Russia unable to abandon US dollar despite al benefits to Armenia - Bagrat Asastryan

In an interview with Tert.am, ex-chairman of the Central Bank of Armenia Bagrat Asastryan said he is pessimistic about the Armenian sides’ proposal for RUR payments for energy carriers.

He does not think the proposal will be accepted.

With respect to an Iran-Armenia railway project, Mr Asatryan considers it economically unsound. He believes it is more a political project.

As to the results of Armenia’s membership in the Eurasian Economic Union (EEU) over the last few months, they prove the opinions that Armenia was “going to Siberia wearing a T-shirt.”

Elaborating on Armenian Prime Minister Hovk Abrahamyan’s proposal on RUR payments for imported strategic goods, Mr Asatryan said:

“This is nothing but a wish because Russia is not prepared to abandon the USD in exchange for sale of strategic goods. And I cannot way what is the reason for Mr Abrahamyan’s statement.”

Russian president Vladimir Putin stated that the Russian side was ready to consider the proposal.

“This is a political statement with a hint of blackmail. But Russia is unable to abandon the USD because its economy will suffer great losses. Abandoning a foreign currency is a multi-faceted phenomenon."

Russia’s reserves are in terms of US dollars. We should not forget that Russia’s economy, with a very large government share, is liberal. That is, economic entities make decisions in conformity with the economic reality. The more so is Armenia. No one is forcing anyone in Armenia into conducting trade in US dollars. It is up to each economic entity to decide.

“I can also say that in foreign trade long-term stability is of importance, whereas the Russian ruble is a weak currency that can by no means be compared with the US dollar or Euro.”

Asked about the Iran-Armenia railway construction and China’s possible assistance in the project, Asatryan said he doesn’t find it economically justified. “It is a project that has no economic content. It will be very good, of course, for us to have a railway, but it doesn’t have any justification, as there is no demand for that at the moment. First, Armenia does not have that much high product turnover with Iran, and secondly, we do not see those products’ flow to the North, to Europe, Russia or elsewhere. It isn’t as though all this has to do with the transportation of goods,” he replied.

Asatryan said he doesn’t expect the turnover to increase even after Iran shakes off the nuclear sanctions.

"Even if the [turnover] volumes increase tenfold, it isn’t enough for having a railway and ensuring its effective functioning economically,” he added.

Asked about the Government decision to alienate the Electric Networks of Armenia before the planned auditing, the economist said he doesn’t see serious concerns about that. “I am not afraid of it, and nobody has to be. The whole problem has to do with selling the electric networks to a company with good records, because experience showed that the Russian company is not able to resolve the problem, ensuring an effective management. And the surge in the tariffs and all the damages and the company’s financial situation are an aftermath of that, aren’t they? All this, of course, resulted from the decisions made in the past, and they obviously contained a considerable element of corruption from the very first steps. Today, everybody is inclined to evaluate the current management as such, but the problems stem from the initial stages,” he added.