys anumberof business advantagestoointernal political stability, a highly-educated laborforce, and a large and wealthy diaspora. But its one unique disadvantage is the con-

tinuing conflict with Azerbaijan over Karabakh.

Everyone involved in business or economic reform in Armenia prefaces his remarks by saying that the blockade and the intemational perception of a country at war greatly increase their problems. But they considerthey are largely powerless tochange the situation, and resign themselves to waiting for apolitical breakthrough that will improve the economic climate. "If it were not for the war, Armenia would bynow be one of the flourishing republics. I'm sure even the tax situation would be better," said Hakob Aristakesian, whose Luys firm gave 30,000 rubles in May to help people in Karabakh. "But although I am abusinessman, I don't want my relatives in Karabakh or Armenians anywhere to suffer." The unstable situation in the country is one ofthe reasons SAT's members are leaving for Moscow, at least fornow. "If the situation gets better, then we will see. Of course, we want to live here and work here, but the situation now does not allow us to do this," said Alek Areshian. "The political stability is one ofthe greatest causes of oureconomic problems," said Armentoy's I-Irair Aguyumtcian. "All the economic changes will only follow thepolitical changes. "If we are going to establish good business in Armenia we have to have a good base-a business center, a marketing center, good roads and communications. This is not our problem, it is our govemment's problem. If they want somebody to stay and

work in Armenia, they have to provide this environment." AIM, OCTOBER 1992

Committee of Privatization and Management of state Property will the Privatization Law for all state property except land and housing, which are under the jurisdiction of other ministries. Born in Yerevan in 1950, Pavel Khaltakchian, the committee's president, brings to the post years of experience as an economist and accountant.

Alll:

How do you assess the

privatization proceas in Armenia? Khaltakchian: We have estimated that it will take about eight to l0 years to complete privatization in Armenia. We have broken down the process into specific stages. We have already begun the privatization ofstores and service operations. Land in the rural areas is already 80 per-

cent privatized, and housing in the whole country is in the process ofbeing privatized. Various city or district councils are entrusted to carry out the pdect. Employees of existing businesses are offered the right of first refusal to purchase the companies. for whatever reason, the

employees decide not to,

it is then

sold

through a public auction. The prices ofthe stores range from 300,000 to 1.5 million rubles, depending on the location. The Council of Ministers has finalized a list of 290 small businesses in Yerevan, where only two-three percent of all shops

have been privatized so far, and only five-six percent of all service-oriented shops are privately owned. There are

five stores in the capital that were formerly state-owned, but which

are now owned by former employees.

Are there any condations placed on privatized businesses? The character ofthe store or service shop

cannot be changed for three years from the time of purchase. After that point, the owners may do as they wish with the store. We set this condition in an effort to prevent all service businesses from becoming trade stores or "Commissions," as they are called.

There seems to be at least one sueh commission on each block in Yerevan. Who owns these small trading shopslilled with imported products? Those shops are privately owned, newly established stores. The owners apply to the Yerevan City Council to rent space, usually a basement flat. The council makes its decision whether or not to lend the space based on the proposed profile of the commlsslon. The council considers such issues as whetherthe neighbon will be botheredby the noise and foot traffic produced by the shop,

the basement is already used

storage space

by the

tenants

menian commetce? At present, foreigners are allowed

purchase and complete what we call unfinished construction. These are factories and

other projects which have not been completed by the previous govemment. The land under the buildings, however, remains the property of the state.

the City

Council okays the lease, then the shop

owner obtains an open-ended lease. An annual rent is paid, and the lessor incurs all renovation costs. Taxes are paid

to the city,

Will foreigners be allowed to par. ticipate in th6 privatization of Ar.

The rent per square meter for these

of privatization of transportation, but will also specify what parts will be sold only for hard currency, and which will be sold in Armenia on the free market. The reasor for selling some parts only for hard currency is that Armenia would like to attract new technology for the transportation system, as well as attract hard currency for the government.

the

building.

flats varies per location.

For the time being, enterprises which remain strategic to our national security, such as utilities; and public transportation, including airlines, will remain the property of the govemment. In relation to transportation, the Parliament will create a separate schedule or program regarding those enterprises vital to our national security. There will be a constitutional law which will list what parts of the fransportation system will be privatized. The schedule will not only prioritize the process

based on gross sales. These

shops are locally owned.

How will the Privatization Law be

implemented?

The flrst stage ofprivatization under the new law may targetthe linkbetween land and stores. Thus, food processing, canneries and milk-producing factories will be the first to be privatized. During this stage, light industries such as those producing consumer goods will be privatized as well. The second stage may be aimed at the

means of transportation. For instance, a ministry such as the Ministry of Agriculture has a division oftransportation attached to it, which is responsible for transporting food products from the villages to the cities. This division may be sold to one person, or it may be sold to individuals who will then form a union-type association. Such a process may also apply to the construction industry.

The final stage of privatization may target the large machine building factories

But wouldn't such a move trigger local resistance? There may be some psychological resisof workers against foreigners buying stores and unfinished construction. The locals may feel that they have eamed the right to ownership of those stores because they worked formany years in them. However, it is difficult to predict the degree or significance of such a reaction. tance on the part

What is the next step in the privatization process, whlch follows the passage of the privatization law? The next step is for the draft of the privatization program to be submitted to Parliambnt for debate and passage. We expectpassage to occur sometime this fall. This is necessary for the implementation of the

privatization law.

!s Armenia seeking any advice from developing nations, such as those in Eastern Europe, which have gained considerable experi. ence in the privatization process dudng the past years? The Board of Economic Reforms, a

and electro-engineering plants. This

committee of the Council of Ministers, has

includes machinery for cars and trucks. It should be noted, however, that any ofthese firms included in the third stage may be privatized sooner by special govemmental

been

permission.

in contact with

specialists from

England, Poland, Hungary and Czechoslovakia, and has leamed a great deal from

the common experiences of these T

countries.

AIM, OCTOBER 1992

Benetton operates a dollars-only shop ln the center of Yerevan.

Tlewart

to reward lhoce people nho

ateptcparcd

toriC(a littla alrd conre to Armenia in tlp early dagec of hel ecotromie

developnrent.t

BETTING

ON CHIPS The Aragast

Story

BY NANCY NAJARIAN In 1988,astheSoviet

govemmentbeganto encouragethedevelopment of private cooperatives and joint ventures, two brothers in theirearly 30s, Armen and Gurgen Martirosian, started their own

popular Westem goods, such as Proctor & Gamblepersonal andhousehold items, which are sold for both rubles and dollars. The Martirosians also own a take -otttpizza jointventure, an insurance company, and a40. acre farm. Presently their farm products are sold through state distribution, but in the near future there will be a retail store in Yerevan offering fresh cheese, milk, ice cream and Frenchbread. Future plans include entering the magazine business, building a shopping center in Yerevan, and starting a financial and investment service company gearedto overseas clients. Aragastis alsoactivelynegotiating to bring acellularphone company to Armenia. With capital to invest in the CIS and abroad, Armen has worked hard to build an international network. The company owns a retail store in Odessa and holds shares in stores, atransportation company, andlandand buildings in Odessa, Kiev, Moscow, St. Petersburg, Sokhomi, Sofia, London, and

Tbilisi.

computer company. With a background in computers andmath,and workexperience in

Not one to sit back and let the competition gain an edge, Armen applies Westem con-

state enterprises, they had the technical

cepts of market research. Aragast developed software thattracks retail and wholesale prices of goods, evaluates the success of conftacts fulfilled, and consumer demand. Twice a

knowledge to start the business. What may have even been more crucial than their backgrounds, however, was their impeccable timing: their entrance into the computer market coincided with the 1988 boom in ttrc Sovietcomputerindusoy. Soontheothertwo Martirosian brothers, Karen and Babgen, joined the firm. In 1990, they established a holding company, Amaras Business Associ ates, of which Aragast is the most active. lnitially, Aragast's activities werefocused on automating the workplace, creating databases forpersonal computers, and selling and installing hardware and software to state enterprises and ministries. In 1989, the bro-

thersreceivedtheirfustbigcontractfromthe state for a database. Their software had applications for transportation, banking and warehouse management. In just three years, Aragast grew from a five-person firm with zero capital to a company employingover l50peopleandabudget of 200million rubles. With growing success, the Martirosians diversified, investing in a

variety of domestic and intemational companies.

The mover and shaker responsible for Aragast's rapid growth is Armen. A rather unimposing and soft-spoken man, he runs a highly cenralized organization. And though he has a say in every aspect ofthe business, he does encourage his youthful staff to make proposals. In fact, Aragast's recently won confract withProctor& Gamble was acquired upontheinitiativeofhis 21-year-oldmanager

of the intemational

division, Vartan

Darbinian.

Iocally, Aragast seems to have ahand in all sectors of Armenia's market. The com22

pany runs fourretail ortrade stores, featuring

week Aragast employees physically canvas

different sections

of the city, checking

wholesale and retail prices. The data is analyzed on computer, and Aragast bases its inventory purchases on these market reports. Armen is considering ruming this side of the business into amarketing firm. However enfrepreneurial and successful

anArmenianfirmcan be, thereisnoescaping the trials and tribulations of doing business in a fledgling market economy with few regu-

lations.

The political instability is the first and of Aragast owners. Darbinian explained that political instability contiriues to prevent most foreigners from investing in Armenia. Furthermore, no foreign company will give an Armenian company exclusive disributonhip of their products; companies must operate on "gentlemen's" agreements. The lack of

foremost concern

transportation is another factor keeping the market underdeveloped.

In an effort to alleviate the problem, Aragast purchased a huge supply ofoil in 1D0, andis stillusingit. TheMartirosians are also hoping that a recently purchased cargo company in Armenia will help relieve the situation. Finally, the banking system, with constantly fluctuating interest rates, is very difficult to predict and hampers market growth. Despite these problems, the Martirosians are committed to doing business in Armenia, and so farseem to have discoveredthe formula for success.

AIM, OCTOBER

1992

Despite overwhelming obstacles, some companles have succeeded in producing goods and dolng business in Armenla.

ln just three years, Aragast grew

from a

five-person firm with ze]:o capita! to a company employing over l5O people and a budget of 2OO million rubles.

VITAL SIGNS

the fust thing. Income tax

AnlnterviewWith Economy Minister Hrand

percent,

who are active and whom I respect. There are

Bagratian

some laws which relate to businessmen. Banking regulations for example, laws on property protection, and the privatization law, which is in its embryonic stage. The sad

TOTYHALPI]I

I{rand Bagrat-

ian,34, has been economy minister since September1990.

He graduated with a master's degree from the Yerevan State Economic Institute and is the author of several books and articles on economic issues. Married, with one son, he worked at the Academy

Economics before being appointed

minister.

Alt:

is 30

profits tax is 30percâ&#x201A;Źnt, andvalue-addedtax is 28 percent. I advise you to check the situation on taxes in the US and compare our level oftaxes accordingly. On average, itis half the rate of US taxes. There are no taxes on imports and exports, and customs tariffs areonetothreepercent. Iammoreconcemed that there are no businessmen, not that there a1e no laws, although there are some people

How does the govemment

hope to stabilize the environment

for bucinese to proeper? Bagratian: The Azerbaijani blockade of all roads is the gravest obstacle we face. Then comes the inflation of the ruble, and the raw materials problem. There'is orle morehurdle--+1rc transfomration of the rules from those of a state-plannedto amarket economy. The govemment is negotiating with the different forces and political groups and trying to settle to a certain extent the political problems with the different reprrblics and to open roads. We are trying to open new routes throughlran and Turkey. What we are doing with regard to the ruble is to coordinate our policy with that of the Russian goveflrment. We are about !o sign an agreement on bank relations which should help to bring about a certain stability.

Bucinssr people roem to com. plain mort often of two things-

the level of taxation and the lack of clear information on

whlch lawt aro operating. Why is lt taklng so long tor Pailiament

to create a bueiness envlron.

mert?

The businessmen are telling lies, that's

thing is that newspapers are quite expensive now andpeople don'tbuy themto see whatis happening.

There has beena debate between

those who favor privatization strictly at an economic sale and

those who wish to allocate shares

among the population as

i rroa.

sure of wealth distribution. Which method will be used?

Generally it is morereasonable to sell the a political question since you are selling national property. It would be great to sell a factory and distribute the money among the population but, since big companies, but this is

this is virtually impossible under present political conditions, we have opted for a voucher system. Thirty percent of aproperty will be issued in theform of vouchers. This is a compromise between, on the other hand,

the economic and on the other hand, the social and political realities. But I would not say that ttre people will profit by itvery much. It will cause inflation and the vouchers willbe sold for a very low price-they will lose even more than they will gain. We even have a forecast that the rate ofexchangecould fall to seven vouchers for one ruble. It will only lead to the further impoverishment of the poorer layers of society.

It sounds as though you oppose the idea of vouchers. Any economist who has a proper education would be against it. What is privatization? It is selling, not the distribution of stateowned enterprises to the population.

Who

Hrand Bagratian

'3life have

been blockaded and all four routes from Armenia have been blocked, but we are surviYing."

will buy these companies?

It depends on the market. Foreigners will have equal rights with Armenian citizens to buy them. Anyone can buy them for hard currency or rubles according to the exchange rate at the

time.

Doesn't this mean that foroign in. dustry will own most of Armenia's economy? It doesn't worry me. I think ttie greater pafi of it will not be in foreigr hands. If the personnel of a plant decide to buy their AIM, OCTOBER 1992

factory then, besides the vouchers, they will get a 30 percent discount. At this

rate,

it only

remains

to give them

the factory for free. Then this

will not

privat2ation but collectivization.

Are the worst of the economic bad times behind Armenia now? There will be some more. Most of the problems are behind Armenia but there are still some to overcome.

Arethe big llayirit and ArmElectro plants operating now? They are. ArmElectro at 5l percent of capacity and Nayirit 4t 50 percent.

So much of Armenia's Soviet economy was connected to mili. tary produetion. l{ow ane you going to change those planti to othe; uses? We have programs conceming all of these plants but we don'thave the money. We are

trying to attract foreign capital to utilize the significant potential of these plants. As the investment arrives, these factories will be transformed.

What are those factories doing now?

ftile

havel

tares on inports and erports, no

and customs tariJfs a;e

onetothrce ;Dereent.'

These factories were mainly working in electronics for rockets and missiles and Armenia doesn't plan to produce any of these items. So they don't work at present.

Are you among those who support

the introduction of an Armenian currency? Will it help the situa. tion? I am in favor of issuing a new currency. Whether it will aggravate or alleviate the situation largely depends on when we introduceitandhow. Oneday itwillbeinevitable. I don't favor a rapid move in this direction but step by step.

Why do businessmen I have talked to seem so pessimistic when you aeem so optimistic? Are they missing something? I appeal to all ofthese people to work and try to be optimistic. The government is preoccupied every day with trying to supply the minimum amount of fuel needed by Armenia.

ls the Armenian Diaspora taking

up opportunities here or are they

reluctant to invest?

Unfornrnately, up to now they have not shown very great interest. The Diaspora is so

far dithering. But I can say that visits by groups from abroad have tripled in the last few months. We think that the Diaspora will take positive steps and show more interest here as the

some 24

Armenian govemment gains

credibiliw. AIM, OCTOBER 1992

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GEARING UPFOR WINTER Khosrov Harutunian on theTough Choices He Faces as Armenia'sNau Prime

Minister By TOIIY HALPlll

Khosrov Harutunian was

ap-

pointed Armenia's new prime minister at the end of July. A 44-yeu-

old former engineer, he previously chaired the Parliament's Commission on Local Administration. Under the Communist regime, he headed the Charentsavan Regional Council ofPeople's Deputies, where he had also managed a local factory. Harutunian is married with two children.

Allft What do you see as youl

most urgent task as prime minis. ter? HARUTUl{IAl{: My prime task now is to ease to some extent the tense economic situation existing in Armenia. As for the strategic plans, my job is to enforce the program of economic reforms which has been passed by Parliament.

So your role is entirely an economic one? I

just mentioned the economy, but there

political hurdles, such as the Karabakh conflict, which need to be addressed. It's obvious that many of the country's economic woes need political soare also serious

lutions because they largely depend on this. There are two major problems facing the govemment. One is the question of peaceful co-existence with all the neighboring countries and, as part of that goal, the peaceful resolution ofthe Karabakh conflict. Second, the economic development and democratization of society, which depend on eco-

nomicfreedom.

There is a perception that the gouelnment has lost its way and is drifting somewhat. What do you

I E

t t

;

p;opoie to do about this? I could argue with you in respect of the drifting of the govemment. The programs which we must realize are the expression of the clear-cut direction which we must follow. Even those legislative acts which have some problems when beingpassed in Parliament express the outline and general direction of the govemment. In that respect, I

don't agree with you.

It should also be understood that, to improve Armenia's situation and toput in place all the reforms which have been mentioned, there is a great need for structural changes at the macro level. If it is said ttrat the govemment doesn'thave aclear-cut stance, this can

be partly explained in that it is not always easy to decide in every problem among the variety of options we have to impose these structural changes. So even if there are some differences beFween the govemment and Parliament, it doesn't mean we can't work out a managed program on how to proceed.

The Karabakh conflict has now gone on longer than World War l. When do you think a solu. tion will be found

in all the civilized world. I think both the govemment and the Armenian people understand that this is a rocky and very trying path. The objective is topass along this road in the shortest time possible.

The coming winter is going to be painful indeed, taking into account the severe blockade imposed upon Armenia. At present, considerable amounts of goods and raw materiespecially bread and fuel, have notentered

als,

Armenia.

The problem of bread supply will be It is already tense. The govemment is taking all possible measures to provide the population with the necessary amount of acute.

bread and we think we will at leastbe able to regulate the situation. I would like to add here that, although I understand the greatdiffrculties facedby the West in its attempts to provide for the inevitability of the democratization processes in the former Soviet Union, it should be more organized initsefforts andtrynottopoliticize

all the problems. Otherwise, it may cause great social tensions within the former So-

vietUnion.

because it doesn't depend only on us. Sooner or later

Because ofthe developments of the last several years, the West must have understood that bottr theArmenianpeople and govemment have not so far broken the principles of democracy. This must be a sound guarantee for political and economic partnership.

the resolution of the conflict will be determined by the reality ofpolitical life. The reality is that it is the

But do you lear so. Gialunrostthiswin. ter?

and on what basis?

I would rather answer whether it can be resolved. We can't say for sure when

it is going to be resolved

Armenian people of Karabakh who must define their own future and be guaranteed the right to

doit. Politics

is an art of

compromise, and if all the political forces inyolved by to consider all therealities of theconflict with acool head,I am confident that there will be a peaceful solution.

ls the worst ol the economic crisis an Armenia still to come? I'm thinking particularly ol the wlnter ahead. It is hard to say which is the most difficult come our way. The sitr'ration in Armenia is so tense that even a minor social problem can be politicized. I mean the economic situation. I can only say that I guess all the republics of the former Soviet Union are experiencing the same. We don't have an altemative. The only way out for us is the road toward the market anddemocracy, and we willhavetotake this roadwith all its difficulties, ashasbeen done

thing

AIM,OCTOBER 1992

It is not excluded.

You'ropereeiuedas 3omethlngof rGonion.us figurs. Is it your talk to try to nepair the strained rolation3 between Levon Ter Petrosslan's goYernment and tho opposition? I can't say how I am viewed but I can tell you what I am going to do. I think I must and it will be a kind of motto forme, I will do everything to collaborate with all ttre political organizations and parties present in the Armenian Parliament.

fulfill this mission. Every day,

I think ttrat all ttre political forces in Armenia, the Parliament and govemment,

will come to the realization that we are all in the sameboat. I also findthe very existence of an opposition in Parliament to be a positive phenomenon.

think that the opposition, once it

understands the task pursued by the Parliament, will inevitably come to the support of the govemment.

AGUT ABOVE Armenia's Shiral<atsi Academy Has Become a Magnet for the Best and Brightest in the Nation By IIARK MALKASIAN

IIWilh independerce, Armenia needs intelleetuals to promotethe ftrturc of the corrltry, The Jemaran 1s ditterent in that it

l eon&tothat d.ll

Taron Asaturian, tG

or Gnel Sarjian, it was a critical day. The 14year-old had naveled more than l0 hours by bus from his home in the Akhalkalak region of Georgia. Now he was seated at the head of a long row of desks in a high school gymnasium while his parcnts waited anxiously outside. Gnel was joined on this day by 1 I 3 other high school freshmen, all hoping to gain admission to the Anania Shirakatsi Academy, one of Yerevan's elite high schools. Two days earlier, Gnel had performed well on a fourhour mathematics examination. Now he was listening intently to instructions for a physics test of similar length. Like the great majority of his peers, Gnel had eamed top grades at his home school. The Academy, however, promised a new beginning in his education. From appearances, the school seems an unlikely site for an intellectual hothouse. Located just outside of Yerevan in the Nor Nork district, the Academy, or Jemaran, is bordered by padlocked defense plants and stalled construction projects. Inside the school's steel gates lie planks of rough timber and piles of concrete rubble. Mounds of newly excavated earth have been baked crusty brown by the June sun, while the light pink ofthe school's tufa stone facade has been softened by a thin film of dust. As the Jemaran's principal, Ashot Alikhanian, likes to emphasize, the school is a long-term intellectual investment. Wipe off the dust, clear away the rubble, and Alikhanian maintains that the Jemaran offers the best hope for Armenia' s fu ture. Since opening in the fall of 1990, the reputation of the school has indeed spread rapidly throughout the republic and beyond. Some of Armenia' s brightest students, as well as many of its most outstanding teachers, have been attracted to a rigorous curriculum based on academic excellence, competitive admission tests, innovative teaching methods, anA inAividualized attention. Alikhanian concedes that today's Armenia hardly offers an appealing investment climate, especially for a project that will require a generation to pay off. As the AIM, OCTOBER I992

199

l -1992

academic yearconcluded in June,

Armenia was still shaking off the effects of a devastating winter. Azerbaijan's blockade

of fuel

shipments to Armenia left homes unheated and factories idle, and led to the suspension of classes in most schools for more than three months.

in this country," says Ghazarian, who currently serves as the director ofthe Center for Research in Higher Education. Ghazarian's analysis is played out on nearly every street corner of Yerevan. At makeshift seglranikner (little tables), young men, often school-age teenagers, sell

Ameri-

can cigarettes, German beer, Lebanese

worse. The collapse ofthe Soviet state has struck education, in particular, with the force of an avalanche. [n the course of a few years, the

crackers, French champagne and other con-

Most expect the coming winter to

ideological basis

for Soviet

Armenia's schools meltedaway, and with it wentagood part of the old system's rationale and author-

ity. Although well-behaved by American standards, many Armenian students have come to question the value of education. Growing discontent has reponedly bubbled to the surface in the rising number of shouting matches, even fist fights, between students and teachers. More prevalent the widespread impatience with outdated textbooks and the rigid discipline of the Soviet eta. "An essential issue in Armenia today is the apathy ofhigh school kids toward educa-

tion," says Edvard Ghazarian, one of Armenia's leading educational theorists and an advisor to the Jemaran. "You've got this new environment where the very bases and usefulness of knowledge are being questioned. It's a phenomenon that is quite alien

sumable imports at inflated prices. With eamings of more than 100 rubles a day for a six or seven hour shift, they may bring home incomes two or three times bigger than their parents' . According to Ghazarian, the young entrepreneurs are often leaming the wrong economic lessons. "First there is the question of attitude. Until recently, the idea that knowledge determined one's station in life was accepted as a universal truth, and in fact that belief largely corresponded with reality. A person's expertise in his or her field did translate into an enhanced status within ttre larger society. But in these last few years, especially in the last few months, that system has all but collapsed." As Ghazarian illustrates, Armenia's educational system is also saddled with more fundamental, material problems: dilapidated campuses, the lack of quality textbooks, the shortage of laboratory equipment and computers; even paper and pencils are in short supply. These and other deficiencies are tied

to the republic's current economic crisis. There is also the challenge of rebuilding public confidence in teachers as a devoted corps of competent professionals, and to quell resentment in some segments over a government decision that forced Russianlanguage schools to adopt Armenian as the primary language of instruction. Amid the many difficulties, however, Ghazarian prefers to concentrate on issues that can be addressed in the present. "We have to move away from the collective, leveling approach of the Soviet era, because clearly the ability, potential and desire of children were not taken into account. Instead, we must create a system that

appreciates individual difference. Each school musthave its own pedagogical vision for solving education problems. The role of the state is only to ensure that basic standards are being met. The educational process

itself, framework of intellectual freedom-freedom to develop new teaching methods, create new educational environments, and try out new ideas for making students capable of thinkhowever, has to be govemed within

ing independently." Since 1990, Ghazarian's ideas have found ahome attheJemaran. Twoyears ago, Ashot

Alikhanian was among the first Armenian educators to recognize that the centralized structure of Soviet education was falling apart. But rather than try to prop up the old

Ashot Alikhanian, principal ol the Jemaran, handing out awards lor academic ercellence, left; ln contrast, many Armenian teenagers are opting for early financiai'success through street businesses called "seghanik"s. AIM,OCTOBER 1992

system, Alikhanian moved decisively to demolish it. At that time, the

II The level of both

facility that today houses the Jemaran was a technical school with Alikhanian as its director. Like technical schools elsewhere in the former Soviet Union, Alikhanian's institution was geared toward

teachers and students is higher here. These are students who want to study. I think that all schools in Armenia have to be like the Jemaran. At lots of schools, there isnt this type of spirit. We have to restorc this in Armenia. At other schools, teachers dont pay much attention to students. They receive their salaries and iust go through the

producing workers forthe USSR's sputtering industries. Alikhanian, himself an electrical engineer with hands-on experience in a local factory, knew that the Soviettechnical school model was notready to meet the economic demands of the 2l st Century. He enlisted the help of his faculty, as well as Ghazarian and other prominent educators, to draft a new plan for the school. Throughout the spring and summer of 1990, Alikhanian and his colleagues grappled with many of the same questions that shook the

Armenian nation as a whole. Levon Ter-Petrosian's election as president in August 1990 and the new democratic government's commitrnent to seek independence through constitutional means focused attention on the purpose of education in the emerging Armenian state. By that time, Alikhanian had already foundhis place in the big picture. Facing Alilhanian in his quest to create a new educational model were 70 years of communist ideology. When the Soviet educational system was imposed on Armenia in the early 1920s, the country was still largely agrarian and illiteracy was widespread. As Alikhanian notes, "the great success of the Soviet system was its capacity to diffi.rse the basic elements of culture to the masses." In the course of a generation, illiteracy was largely eliminated. Shakespeare found its way even into ttre hands of highland shepherds. For the first time, Armenians atevery level of society wereexposed to Westem culture, albeit in a form carefully filtered by Moscow. "I believe that ageneral course ofdevelopment toward an enlightened intemationalism is evolving among neady all nations," Alikhanian says. "Our citizens must have the upbringing and education to travel that road. Our students need to be exposed to intemational political science and culture, explore the history ofother peoples, and leam to respect their traditions, customs and heritage. But in the process of coming to know the intemational, students must have a secure foundation in their own national culture." Another term tainted by the Soviet past-"intelligentsia"-is also

motions.lt

Nellie Badalian,

liFotstudents coming from Russian-language schools the Jemaran has crcated conditions so that it wouldnt be difficult to make the transition to this school. Everyone is trcated equally.ll

undergoing redefinition. During the last decades of Soviet rule, "intelligentsia" came to signify the well-connected intellectual elite that enjoyed privilege and power. Alikhanian wants to restore the notion that members of the intelligentsia should serve as model citizens.

"We want students to graduate from the Jemaran as intellectuals in the b,roadest sense," he sfiesses. "Intellect cannot be defined by the intensity of one's commitment to acertain field orthedepth of one's

Karine Yepremian, 15

We understand that we're working not for the

Soviet state but for our homeland, that we're gaining knowledge for our country. We're considered one of the most advanced nations, and hopefully we can neach the level of developed countries beforc long.tt Vahan Kercpian, 16 30

research but, first and foremost, within the context of morality, spirituality and citizenship." Alikhanian's vision of education goes backto the ancient Greeksto the lyceum of Aristotle. Since Armenia's conversion to Christianity, the lyceum, or jemaran, has served chiefly as a seminary for aspiring clergymen in Armenia, but Alikhanian believes that the public will recognize the classical meaning of the term. Above all, he wants the Anania Shimkatsi Jemaran to stand for a school of distinction. Back in 1990, Alikhanian scrambledtobring his dream to fruition. He negotiated a compact with the Armenian Ministry of Fducation that allowed the Jemaran to limit academic class sizes to a maximum of 20 students, restructure the daily schedule to feature three 70minute periods in the morning and a variety of elective classes in the afternoon, and introduce new courses. Alikhanian, however, is perhaps proudest of admission standards that have withstood the most extreme pressures.

During the Jemaran's fust year of existence, Alikhanian was besieged by dozens ofparents requesting favors and offering attractive bribes. A militia chieftain even sent a representative with an armed escort to demand admission for his son. Nevertheless, Alikhanian held firm. The following year, there were fewer supplicants, and this year not a single parent has asked for special consideration.

AIM, OCTOBER 1992

On the contrary, parents of grammar school students bring their children to the Jemaran to review the one-page admission exam that is tapedon the glass windows of the school's front entrance. In his office, Alikhanian is busy planning for the coming semesters. Walls and tabletops provide a backdrop for course schedules, curriculum charts, organizational diagrams, floor plans, and a long-range projection that includes a spacious auditorium and a sports

facility with

Olympic-size swim-

mingpool.

Although the auditorium and the pool will have to wait, the cuniculum is largely in place. After their fust year, students may choose a course of study that emphasizes either physics, engineering or mathematics. Regardless oftheirfocus, all students receive

ways wondered why students didn't learn," says physics teacherVardan Melkonian. "Did the fault lie with the teachers or the students? Now I have the opportunity to teach as I wish, to use my creativity. Nobody says I have to do this or that." Among the 64 teachers, I I hold Ph.D.'s and three are completing their dissertations. Many of them serve as part-time instructors at Yerevan State University and the State Engineering Institute. Also in common with the students, candidates for teaching positions at the Jemaran must pass a grueling examination. For the 1992-1993 academic year, 50 teachers are competing for six or seven slots.

Alikhanian envisions a total enrollment

of no more than 250-26O students. Among this year's 114 applicants, 70-80 will be

financial state than their own parents. With all the problems of getting to school, changing buses, passing by the seghanikner, students come here to leam something. It's imperative that we provide the proper instruction. to create the proper environment, so that they can put what they see outside in context." And what about the students? Are they imbued with the spirit of the Jemaran? As Alikhanian proudly points out, classes at the Jemaran were not intemrpted by the lack of

heating last winter. Instead, the entire

school-

students, teachers and administramoved to a building where the worst of the cold was kept at bay by a few electric

tors-

heaters.

"These students are convinced that even difficult of circumstances, there's

in the most

= =

a way out," says Alikhanian. "If we hadn't found that warm building forourclasses last winter, we wouldhave heldclasses inpeople's

solid grounding in the natural sciences and

accepted. Ultimately, Alikhanian hopes to

math. Perhaps morerevealing are the classes

raise the school to the standards ofthe International Baccalaureate Organization. In many respects, the enthusiasm gener-

houses."

ated by the Jemaran is remarkable. The school's annual budget comes out to less

Alikhanian is again prepared to do what it

outsideof the school'scorecurriculum. Three years of English, for example, are mandatory. Also required is "Beautiful World," a newly created course that combines music, drama, painting and other fine arts with aesthetic theory. Within the humanities, students explore the world's religious philoso-

phies in a specially desigred offering in theology. Even physical education takes on a novel approach, with the accent on cultivat-

than $15,000. Teachers eam approximately

l,000rubles amonth,theequivalentof about eight dollars. Many supplement the school's scarce teaching supplies with items from home. For their part, most students have to

elbow their way onto overcrowded buses,

ing healthy lifestyles rather than athletic

often transferring at least once, to reach Nor

competition.

Nork. "We have to ffy to lift their spirits, to give them some hope for the future, so they don't fall apart." says Alikhanian. "On their way to school every morning they see hundreds of

Undergirding the Jemaran's curriculum is an abiding trust in the competence of the teaching staff. For many on the faculty, the vote of confidence is a sharp break with the past.

"Until the creation of the Jemaran, I al-

seghanikner selling gum, candy bars, cigarettes. Those kids are in a better AIM, OCTOBER 1992

And as anothef winter draws

near,

takes tokeeptheJemaran operating. He isfar from alone in his conviction that the future of

the Jemaran somehow embodies the future

ofArmenia. "We have to start by retrieving what we've lost- our attitude as a nation toward study, toward books, education, the desire for leaming," says Ghazarian. "We have to restore the belief among our children that knowledge will ultimately be the yardstick by whicheverything is measured." Mark Malkasian ls a wfiter, educator and iournallst, based in Rhode lsland.

MANI(ATUN REVISITED AYear l,ater, the Yerevan Orpltanage Appears a Kinder, Gentler Place By JAGKIE ABRAilIAN s we walked down the soiled hallway of the main building, the place felt purged ofthe once-ubiquitous stench ofurine and vomit. In the cafeteria, where we found the children on

theirlunch break, lastyear's corrodedmetal benches were replaced with square, wooden tables. Once we were in, the children wreaked havoc rushing toward us; and while they were busy snatching the lollipops we had brought with us and stuck them in their mouths without even removing the plastic wrapping, we were struck by the joyous mood that permeated the hall. Much had changed since our last visit to Yerevan's Number 2 Mankatun, a home for mentally retarded and handicapped children. Still, the conditions seemed far from perfect. The white-uniformed women watched curiously, but stayed out of our way. They did not force the children to sing, and were even helpful in answering ourquestions. Soonthe new director, Setrak Hovanessian, who was appointed lastDecember, reached the cafeteriaand inquired about our visit. But his initial apprehension dissolved as we were encircled by the smiling faces of our young friends. The children's openness was a delightful surprise, as were their loud laughter and daring expressions. Some of them were still huddling together fearfully, but most were friendly and eagerto meet the visitors. According to Hovanessian, there are 116 children (down from last year's 170) living at the Mankatun. Many of the older children were let go and a number of them were sent to Mother Theresa's center in Spitak, while some lost their lives. Hovanessian estimates that each year "20 children die due to various sicknesses." Amid the swarming kids, I noticed the familiar face of Goharik, who was introduced to us last year as "blind." While she dashed here and there, bringing lollipops to the other children, she suddenly straggled toward me on her curved-out legs. Recognizing me, she let out a joyous shriek and, raising her index finger, bellowed, "You came!" We embraced as she dropped herself upon me, and then hastily requested to be photographed. Her wish was granted immediately. Last year' s visit by Armenia's First Lady, Ludmila Ter Pefrossian, to the Mankatun, resulted in Hovanessian's appointment as director. Since late 1991, the home has received some 400,000 rubles in cash from intemational and Armenian charitable organizations. Clothing, toys, physical therapy equipment, five heavy-duty washers and driers and cash donations were also given by various benevolent funds and organizations, including the Armenian Missionary Association of America, the Aznavour Association, Louise Manoogian Simone, the Gtutiun Charitable Association, and even workers from the Nayirit plant. The government's daily allowance for the Mankatun children has increased from 1.40 rubles in 1991 to 50 rubles per child. While govemment subsidies for the home remain undetermined, it received 50,000 rubles from the Ministry of Social Services this June, according to Hovanessian. The Mankatun now employs a staff of 100, including one full-time physician. In addition, four members of the French organization M6decins Sans FrontiEres (MSF) and aphysical

Hovanessian plans to convert one of the home's dilapidated buildings into a hotel. "Perhaps the hotel can house relief workers who willcometo stay forlongterms," he says. The Mankatun's new wing has been under construction for eight years. "Materials are hard to

find," Hovanessian

says, buthe is hopeful that construction

will be

completed by the end of this year. The staff, however, is not as optimistic and does not seem particularly fond of its new director, though no one cared to explain why. All ttre Mankatun rooms are now filled with colorful toys and wall hangings, providing visual stimulation for the children. Most of the infestedholes in the wooden floorshave been filled andcovered with carpets andmattresses. Thehallways, walls andpaint+hipped wooden doors and broken windows have been repaired or covered with plastic. And identification cards, prepared by the MSF staff and bearing vital information and photos, now hang by each child's bed. Now and then a child's shrill cry still echoes in the buildings, and the second building's interiors are still infested with the smell of urine. While some of the children's clothes are clean, there are still

children dressed in tom, wom-out clothing with no shoes. When asked about the torn shoes of one girl who was escorting us around, Hovanessian commented that "she has already been given two pairs of shoes this year, but she does not maintain them very well." The comment brought a sad smile to the girl's face as she cast apuzzled look at her shoes.

In the second building, what was a wretched kitchen is now converted into another room, where we found a group of children sitting on a large mattress. As we arrived, the bewildered children rushed over to embrace and cling onto us. In one of the rooms, a child sobbed and desperately called for "Mama." Lying on a mattress, he lifted himself up to grab the lollipop he was offered. He still called for Mama. The children's lives havebeen improved by the fourMSF staff and

Finnish physical therapist Aneli Turia, who works with physical therapy equipment donated by Love World. Three of her young patients were initially paralyzed, but are now showing signs of mobility. Turia stongly believes that only staff with pediatric education or training should be hired at the Mankatun. "The staffmustunderstand thatthese children are people andthey must learn to feed and wash the children properly, to make such activities enjoyable for the children." She would like to see the new building completed and to have local Armenian organizations and institutions unite to help the Mankatun. "And I wish the children could have outside friends who could come and visit them. They're always waiting for visitors," she says. Turia was initially shocked by conditions at the home. "These children need a lot oflove. Some are tenibly afraid, they shriek and huddle together, but they're very clever. I give each one a toy and tell them that it is theirs. This is the flrst time they have been given

therapist from the Finnish organization Love World have been working at the home. Hovanessian has hired farmers to cultivate the surrounding fertile grounds, which until now were left neglected. With the popularity of two cows donated to the Mankatun, Hovanessian intends to bring in more animals for the children's enjoyment. In addition, local artists

something to keep and it makes them feel more like a person." As we prepared to leave the Mankatun, a group of children gathered at the wrecked stairs of the main building to wave goodbye. Pushing everyone aside, Goharik rushed out of the building and yelled, "God.bless you." Her commotion brought many of her friends into the cold air, while others lined up indoors, against the windows to wave to us, We left the children with tears of joy, happy that they weren't completely forgotten.

conduct art and woodworking workshops on the fi rst fl oor of the new, yet-unfinished wing of the home. Products created here will be sold at Gtutiun stores in Yerevan to benefit the Mankatun.

Jackie Abramian is a lrelance writer based in Boston. Her llrst report on the Mankatun appeared in AIM's October'91 issue.

AIM, OCTOBER 1992

i:,:

:: ::

\*--\;:-_r:i*dE*t 't:

-,) t' Jb

t -'.i \

\w AIM. OCTOBER 1992

The children have learned to smile. Goharik and Jackie Abramian, middle; beside each bed, the staff has posted identilication cards, lefl. -) -1

ANEWKTD ONTHE BLOGK Armenia' s C hanging I mn g e in Referenc e and Educational M aterials states emerging Soviet Union.

By iIARK MALKASIAI{ hen a hardJine coup

the

Soviet Union stunned the world, sputtered, and then collapsed after three days in August 1991, Mary Rodgers sensed that the months ahead would be very hectic. Rodgers, the director of the geography department at Minneapolis, Minnesota-based Lemer Publications, was just wrapping up a book on the Soviet Union for the company's Visual Geography series when the coup fell apan. She remembers how the anxiety level began to rise at lrrner as Russian President Boris Yeltsin moved quickly to strip away the Kremlin's power, and the non-Russian republics headed toward independence. In September, a member of the marketing staff suggested that the company rush into production a series on the republics. There was no time to survey the market. Instead, by the end ofthe month a photographer was sent to

the rapidly crumbling Soviet

empire, freelance authors were approached to write on each of the 15 republics, and a cartographer was hired to draw new economic, historical and topographical maps. "That was a little more on top of current events than I wanted to be," recalls Rodgers.

"Books, after all, are not magazines. We can't accommodate the pace of current events, especially in the former Soviet Union, where things have been changing so fast." Nonetheless, the Then & Now series took priority, and this fall the first four volumes of the series-featuring Russia and the Baltic republics-will be available for elementary and middle school classrooms. Volumes on Armenia, Azerbaijan, Moldova and Ukraine will be completed by the end of the year but will be released in 1993, along with titles on the remaining republics. The bustle at kmer Publications has been replicated at other publishing houses since the disintegration of the Soviet Union. Textbooks have been rendered irrelevant, encyclopedias left outdated, and maps made obsolete by the course of events. In the scramble to keep up with the times, publishers of educational and reference materials have been compelled to tum their attention to long-neglected areas. The process is certain to shape American impressions of the new

from the wreckage of the

What goes into this new flurry of publications, however, is a bigquestionmark. Few universities and foreign

nia in manyAmerican eyes, experts contend. remains rather murky.

"There are these images of the old churches and Mount Ararat," notes Stephen Shenfield, a research associate at the Center for Foreign Policy Development at Brown University in Rhode Island who closely follows events in the former Soviet republics. "In general, Armenia has a rather exotic image, which has a certain amount of attraction. It's not very salient, however." The reference materials scheduled to ap pear in 1993 may very well mark a watershed in how Armenia is presented. Most major encyclopedias are busy developing entirely

policy think tanks devoted much energy to promoting the study of nations that had been

pigeonholed into the category of Soviet na-

tionalities. Even the

State

Department

found itself lacking proficient analysts and translators for some of the newly independent

republics.

In place of

expertise, a mixture of old stereotypes and sporadic news reports

have often influenced what ends up in print.

In the case of Armenia, the story of the

fouryears has been dominated by violence with Azerbaijan over past

Mountainous

Karabakh and the devastation of the December 1988 earthquake. By their nature, encyclopedias, yearbooks, almanacs and other reference

general

sources must be brief and superficial. They also must sacrifice

complexity and nuance

in favor of broad generalizations. Thesweepingbrush strokes of recent publications have painted the Transcaucasus as a chaotic and striferidden land, with Armenia squarely in the middle. Although still generally considered in terms of the former Soviet Union, Armenia

and its neighbors have also begun to be viewed in the context of the Middle East, especially in respect to the region's turmoil.

Lemer Publications even postponed its photographer's tour of the Transcaucasus because of the area's instability. Other than the ongoing violence, the picture of ArmeAIM, OCTOBER 1992

new articles for Armenia and the other former Soviet republics. As Bemard Johnston, edi-

tor-in-chief of Collier's Encyclopedia, explains, the process involves much more than

simply updating information. "Now instead of having 15 Soviet republics, we have l5 countries. Forour purposes, that has promprcd us to adopt a formit that presents them as countries, with sections on

land, people, government and politics, economy, society, cultural life and history," says Johnston.

In practical terms, that means the section

under "Armenia" in the 1993 edition of Collier's should command fouror five times the space of its predecessor. Albania, for example, has been allotted I 5 pages in recent

years, while Armenia has been covered in three. The collapse of the Soviet Union, according to Johnston, has also sharpened competition among encyclopedia publishers to secure the services of knowledgeable au-

thors. In the past, a single scholar might have been assigned to write articles on all five Central Asian republics or the three Baltic republics, but Johnston reports that the 193 edition will feature separate ar-

Asian republics proved taxing, Johnston reports that the pool of experts on Armenia was more than adequate. Ronald Grigor Suny and Vemon V. Aspaturian, for example, have penned articles in the past for World Book Encyclopedia and Encyclopedia Americana, respectively. Educational publishers are under deadline pressure as well, especially with social studies teachers pressing to replace outdated textbooks. Educational publishers, however, face another set of hurdles. Lengthy review processes and political pressure groups often delay the acceptance of new textbooks for the schools. As a result, materials designed to supplement social studies courses have filled the vacuum left by the collapse of the SovietUnion.

As Barbara King, administrative assis-

tant for the editorial department at lrmer,

points out, time is

:{i,r,,lt!r:rl: 1::',::

t....

money in the publishing world.

rliilti.:{iri'irl

theKremlin. "For most of us, there was this big place called the Soviet Union," says Rodgers. "If we had studied the area, we knew that it was made up of a number of peoples, but nonetheless there was this

monolithic sense in the

way we viewed it, especially in

political

and

cultural terms. Now we realize that this monolithic place wasn't so monolithic after

all." Although books in the Then & Now series will have an initial print run of 7,500 copies, Rodgers expects American ethnic

communities, particularly Armenians, Lithuanians and Ukrainians, to add to the potential market. Many Armenian-Americans are already familiar with an earlier

Lemer publication, The Armenians in America, authored by Dr. Arra Avakian. The book on Armenia for the Then & Now series has been written by Russell Adams, a geography professor at the University of Minnesota. The individualized attention that Armenia is receiving from publishers, however, does not answer the larger question of how the new republic will be portrayed in

'r:l:al'r 'ir:i i;riliif tt'ri:{ti:ri iyii11?i

i$.i;'!if,r

{:r"t.

a standard format in exploring each of the republics. Books will contain four chapters, focusing on the land and people, history, economic activity, and current issues. A generous sprinkling of color photographs will also be included in each text. Educationally, Rodgers hopes that the series will be a flrst step in introducing students to nations long under the shadow of

classrooms, scholarship and the me-

dia. Shenfield, for example, thinks that the Transcaucasus will generate in the West, now that the Soviet Union is gone. less interest

"What we

see

in Yugoslavia,"

observes, "is the.reassertion of traditional geopolitical attitudes in which the importance of a region is judged in terms of how vital it is to the great power contest and in its economic value. This is what dooms areas to marginality, and explains why people who wam of the danger of abandoning these areas are largely ignored." In Shenfield's view, Armenia is not only

ticles for each repub-

lic.

"Our purpose is to get someone who will write an article that treats Armenia and the other former Soviet republics as places that have their own unique history and culture, not as appendages of something," Johnston says. "In the past, we've thought of Armenia in the context of the Soviet Union. That's obviously changed."

While finding authority on Turkmenistan and some of the other Central

"When the changes in the Soviet Union

happened, we realized it was important enough to publish new books as soon as possible. From the point of view of sales, we're trying to be the first to get books out there."

lrmer's

Then

& Now series will follow

AIM,OCTOBER 1992

likely to be marginalized but could drift beyond the general orbit of the West in intemational affairs. Armenia's image for Americans in the coming years, he thinks, could hinge on the course of international relations in the Balkans and the southem tier of the former Soviet Union. "Ifa lot ofconflicts develop that are on an Islamic vs. Christian axis, then Armenia will be of interest as one of the more exotic and historically ancient participants on the Christian side. I would suppose that if such a pattem does not establish itself, it would be I interpreted inmore local terms."

THE UNDIMINISHED DISGORD A P erfe c tio ni s t' s B attl e To S av e H i s H e rita By KEVORK

g e from O b liv io

"I kept thinking that we needed some sort of a spark to awaken the community," he says. "But even when that happened, very few responded." To Salibian, the long-awaited spark was providgd by the popular movement in Armenia during the winter of 1988. "I see that as a true tuming point for me," he says, still the entropy he sees around him.

llllRZlAil

hannes Salibian has two serious

addictions.

The first one, as he

sionally and in a proper context. "The world has now established a standard," he says, eyeing the thick layer ofresidue collected at the bottom of his mug. "If we don't meet that standard, then no one is interested to hear what we have to say."

will tell

from a family-size mug, is a special blend of coffee that he has perfected over the years to you between generous gulps

satisfy his demanding taste buds. The second, as he will tell you in the tomb-like silence of his sound-proof studio, is music----orany intriguing combination of sounds-thathe listens to, or writes himself, to satisfy his demanding ear. While Salibian depends on caffeine to stretch his working hours beyond midnight every day, he depends on the powerof music to stretch people's minds to overcome "the neglect"thathe sayshas afflictedhiscultural heritage. "Through the centuries our culture has produced two significant achievements," says the mild-mannered Salibian. "One is architecture and the other is music. These twoneedcareful examinationnotjust forthe sake of scholarship or for our enjoyment but for a thorough understanding of ourselves as a people." Salibian has worked toward that goal in music flrst as student then as composer, teacher and finally as "a cultural activist." His musical odyssey has taken him across four cultures and as many countries, finally landing him in Cambridge, Massachusetts, where he now mns a state-of-the-art studio for the recording label he started three years

carrying some of that spark in his

eyes.

One can perhaps trace this obsessive insistence on high standards to Salibian's profound respect for Komitas and his music. "Komitas was not only a genius," he says with special emphasis on the last word, "he was also a revolutionary figure right alongside Israel Ori and Khachatur Abovian. He

saved Armenian folk music from oblivion and tirelessly documented every folk song he

could get his hands on." Salibian sees a special meaning in Komitas' documentation music. "Any document which belongs to a nation should be properly attributed to that nation," he explains. "In its tum, this will present an obstacle to those who are

of folk

ago.

Salibian's conversation is at once lofty and colloquial, intellectual and passionate, replete with street-smart wisdom and the high seriousness of academe. "Historically," he begins, "it has been very difficult for us to maintain a sense of continuity in our culture due to all ttre foreign occupations and the displacement we've been subjected to as a nation. So we shouldn't be surprised to see our cultural treasures in neglect, since we were preoccupied with ourphysical survival

mostof thetime." Salibian is far from making excuses for what he calls the current apathy in cultural affairs, which he-attributes to "tribalism" and a general lack ofvision that pervade all diasporan communities. In fact, while Salibian usually opts for the observer's detachment, he does not exempt himself from 36

Salibian: "We're still confusing real creativity wath entertainment."

"That's when I decided to take a step and begin to cure some of the neglect accumulated over the years." One tangible result of that first step was the release of Komitas' Badarak, which Salibian recorded in Yerevan and released under the prestigious New Albion label. Beside eaming wide critical acclaim, the success of the CD proved a maxim Salibian had long preached as well as practiced: that quality work will pay off if it is presented profes-

AIM, OCTOBER 1992

now trying torewrite history." It was indeed Komitas' music that moved young Salibian to consider a career in music. When the unsung Janacek Quartet visited his native Beirut in 1954, Salibian, who was one of the four people attending the concert, heard Komitas' string quartets for the first time and was totally spellbound. "You cannot imagine what those peopleplanted in my adolescent heart," he remembers fondly. "There was nobody else to expose me to that

kind of music in Beirut. So they became the catalyst." Almost six years after that love-at-

of Iowa, where his wife, too, was a Ph.D. student, "a blessing" and a rehabilitating

frst-sight, he enrolled as a student at the

experience. It was also atlowathathedeveloped a taste for the avant-garde and gradually tumed toward electronic music, writing several compositions that synthesized the human voice with machines.One of his works puts to electronic music an equally avant-garde piece of literature-poet Vah6 Oshagan's

Komitas Conservatory in Yerevan. "I cannot forget the nurturing I received in Armenia," says Salibian in evaluating the six years he spent there as student. "l had someextraordinary teachers such as Ghazaros Sarian, Robert Ataian, Melik Vertanesian, and Ohan Dourian, to whom I owe everything. I credit thenr for teaching me my own vocabulary and my own language, without which I wouldn't be able to understand other people's musical language. They taught me that if you don't master your own, then you can never master the

others'."

Salibian spent l0 frustrating years in Beirut following his graduation. While the local conservatory treated him as an outsider, he had a hard time finding rneaningful em-

ployment elsewhere. He tried his hand at teaching privately and producing a weekly program for the radio. When funding for a children's chamber group he had put together was withdrawn, he tumed to jazz, forming and training a l7-piece burd comprised of neighborhood shopkeepers and vendors that became a respected grass-roots jazz ensemble. Finally, with the onset of the civil war, he closed the chapter on Lebanon and moved to the United States to pursue a doctorate in music. Salibian calls his arrival at the University

Kughak(City.) Upon eaming his doctorate, Salibian was lured to the University of Southem California to establish an Armenian chair in music. For seven years, he gave it all he had, he says, only to have the program shut down for lack of funds. "It was hard for me to believe that the most prosperous community in the Diaspora could not support an already existing program," he says wistfully. "Perhaps Los Angeles was not the appropriate place for the program to flourish. because they expected a miracle." Salibizur sayshe isby now well-acquainted with the vicissitudes of success andfailure in Armenian life. And it is afate aboutwhichhe

has leamed to be philosophical. "It is now clear to me that we have yet to master our

own vocabulary," he reflects. "We're still confusing real creativity with entertainment. I have alot of respectforArmenian entertainers, but don't tell me that what they're producing is art. For a people like us entertainment is a luxury."

"Ohannes is a man rvho's constantly fighting against time," says his wife, Taline. "Forthe things he wants to accomplish there don't seem to be enough hours in the day." Those who know him say Salibian can be very generous with his time and will go out of his way to help a friend. His wife adds that, owing to his youthful spirit, he has an easier time finding language with the younger generation and has acted through the years as a father figure for many a musical orphan.

Nowadays, Salibian is busy editing a brought with him from consecutive visits to Armenia. The first CD, featuring the Yerevan Women's Choir, was released recently under Salibian's own label, MEG Recordings. "Especially these Iast l0 years, I've had this fascination with spate of recorded music he

the human voice," he says, "which happens to represent the very heart of the Armenian

folk idiom." Regardless of the magnitude of the challenges facing him, Salibian says he's still optimistic. "I can see the day when the world is going to come to our door and ask: 'What else have you got?"'

"Until then," he continues, "and after seeing all that happened during the past four years, I cannot just sit back and enjoy my steak." After a moment's pause, he adds with

a gentle shake of his head, "I just notdo

it."

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TONE Children's BookAuthor GladysYessayanCretan Stresses Basic Values in herWorl<s By JAI{ET SAilUELIAN and KATIIERI|E CIIILJAN

ommenting on the public percep-

tion

children's literature,

Gladys Yessayan Cretan stresses

the significance

children's

books as an imcomparable conduit to instill societal values in young minds. "Our lives

Bronze 24"

have become so complex," she says. "I like to chew on ideas and wrestle them to the ground, because children have questions about our value systems." A generation of American children have grownupreading Cretan's stories. A prolific and best-selling author, she draws inspiration for her works from her own childhood.

"Ihe ArchAngel"

Limited Edition of Z

AVAILABLE FROM

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loey's Head, her latest book, is a fantasy about love and anger.

A minister's daughter, Cretan grew

AIM, OCTOBER 1992

during the Depression in and around the

could have come from," she says.

portray children who, struggling to over-

Bethany Armenian Congregational Church in Califomia. Her father left Talas, Turkey, before the Genocide and began his ministry in the small Oakland Armenian community. From age 12 until her late teens, Gladys played the church organ on Sundays and sang with the choir. Cretan's literary careerbegan as editorof her high school yearbook. She went oii,to study journalism at the University of Califomia in Berkeley and wrote short fiction

Cretan's frst w ork, A G if't fr om t he B r i de, was a tribute to her mother-the only girl in

come misfortune, embark upon journeys of self-discovery. All Except Sammy explores the plight of a child who is different-he is

before

fully

devoting her energies to

children's stories in the '60s. Reminiscing about the years when she read for her children before becoming a children's author, Cretan recalls being stuck by the difficulty of presenting a positive image of Armenia to a child's imagination. "I had never been able to find anything that made Armenia seem like another

her village to attend the American High School and then the Anatolian College in Marzavan, Turkey. Cretan had the good fortune to meet the Atlantic Monthly hess children's book editor, who liked the socially conscious message in Cretan's subjects and encouraged her to develop the point-of-view of a child who is deprived of formal education. A Gift from the Bride tells the story of a young Armenian village girl who painfully realizes that she will never be allowed to leam to read because only boys can go to school. Her tribulations, and the book's happy ending, teach young readers some valuable lessons about equality between the genders and the importance of education. Cretan feels that the book's ethnic focus

nonnal country, another

helped make

placeaperson

ences.

appealing to larger audi-

"At

the time there was a lot of civil unrest in the country, and librarians I knew

told me how much they enjoyed having a book about ethnic people-a 'normal' family with an Armenian sumame." Cretan's reputation as a highly sensitive, sympathetic story teller has since widened. "What's interesting now is that

I'm getting requests from schools, especially Armenian schools, and young Armenian families, in ways that never

happened in the '60s," she says. "Young Armenians are interested in their roots more actively than the preceding generation was." Many of Cretan's works

-ar*o'=Wn* to for

6undal

non-musical in a musical family. Runaway Habeeb is another story that portrays the importance of literacy. The book's boy hero, a school dropout, goes on to work for various tradesmen until he realizes that he can-

not write to his grandfather without proper schooling. Because I Promised is about an Armenian shepherd boy who loses a sheep, and Sunday for Sona tells the story of a grandmother who accepts a child's non-Armenian friends. All these books feature

charming, witty illustrations of Armenian homes, characters and locales.

In the story of A Hole, a Box and a Stick,Cretan argues for simplicity in a child's life and shows how everyday objects encourage creativity. And in stories like Messy Sally and M e, Myself and I,shepromotes selfacceptance and recognition of one's potential. Cretan has written two books, Lobo and, Loboand Brewsfer, forvery young children; these stories have animals as their heroes and are about rivalry and acceptance ofthe "other." Cretan has also published a large counting book

for children. Entitled

Ten

Brothers with Camels, the book has Armenian names for all 10 characters, and was a big commercial success in the '70s.

Though she doesn't recall being influenced by books she read as a child, Cretan speaks fondly ofone particular author who has captured her imagination as an adult.

think William Saroyan's My Name is Aram really affected my writing," she says. "I lovedtherhythm of it andl loved the lucidity of it. And I don't know anybody who writes about love so naturally." Cretan says her books have a life of their own once they are published. She heard Messy Sal/y presented on Public Television's "Reading Rainbow;" A// Except Sammy was tririnted in Braille and was a Junior Literary Guild selection; and textbook companies have included excerpts from her works in teaching supplements.

"Writing for children, every word counts, and every line has to move the story along. You have to love words and rhythm, and leam to self-edit," says Cretan. A San Mateo, California, resident and grandmother of five, she has never outgrown her sense of curiosity and wonder. She lectures at book fairs and to children in classrooms. "When I talk, I tell them why it's important to read, to make time to read. 'lf you don't read, you'll only know what you see. But you won't know what the mountain climber you see is thinking. What does he love or hate? You won't know these things unless you read.' I show them how a book is made. At the end, my punchline is holding up ablank sheet ofpaper and saying,

'Nothingwas here AIM, OCTOBER 1992

before."'

CAPTAIN'STALE

seafaring legacy through extensive research,

miniature reconstructions and exhibitions. Culling an evergrowing body of data from

A Father and SonTeam Re c re at e s S e afari n g H i s tory By ISHKHAN JINBASHIAN

sented Marco Polo an as

a Papal

ikael Grigorian traces his fascination with shipbuilding to his childhood years. Growing up in Armenia, where navigable waters are scarce, Grigorian went on to become a successful engineer. Meanwhile, his obsession with the sea ultimately took a practical

Armenian-built galley on the occasionof

agiftforhis tripto Agra,

mission to the Indian subcontinent.

With vessel parts imported from Venice, Cilician Armenians built trade boats and warships of many sizes, traveled throughout

the Mediterranean, and signed commercial maritime treaties with Genoa, Venice and the Sultanate of Egypt. Trade ships bearing Armenian flags were

history, underwaterexploration andarcheology, Ayas is currently planning to reproduce amedieval Armenian ship. Whencompleted, the vessel will be put to the test, first on the waters ofLake Sevan, then out on the Black and Mediterranean seas. On board, strictly medieval living conditions, including the use of period instruments, will be observed

throughout the ship's travels. Also in the works are plans to found a permanent museum in Armenia, where the gamut of international maritime history would be displayed. Back in the workshop, Mikael Grigorian and his expert assistant, his son Garik, have

turn: by combining his engineering skills with a natural knack for research in history and literature, he began building miniature ships. To date, Grigorian has made more than I 00 models. His ships, whose sizes vary in scale from

1:200

to l:500 of the original

vessels, represent almost 5,000

years

of shipbuilding. Among

his recreations are Assyrian warships, Chinese and Japanese

junks, Egyptian papyrus boats, Greek biremes, Roman galleys, Arabian and Venetian merchant boats, Viking battleships and Francis Drake's Golden Hind. The materials he uses include wood, plastics, various metals and wires.

Although Grigorian's collection has yet to feature an Armenian vessel, Armenia boasts

a well-documented shipbuilding and seafaringhistory. In the last decades, archeological research in the Lake Sevan district in Armenia, as well as data gathered from ancient inscriptions, illuminated manuscripts and historiographical texts, notably those of Herodotus, Marco

Polo,

Agatangeghos and

Movses of Khoren, have yielded a wealth ofevidence on the sub-

jects.

We know from Herodotus, for instance, that ancient ArmeClockwise from left: Egyptian boat; Greek bireme; Roman merchant ship; Mikael and Garik nian mariners navigated down Grigorian; French merchant boat; Francis Drake's Golden Hind the Euphrates on leatherbound wood floats to trade with the Mesopotamians. in use well into the l9th Century. And milbuilt miniatures of three of the most famous Selling the wood of the vessels and other lennia of seafaring tradition spawned subflagships in history: the Nifla, Pinta and goods to their southem neighbors, the traders industries in map- and instrument-making Santa Maria, to celebrate the quincentenary kept the leather for future use and traveled and, in the modem era, textbook printing. of Christopher Columbus' discovery of the backtoArmeniaon mules. FromMarcoPolo Astrolabes from as far back as the 9th CenNew World. The reproductions will be exand the Armenian historians of the Middle tury and maps dating from the 1600s have hibited throughout the year at commemoraAges, we leam of an extensive shipbuilding come down to us in well-preserved and often tive celebrations in various countries. industry that flourished in the port cities of excellent shape. the Kingdom of Cilicia ( I I - l4th centuries) Today, aficionados of the ship, such as With reporting trom Yerevan by Alexander on the Mediterranean. King Levon [I preAladjiantz. Yerevan's Ayas Club, are reviving anation's AIM, OCTOBER

1992

I n a remote comer of Wales. in a picturI ".or" and historic oarish chuich in I Hawarden. a humble silverchalice stands I u, u siient restimony to the undying gratitude of a persecuted people. Fornearly a cennrry, the chalice has graced the altar of S. Deiniol. Lost in the maze of history, and remembered only vaguely in one or another church document, it has always been a source of iwonder for the Welsh worshippers who prayed at the church. Few people knew how it got there. Fewer still had any inkling what the strange inscription on it read. Until a curious Armenophile-a priest from the neighboring Shotton Vicarage, at Deeside-happened to take a closer look at it. The moment the Reverend A.R. Roberts saw the unusual calligraphy, he suspected the inscription was in Armenian. Al-

THANKS TO GLADSTONE After Almo st a C e nturlt, a Long -F org ott en C halic e Givenby Armenians to the

Prime Minister Is Discovered By ABTHUB HAGOPIAN

though he had no inkling what the words stood for, or what the letters represented, he managed to reproduce them "sufficiently accurately for them

Canon Roberts reported. "In response to thepersonal support given by so eminent a British statesman and churchman, at a time in his life when many would have hesitated to become involved in the affairs of anothercountry, the Armenian community made gifts tohis parish church at Hawarden in gratitude for his sympathy and assistance," Canon Roberts added. The chalice stands 22 cms high, just less than 15 cms in diameter at the outer edge of the lobes. The knob is set with six gems of a deep-red color (possibly gamets), one mountedon each face, above which the bowl rises, 10.5 cms in diameter at the lip. The base of the chalice is engraved with a

cross on one of the six faces, and a sixpointed star on the remaining five, all surrounded with a pattem of engraving which rises up the stem towards the knob. The bowl is plain, except forthe maker's mark and hallmark on one side, toward the lip which showed that the chalice was made by one Herbert Edwin

Willis, a London silversmith,

and

certified as sterling silver by the London assay office in 1893. The

tobe intelligiblel" The next step was to locate somebody who knew Armenian! By a lucky

Armenian inscription is carved on the opposite side of the bowl, between two crosses. On the underside ofthe base, Canon

coincidence, Canon Roberts had been to Jerusalem and met its Armenian Patriarch, Archbishop Torkom Manoogian, an avid fan ofhistory and archaeology. Canon Roberts promptly contacted the Patriarch. By August, the mystery was unveiled. Poring over the Welshman's imperfect rendition, the Armenian priest had no difficulty deciphering the seven tell-tale words. A picture ofthe chalice, in solitary splendor against the backdrop of an altar, later confirmed his findings beyond the shadow of a doubt. The inscription was, in fact, in Armenian, the Patriarch wrote Canon Roberts. To be exact, it was a quotation of Verse 13 of the 1 l6th Psalm: "I will lift up the cup of salvation and call on the name of the Lord." Meanwhile, Canon Roberts was busy digging further into the circumstances of the chalice and its strange message. Before long, its curious story came to light. The chalice was a hundred years old, and hadbeen crafted by an English silversmith as a gift to British Prime Minister William E. Gladstone for his efforts in alleviating the sufferings of the Armenian people during the Turkish genocide.

Roberts found the following inscription

in English: "To the glory of God, in the name of the Etemal Trinity, this chalice was presented to the rector of Hawarden by the Armenians of London and Paris, on the tl5th anniversary of William EwartGladstone, whose loving service on behalf of the persecuted Christians in Turkey they desire humbly and gratefully to acknowledge and whose life they pray Almighty God may long pre-

inscription is dated December 29, The grateful Armenians made a further gift to Hawarden-a two-light stained glass

window, situated at the eastem end of the

north wall

of the nave, depicting St.

Bartholomew, who brought Christianity to Armenia, and St. Gregory the Illuminator, the first Catholicos (supreme religious head, or pope, of all Armenians), according to Canon Roberts.

Carved into the sloping stone sill of the two parts of the window, he read a similar inscription, again in English, thanking Gladstone. The

window was dedicated by Arakel Zadouroff of Baku, Azerbaijan. The date reads

"Well aware of the plight of the Armenians around the end of the l9th Century," Gladstone, who had retired to his home at Hawarden Castle after having resigned as prime minister, nevertheless "saw it as a matter of personal honor and integrity that he must give whatever support he could to the Armenian Christians in theirtime of oppression, need,"

1897-the identity of Arakel Zadouroff remains mired in mystery.

Arthur Hagopian is a Jerusalem-based journalist, writer and teacherwho describes himself as a student ol Zen. AIM. OCTOBER

1992

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"The professional Stalin of the Soviet Union" is how the Moscow film magazine Kinonetelya describes George Sahakian-the only character actor in the world able to portray the notorious Georgian, Iosif Dzugashvili, without special makeup or plastics. Sahakian's role for life as Stalin began from a chance encounter at a hotel with film producers. Sahakian,anengineer, was given ascreentestandwas immediately castas StalininTehran43. To date he has portrayed the dictator in 17 feature films, most recently And the Detil Within Us.

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But portraying Stalin wasn't exactly new for him. As a student, Sahakian and friends would imitate Stalin in the campus auditorium by reciting his famous speeches. "I nevercherished the idea that one day I would represent him on film. At that time, I didn't even know what a dangerous leader he was. I admire his outstanding diligence and iron will, butthe fact remains thathe had aruthless andparanoid personality that disliked other people of merit and talent. He wasconvincedofhis mission as theonetofulfill Lenin's great vision." Sahakian's life took anotherdramatic tumas avictim of

the anti-Armenian pogroms which broke out in Baku in January 1990. "It's by miracle that I was able to flee for my life, leaving behind my home and my books,"he recalls. "I feelespecially sadforlosing my books."He is oneof6,000Armenian refugees from Baku now displaced in the Russian capital. "l feel fortunate for my film career," he says. "Ithelped mefindpsychological balance afterthe violentriots and my displacement." In a look-alike contest held in Moscow, Sahakian's Stalin won first prize among participants from all l5 republics of the former Union. Presently, he is the president of the Look-Alike Association of Russia. "It is true that physically I look quite like Stalin," says 66year-old Sahakian, "but my personality is completely different. I consider myself to be tenderhearted and kind."

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Ghronicler of Space The idea came to French-Armenian Dicran Shirvanian during his stay in the United States, when he noticed that the European launching of the Ariane rocket was gaining in importance, to the point lhalThe New YorkTimes featured it on its front page. A joumalist commissioned to study US energy industries in New York, Shirvanian discovered that the space field was a relatively undocumented area. The lack of a space directory on the market prompted him to compile and publish his own. Shirvanian then established Sevig Press in 1985, and one year later published the first directory exclusively dedicated to space industries. The Eur op e an S pat' e D ir e ct ory is now one of the most comprehensive and authoritative aerospace publications in the world, with key information on Europe's over 400 space companies and institutions. It was printed with the cooperation of Eurospace (an organization ofEuropean aerospace industries) and the European Space Agency, which Europe's spaceactivities. coordinates all Updated and published annually, the directory is in its seventhedition, selling inover 30countries. "When I set up Sevig Press,Ihad two goals:First,I wantedtohave my own publishing company, and second, I sought to finance the printing of Armenian books through the revenue which non-Armenian publications would provide. For example, the publishing of [Boston-based)Zoryan lnstitute's Le D ossier Karaba,gft in 1988 was made possible by the sales of the European Space Directory." Thepromptreactiontothe Karabakh movement atthe time resulted in important sales of the book, mostly to Armenians, but also to embassies in France and the European press and politicians. "We had some surprising customers forL e Dossier Karabagh;for example, people from the island ofNew Caledonia ordered some 20 copies ofthe book," said Shirvanian. His latest publications include a Karabakh map printed in French and Armenian (in cooperation with the Chene Association) and Artsakh: Histoire du Karabagh by authors Patrick Donabedian and Claude Moutafian. Shirvanian hopes to publish new directories on other high-technology industries to provide a larger budget for his Armenian publishing projects.

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AIM, OCTOBER

1992

o 6 q

THE DARKSIDEOF MONETARY INDEPENDENCE I n To day' s Vo I at i I e C o ndi t i o n s, C ur re ncy inArmenia Is a Rislcv Business

R efo

By VARTKES L. BROUSSALIAN, Ph.D. he introduction of a new currency to replace the ruble in Armenia has been on the minds of many people ever since Armenia became independent. Monetary independence should not to be viewed solely as a symbol of national sovereignty as is the national anthem or the national flag. That it has not taken place is perhaps a good sign, since currency reform is not

lapse

or has already collapsed

due to monetary mismanagement. A functioning currency is so vital for our daily living that we frequently continue lo use it despite major defects in it. In

some economies inflation reaches very high rates, yet people do not abandon the currency. Few reforming govem-

be severely impacted.

Armenia's major trade partners will lor many years to come continue to be the other republics. If Armenia were to adopt its own currency, its trade with them will probably be conducted in dollars or through barter arrangements. Either of these methods of trade will cause its volume to shrink drastically leading to further decline in Armenia's living standards. Before rushing to issue a national currency, Armenia would need to reach a full understanding with the other republics regarding payments arrangements. In the present state of political instability. the prospect of negotiating such a multilateral agreement with the republics appears very slim. Furthermore,

ments have the courage in such circumstances to replace their

currency. They would much rather try to correct its defects than to replace it. A currency that hobbles along is preferable to one that has no acceptability as yet. Currency reform, in other words, is too important a matter to be seriously considered except in the most extreme cir-

the repub-

pooled and each republic's share, with one or two exceptions, will likelybegreater. This will be partly due to the greater volume of trade, but also because a small country like Armenia will likely get a better deal as a member of a group.

cumstances.

With the disintegration of the Soviet Union, the issue of currency reform can perhaps be

Putting the argument

in a

slightly different way. Armenia on its own will have great difficulty achieving convertibility of its currency, whereas it can attain all the benefits of con-

best viewed as a question of whether monetary policy should be determined for all or most

lics stay with the ruble, it will be easier for most of them to obtain foreign exchange to pay for their imports than if they went their separate ways. Their foreign currency eamings will be

the republics by a single independent authority, for instance by the central bank in Moscow, or by a national authority in Yerevan. As might be expected, there are pros and cons for either altemative. In favor of staying with the

vertibility by staying with

stabilized ruble.

In favor of a national rency is the argument

ruble-assuming for the moment that it will somehow survive the current high inflation rate and stabilize at some level of exchange rate with the dollar-the most important argument is that it is the common currency of the republics. For inter-republican trade it is far more efficient to use one curency than several currencies. If each republic issued its own currency, trade among the republics would become so cumbersome because of exchange rate uncertainties, or lack of a well-developed payments arrangement among the republics, orcurrency inconvertibility, thatthevolume of trade would

curthat Armenia's economic interests might conflict with those of the other republics. The Armenian govemment should be free in that case to pursue its own monetary policy. Forexample, supposethe Amenian govemmentpursues a strictpolicyofbudgetary balance, while the otherrepublics follow a lax fiscal policy entailing substantial budgetary deficit. Ifthe central bank in Moscow accommodates these republics, Armenia's austerity policy would be for nought. Letus assumethen that the Armenian govemmentdecides to issue its own currency. How does it go about achieving it? Suppose that the unit ofcurrency, call it the "yerevan," is to be exchanged with the

AIM, OCTOBER 1992

ffi;*-*-;i

.45

ruble on a one-to-one basis, what can it do with the rubles it collects? They cannot serve as backing for the yerevan, i.e., as an asset in the exchange stabilization fund. Nor can they be invested in income yielding securities denominated in rubles, i.e., as an asset of the Armenian central bank. Issuing yerevans against rubles does not seem to be a sensible action. Only if the rubles acquired could in turn be used to acquire gold or hard currency, will the public accept the new currency. If the rubles collected in exchange for an Armenian currency cannot be converted to gold and hard currency, can the Armenian govemment obtain hard currency from other sources, e.g., the Intemational Monetary Fund (IMF), and use other real assets and ignore the rubles held by the public entirely? The problem with this solution, if it can be done, is that it may impose a severe hardship on the public. The Russian govemment. as a protective measure may well take steps to prevent holders of rubles in Armenia from exchanging them for goods and other assets produced outside Armenia. The net result of the Amenian govemment's action would be to wipe out the monetary wealth of the public in one swoop. Moreover, assuring convertibility of an Armenian currency-a necessary condition for Armenia's successful transition to a market economy-is hard for a numberof reasons. To do so Armeniahas first to acquire sufficient hard cunency reserves. There are two possible sources of reserves: One source is an intemational loan, say from the IMF. The dollars and other hard currency so obtained will go toward constituting a-currency stabilization fund which will be used to convert any amount of yerevans into foreign hard currency at a predetermined exchange rate. Because yerevans will be needed for domestic transactions, especially for buying state assets that are privatized, the risk that the public will quickly exchange its entire holdings ofyerevans for hard currency and thus rapidly deplete the stabilization fund is minimal. Unfortunately, the feasibility of obtaining hard currency reserves

"A Signifwant

'Yw*mrian

from this source is doubtful in the present circumstances. To be forthcoming, such an intemational loan needs political support as well as economic justification. The economic justification for a loan is weak because the potential of hard currency eamings of Armenia, unlike thatof a largeandrich republic like Ukraine, is very small. And the political backing-which means primarily the support of the US-necessary to overcome the weak economic justification is also lacking forreasons that have become all too obvious in recent months. The US does not consider Armenia a strategic ally or a country the support of which is indispensable for domestic politics. The second possible source of reserves is an allocation from Moscow, which, as we have already seen, is even more doubtful than the first source. Thus, the problem ofintroducing acurrencyofits own seems well-nigh an impossibility forArmeniain the currentconditions. Of course there are solutions that might be described as desperate measures, one of which is to use various state propefties and valuable real estate as assets to back the currency issue. This option will possibly do temporarily until the economy settles down and eamings ofhard currency begin to flow in. In conclusion, Armenian currency reform is like a divorce between an aged couple. It is painful and almost always unwise. A little patience may solve the problem. If efforts to stabilize the ruble fail, new currencies will replace it. It is reasonable to expect that by then the republics will realize that they should negotiate a numberof other economic issues somewhat related to currency reform, such as a payments union, a multilateral trade agreement, gold and hard currency reserves, and debt apportionment. When these negotiations are completed, each republic can have its own culrency.

Vartkes L. Broussalian, Ph.D., has worked at the US Office ot Management and Budget, and has taught economics at UCLA. He currently lectures at Calitornia State University, Northridge.

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