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At the Crossroads A Time for Solutions

Ruben Vardanyan Nuné Alekyan

July 2018

To the memory of Karlen A. Vardanyan (Ter-Balents) A True Armenian and a Man of the World All rights reserved.

No part of this text may be reproduced in any form or by any means, including posting it on the Internet and in corporate networks as well as storage in computer memory for private use, without prior permission in writing from the copyright holders.

© R. Vardanyan, N. Alekyan, 2018

Russian text editors M.S. Grinberg and I.Yu. Mandre English text translator V. Osipov English text editor G. Stepan-Sarkissian English text copyeditor P. Sutton Contents

Introduction 7

Chapter 1. The Past: From the Dawn of Civilization to the 19th Century 12

Chapter 2. The 20th Century 56

Chapter 3. The Present: Independent (1991–2018) 78

Chapter 4. The World in the 21st Century: New Reality 114

Chapter 5. Our Vision of the Future 144

Afterword 194

Introduction 7

In the course of its long history the Armenian people has known both high and low points and was more than once on the verge of extinction. Yet, unlike many ancient civilizations, we have managed to survive, and this fact is amazing in itself. Today, in the first half of the 21st century, we are again poised at a critical juncture and are facing choices that will have very serious consequences for our nation. We must compare possible trajectories for the nation’s future development and make choices that reflect our keen awareness of our responsibility to the generations to come.

The discussion paper that we offer readers does not claim to be a historical or sociological treatise and does not provide a comprehensive political or macroeconomic analysis of the current situation. Nor does it forecast the future. We merely wish to share the results of years of discussions and debates that have been held with a group of people who take the destiny of the Armenian people and Armenia to heart. Our goals are:

Firstly, to provoke a public debate about the future of the country and the nation; and

Secondly, to share the vision of the future which underpins all the development projects that we have hitherto initiated, with the aim of making that vision a reality.

The title of the paper contains several messages. In the first place, the land of the has always been and is now at the crossroads of different civilizations, of important trade routes and of centripetal and centrifugal migration flows. Furthermore, the very concept of the Armenian nation encompasses both the people living in Armenia and the members of numerous diasporan communities who, throughout their lives, experience a fusion of cultures and one way or another combine their Armenian identity with that of their host country. However, that is not all. In our discussion paper we review the nation, the country and individuals at a crossroads in time: we analyze the past, look to the future and try to understand how to act in the present. That crossroads is a meeting place for like-minded persons and their adversaries, where we exchange opinions and seek consensus. Finally, as we have already said, it is precisely at this moment that the Armenian nation has once again found itself at a historic turning point that requires well-considered and prudent choices which will shape its destiny for many years to come.

The two authors have cooperated in the past on a number of occasions but writing this paper has been by far the most challenging and complex undertaking; we were both overwhelmed by the sense of responsibility, given the chosen subject. Concern for the destiny of our nation and a shared vision of its desirable future development are what unites us. Moreover, despite all the differences in our life experience, we are both aware of how complex 8

the modern world is and what perils may hide behind simple, superficial responses to the immense global and local challenges faced by the country and the nation. In this paper we try to address those challenges and to consider the opportunities that are opening up for Armenians in the 21st century.

Today we are witnessing a serious crisis in the world order that emerged in the aftermath of World War II. This crisis is exacerbated by the declining trust in global elites, authorities, and key public institutions. The concept of ‘national identity,’ which until now formed the basis of nation states, is undergoing a huge transformation. Alongside this global crisis, the Armenian nation is also facing an internal crisis at a new stage in its centuries-old development. Unless we make a concerted joint effort to examine our situation, rather than going round in circles because we are scared of change, we will not be able to prevent further assimilation and the Armenian ethnos may therefore cease to exist as a unified entity, while the country itself may lose its independence, at least de facto, if not de jure. In our view, such dire potential outcomes should outweigh our personal fears of change and the danger of making mistakes.

We find it necessary to speak out at present for several reasons. Firstly, we recently commemorated the centennial of our greatest historical tragedy, namely the Genocide of Armenians in the . The centennial made us look again at the issue of preserving and cementing ties among the Armenian communities scattered all over the world, which are drifting apart in the absence of an overarching vision that holds them together. Secondly, in the past few decades the world has gone through rapid, unprecedented changes. And lastly, the sovereign Armenian state that has been in existence for a quarter of a century is at yet another milestone, which requires serious discussion of our historical destiny. In 2041, the Republic of Armenia will be marking the 50th anniversary of independence, and we must start today doing what it takes to make that date a cause for celebration and not for regret. All this makes the debate about possible development scenarios highly relevant and critically important.

We anticipate that representatives of various social groups in today’s Armenia and in the will take part in that debate, along with intellectual, political, business, and military elites, and that it will capture the attention of people of all ages, especially of young people on the cusp of adulthood. Reflecting together on our past, present, and future, we should be able to come closer to finding a way out of the present situation and to identifying mechanisms and methods of cooperation. We do not expect a general consensus on all issues but we are confident that a frank discussion will be instrumental in clarifying many things. Those empowered to make decisions about the future of the country and of the nation must achieve a public consensus, which is simply unattainable without such a debate. Unfortunately, an unpleasant feature of our public life is that we are not always willing to patiently discuss complex and painful subjects, and that we have yet to master the art of dialogue.

It is our hope that among the readers of this discussion paper and the participants in future discussions, there will be many Armenians and non-Armenians who will take an interest in the ideas and development projects considered in the paper. We also hope that Introduction 9

these individuals will be willing to contribute to the success of our common cause in one way or another and, above all, to the implementation of our projects. We are open to cooperation and we will be glad to find new friends who sympathize with our views.

Needless to say, the authors do not claim to be able to provide answers to all the sensitive questions associated with the development of the nation, and do not regard their views as the only correct ones. Nevertheless, we are confident that such questions should be posed and that we need to search for answers jointly. We may indeed find that our paper proves contentious because it presents a not entirely impartial view of a possible way out of the current situation. Our profound concern about the current state of affairs accounts for our critical tone at times, and we ask our readers to focus on the substance of our ideas.

It is obvious that Armenians who live in different countries and are surrounded by different peoples differ from each other too. Nevertheless, many individuals of Armenian descent make a conscious decision to consider themselves Armenian. Profound and essential differences notwithstanding, all these individuals are united in the desire to see Armenia prosperous, united, just, viable, and competitive in the global community. To make a reality of our dream we must find creative solutions to the challenges of the 21st century. 10

Acknowledgements

We express our deepest gratitude to Irina A. Vardanyan, Mariné A. Engibaryan and Bagrat G. Alekyan. Our wise parents’ unconditional love and extraordinary patience have been a great help throughout our lives. It is due to their efforts that we have become what we have become.

*** Ruben Vardanyan:

I am deeply grateful to my beloved wife, companion of many years and like-minded partner, Veronika Zonabend. Veronika has been for me and Nuné an inexhaustible source of inspiration. Without her support even a fraction of what we have been able to accomplish would not have been achieved.

My special appreciation goes to my only and immensely dear sister Mariné Ales. Mariné is our trusted friend, a tough and honest critic and a source of many interesting ideas. Her deep love for the Armenian nation and its history, and her harmonious vision of the world, have served as a sounding board for Nuné and myself and have helped us remain on track.

***

We wish to say a few words with a very warm heart to:

Noubar Afeyan, with whom eighteen years back we began our life-long journey which determined our aspirations. Thanks to Noubar's creativity, the breadth of his views, his ability to synthesize different ideas, we jointly initiated the Armenia-2020 project, and created all our other anchor projects. Noubar is a rightful author of the vision for the future presented in Chapter 5, which emerged as a result of our extensive collaborative discussions and joint projects. Our entire journey is, by itself, a testimony of the far-reaching possibilities of network interaction, a concept we dream of spreading to the global Armenian nation someday.

Pierre Gurdjian, Gor Nahapetyan and André Andonian, who have always stood by us. Our vision of the country’s and the nation’s future was shaped by many hours of discussion with these partners. By implementing joint projects we are trying to move closer to that future.

Ina Mandre, whose contribution goes well beyond standard editing of the text. Ina’s resilience and consistency helped us to further clarify our ideas.

Felix Khachaturian, who involved himself in our work selflessly and passionately. His incredible erudition and subtle comments helped us to significantly deepen our understanding of the issues under discussion.

Aris Ghazinyan, who generously shared his knowledge with us. Aris significantly improved our understanding of some episodes in the history of the Armenian people. 11

Mark Grinberg, who helped us in the final stage of our work. His professionalism and exacting rigor considerably improved the quality of the text.

Our first readers Sergey Ambartsumian, Ara Bagdassarian, Yulia Balandina, Karen Gevorkian, Arman Jilavian, Dmitry Levonian and Norayr Tevanian. Their advice helped us to critically assess controversial ideas, restructure the narrative and examine additional materials that proved useful in strengthening our arguments. Friendly criticism generated new ideas that made their way into the final version of the text.

David Vardanyan and Konstantin Badalov. These young men’s unorthodox views and independence of judgment prompted us to re-evaluate many specific features of the current situation.

Ivan Nikolayev, who also took part in editing the text and made a number of valuable comments that helped us describe some historical facts in a more precise way.

Anna So, who did the graphic design.

All those who disagreed with us and whom we did or did not succeed in winning over to our point of view. Caring critics are the best asset in any undertaking.

Partners, colleagues, friends and family whom we have not mentioned above. We highly appreciate their role in our lives.

Authors of numerous books, studies and articles that we have made use of in this enterprise. Their works have been an invaluable resource for us. Chapter 1 The Past: From the dawn of civilization to the 19th Century

“To serve Armenia is to serve civilization.” William Gladstone1

While reflecting on the past, we do not intend to review and describe in detail the formation and evolution of the Armenian nation, since such a task should be left to historians. We are interested in the past in so far as answers to a number of today’s most important questions can be found in it. What enabled the Armenian nation, one of the most ancient nations on this planet, to survive over many centuries? Although located at the crossroads of civilizations, why was it not assimilated? Why was it able to exert a degree of influence on the process of global civilization? In our view, without answers to those questions any discussion about the present and future of Armenians will be futile and unproductive.

In this chapter we will focus on the events which, in our view, have shaped the Armenian people and played a decisive role in the formation of Armenian ethnic identity. We will also touch upon the values traditionally shared by the majority of Armenians and the character traits and behavior patterns which have prevented the complete assimilation of our nation. We need to think afresh about these non-material assets because they have helped us survive and prosper and should, we believe, be taken into consideration in discussion of our present and future. In addition, we will review the various models of existence of the Armenian people. That analysis may be instrumental in identifying the optimal development models that will secure prosperity for the Armenian nation in the 21st century.

***

Igor M. Diakonoff, a prominent expert on the Ancient Near East, writes, “The question of whether Armenians are direct biological descendants of the population that resided on the Armenian Plateau since the late Neolithic Period - Early Bronze Age can only be answered unequivocally in the affirmative: yes, of course they are ... I must state quite categorically that I do not regard Armenians as nomads on the Armenian Plateau but, on the contrary, I regard them as direct biological descendants of the autochthonous population of the Plateau and direct successors to the creators of the great ancient cultures of this region.”2 A recent analysis of the DNA of ancient and modern Armenians that was conducted by the Centre for

1 British statesman and Prime Minister (1809–1898). 2 I. M. Diakonoff, ‘On the pre-history of the : facts, evidence, and logic’, (in Russian), Istoriko-filologicheskiĭ zhurnal, no. 4, 1983. The Past: From the dawn of civilization to the 19th Century 13

GeoGenetics of the Natural History Museum of Denmark3 reveals that no significant changes have occurred in their mitochondrial genome in the past eight thousand years despite the fact that they live at the crossroads of migration flows. By the very fact of their existence, Armenians refute Lev Gumilev’s theory of ethnogenesis4, which contends that the life cycle of an ethnos does not exceed 1,600 years, and Oswald Spengler’s theory5 that the cycle is about 1,000 years.

Over the past 2,500 years the greater part of the planet’s population was ruled by empires. Empires fought each other, and the constant flux of frontiers meant that people ruled by one empire became subjects of another. At times, some ethnic groups attained stable sovereignty, but more often they disappeared as a single ethnic community. Hittites, Akkadians, Caucasian Albanians, Phoenicians, Sumerians, Etruscans, Samnites and many other peoples who were united by language, religious beliefs, cultural traditions, and household practices were assimilated and vanished from the face of the earth. Of the numerous Iranian ethnic groups of the 4th and 5th centuries BC, only the Persians managed to maintain a presence on the ethnographic and political map of the world thanks to the consolidating role of Zoroastrianism and the adaptability of that people to change. Another ethnic group immediately neighboring the Armenians was the Assyrians, heirs to one of the first great world empires, who lost their statehood in the late 7th century BC. While they managed to avoid complete ethnic assimilation, their population has substantially decreased. Armenians are among the few ancient ethnic groups that have not been assimilated and have, over the millennia, outlived all the powerful empires of which they were a part. Besides, despite the small size of their population, Armenians have constantly found the strength to fight to restore their own statehood within the boundaries of their historical territories.

In 164 BC, just a few decades prior to the reign of Tigran the Great (Tigran II, reigned 95–55 BC), the population of Anatolia and Greater is estimated to have been 14 million6, while the population of the Roman Empire, the largest state of the time, was around 61 million7. In other words, the population of the Kingdom of Armenia, which at its peak covered a large portion of Anatolia and Greater Syria, was quite large by the world standards of the time (although it should be borne in mind that only a fraction of the population of the kingdom was ethnically Armenian). Twelve centuries later, at the time of the Crusades (11th–13th centuries), the total population of the Earth was about 400 million8, with 100 million residing in the Mediterranean region, which was then one of the centers of the civilized world. In the

3 Ashot Margaryan, Morten E. Allentoft, et al., ‘Eight millennia of matrilineal genetic continuity in the South ’, Current Biology, 27, issue 13, (July 10, 2017). http://www.cell.com/current-biology/ fulltext/S0960-9822(17)30695-4 (accessed September 13, 2017). 4 L. Gumilev, Ethnogenesis and the biosphere (: Progress Publishers, 1990 (in Russian)). 5 Oswald Spengler, The decline of the West (New York: A. Knopf, 1970). 6 Max Roser, Esteban Ortiz-Ospina, ‘World population growth’, Our world in data. https://ourworldindata. org/world-population-growthhttps://ourworldindata.org/world-population-growth (accessed September 11, 2018 7 ‘Demography of the Roman Empire: https://en.wikipedia.org/wiki/Demography_of_the_Roman_ Empirehttps://en.wikipedia.org/wiki/Demography_of_the_Roman_Empire (accessed September 11, 2018) 8 United States Census Bureau International Data Base, Historical and forecast data on the planet’s population size. http://www.census.gov/ipc/www/idb/worldpop.html (accessed September 13, 2017). 14

absence of reliable data one could assume that at that time the Armenian population would not have exceeded five million, i.e. around 5% of the population of the Mediterranean region9. Quite a few times, ethnic Armenians ascended the thrones of world powers10, while Armenian churches and communities were in evidence in the largest economic and religious centers of Europe, Asia, and the Middle East. In general, the visible role of political, military and cultural figures of Armenian descent in Antiquity and the Middle Ages cannot be denied. We will touch in greater detail on the influence of talented representatives of the Armenian nation on the development of civilization during the Renaissance and the modern era.

Despite the tragic events of the early 20th century, some say that at present there are about ten million Armenians in the world. And that number, highly unreliable in our view, would account for around 0.15% of the population of the globe. According to University professor David Marshall Lang, Armenians’ contribution to world civilization is out of all proportion to their numbers11. In our view, the influence which the Armenian nation and some of its distinguished representatives had in the past is at times an impediment to an adequate assessment of the role that Armenia and Armenians perform today. However, we do not intend to spend time lamenting the irreversible disappearance of the ‘Golden Age,’ and propose instead to discuss the potential role for our nation in the global community of the 21st century. But first, let us address the issue of why Armenians did not become assimilated, unlike the majority of ancient ethnic groups.

The Shaping of Armenian Ethnic Identity

The heritage of the Armenians comprises not only ancient chronicles about heroes and rulers, states and battles, but also myths and legends passed down from generation to generation. One quite remarkable myth concerns the founder of the Armenian nation, the mighty archer , who led three hundred men with their families from Babylon to ‘untainted’ lands. In an unequal confrontation with his fellow giant Bel, Hayk defended the independence of his people by gaining a victory due to strategic thinking and military skill but not to numerical superiority. We mention this myth in order to emphasize its symbolic significance, namely the refusal of the Armenians’ legendary forefather and his followers to live in corrupt and depraved Babylon, their desire to find a land where they could live under their own laws, upholding lofty values, and their determination to make good their choice by fighting superior enemy forces.

9 For comparison, today’s population of the Russian Federation accounts for 2% of the world population. 10 At least sixteen Byzantine emperors and eleven empresses were of Armenian descent. According to Robert H. Hewsen, three imperial dynasties of Iraklia, Macedonia, and Lakapin were of Armenian descent. See: Robert H. Hewsen, Armenia: A historical atlas (Chicago: The University of Chicago Press, 2001). 11 David M. Lang, Armenia: Cradle of civilization (London: George Allen & Unwin, 1970). The Past: From the dawn of civilization to the 19th Century 15

In discussing the subsequent evolution of the Armenian nation, we would highlight in particular several pivotal events of the 4th and 5th centuries AD which, we would argue, contributed significantly to the shaping of Armenian ethnic identity and affected the formation of the modern Armenian ethnos.

1. The proclamation of as the state religion of Armenia by King Trdat the Great (Trdat III, early 4th century) and its rapid spread among the Armenians. Having embraced a new religion, they were prepared to defend it. Religion became a unifying force for Armenians in their resistance to the great empires of that time. First, they had to fight Rome (in 311), as related by Eusebius of Caesarea in his account of the reign of the Emperor Maximinus II: “In addition to this the tyrant was compelled to go to war with the Armenians, who had been from ancient times friends and allies of the Romans. As they were also Christians and zealous in their piety toward the Deity, the enemy of God had attempted to compel them to sacrifice to idols and demons, and had thus made friends foes, and allies enemies.”12 Over a century later, Armenians rose up against the Sasanian Empire and confronted its army in the Battle of Avarayr (451) without any support from the Christian world. Armenian independent religious self-determination assumed at that time an institutional form, which found its expression in the non- acceptance of the doctrine of the Council of Chalcedon (451) by the Armenian Church.

2. The partition of Greater Armenia between Sasanian Persia and Byzantium in 387. This resulted in Armenians living separately one from the other for many centuries, at the meeting point of two antagonistic civilizations. Both these civilizations were hostile to the numerically small Christian nation which, later on, remained loyal to its pre- Chalcedonian religious faith. The history of the Armenians attributed to Pavstos Buzand (5th century AD) purports to quote from the treaty concluded between the Byzantine emperor and the Shah of Persia: “… [T]his mighty and wealthy kingdom … is in our midst. First, we divide it in two … Later … we shall try to destroy and impoverish [the Armenians] and put them into service so that they will be unable to raise their heads between us.”13 Those words, written over 15 centuries ago, are a formidable prophecy of the disasters that the Armenians would suffer in the centuries that followed.

3. The invention of the by (405). It would be erroneous to assert that a chance or private initiative by one extraordinary personality accounted for the invention of the alphabet. That event was the result of jointly planned and purposeful actions on the part of religious and secular elites. Realizing the importance of having their own script for the preservation of ethnic unity, at a time when the nation was

12 Eusebius Pamphilius of Caeseria, The history of the Church from Christ to Constantine, translated with an introduction by G. A. Williamson (New York: Dorset Press, 1985), Book IX. Chapter VIII. http://www. ccel.org/ccel/schaff/npnf201.iii.xv.viii.html (accessed August 22, 2017). 13 P'awstos Buzand, The epic histories attributed to P’awstos Buzand, translation and commentary by Nina G. Garsoïan (Cambridge, Massachusetts: Harvard University Press, 1989), Book Six, Chapter 1. https:// archive.org/stream/HistoryOfTheArmeniansByPawstosBuzand_569/Pawstos_Buzand_djvu.txt (accessed August 22, 2017). 16

partitioned and surrounded by antagonistic religious teachings, those elites succeeded in mobilizing the necessary resources and creating the conditions for its invention and dissemination. The first recorded words written in Armenian script read as follows: “To know wisdom and instruction; to perceive the words of understanding” (Proverbs 1:2). St. Mesrop’s emphasis on knowledge and understanding is significant in that the Armenian nation has remained faithful to those values over the centuries.

Naturally enough, the following question arises: Would the Armenian national identity have been shaped differently from what it is today, if any of those three events had not occurred in the history of the Armenians? We believe that all those events combined – the adoption of Christianity, the creation of a unique alphabet, the centuries-long survival of the Armenian people after its partition – had a profound impact on the formation of the modern Armenian ethnos. It should be stressed that those events occurred as a result of informed and courageous decisions on the part of the Armenian elite.

Pillars of National Identity

Not many ethnic groups in world history have emerged and developed at the crossroads of different cultures and civilizations while preserving their uniqueness. In our opinion, the only comparable example would be the Koreans, who were influenced for centuries by three cultures, Japanese, Chinese, and Russian, but who managed to preserve their own religion (Korean Shamanism) and their unique alphabet, to say nothing of the language. In various periods of their history, Armenians were under the influence of at least four dominant civilizations, European (Catholic and Protestant), Russian (heir to the Byzantine-Orthodox tradition), Ottoman (with its Turkic-Arabic-Sunni origins), and Persian (where Shiism dominates). Many ethnic groups also left their mark on Armenian lands: Romans, Parthians, Persians, Byzantine Greeks, , Turkic peoples, Mongols, Ottoman Turks, and Russians (Fig. 1). However, none of them succeeded in assimilating the Armenians, who preserved their national identity over many centuries, even though for long periods of time they did not have their own state and frequently had to live far from their historical lands.

In our view, the pillars of Armenian national identity were and still are:

> the Christian faith and the Church as a specifically religious and educational institution,

> the Armenian language as a means of communication, and its alphabet as a unique cultural phenomenon,

> the family community as a mechanism for transmission of traditions and knowledge from one generation to another.

Thanks to these pillars, over 17 centuries the Armenians have constituted and still constitute one ethnos, regardless of where they live. The Past: From the dawn of civilization to the 19th Century 17

Roman Empire 8th century BC 20th century AD Alexander the Great Empire Persian Empires

Russian Empire Mongol Empire

Persian Empire

Armenian Plateau

Seljuk Empire 11th-12th century

Arab Caliphate

Ottoman Empire

Arab Caliphate 7th century

Fig.1. Armenians at the crossroads of civilizations14

The Apostle Paul’s words about the universal mission of Christianity are frequently quoted: “… [T]here is neither Greek nor Jew … for you are all one in Christ Jesus.” Without denying this supra-ethnic message of the monotheistic religion, Armenians succeeded in establishing the independent Armenian Apostolic Church, which became the moral core of the community, a repository and source of knowledge and a center for enlightenment and education. In Kostan Zarian’s novel The Ship on the Mountain, a monk says: “The Armenian Church exists for the Armenian people but not the Armenian people for the Armenian Church.”15 There is a profound meaning in this phrase because ties between the Armenian Church and Armenian communities were much closer than, say, between Catholic monasteries and communities in feudal Europe. Over the centuries, the Church and the community were in a way inseparable. Of course, not all Armenians were members of the Armenian Apostolic Church. It is revealing, however, that Catholic Armenians stressed their ethnic identity by declaring themselves to be the . Such a desire for ethnic distinctiveness was not displayed by other Catholics, by the French, say, the Portuguese, or the Spanish. The same holds true for Armenian Protestants and some Muslim Armenians (including Islamized Hamshen Armenians).

For centuries, the Armenian Church was the only stable institution that Armenians could rely on for their advancement. The role that it offered them was that of a peaceful Christian nation with a rather small population, surrounded by non-Christian nations of the East, and unable to count on support from other Christian nations because of denominational differences. In the absence of an independent state, it was thus the one institution that guided

14 The map is provided by the Charitable Foundation Initiatives for Development of Armenia (IDeA). 15 Kostan Zarian, The ship on the mountain, (in Russian) (Moscow: Izvestiya Publishers, 1974). 18

the life of the ethnic community, and although it could never perform all the functions of the state, for a certain period of time it performed some of those functions, engaging in particular in foreign policy.

Living for centuries under foreign rule, many Armenians were equally fluent in their mother tongue and in the language of the relevant empire, while educated people also knew several foreign languages. It is remarkable that in any country where Armenians settled, their mother tongue remained for a long time the language of communication among them and was their ‘code system.’ Moreover, surprisingly, this numerically small nation did not make use of any of the existing alphabets, for example the Greek or the . Quite the opposite: the Armenian alphabet was invented by an Armenian as a national sign system that would make it possible to record and pass on knowledge from one generation to another, and to maintain national uniqueness and reverence for the Book as a sacred source of wisdom.

In a society that did not have stable state institutions, family and community had a pivotal role to play in preserving the traditions, culture and language, and were instrumental in transmitting behavior patterns and shared values. The family was the principal ‘building block’ of society, a closed system of healthcare, social security, insurance, funding, accumulation of material goods and, at times, of ‘police’ control, let alone the mechanism for transmitting information to relatives living abroad. The importance of family-based life was due in part to the fact that it improved the chances of survival for the entire community. In consequence, the hereditary nature of trades was no coincidence, with knowledge and skills being accumulated and transferred from one generation to another. Competent craftsmen, who learnt their trade in the family environment, could expect to earn a steady income and respect in society. Trade, crafts, and agriculture, i.e. all aspects of Armenian economic life, were organized on the basis of family and community.

While reviewing the pillars of ethnic identity, it is also important to mention the ancestral Armenian lands and their role in preserving national uniqueness. Historically, the area where Armenian people lived is the Armenian Plateau, and the Armenians’ internal identification with that territory is of utmost importance16. Even though Armenians lost their sovereignty and suffered persecution in their native land more than once, they never left it completely. Even in the absence of an Armenian sovereign state, Armenia was shown on maps and was mentioned in historical documents as a country where Armenians resided. For example, Armenia is mentioned among over 20 subordinate satrapies in the famous Behistun Inscription by the Achaemenid King Darius I (last quarter of the 6th century BC). Almost all the capital cities of various Armenian state entities, Yervandashat, Artashat, , , Shirakavan, Bagaran, Kars, and , are located on the Armenian Plateau. The

16 The toponym ‘Armenian Plateau’ was used for the first time by the German geologist, natural scientist and traveler, one of the founders of the geological study of the Caucasus, Otto Wilhelm Hermann von Abich in his treatise Über die geologische Natur des armenischen Hochlandes (Dorpat: Laakmann, 1843). The Past: From the dawn of civilization to the 19th Century 19

distance between them is usually not more than thirty kilometers. If there is a ‘natal home’ on which Armenians pin their hopes for their own sovereign state, it is indisputably the Armenian Plateau and .

At the same time, by contrast to the Jews who, during their two thousand years of exile, set themselves the goal of returning to and restoring the Temple, diasporan Armenians did not regard the Plain of Ararat as a sacred place for ethnic consolidation. The Armenian people did not have its own Jerusalem. In other words, at all times and in all countries, while Armenians may have clung to their Church, mostly spoke their own language, and kept themselves together in families, by all accounts they rarely associated their dreams and aspirations with a return to their historical motherland. Nevertheless, the issue of land is an important matter of common concern that merits further discussion in relation to the future of the Armenian nation.

Traditional Values

The above-mentioned pillars of identity determined the survival of the Armenians as a nation, and they still largely perform that role. They helped Armenians avoid assimilation and absorption into a host of other nations far from the historical homeland. However, they did more than that. We believe that they laid the groundwork for the formation of values which, in our view, also played a decisive part in the preservation of the Armenian consciousness.

Firstly, as we will demonstrate below, there is high regard among many Armenians for educated people and the indisputable authority of education, which has often encouraged competitiveness. The high esteem for education, the veneration of the Book, and the establishment of centers of higher learning in monasteries which transmitted knowledge from generation to generation – all of these are implicit in that first phrase written in Armenian: “To know wisdom and instruction …”

Secondly, there is respect for highly professional skills. Armenian goldsmiths, architects, engineers, doctors, lawyers, scientists, scholars, and craftsmen have been highly valued in the world for a long time. A high level of professionalism and competitiveness among these Armenian specialists has allowed them to survive in the harsh conditions of a foreign environment or to relocate quickly in case of an impending threat, successfully adapting to a more favorable environment and remaining in demand in various countries of the world.

Thirdly, reputation is considered crucial, especially in dealings with others. In the minds of many Armenians, the ability to negotiate with representatives of the outside world, to abide by the agreements reached, and to listen to and appreciate the points of view of both ‘us’ and ‘them’, is seen as particularly relevant, and is again reflected in the first words recorded in the Armenian language: “… to perceive the words of understanding”. Naturally enough, it has also affected the perception of Armenians by other peoples with whom they have been in contact: over time, the latter have come to see Armenians as useful and desirable intermediaries. 20

Fourthly, there is the desire for independence. That Armenians wish to live in their own land and under their own laws is evident from their unrelenting struggle for independence, and from their numerous attempts to restore lost political sovereignty.

The retention of traditional values in society always was and still is essential, even though they may undergo certain changes and transformations. In the chapters that follow we will look at the ways in which those values have influenced our development in the past and are influencing us today.

We have dwelt on the description of the pillars of identity and the traditional values of the Armenian people because we thought it necessary to establish a point of reference for the discussion of our present and past. Below we will be coming back to this theme, demonstrating how the non-material cultural heritage of the Armenian nation helped it survive and succeed in the past and how it can help us in the search for development models in the 21st century.

Historical Models of Existence

For over 1,600 years, the Armenian people lived on their land under the rule of foreign empires and constantly fought for independence, sometimes restoring it but losing it again every time. From the 7th century on, leaving their homeland voluntarily or perforce, Armenians established diasporan communities far from the Armenian Plateau. If we trace the trajectory of those migration flows, we can see that Armenian diasporan communities were concentrated particularly in Istanbul, , , , Moscow and .

St. Petersburg

Moscow

Manchester London Brussels Krakow West Paris Switzerland Vienna Rostov Krasnodar Pyatigorsk Florence Bulgaria Vladikavkaz Tashkent Rome Tbilisi Baku Istanbul Yerevan Samarkand Ashkhabad Aleppo Beirut Jerusalem Isfahan Alexandria Cairo

Kolkata

Mumbai

Ethiopia

Singapore

Eswatini

Fig. 2: Armenians are a global nation17

17 The map is provided by the Charitable Foundation Initiatives for Development of Armenia (IDeA). The Past: From the dawn of civilization to the 19th Century 21

The main migration flows of Armenians from the 7th to the 19th century are presented in Fig. 2: > the Western European flow: Istanbul – Venice and the Mediterranean region – Vienna – Paris – Amsterdam – London – Manchester; > the Eastern European flow: Crimea – Western Ukraine – Poland – Bulgaria – Romania; > the Northern flow: Tbilisi – Vladikavkaz – Pyatigorsk – Krasnodar – Rostov-on-Don – Moscow – Saint Petersburg; > the Middle Eastern and African flow: Aleppo – Beirut – Jerusalem – Alexandria – Cairo – Addis-Ababa; > the Central Asian flow: Shushi – Baku – Ashkhabad – Bukhara – Samarkand – Tashkent; > the Eastern Asian flow: Old Julfa – Isfahan – Mumbai – Kolkata – – Hong Kong.

It could reasonably be expected that such intensive migration, combined with living under the authority of foreign rulers during the Middle Ages and the modern era, would have led to a significant reduction in the presence of the Armenian ethnos in the world, if not to its complete assimilation. That, however, did not happen because of the models of existence that the Armenian people historically adopted. We will review the main models that helped the nation not only to survive but also to thrive at certain times and to make an impact on global civilization. Those models are buffer territory, sovereign state, global network, diasporan communities and ethnic minority within an empire.

Buffer Territory After it lost its sovereignty in 387, Greater Armenia remained divided for almost three centuries between the Eastern Roman (Byzantine) Empire and the Sasanian Empire. In fact, both Eastern and at that time were at the ‘periphery of an empire.’ However, in the 7th century the situation changed. A new stage in world history began with the emergence of and subsequent Arab expansion. Armenia was destined to become an arena of confrontation between two great powers, Byzantium and the Caliphate. For a while, the adversaries were of equal strength, and in the mid-7th century in Armenia a climate of relative peace and tolerance was created, which remained intact until the early 8th century. A model of existence emerged which might be called a ‘buffer territory.’ It suited the two feuding powers that Armenia should have this status, and they therefore refrained from direct military conflict. The viability of the country at that time was secured,on the one hand, by the Armenians’ readiness to unite when faced with external threats and to defend their independence with arms, and, on the other hand, by the local elite’s art of negotiating successfully with a more powerful adversary, thereby protecting their religion and hence their identity. While attempts by Byzantium to impose religious unity on the population of territories under its control provoked strong resistance among Armenians, Arab invaders agreed to maintain a degree of religious tolerance in the lands they had conquered. The preservation of the Armenian religion played a key role in the Armenian elite’s decision to replace the country’s pro-Byzantine orientation with a pro-Arab stance.

Thus, performing the role of intermediary between powerful warring neighbors, Armenians managed to live a relatively prosperous life in their native land under their own laws, even though that period did not last long in historical terms. By giving the two empires 22

an opportunity to reconcile their interests in the territory of Armenia, such a modus vivendi allowed Armenians to preserve their identity. In the context of further discussion of the present and future of the Armenian nation, this fact is significant and extremely valuable.

The buffer territory remained resilient as long as both empires were powerful enough and avoided direct confrontation. However, with the weakening of Byzantium and the growing power of the Caliphate, this role for Armenia had run its course. Again, as happened many times in history, some Armenians were forced to leave their historical lands. Those who stayed behind continued their struggle for independence with armed resistance. The status of buffer territory, separating powerful neighbors, thus proved relatively short-lived for Armenia, but that does not mean that valuable lessons cannot be learned from this model of historical existence.

Historical Note

The emergence of Islam in the 7th century and the subsequent foundation of the extensive Arab Caliphate expanded the geography of global confrontations. The first Arab incursions into Armenian lands date back to 639–640. The Arabs managed to capture Dvin, the center of Persian Armenia, where the Patriarch of the Armenian Church resided, but in 642 they were defeated at the fortress of Yerevan. Successful resistance by Armenians determined further developments to a large extent and contributed to the establishment of a relatively lenient rule in the conquered territories. By the mid-7th century the Arabs controlled the Levant, Persia, Mesopotamia, the Eastern Mediterranean region, western areas of Central Asia and north-eastern parts of Africa, imposing a new religion on the conquered lands. Thus, Armenia found itself surrounded by a Muslim environment. Apart from , itself partitioned, Byzantium remained the only Christian state among its neighbors.

When faced with the rise of the Caliphate, the Emperor Constans II tried to achieve Church unity in territories subservient to Byzantium. At the Fifth Council of Dvin (648), Catholicos Nerses III and the military commander Teodoros Rshtuni opposed the proposal put forward by the Emperor and by Patriarch Pyrrhus of that the doctrine of the Council of Chalcedon be accepted: “We hold to our faith, not as it is defined by people of the recent past, but as we received it from the holy apostles through our patriarch St. Gregory, who instructed King Trdat and the princes of Armenia almost 30 years before Constantine.”18 Armenia at that time was officially subordinate to Byzantium, and this reply roused the Emperor’s ire. In 652, Constans II invaded the country and forced Catholicos Nerses III to hold a Sunday service in the church in Dvin in accordance with the Byzantine rite.

18 , The Armenian history attributed to Sebeos, translated, with notes, by R. W. Thomson, historical commentary by James Howard-Johnston with assistance from Tim Greenwood (Liverpool: Liverpool University Press, 1999). The Past: From the dawn of civilization to the 19th Century 23

This news provoked a massive wave of anti-Byzantine feeling throughout Armenia, encouraging the national elite to draw closer to the Caliphate. Under the Damascus Treaty of 652, Armenia recognized the authority of the Caliph but obtained de facto self-rule. Thus, in the mid-7th century Armenia was no longer subordinate to Byzantium. Nor did a sizeable segment of the Armenian military-political elite conceal their pro-Arab orientation since they saw the Caliphate as a power capable of counteracting Constantinople’s ambition to establish control over Armenian lands and to impose Greek Orthodoxy.

In the second half of the 7th century, possessing an element of autonomy, Armenia was a buffer territory without clearly delineated frontiers, and in that capacity it minimized the threat of direct military conflict between Byzantium and the Caliphate. Such a situation was beneficial for both Constantinople and Damascus as it afforded them an opportunity to conduct a proxy war. Relative calm in the country in the second half of the 7th century can be accounted for by that fact.

The chronicles of Armenians defending their religion abound in remarkable stories. A report has come down to us of the life of the military commander Surhan, who embodies the contradictions of that era. Persian by birth, Surhan was an Arab military leader who converted to Armenian Christianity. In the Plain of Ararat he became acquainted with Armenians, fell in love with an Armenian woman and decided to convert to another religion. This open conversion of an Arab military leader is evidence that the Caliphate took a rather tolerant attitude toward Armenia in the second half of the 7th century. While a considerable part of the civilized world was being forcibly Islamized, in Armenia (one could say, under the nose of the Caliph) the baptism of a Muslim man, and a military commander at that, was performed at the highest level, with the participation of Armenian religious and military leaders.

In the early 8th century the balance of power was tipped in the Caliphate’s favor, and the situation became more complicated. In the 8th century, the Arab authorities established a regime of extreme oppression. The historian Ghevond left a report about it: “Abdullah … came to the land of the Armenians, reducing everyone to bankruptcy with many afflictions and torments, to the point that he was demanding taxes from the dead. He made many orphans and widows suffer greatly and he tortured priests and servants of the churches mockingly, beating them with sticks … He viciously tormented the inhabitants of our land with bitter tax demands, imposing a tax of many silver zuzes per capita and placing a lead seal around their necks. Now the lords of the clans voluntarily and involuntarily gave gifts of horses and mules, precious clothing and other gold and silver goods, to fill the mouth of that dragon which had attacked and was wrecking the country.”19 Numerous riots flared up on a scale comparable to a genuine war of national liberation. Migration reached a critical level, and that trend could have brought about a dramatic change in the

19 Ghewond, Ghewond’s History, translated from by Robert Bedrosian (Long Branch, N.J.: Sources of the Armenian Tradition, 2006), Chapter 28. https://archive.org/stream/ GhewondsHistoryOfArmenia/Ghewond#page/n33 (accessed January 10, 2018). 24

ethnic composition of the population in the historical Armenian lands. The relocation of Armenians to Byzantium gained momentum, particularly after the enthronement of Emperor Philippicus Bardanes, who was of Armenian origin. Nevertheless, while some Armenians also made their way to , the majority remained in the homeland and became embroiled in a new stage of the struggle, headed by the .

The Historical Note has been composed on the basis of materials provided by the journalist, historian, and writer A. Ghazinyan.

Sovereign State The restoration of sovereignty after century-long subjugation by the Caliphate on the one hand, and constant pressure by Byzantium on the other, was the result of a ceaseless armed struggle by the Armenian people. Armenians took advantage of the weakened positions of feuding neighbors and united their native lands under a single national command. In 885, Ashot I Bagratuni and Catholicos Zakaria Dzagetsi succeeded in persuading Emperor Basil I and Caliph al-Mutamid to recognize the independence of the Armenian kingdom.

The Kingdom of Ani existed for a relatively short period of time, merely 160 years, but that period went down in history as the Golden Age of Armenia. It was the time of unprecedented demographic growth, economic upturn and rapid development of science and culture. Similar advances would only recur in Soviet Armenia. Those two examples, with an interval of 11 centuries between them, attest to the remarkable ability of the Armenian people for rapid economic, cultural, and demographic revival, given favorable circumstances.

It was the accumulated internal contradictions that were responsible for the sovereign state turning out to be fragile and short-lived. The fight for the Armenian throne, which the different branches of the dynasty were waging, led to a split within a morally decayed elite. Individualism and unwillingness or inability to reach a consensus divided the elite into hostile camps that failed to agree on a coordinated plan for the nation that would preserve its sovereignty. Another significant factor in the decline was that the Church had become a major feudal landlord in the Armenian kingdom and began to lose the moral authority that it had enjoyed for centuries. The alienation of the religious and secular elites from the people triggered a number of peasant uprisings. Thus, the main cause of the collapse of the sovereign state was the desire of the elite to preserve the status quo so that it could accumulate further wealth and stay in power.

The loss of sovereignty brought about yet another exodus of many Armenians from the ancestral lands, and the search for a safe haven in a foreign country. Those who stayed faced a difficult struggle for existence. The Past: From the dawn of civilization to the 19th Century 25

Historical Note

The Bagratid dynasty (9th–11th centuries) strove to unite the historical native Armenian lands and therefore restored the name of the ancient Armenian state, ‘Greater Armenia.’ Ashot I (Ashot the Great) succeeded not only in uniting those lands but also in adding Eastern Georgia and Caucasian Albania.

According to the 11th century historian Stepanos Taronetsi, King Abas I of Ani “promoted peace and well-being in the Armenian land.”20 The king made consistent efforts to centralize secular power and tried to subordinate the interests of the Church to it. In 989, power was transferred to Gagik I, who received the title ‘Shahanshah’ – ‘King of Kings’. The period of his rule is believed to be the heyday of the Kingdom of Ani. An upsurge in cultural life was particularly noticeable in the city of Ani, which was the political and economic center of the country and was called the city of ‘forty gates and a thousand churches.’ Architecture, mural painting, and decorative and applied arts flourished also in vassal states.

The Bagratid dynasty promoted further advances in the ancient tradition of and other writings in centers of education – in , , Haghpat and Sanahin monasteries. Scholars, historiographers, philosophers, theologians, and poets were engaged in creative work, and calligraphy, mathematics, and medicine were thriving.

Under the Bagratids, Armenia became a trading center of global significance, where several key transit routes converged. Flourishing trades and crafts contributed to an intensive growth of towns and cities, where textiles, carpets, glazed pottery, faience and metalware were produced. With around 100,000 residents, Ani became one of the largest cities in the world. Dvin exported the natural dye carmine obtained from cochineal insects. The 10th century Arab geographer Ibn Hawqal reports that: “Armenian seats and carpets known as Armenian ‘mehfur’ are produced in Meranda, Tebriz and Dabil (as the Arabs called Dvin) and in regions of Armenia: not many such goods are produced in all those countries where production of fabrics is similar to Armenian production.”21 Armenia was also famous for its scarves, patterned coverlets and shawls. Maintaining extensive economic ties, the country was engaged in active trade in goods from the Caliphate and Byzantium as well as in domestically produced goods. According to reports by Arab historians and geographers, Armenia exported wheat and timber as well as fish caught in .

Strategic resources (land and irrigation channels) belonged to kings, princes and their vassals, and the Church was also a large landowner. For example, the

20 Stepanos Taronetsi, The ‘Universal History’ of Step’anos Taronec’i, introduction, translation and commentary [by] Tim Greenwood (Oxford: , 2017). 21 Muhammad ibn Hawqal, The Oriental Geography of Ebn Haukal, an Arabian traveler of the tenth century, translated by Sir William Ouseley (London: Oriental Press, 1800). 26

owned 47 settlements. In the 910s, in a complicated political situation, a wide anti-feudal peasant movement emerged that swept across the entire Ararat region. From the on, peasant revolts erupted on an even larger scale.

In the second half of the 10th century, the annexation policies of Byzantium and its eastward expansion posed a threat to the secure existence of the kingdom. Soon, Armenia was shaken by a string of incidents of internal strife. In 1020, the lawful right of Hovhannes-Smbat to succeed to the throne was not recognized by his brother Ashot IV. In the pursuit of power, one brother rebelled against the other. Hovhannes-Smbat’s great political mistake was his support for the King of Iberia, Georgy I, in a war with Byzantium, and having suffered a defeat, he was obliged to agree in 1022 that the Kingdom of Ani would be transferred to Byzantium after his death. Catholicos Petros I Getadardz and Emperor Basil II concluded the Trebizond Will, and, in the words of the 11th century historian Aristakes Lastivertsi, “… in that place was created the deed and letter of destruction of the Armenians.” This Will stirred up widespread discontent in Ani but in 1041, when the childless Hovhannes-Smbat died, the Byzantine emperor Michael IV demanded that the Trebizond Will be implemented.

The Armenian political elite split into two factions. Catholicos Petros I Getadardz and Prince Sargis Haykazn took a pro-Byzantine position, whereas the other section of the nobility, headed by prince Vahram Pahlavuni, decided to defend the sovereignty and crowned Gagik II, the son of Ashot IV, king. Upon ascending the throne, Gagik II refused to comply with the terms of the Trebizond Will. When he failed to achieve the goal through military means, Emperor Constantine IX Monomachus invited Gagik II to Constantinople, supposedly for peace negotiations. The latter gave in to persuasion by Sargis Haykazn and Catholicos Petros I Getadardz. In Constantinople the Armenian king was asked to capitulate and to surrender his kingdom to Byzantium. At the same time the Catholicos and Sargis Haykazn sent to Constantinople the keys of the Armenian capital. In 1045, during yet another siege, the city of Ani surrendered.

In his History, Aristakes Lastivertsi, a contemporary of those events, writes: “Three years later, Armenia’s life came to an end. For in one year the two brothers Ashot and Hovhannes, who held the kingship of our land, died. Thereupon their throne of stability was moved and never more came to rest; thereupon the princes arose and departed from their patrimonial inheritances and became wanderers in a foreign country; thereupon districts were destroyed, looted by the Greeks. Prosperous boroughs became the dwellings of wild beasts, and their fields the pastures of deer. Houses, desirable, with lofty ceilings and grand, became the habitations of sirens and fairies. [And our land can be lamented as] did the blessed prophets lament the desolation of …”22

22 Aristakes Lastiverttsi, History, translated by Robert Bedrosian (Long Branch, N.J.: Sources of the Armenian Tradition, 1985). The Past: From the dawn of civilization to the 19th Century 27

Through their policies, the Bagratids themselves contributed to the disintegration of the centralized state by dividing it among several branches of the clan. Separatism was encouraged in every possible way by Byzantium and the Caliphate. Feudal and Church infighting further weakened the country. In the 11th century Byzantium withdrew its support for the Kingdom of Ani, preferring to expand its own territory at the kingdom’s expense. In his Book of History Arakel Davrizhetsi writes: “The Armenian people blinded themselves with their own fingers because they ruined their kingdom with their wildness and disobedience. The people began to be trampled underfoot; they became slaves and prisoners of other tribes and kings, and when some calamity overtook them, finding themselves in a desperate situation and getting no help from anywhere, they became refugees and scattered in different directions.”23

The fall of the Kingdom of Ani generated a new wave of forced mass migration of Armenians. Thousands left for Cappadocia from Vaspurakan alone. Armenians emigrated also to Georgia and, particularly, to Cilicia. The remnants of Armenian ethnic statehood survived only in (Zangezur), Tashir and Artsakh (Karabagh).

The Historical Note has been composed on the basis of the following materials: Stepanos Taronetsi (Asoghik), writer of the 11th century. Universal History. Moscow: Publishing House of Lazarev Institute of Oriental Languages, 1864 (in Russian). http://www.vostlit.info/Texts/rus17/Asohik/ frametext31.htm (accessed January 10, 2018).

‘Arab writers’ information about the Caucasus, Armenia and Aderbeijan: VIII. Ma’sudi.’ In Collection of materials for the description of localities and tribes in the Caucasus. Issue 38. Tiflis: Department of the Caucasus Educational District, 1908 (in Russian).

Aristakes Lastivertsi. History. Translated from Classical Armenian by Robert Bedrosian. Long Branch, N.J.: Sources of the Armenian Tradition, 1985.

Arakel Davrizhetsi. Book of History. Moscow: Science Publishers, 1973 (in Russian).

Global Network After the fall of the Kingdom of Ani in the 11th century and of the Cilician state in the 14th century, European merchants who arrived in the East found that Armenians had created a successfully functioning network of international trade that encompassed almost the entire known world at the time. In fact, Armenians were among the leading intermediaries in trade relations between East and West, making use, many centuries earlier, of the principles that underlie present-day social networks. Networking allowed Armenians to support each other and to exchange information across great distances, working through family and/or community contacts.

Until the mid-18th century, about 80% of the world economy was concentrated in Asia. Up until the end of the 15th century, the Silk Road was the main source for accumulation of

23 Arakel Dawrizhetsi, The History of Arak’el of Tabriz, introduction and annotated translation from the critical text by George A. Bournoutian (Costa Mesa, California: Mazda Publishers, 2005). 28

capital and possessions both in the West (Genoa and Venice) and in the East (the Ottoman and Safavid Empires, the Great Mogul Empire, China at the time of the Ming and Qing dynasties). Despite the absence of their own state, the Armenian population in the Middle East skillfully used their unique geographical position at the midpoint of the Silk Road, as one might say. However, by the early 15th century, after the incursion of Turkic tribes and Tamerlane’s conquests in Central Asia, the Silk Road declined and traditional sources of wealth dried up. It was necessary to look for alternative trade routes.

In the 16th and 17th centuries, Armenia became a stage for fierce wars between the Ottoman Empire and the Safavid state. Those wars were accompanied by the mass extermination of Armenians, their displacement from historical territories, or forced migration. In 1603–1604, over 250,000 Armenians were forcibly deported to the interior regions of Persia. This tragedy brought about a drastic reduction in the autochthonous population of Eastern Armenia. Nevertheless, the Armenians who had been relocated to (see Historical Note below) succeeded in establishing a very wide trade network that united Armenian communities in various countries of the world. The ability to negotiate, and the enterprise and audacity of Armenian merchants, enabled them to make maximum use of their new situation and to accumulate capital thanks to their increasing presence in all the centers of economic development of the time.

In our opinion, the global network was a unique form of existence that contributed to the survival and development of the nation in the late Middle Ages and the modern era. History knows very few similar examples. There are three reasons why we regard an analysis of this form of existence as important. Firstly, the principles by which the network functioned provide a key to understanding how the nation could prosper even in the absence of sovereignty. Secondly, some communities that were established in that period by Armenian merchants remain a focal point of the Armenian Diaspora even today. Thirdly, networking is important for Armenia now, in the 21st century, and we will discuss that in the last chapter.

The global network comprised the core, located in New Julfa, and numerous nodal centers at key global points. This network ensured profitable trade operations within extensive geographical areas. Thus, Armenians set up a mechanism that allowed them to establish mutually beneficial relations with the outer world and to live comfortably far from their historical lands, avoiding both total isolation and assimilation. To skip ahead, we can point out that many communities that were established or strengthened by merchants from New Julfa in the 17th century later on became focal points for Armenians fleeing from the Ottoman Genocide.

Unfortunately, innovative as it was, this model of existence did not last very long, for about 150 years only. Its relative vulnerability can be accounted for primarily by external factors. However, while aggressive actions by powerful empires bordering Armenia had accounted for such factors in the past, events occurring far from the Middle East now became the underlying causes of the decline in this global network.

Up to the 15th century, the British Isles and Western and Northern Europe remained peripheral to the Mediterranean heartlands of the Holy Roman Empire. The great famines, The Past: From the dawn of civilization to the 19th Century 29

outbreaks of the Black Death, feudal wars and peasant uprisings led to the decline and desolation of those peripheral regions of Europe. However, as the Middle Ages gave way to the modern era at the end of the 14th century and the beginning of the 15th, the center of development shifted in their direction. The Age of Discovery (1492–1610) and the subsequent rapid pace of capital accumulation dramatically accelerated the development of Britain, France, Portugal, Spain and the Netherlands. By the mid-17th century, they outperformed the Middle Eastern and most Mediterranean regions and took a leading position in economic affairs, politics, the military sphere, science, and culture.

From 1500 to 1750, Western Europe accumulated extensive knowledge that enabled it in the Age of Enlightenment to achieve a cultural breakthrough and relatively quickly to outstrip the once-powerful Ottoman, Persian and Chinese empires, and the Empire of the Great Mogul. Translating knowledge into innovations, in the late 18th century the West became the vanguard of the Industrial Revolution and resolutely forged ahead. In the 19th century, the progress of capitalism brought about a search for a resource base and a struggle for spheres of influence that sparked a number of colonial wars, whereupon the center of evolutionary development moved definitively to Western Europe and the USA.

The emergence of capitalism as a new form of economic relations would have been impossible without a radical political reorganization of Europe following the Thirty Years’ War and the Peace of Westphalia (1648), without the transition from absolutism to parliamentary monarchy (the Glorious Revolution of 1688 in England) or a republic (the French Revolution of 1789), and later on without the rise of nation states. Factors which, by the early 20th century, ensured the supremacy of the great empires of the modern era included new forms of government which gave Western European states unprecedented military power and a well-developed legal system to protect private property both at home and in the dominions, a dizzying growth of well-being, and the emergence of numerous political and economic institutions. However, the inequalities in wealth brought about by industrialization have remained with us ever since.

According to the prosperity of nations theory proposed by the American economist of Armenian descent Daron Acemoglu, and the British political scientist James Robinson24, the rapid economic ascent of Western Europe and the USA was primarily accounted for by the constantly growing inclusiveness of their political and economic institutions. The authors of this institutional theory contend that the larger the number of citizens who can have a direct or indirect impact on political processes, the more inclusive will be the political and economic institutions of the state – and the more likely will the nation be to achieve sustainable long- term prosperity. It is inclusive institutions that offer incentives for development and make it possible to reward talent and creative ideas.

While the changes described above were taking place in Europe, and inclusive institutions were emerging, a large percentage of Armenians were living in the territories of the Ottoman

24 Daron Acemoglu and James A. Robinson, Why nations fail: The origins of power, prosperity, and poverty (New York: Crown Publishing Group, 2012). 30

and Persian empires, which were gradually declining. The political and economic institutions of those once powerful empires were, by contrast, highly extractive. In other words, they were an instrument that the ruling elite used to extract wealth from the material and human resources at their disposal. The authors of the prosperity of nations theory believe that countries with extractive institutions have considerably less chance of sustainable development because there are too few incentives for the citizens of those countries to invest and innovate.

Armenian merchants had to compete with the leading trading houses of Western Europe that were propped up by powerful banks, insurance companies, advanced industries, protectionist laws, and governments ready to resort to military might to protect their citizens’ financial interests.Armenians, however, did not have a nation state which might, in the context of emerging capitalism and the Industrial Revolution, have laid the groundwork for the creation of their own inclusive institutions. There was thus no means of concentrating the required resources. As a result, the global trade network of Armenian merchants that relied on the family and community principle did not stand a chance in competition with the new Western European economic institutions. Of no little importance was the fact that the population of New Julfa, the core of the global network, barely exceeded 30,000, while commercial law, which was regulated by the Safavid authorities, made it difficult to hire non-Armenians, making the expansion of the network impossible.

Political changes in the Safavid Empire became yet another external factor that contributed to the decline of the global network. The increasingly extractive nature of its political institutions resulted in a considerable growth in the tax burden that was hindering Armenian merchants’ efforts. During the reign of Shah Sultan Husayn (1693–1722), religious intolerance against Christians also increased significantly, leading to the exodus of the wealthiest merchant families from New Julfa. The remaining Armenian merchants survived the downfall of the ruling and Afghan occupation but were subjected to cruel persecution by , who ascended to the Persian throne and imposed exorbitant taxes on the Armenians. Unable to withstand that pressure, by the mid-18th century they had moved to the Mediterranean region, and Southern Asia. By the end of that century the core of the global network had ceased to exist. With its disappearance and the loss of dominant positions in global trade, Armenian communities were no longer capable of networking, and their global influence began to wane. However, the communities scattered the world over survived and later on would incorporate other Armenians who were migrating from where they had previously lived. Contacts between those communities, frequently on a kinship basis, still existed but their joint economic activities, which had been in high demand in the preceding century and a half, disappeared.

In his recent work the historian Niall Ferguson25 analyzes the causes for the emergence and the decline of network structures from the Illuminati, freemasons and the Rothschilds’ banking house to present-day social networks. According to Ferguson, such structures existed

25 Niall Ferguson, The square and the tower: Networks, hierarchies and the struggle for global power (London: Allen Lane, 2017). The Past: From the dawn of civilization to the 19th Century 31

throughout the whole of human history but started to evolve particularly rapidly in the last three centuries. In the author’s view, trust and reputation are factors that operate not only at the level of individuals and traditional hierarchical institutions but also at the level of networks. The latter are created through some shared human activity and/or unifying idea, and are in constant conflict with hierarchies. As a rule, ‘verticals of power’ take the upper hand in confrontation with horizontal networks. The fate of the network set up by New Julfa merchants who did not have the support of a sovereign state provides a good illustration of this conclusion drawn by Ferguson.

Historical Note

In the historiography of the Great Deportation of 1603–04 there is no consensus on the causes and or the motives for the decision of Shah Abbas I to move Armenians to Persia. In Roger Savory’s view, the deportation of Armenians from their native Julfa on the River Arax (in the present-day Nakhchivan Autonomous Republic, which is part of ) and their relocation to a settlement on the outskirts of Isfahan that was given the name ‘New Julfa’ aimed to place hard-working and enterprising Armenian merchants at the service of the Safavid Empire. This view is shared by most researchers of the history of New Julfa Armenians, including Ina Baghdiantz-McCabe, who writes that in all likelihood there was an informal verbal agreement between Armenian merchants and the Shah, who promised them economic prosperity if they would relocate26. It is reported by the Italian traveler Pietro della Valle that in 1619 the Armenian merchants from New Julfa obtained the monopoly on trade in Iranian silk when they won an open auction held by Shah Abbas, in which they participated alongside the English East Company and the Spanish Order of the Discalced Carmelites.

While establishing network clusters primarily to support trade, the merchants from New Julfa were at the same time building Armenian churches and cathedrals in the cities where they had settled, in association with which publishing houses were sometimes set up. A sizeable part of this rich architectural heritage has been preserved to this day.

The network clusters provided three interconnected trade routes (Fig. 4): > the North European route: to Amsterdam and London via the Kingdom of Muscovy and the Baltic countries; > the Mediterranean route: to Venice, Livorno, Marseille and Cádiz via Aleppo and Smyrna; > the Indian route: to Madras, Kolkata and on to via Hormuz.

26 Ina Baghdiantz-McCabe, ‘Elites and early modern state-building in Safavid .’ In Les Arméniens dans le commerce asiatique au début de l'ère moderne, ed. Sushil Chaudhury, Kéram Kévonian (Paris: Éditions de la Maison des Sciences de l'Homme, 2008). 32

Archangel

St. Petersburg

Libau Casanca/Kazan Moscow Amsterdam Brussels

Venice Astrakhan Livorno Constantinople Erivan/Yerevan

Smyrna/Izmir Tabriz Malta Aleppo Isfahan/New Julfa

Hormuz

Macau Surat

Madras Manila Pondicherry Tenesserim Tranquebar

Cities Santiago Barrachiel (1720s) Gregorio ci Zaccarias (1720s)

Batavia

Fig.3: The trade network of Armenian merchants from New Julfa27

Archangel

St. Petersburg (1710–) Libau Kazan Moscow (1640–) (1660s–) London (1680s–) Amsterdam (1620s–) Paris Lvov (1660s–) Venice Astrakhan (1570s–) (1616–) Genoa Split/Spalato Marseille Constantinople/ (1620s–) Livorno Istanbul (1550s–) Tabriz Cadiz (1605–) (1680s–) Smyrna/Izmir (1630–) Rasht/Enzeli Malta Aleppo (1620s–) (1560–) Shahjahanabad (–) Lhasa Isfahan/Julfa Delhi (1700s–) (1660–1717) (1605/1606–) Basra Agra Saidabad (mid-1600s–) Hormuz (1573?–) (1665–) Dhaka Canton Lahori Bandar Chinsura (1711–) (late 1600s–) Surat (1645–) (1630s–) (1579?–) Ava Calcutta (early 1600s–) Bombay/Mumbai (1630s?–) Chandernagore (1661–) (1740s–) Pegu (early 1600s–) Manila Aurangabad Syriam (early 1600s–) (1660s–) (1670–) Hyderabad (1660s–) Rangoon Goa (c. 1740s–) (1550s–) Mylapur (1520s–) and Madras (1666–) (1822–) Pondicherry Cities with Church Singapore (1831–) Cities with Church and Printing Press Cities Cities with Printing Press Cities with Cathedral/Monastery and Printing Press Jakarta (mid 1800s–) (mid 1800s–)

Fig. 4: Clusters of the global network28

27 Sebouh David Aslanian, From the to the Mediterranean: The global trade networks of Armenian merchants from New Julfa (Berkeley: University of California Press, 2011). 28 Aslanian, op.cit. The Past: From the dawn of civilization to the 19th Century 33

The functioning and development of the network were grounded in so-called partnership agreements (‘enkeragir’), otherwise known as ‘commendation contracts’, and the same practice was also typical of Islamic and Venetian merchants. Enkeragir agreements entailed partnerships between a well-to-do businessman (‘ter’, master) who lived in New Julfa, and a young enker (‘associate partner’), an agent who would make trips to faraway cities and conduct commercial transactions there, and upon return would give an account to his ‘ter’. Personal trust was the most important instrument of such partnerships, which were as a rule based on kinship. Usually, the head of a family acted as the ‘master,’ while his son, younger brother, cousin or another relative could be an ‘associate partner.’

In order to expand their commercial transactions, each family concluded new partnership agreements with agents who were not their relatives and who did not live in New Julfa. The number of such agents could be quite large, from 20 to 100. While not members of the ter’s family, they were nevertheless Armenians and originally from New Julfa. Their relatives who still lived in the city were guarantors that the enker would keep his end of the bargain. At the same time, they enjoyed the protection and patronage of the ter throughout the entire duration of the contract. It was in this way that a peculiarly sustainable coalition of proxies was formed in various parts of the world. Armenian communities were growing and taking root in new localities, while at the same time maintaining close contacts with the core in New Julfa.

The main non-material asset of merchants from New Julfa was their reputation, which was gained on the basis of intensive commercial correspondence between members of Armenian communities. Correspondence was carried on in the Armenian language, which served as a unique long-distance code system of information exchange. It is worth mentioning that rumor and gossip played a significant part both in business and personal correspondence, and in religious correspondence between clergy. A good reputation was indeed called ‘hambav’, one of the meanings of the word being ‘rumor’ in the Armenian dialect of New Julfa. Hambav underpinned trust and partnership within the network, while a tainted reputation meant expulsion from the network. News of a breach of honor by a ter or enker would also be passed on to merchants the world over, sometimes casting a dark shadow on other family members. Trust was a quite fragile, long-term asset29.

As they did not have a sovereign state, alongside the usual Armenian institutions of family and Church, merchants relied on an additional legal institution, the Assembly of New Julfa Merchants, which was approved by the Safavid authorities. The Assembly regulated relations between merchants and oversaw the execution of contracts. Anyone failing to comply with contractual obligations could be sentenced to a year’s imprisonment or to

29 At present, when visiting Iran, we often hear from local residents that they trust members of the Iranian Armenian community and we understand that the groundwork for this trust was laid by Armenian merchants back in the early 17th century. 34

caning. The Assembly’s jurisdiction was limited to members of the Armenian minority, and this fact to a large extent accounts for the closed nature of the network, which excluded other ethnic groups.

The Historical Note has been composed on the basis of the following book: Sebouh David Aslanian, From the Indian Ocean to the Mediterranean: The global trade networks of Armenian merchants from New Julfa, Berkeley: University of California Press, 2011.

Diasporan Communities This model of existence had some similarities to both the global network and to existence as a minority on the periphery of an empire (see below). Nevertheless, it had specific features that are to some extent still in existence today. We will review it using the examples of the Armenian Diaspora in Poland, India, and Singapore, which were established in different epochs, existed in different socio-cultural contexts, and evolved under the influence of different institutions but nonetheless suffered similar fates.

It should be noted that regardless of the underlying cause, the exodus of Armenians from their historical homeland was often accompanied by an invitation to relocate extended by rulers of the countries to which Armenians were heading. Armenians were seen as loyal, enterprising, non-aggressive and, on the whole, obedient, meek, and useful subjects.

Every diasporan community started life in its new place by inviting an Armenian priest and building a church. The local church was the central pillar of community life, strengthening the distinct identity of Armenians in a new socio-cultural environment. However, while the Armenian language remained a means of communication within the family and community, immigrants also mastered the language of the country in which they lived and became integrated into the host society. They did not impose their culture and did not establish closed communities. Very often they became members of the elite in the countries where they found refuge, their main source of wealth and influence being the large scale and wide geographical scope of the international trade in which they were engaged. During the 17th and the first half of the 18th century, when the core of the global network was still extant, many diasporan communities were part of its system of trade routes and institutions. With the subsequent decline of the network, trade activities were not discontinued, but their nature and geographical area changed (see Historical Note below).

Armenian craftsmen, who were well-known for being highly professional and innovative, were very much appreciated in all countries. Armenians were also able to persuade local authorities to grant them exclusive rights and privileges (tax exemptions, elements of self- government, etc.) This favorable situation was sustained over many years, even centuries, but sooner or later Armenian communities lost their exclusive status because of the impact of external factors beyond their control.

However, sometimes, as in Poland, the Diaspora fell apart as a result of internal strife, the inability of its members to agree among themselves and the moral degradation of its leaders. That process might take a long time, but invariably led to the same outcome: community The Past: From the dawn of civilization to the 19th Century 35

assimilation. Again, many Armenians had to leave the comfort of their homes and look for a new place to live. Only the assimilated segment of the community remained in situ. Nevertheless, instances of Armenians returning to their historical homeland, the Armenian Plateau, were rare. Unfortunately, the same behavior can be observed today.

Armenians were constantly moving from a more aggressive to a less aggressive environment, and any dramatic change in the society in question would trigger a resumption of that movement, which was of a multi-directional rather than a centripetal nature because of the absence of a consolidating core, the sovereign state. Thus, after the tragic events of the 20th century, the ranks of many Armenian diasporan communities were and still are swelling because of an influx of refugees. We will address the issue of the alienation of Armenians both from the Diaspora and from the independent Armenia of today in the next chapter.

Historical Note

Kingdom of Poland The first Armenians appeared in the territory of Galicia and Volhynia between the mid-11th and the early 12th centuries. There were military men, craftsmen, tradesmen and builders among them. Lvov was regarded as the center of the Armenian community, but thousands of Armenians also settled in small towns and villages. In Lvov, the Armenians built a church for themselves in 1303 (according to some reports, even earlier, back in 1183). By the mid-14th century, the number of Armenians in the Kingdom of Poland had increased so much that Holy Echmiadzin found it necessary to set up a separate diocese there, and in 1364 sent an archbishop to Lvov. According to information provided by a Venetian ambassador to Poland, in 1575 sixty Armenian families lived in Lvov and 300 families in Kamenets. In Zamostie, there were 1,302 Armenians in 1591 and 2,046 at the end of the 17th century30. Polish rulers regarded Armenians not only as ‘loyal subjects’ (that is how King Casimir the Great described them in a letter dated June 17, 1356) but also, in some cases, as part of the elite, granting them special privileges including self- government. In the opinion of Polish historians, Lvov and Kamenets prospered to a large extent due to Armenians.

Between the 15th and the 18th centuries Armenians from Lvov entirely controlled gold and silver mining in the Carpathians. They turned the region into a focal point for trade routes, supplying goods to countries in the East and importing spices, Persian rugs, and fabrics to Europe. Apparently, it was due to their skillful conduct of business that Armenian merchants were granted certain privileges, including tax exemptions and the right to engage not only in foreign trade but also in commercial activities in Polish

30 G. O. Galustian, ‘Armenian-Polish ties in the 16th–17th centuries.’ In Russia, Poland and the Black Sea area in the 15th–18th centuries, (in Russian) (Moscow, 1979). http://annales.info/kavkaz/armenia/ armenpol.htm (accessed December 20, 2017). 36

territory. In the 16th century, 22 out of 38 trading houses in Lvov belonged to Armenians, and in the 17th century, all but two. Needless to say, those trading houses were part of the global network.

In 1350, Armenians were granted an autonomous status. They were given the right to establish their own courts of law and to govern the community on their own. Court proceedings were held on the basis of the Code of Law compiled by in the 12th century and used in Cilicia. The courts were composed of 12 elected elders, and the Civil Code they used for guidance was approved by the Polish authorities. This special status was maintained until 1474. Afterwards, the scope of privileges gradually began to shrink, but even then the Armenian Diaspora did not lose its influence. By becoming integrated into Polish society, Armenians were able to receive titles of nobility and appointments to key state positions. They were entrusted with important diplomatic missions in Persia, Arabia, Tartary and other regions. Armenian volunteers took part in military conflicts between the Kingdom of Poland (later theRzeczpospolita Polska, i.e. the Polish Commonwealth) and the Ottoman Empire. Polish-Armenian ties were so strong that in 1696 the Polish monarch offered to dispatch a 35,000-strong army against the Turks so as to help the Armenians in the Ottoman Empire to regain their independence.

The strengthening of ties, however, entailed a growing danger of assimilation. Armenian names began to be ‘polonized,’ the traditional ending ‘ian’ in Armenian surnames being replaced by the Polish ‘vich:’ Vartanian became Vartanovich, Sarkisian became Sarkisevich, etc. Polish influence made its way even into the Armenian Apostolic Church. Deacon Nicholas (Nikol) Torosevich, the 22-year-old son of a wealthy merchant, was elevated to the rank of archbishop. Later on, he initiated a union with Rome and in 1635, severing ties with Holy Echmiadzin, converted to Catholicism. For over 20 years, however, many Armenians resisted conversion to Catholicism, and thousands left Poland and moved to Bulgaria, Romania, and . But attempts to oust Torosevich failed because he enjoyed the support of leading Armenian merchants whose financial interests were closely connected with Catholic circles. In 1664, the Vatican sent two monks to Poland who founded schools and seminaries to train new Armenian Catholic priests and were essentially engaged in proselytizing within the Armenian community. One hundred years after the arrival of the two missionaries the Armenian language disappeared almost entirely from official documents, while Grabar (the Old Armenian language) was limited to the liturgy.

The privileges once granted to Armenians were abolished completely in 1784 after the First Partition of Poland, and by 1820, Armenians in Poland had lost most of their influence. Their numbers dwindled. There were only 100 families in Lvov, and their assimilation gained considerable momentum. The final blow to their mother tongue was dealt in the mid-19th century, when special Armenian schools were closed down. The polonization of Armenians was thereby complete. The Past: From the dawn of civilization to the 19th Century 37

India It is believed that the first Armenians reached India with the army of Alexander the Great. The earliest references to relations between Armenians and Indians are found in Xenophon’s Cyropaedia (4th century BC). There are also medieval accounts of Armenians traveling to India, apparently aware of the land routes, political geography, socio-cultural environment, and economic life of the Indian sub-continent. A document is preserved in an archive in Delhi which mentions the Armenian merchant and diplomat Thomas of Kann (Knay Tomman), who in 789 used a land route to reach the Malabar coast. This wealthy tradesman succeeded in gaining commercial, social, and religious privileges for Christians from local rulers. Vasco da Gama only reached the Malabar coast by sea seven hundred years later, during the Age of Discovery.

In the 16th century, Akbar the Great (Akbar I, reigned 1556–1605), the third Padishah of the Empire of the Great Mogul, invited Armenians who were leaving their native lands because of the Ottoman-Safavid wars to settle in his capital city of Agra. By the Padishah’s decree, Armenian merchants were exempted from taxes on imported and exported goods. They were also allowed to travel through those areas of India where foreigners were generally prohibited, and Armenians were appointed to high administrative positions. For example, Abdul Hye, an Armenian, was a chief judge in the empire of Akbar the Great, and the first Armenian church in India was built in 1562 in Agra.

Akbar’s successors Jahangir (reigned 1605–1627) and Shah Jahan (reigned 1628– 1658) also encouraged the relocation of Armenians to India. Connected through the trade network, Armenian communities emerged in Calcutta, Bombay, and Madras (as those cities were then known), trading for the most part in woolen fabrics, amber, Venetian dishware, mirrors, rifles, and swords. From India they exported spices, pearls, gemstones, and cotton. Merchants from New Julfa established a mission on the west coast of India in the city of Surat, which was the most important commercial port of the Empire.

The late 17th century saw a flourishing of Armenian trade in Calcutta. Initially, Armenians settled in the nearby city of Chinsurah, where trade in jute was concentrated. An Armenian church was built there in 1697. Moving subsequently to Calcutta, this Armenian community became the largest in India. In 1715, it was the Armenians who helped the British to settle in Bengal and made Calcutta a new center for trade.

Aurangzeb (reigned 1658–1707) also allowed Armenians to establish a settlement on the outskirts of Murshidabad, the capital of the Muslim rulers of Bengal. By his decree, the tax on Armenian merchants’ trade items was reduced from 5% to 3.5%. By the mid- 18th century, Armenians became an active part of the local commercial community, and an Armenian church was built in Murshidabad in 1758. 38

By the mid-19th century, the original Armenian community in Agra had become quite numerous, prospering economically and exercising considerable influence. Nevertheless, with the disappearance of the core of the global network in New Julfa, the Armenian communities in India started to decline and broke up under the influence of assimilation.

Singapore The first Armenians on the island of Singapore were from New Julfa. When the core of the global network ceased to exist, some Armenian families moved to India, the Dutch East Indies, Burma, the Malay Peninsula and Penang Island. In 1819, however, Sir established a trading post in Singapore and soon after that Armenians arrived there from . By 1824, sixteen Armenian merchants lived in Singapore, hoping to become rich in the new duty-free port. In 1827, the community received a priest sent from New Julfa, while in 1836, the Saint Church was consecrated. The largest part of the construction costs was covered by the community, which by that time consisted of ten families. The land for the construction was allocated by the Governor. While the community was too small to open a school, in 1849–1853 it published the newspaper Usumnaser (Lover of Learning).

In the 19th and 20th centuries, headed numerous commercial organizations. Most of them specialized in importing textiles and exporting local products. Singapore Armenians also owned law firms, restaurants, watch and clock repair shops and jewelry stores, auction houses, small factories, and other businesses. The law firm of the Joachim brothers was well-known throughout the Malay Peninsula up until its closure in 1902. George Michael (Georg Mikayel) owned the most popular photo studio in Singapore, and many Armenians were attracted to the hotel business. They owned not only modest guesthouses but also luxurious hotels, in particular the historic built by the Sarkis brothers who had earlier owned two excellent hotels in Penang. The Armenian Catchick (Khachik) Moses was a founder of The Straits Times, the most popular English-language newspaper in the country.

Armenians made a considerable contribution to the education, economy and public life of Singapore, and that contribution significantly surpassed the numerical strength of the community. They were members of various committees, including the first Chamber of Commerce and Industry established in 1837. Out of eight City Council members elected in 1895, two were Armenians. It is a very high proportion for a very small ethnic community. The well-known lawyer Joachim P. Joachim (Hovakimian), who chaired a municipal commission and served as a member of the Legislative Council, was appointed Deputy US Consul. George G. Seth, another eminent Armenian public figure, held the post of Prosecutor General of the Straits Settlements colony and then the post of Minister of Justice. Agnes Joaquim (Ashkhen Hovakimian) became famous due to the new orchid hybrid that she cultivated, which was named in her honor Vanda Miss Joachim. In 1981, this flower became a national symbol of Singapore. The Past: From the dawn of civilization to the 19th Century 39

The Armenians born in Singapore were British citizens. Those who immigrated to Singapore from Persia were also granted British citizenship. Armenians were very favorably disposed toward the United Kingdom, and the community contributed a part of its capital to the fund for the celebration of Queen Victoria’s jubilee. In 1915, with money donated by the Singapore Armenian Oseb Aratun a reconnaissance aircraft for the British air force was built and equipped. During both World Wars, young Armenians served in the British army and in volunteer units. The Singapore community closely followed events in the Ottoman Empire. It raised large amounts of money to help victims of the massacres of the 1890s and later on, of the Genocide.

In the 1920s, a chapter of the Armenian General Benevolent Union (AGBU) operated in Singapore. The Raffles Hotel was thriving, and commercial firms provided jobs for young Armenians not only from Singapore but also from other communities. However, the Great Depression undermined the operations of commercial companies, leading to an exodus of Armenians from Singapore. In 1938, the last Armenian priest returned to New Julfa because of the absence of a congregation. In 1942, Singapore was occupied by the Japanese. Many Armenians, chiefly women and children, left for , while the men fought as volunteers. The civilians who were British subjects were interned, only those Armenians regarded as Persians being exempt.

After World War II, a new Singapore emerged, where the situation for Armenians was not particularly favorable. Armenian families for the most part emigrated to Australia, the USA, and the United Kingdom. Only a few old families who still spoke Armenian remained. Mixed marriages and subsequent assimilation, a low birth rate, and emigration led to the virtual disappearance of the Armenian community in Singapore by the 1970s.

However, in the early 21st century, people from Armenia again started to move to Singapore.

The Historical Note has been composed on the basis of the following sources: The Armenians of Poland are very proud of their heritage // HyeForum. Http://hyeforum.com/index. php?showtopic=3338 (accessed December 20, 2017).

G. O. Galustian, ‘Armenian-Polish ties in the 16th–17th centuries.’ In Russia, Poland and the Black Sea area in the 15th–18th centuries, Moscow, 1979, (in Russian). Http://annales.info/kavkaz/armenia/ armenpol.htm (accessed December 20, 2017).

Armenians in Poland: From arts to politics // Center for support of Russian-Armenian strategic and public initiatives. (in Russian) http://russia-armenia.info/node/15296 (accessed December 20, 2017).

Singapore Armenians. A historical perspective // Armenian Global Community. (in Russian). http:// armeniangc.com/2015/01/armyane-singapura-istoricheskij-rakurs/ (accessed December 21, 2017).

Armenian Singapore as a microcosm of a big world // analitika.at.ua. (in Russian). http://analitika. at.ua/news/2009-04-12-7584 (accessed December 21, 2017). 40

Ethnic Minority within an Empire Up until the end of the 19th century, most Armenians lived in the Ottoman and Russian Empires, and in the absence of their own state had to adapt to foreign rule. This was not necessarily a disadvantage, since despite the flaws in this type of state system,empires have the important and undeniable advantage of scale. Vast territory, extensive resources, significant markets for trading, and a certain diversity of political life provide the most audacious and competitive subjects with virtually unlimited opportunities for advancement. Armenians were capable of making use of the geographical extent and cultural wealth of the great powers. In particular, while imposing numerous restrictions on their subjects, imperial authorities did not infringe ethnic minorities’ right to education. With their passion for learning and education, Armenians made maximum use of that policy for their own benefit, attaining significant success in economic and even political fields, thereby actively contributing to the development of their own culture and that of the empire at large.

For example, in the Ottoman Empire Armenians were more than once able to win the sultan’s trust and to play an important role in domestic and foreign policy. Hagop Kazazian Pasha was the Minister of Finance and Minister of the Privy Purse during the reign of Sultan Abdulhamid II. Artin Dadian Pasha was Under-Secretary at the Foreign Ministry in 1880– 1887. Gabriel Efendi Noradunkian served as Minister of Trade in 1908–1910 and Minister of Foreign Affairs in 1912–1913. The name of Count Loris-Melikov, the so-called ‘Dictator of the Heart’, military commander, statesman and author of a project for liberal reform, sadly never implemented, is well-known in Russia31.

However, imperial political and economic institutions are typically extractive in nature. Millets32 in the Ottoman Empire provide a classic example of political institutions that legitimize extortion, in this case through the levying of taxes on the non-Muslim population for the benefit of the ruling elite. The Ottoman treasury also regularly received payments when a new Armenian Patriarch was appointed, while government officials who allowed non-Muslims to live in the territory of the Empire received bribes and valuable gifts.

While discussing the role of Armenians in the economic life of the Ottoman Empire, one cannot but express serious regret that the information needed for a comprehensive appraisal of the magnitude of movable and real estate property accumulated by Armenian families living there is most probably irretrievably lost. According to some data, the extent of the wealth confiscated from the Armenians during the Genocide is comparable to the total losses of the Ottoman Empire in World War I. At all events, according to contemporary memoirs and existing reports, the economic situation of many Armenians was truly enviable. For example, the Dadian family of industrialists controlled gunpowder production in the Empire, while

31 Dostoyevsky’s opinion about Loris-Melikov’s activities is of interest: “You just tell me … will Loris surround himself with good people? Will he send good people to the provinces? It is awfully important. … I wish him well and success.” Quoted in A. S. Suvorin, ‘About the deceased (obituary)’, (in Russian), Novoye vremya, February 1 (13), (1881). http://dostoevskiy-lit.ru/dostoevskiy/bio/suvorin-o-pokojnom. htm (accessed January 10, 2018). 32 Millets were religious denominations that had autonomous administrative institutions. The Past: From the dawn of civilization to the 19th Century 41

the financier and oil dealer Calouste Gulbenkian was a chief advisor to the National Bank of and to the Turkish Petroleum Corporation. And those are only the most outstanding names that have gone down in history. Armenians held leading positions in commerce and in business circles and traditionally held the post of the sultan’s jewelers. According to the sociologist Berj Berberoglu, in the , where Armenians accounted for 35% of the population, they constituted a majority of the major importers, bankers, industrialists, and petty traders. In the , they controlled trade almost entirely, and agricultural production to a large extent. Moreover, the majority of professionals such as doctors, pharmacists, and lawyers were Armenian33.

Russian rulers not infrequently treated Armenians favorably, seeing them as a peaceful and easy-going Christian minority, and granting them exemptions, privileges, and even the right to autonomy. In the 16th century, Moscow Armenians were given tax breaks by an edict of Tsar Ivan the Terrible, and Crimean Armenians who were relocated by Catherine II to the Don area received plots of land and privileges such as exemption for ten years from servitude and the payment of tributes, the right to trade freely within and beyond the state boundaries, the right to establish enterprises and to engage in various types of entrepreneurship and home crafts, exemption from the quartering of troops and from conscription, and freedom of religion, as compensation for the losses and hardships associated with relocation. Those privileges were reaffirmed by Tsars Paul I and Alexander I.

The names of quite a few outstanding Armenians who made a brilliant career in the Russian Empire could also be mentioned. Among them are Ivan Lazarevich Lazarev, whose father moved to Russia from New Julfa. While he started with petty trade, he subsequently became one of the wealthiest aristocrats during the reign of Catherine the Great. He was a court jeweler, advisor on Eastern affairs and then an advisor to the State Bank of Russia. His name is associated with the famous Orlov Diamond which adorned the imperial scepter of Catherine II in 1774, with the former palace of the Romanovs in Ropsha, with St. Catherine’s Armenian church on Nevsky Prospect in Saint Petersburg, and with the Lazarev Institute of Oriental Languages in Moscow34.

By the 20th century, the Armenian industrialists in the Russian Empire had accumulated huge wealth. According to the list of the 30 wealthiest people and families in pre-revolutionary Russia published by Forbes35, four positions were held by businessmen of Armenian descent, their share of the list being much higher than the proportion of the Armenian population in the country. The fourth position was held by Count Semyon Semyonovich Abamelik-Lazarev, the mining industrialist whose estimated fortune was 45 million gold roubles (equivalent

33 Berj Berberoglu, ‘Nationalism and ethnic rivalry in the early twentieth century: Focus on the Armenian community in Ottoman Turkey’, The Indian Journal of Political Science, 52 no. 4, (1991). http://novarm. narod.ru/arch112006/berber.htm (accessed January 10, 2018). 34 The Moscow Institute of Oriental Studies was established in 1921, based on the Lazarev Institute, and existed until 1954. 35 ‘Old Russians’, Forbes.ru., May 3, (2005), (in Russian). http://www.forbes.ru/forbes/issue/2005-05/19949- starye-russkie (accessed January 10, 2018). 42

to about 500 million US dollars in 2000). The 19th position was held by the brothers Pavel, Abram, and Arshak Gukasovs, oil magnates, bankers, and shipyard owners, whose capital amounted to 15 million gold roubles (equivalent to 165 million US dollars). The 22nd and 23rd positions were held by the oil industry businessmen Alexander Ivanovich Mantashev and Stepan Georgievich Lianozov, each having a fortune of about ten million gold roubles (110 million US dollars).

The notable role of the Armenians in the political, economic, and cultural life of Russia is reflected in the toponymy of the Russian capital city. For example, an alleyway in Kitay- gorod, where Armenians first settled in the time of Ivan the Terrible, was renamed in the 19th century the Armenian Alleyway. One of the Moscow districts was named Lianozovskiy after the above-mentioned S. G. Lianozov, and a neighborhood of country houses and cottages developed in the late 19th century by the Jamharov bankers was named Jamharovka. In the present-day Losinoostrovsk district of Moscow there is a Jamharov Park, a Jamharov Pond, and a Jamharov Street. The Ananiyev alleyway in the center of the capital was also initially called Ananov after the wealthy Moscow landowner Ivan Stepanovich Ananov.

In addition, Armenian architects can be credited with a contribution to the urban appearance of imperial cities. Many palaces, mosques, and churches as well as public buildings and manufacturing facilities in Istanbul (including Beylerbeyi, Dolmabahçe and Yildiz palaces, several buildings in Topkapi Palace and the Grand Mecidiye or Ortaköy Mosque) were designed by the Balians, a famous dynasty of architects. St. Catherine’s Armenian church on Nevsky Prospect in Saint Petersburg, V.P. Kochubey’s mansion in Tsarskoye Selo, Count S. Shcherbatov’s house on Novinsky Boulevard in Moscow, the hospital complex for the Moscow-Kazan railway in Kratovo outside Moscow, and many other buildings, earned Alexander Ivanovich Tamanov (Tamanian) wide recognition. His pre-revolution works include the undeservedly forgotten complex of the model exhibition in Yaroslavl that was to be held to honor the 300th anniversary of the House of Romanov. The fact that a young Armenian architect from the Russian provinces was entrusted with a jubilee project clearly shows his complete integration into the social structure of the Empire. This is further confirmed by the fact that in 1917, before the Bolshevik Revolution, Tamanian was elected Chairman of the Council of the Academy of Arts, also holding the rank of Vice-President of the Academy, and Chairman of the Arts Council.

Similar cases, more of which could be easily cited, demonstrate that even under not particularly favorable starting conditions the most talented, educated, and hard-working members of the Armenian minority achieved professional recognition and high social status in the hierarchy of empires. The Past: From the dawn of civilization to the 19th Century 43

Historical Note

The Armenian community in Constantinople was established early, before the Ottoman conquest in 1453. In the Ottoman Empire the rights of religious minorities were restricted, but they were granted the status of autonomous communities (millets). During the reign of Sultan Mehmed II (1444–1446 and 1451–1481), non-Muslim religious millets were constituted, viz. Greek Orthodox (in 1453), Armenian Apostolic (in 1461) and Jewish (in 1493). In 1831, the Armenian Catholics obtained the status of an independent community and in 1850, at the initiative of the ambassadors of the Western powers, a Protestant community was established. By 1914, there were 17 independent millets, each of which was under the protection of a foreign power. The millet system existed until the disintegration of the Empire at the end of World War I.

In reality, the millet system was a religious-political organization that afforded non- Muslim subjects an opportunity to regulate the life of their communities on their own, subject to recognition by the supreme authority of the sultan and payment of a per capita tax. Patriarchs and high-ranking clergy were exempted from taxes, while others who paid a per capita tax (jizya) and a land tax (kharaj) received guarantees of security of person and property and the right to practice their religion. The head of a millet was simultaneously a religious and a secular leader. He was elected by members of the millet and approved by an imperial charter. He exercised his powers together with the divan of the millet, on which individuals delegated by lay community members sat alongside representatives of the religious hierarchy. Each new Armenian patriarch had to pay 100,000 akches36. It was also incumbent on the patriarch to collect an annual tax of 100,000–140,000 akches.

Sultans often changed patriarchs because each new incumbent brought a large sum of money to the treasury. In addition, in order to obtain a charter of appointment, patriarchs had to pay 60,000 akches37 to the Grand Vizier and 30,000 akches to the Vizier’s Deputy. Often, contenders would bribe high-ranking officials with presents and money. As a result, the clergy who held the post of patriarch were not infrequently merely puppets in the hands of the sultans. At times, interfering with the election process, the Sublime Porte38 refused to confirm the candidate for the position of head of a millet. That said, provided they were loyal to the sultan, patriarchs were free to manage the community’s affairs. On the other hand, if the need arose to suppress resistance among community members, the millet’s leadership could rely on the sultan’s civil representatives.

Over a period of several centuries, the obligations of the Ottoman state toward its non-Muslim subjects were limited to protection from external and, to a degree, internal aggression. It is significant that the Minister of Foreign Affairs was in charge of the millets. Thus, while members of different religious groups lived in one and the same state, they

36 An akche was a small silver coin. 37 A kurush was a large silver coin equivalent to 120 akches. 38 The central administration of the Ottoman Empire. 44

followed different communal laws and practices, which more than once led to conflicts between communities. Being guided by the principle of ‘divide and rule’, the Ottomans often fomented discord among the empire’s non-Muslim population groups. At the same time, no community could infringe the norms prescribed by Islam. In the case of serious economic or political issues, or inter-religious conflict, the final decision rested with the mullahs and the Muslim authorities.

Millet members had the right to speak their mother tongue inside their community and could assist in the development of their own religious, cultural, and educational institutions. The head of a millet had jurisdiction over civil cases relating to marriage, divorce, property inheritance, education, charity, etc. Until 1862, some millets even had jurisdiction over criminal cases. Structurally, their courts were part of the Ottoman administrative system, but legal proceedings were carried out to a large extent autonomously, and that was an important factor in maintaining order and stability.

When it was established, the authority of the patriarchate applied only to Armenians, but the situation soon changed. Christians in the Asian and African provinces of the Ottoman Empire, namely Copts, Syriac Jacobites, Maronites, and Nestorians, were officially under the political, if not spiritual, leadership of the Armenian Patriarch. The Ottoman authorities thus tried to protect the traditional clergy from Catholics.

The semi-autonomous status of a Christian millet did not mean complete equality for its community. The rights of a millet were not permitted to run counter to Sharia principles, and the Muslim millet unquestionably took precedence over the non-Muslim. As the Turkish historian E.Z. Karal remarks, “in the Ottoman Empire the Muslim population was considered to be a ‘privileged’ class, while non-Muslims were the ‘lowest’ estate.” The predominance of Islam was symbolically emphasized by a whole number of restraints and prohibitions. It was forbidden to build new churches, and a special permit was required for renovation of old churches. The texts of imperial firmans (edicts) demonstrate that the need to renovate buildings was checked by a committee composed entirely of Muslims, while the licenses issued by it clearly stated that the same materials as before must be used and the size of the buildings must remain the same.

Christians and Jews were prohibited from testifying against Muslims in the courts of law, from carrying weapons, and from constructing buildings higher than buildings owned by Muslims. There were also bans on wearing non-Muslim ethnic dress. V.A. Gordlevsky, a Soviet scholar of Turkey, writes that “inside the country (in Asia Minor) Christians were prohibited from wearing black fabric but they tried to replace it with dark blue or mottled fabric. There was a ban on wearing bright colors; there was ban on wearing the color red.” In his edict addressed to the Kadi39 of Constantinople, Sultan Selim II defined the types of non-Muslim ethnic dress, noting at the same time that he had earlier prohibited “Jews,

39 An Islamic judge in the Ottoman Empire. The Past: From the dawn of civilization to the 19th Century 45

Christians, and other infidels from wearing high-quality ready-made garments.” The ban was accounted for by the fact that otherwise the price of expensive fabrics might go up in the country.

The Historical Note has been composed on the basis of the following article: A.Z. Kartashian, ‘Some aspects of the formation of the millet system in the Ottoman Empire.’ Bulletin of Saint-Petersburg University, 2013, Issue 4 (in Russian).

Throughout the modern era, Armenians living in empires on their native lands did not cease in their attempts to gain Armenian independence. Whenever the geopolitical situation in Europe and in the Middle East changed and external factors weakened the Ottoman or Persian empire, the Armenian elite resumed its diplomatic activities, sending missions to the Holy Roman Empire, the , and the Russian Empire in an attempt to solicit their support for independence.

Historical Note

Appeals to Western Europe for support for independence In the mid-16th century, some members of the Armenian elite were plotting to restore Armenian kings to the throne. On the one hand, the animosity between Sultan Suleiman the Magnificent and the Habsburgs and, on the other, the Ottoman-Persian war waged on Armenian soil, were the catalyst for this activity. Opportunities arose for dialogue between Eastern and Western Christians, which was expected to lead to a united struggle against the Ottoman Empire.

In 1547, a secret council of meliks40 convened by Catholicos Stepanos V decided to send a mission to Venice and Rome to establish military cooperation between Western and Eastern Christians. The council approved a letter to the Pope (Appeal from leading Armenian citizens) and a plea from the meliks to the Doge of Venice (Letter of entreaty from the Armenian princes41). Headed by the Catholicos, the envoys met with Doge Francesco Donato in Venice and, in the spring of 1549, arrived in Rome. However, the hopes that Stepanos V had placed on Pope Paul III came to nothing. The Pontiff set the traditional precondition, that Catholic doctrine must be accepted before discussion of political issues. After the death of Paul III in 1549, the Catholicos resumed negotiations with the new Pope, Julius III. In April 1550, a decision was made to meet with the Emperor Charles V of the Holy Roman Empire and with the Polish King Sigismund II Augustus. There is no reliable information about their negotiations before the Armenian delegation returned home via Germany and Poland.

40 Armenian mountain chieftains ruling small principalities in the region of Karabagh (Artsakh). 41 The Italian version (Supplica delli signori Armeni) is kept in the Archives of Venice. 46

The Ottomans and the Safavids were aware of the whereabouts of the delegation. In order to forestall further negotiations between the representatives of the Armenian movement and Catholics, the Safavid King Tahmasp I and the Ottoman Sultan Suleiman the Magnificent made concessions and returned 15 dioceses to the Armenian Holy See of Echmiadzin. It was an overwhelming victory, especially in terms of consolidation of the population, but the Armenians did not stop there. In 1562, Stepanos V convened a new meeting with delegates arriving from Eastern and Western Armenia. A successor to Stepanos V, Catholicos Mikayel Sebastatsi went on with the initiatives of his predecessor and proposed to resume negotiations and to send a new mission to Pope Pius IV.

In the late 17th century, Israel Ori, a member of the Constantinople mission of Catholicos Hakob IV, apparently made a last attempt to find allies in Europe. He visited Venice, Vienna, and Paris, and then settled in Germany and established ties with the Palatine Prince-Elector Johann Wilhelm, who sent him with letters of recommendation to the Austrian Emperor and the Doge of Venice. However, Ori did not have official powers and could not obtain concrete results. Returning to the homeland in 1699, he convened a meeting of the meliks in order to adopt yet another appeal to Western rulers. That appeal again came to nothing. Then Ori went to Russia. From that time on, the pro-Russian orientation of Armenian public and political circles became irreversible, and the early 18th century marked the beginning of a radically new stage in the history of the Armenian people. Armenians started to see Russia as the only power capable of freeing them from the Muslim yoke.

Appeals to Eastern Europe A fresh attempt to restore sovereignty was made in the early 18th century. The death of Charles II (Charles the Bewitched), the last representative of the Habsburgs on the Spanish throne, led to the War of Spanish Succession, with the involvement of about 20 monarchies. Prussia appeared on the political map of Europe, while Sweden and Russia waged war for control over the Baltic and the adjacent lands. Meanwhile, the Ottoman Sultan Mustafa II was gradually losing his possessions in Europe. The state of affairs in the Persian Empire was no better. The existing overall situation offered the prospect that Christian (Armenian and Georgian) populations might be freed from the Muslim yoke, and hopes were pinned on the Russian Empire. Armenian meliks therefore set out to persuade the Russian monarch that the presence of a strong Christian element on his southern borders would strengthen his empire. Such was the situation when Israel Ori went to a meeting with the Russian Tsar Peter I in 1701. He passed on the meliks’ request to the Tsar and presented his view of the advantages for Russia of this new military and political undertaking. According to the plan submitted, a 25,000-strong Russian army was to join forces in the Transcaucasus with the Armenian-Georgian militia. The Russian cavalry was to advance through the Darial Gorge, while the infantry was to disembark on the coast. On the whole, Peter I approved this plan, and his intention of turning his gaze to the south seemed firm and irreversible. The Past: From the dawn of civilization to the 19th Century 47

When the Great Northern War ended in 1721, Peter I began to organize a military campaign against Persia. The political situation was favorable for his plans, given a crisis of power in the Safavid Empire following the Afghan invasion. In the summer of 1722, a Russian flotilla set out on a south-western course from Astrakhan. The actions of the Russian infantry and cavalry were aided by an uprising in Artsakh, which was led by the legendary Avan Yuzbashi (Hovhannes Babanov). However, further advances by Russian troops were prevented by a storm in the Caspian Sea that sank vessels carrying supplies of food. Russia then resumed its military campaign the following year. This time the advance was accompanied by a wider uprising in Artsakh led by Avan Yuzbashi and further outbreaks of local fighting. Military operations were coordinated with the Armenian-Georgian forces under the command of Vakhtang VI, king of . Of special importance in the battles fought in the 1720s was the liberation movement headed by David Bek in Syunik, a region in the south of Eastern Armenia. After a number of glorious victories, an independent Armenian principality was established there, and the nation waited impatiently for the arrival of the Russians. However, an Ottoman invasion of Georgia in the summer of 1723 and the capture of Mtskheta changed the Russian military commanders’ plans. In September 1723, a treaty was signed between Russia and Persia. Peace was welcomed not only by Russia, which acquired considerable territories in the south, but also by Persia, which had a vital interest in gaining a respite.

In the spring of 1724, the Ottoman army launched an invasion of Eastern Armenia. The battle of Yerevan is one of the heroic pages of Armenian history. Being aware of the inevitability of the signing of a Russian-Turkish treaty, the inhabitants decided to defend the city on their own. After three months of bloody fighting, оn June 7, 1724, Yerevan fell. After that, a 40,000-strong Ottoman army advanced toward Artsakh, but the meliks succeeded in stopping the advance. Nonetheless, in 1726, the Ottomans embarked on a large-scale offensive against Syunik- and in the spring of the following year gained control over vast swathes of land and strategic communications. David Bek was forced to withdraw to the fortress. Having fortified it and mustered his forces, he launched a new offensive. “He completely cleared Kapan, Bargushat, Chavndur, Genvaz, and Goghtn of the Ottomans and took and Ordubad from them. When Persian Shah Tahmasp heard about it, he generously rewarded David Bek, granting him many privileges. The Shah … reaffirmed with his firman David Bek’s hereditary right to the lands under his rule. He also gave him the right to mint coins in his own name.”42

In the second half of the 18th century, the Armenians again attempted to regain sovereignty. This time plans for the restoration of an independent state were devised not only in the historical homeland but also by Armenians living in Russia, India, Persia, and Georgia. A combination of factors seemed favorable. Firstly, there was the accession of Catherine II to the Russian throne in 1762, which led to Russian eastern policy becoming

42 Raffi,The five melikdoms of Karabagh, (1600-1827), translated by Ara Stepan Melkonian (London: Taderon Press, 2010). http://armenianhouse.org/raffi/novels-ru/khamsa/meliks1_14.html (accessed March 7, 2018). 48

not only far more active but also to changes in the Empire’s approach to the Armenian Question: previously, Empress Elizabeth Petrovna had pursued a policy aimed at inducing Armenians living in Russia to convert to Russian Orthodoxy. Secondly, neighboring Georgia was growing stronger with the support of Russia.

On June 8, 1769, the Russian Collegium of Foreign Affairs received a proposal that entailed deliverance of the Armenian provinces from Ottoman and Persian domination and subsequent restoration of an independent state under Russian protection. The author of the proposal was Moisey Sarafov (Movses Sarafian), a silk farm owner. The proposal submitted on behalf of a group of influential Armenians living in Russia suggested that large-scale military operations in Armenia should only start after control had been established over Yerevan since the Yerevan fortress was needed as a base for Russian troops. Following the liberation of Yerevan, those troops were to begin combat operations against the Ottoman Empire, joining forces with the Georgian army and Armenian militia forces.

Ten years later, the government of Catherine II approved the plan of a Russian military campaign in the Eastern Transcaucasus. The preparation and implementation of the campaign were assigned to Alexander Suvorov. On January 1, 1780, Suvorov, Ivan Gorich (nicknamed Bolshoi) and Grigory Potemkin received in Petersburg Archbishop Hovsep Arghutian and Ivan Lazarev, who had considerable influence in the imperial court. On the following day, Suvorov told them that Empress Catherine was inclined not to make Armenia a part of Russia but to restore an independent Armenian kingdom. The same issue was also discussed with Potemkin. At that time Suvorov received a memorandum about the political situation in Armenia and possible measures for restoration of its statehood. The document stated that the country was devastated and that a part of the population had been obliged to leave their homes, but that the Armenian meliks in Karabagh still retained their independence and were ready to provide troops if necessary. The restoration of the kingdom required Russia’s military and economic aid. In the summer of the same year, Catholicos Simeon I Yerevantsi appealed to Suvorov. Negotiations between the Russian administration and representatives of the Armenian nation were instrumental in strengthening a pro-Russian orientation in the public mind. Armenians were particularly inspired by the prospect of restoration of an independent kingdom with Yerevan as its capital. At the same time people were aware of the fact that Russia had first to establish a firm foothold on Transcaucasian soil because access to Armenia was possible only from there. The death of Empress Catherine, however, prevented the implementation of the ‘Persian campaign’ plan.

At that time a group of patriots came together in Madras under the leadership of Shahamir Shahamirian, an Isfahan Armenian who had relocated to India. Shahamirian produced a program for the future structure of Armenia that was different from the plan of Lazarev and Arghutian. He was a not of monarchical but of republican principles, which were to become the foundation for the political system of a free Armenia. All their The Past: From the dawn of civilization to the 19th Century 49

differences notwithstanding, the common core of these two programs was that liberation of the country was predicated on the intervention of the Russian army and that the future Armenian state was to be an eternal friend and ally of Russia.

The Historical Note has been composed on the basis of materials provided by journalist, historian and writer A. Ghazinyan.

***

The models of existence described above provide valuable lessons, which need to be taken into consideration when discussing the present and future of the nation. However, it is important to bear in mind that such models usually overlap and do not exist in a pure form. The life of the nation could embrace several models; each has its merits and demerits. The question is, which model should prevail at any given time, and to what extent does it benefit the Armenian nation?

The past may seem to suggest a simple threefold formula for a just and prosperous national existence. Firstly, the Armenian state should be as strong and sovereign as the Kingdom of Ani, but with the distinction that the elite and the people are united in upholding the national interest. Secondly, Armenia should be a vital element in the regional balance of power, a unique intermediary that neighboring antagonistic states find useful, retaining some of the functions of a buffer territory. And thirdly, Armenia should form the core, on a par with New Julfa, of a global network of diasporan communities, sharing in activities beneficial both to themselves and to the world at large. But such dreams, which seem simple and attractive on paper, are far removed from reality.

So many diverse, chaotic forces are involved in historical processes that at times it is impossible to explain why this or that event occurred or this or that model of existence took shape. It is easier to describe how these came about. It is difficult to give an unequivocal and definitive answer to the question of why Armenians adopted the Christian religion, which was young and persecuted. It is just as hard to explain why they invented their own alphabet, even though they could have used the Latin or Greek, and why they established a global network that encompassed different countries and continents. It is not easy for us living in the 21st century to understand what reasons influenced the choices made at any particular critical juncture that determined the subsequent destiny of the nation. It is likely that a partial answer to these questions can be found in certain features of the national character and in the behavior patterns that helped Armenians to survive under harsh conditions.

The Nature of Armenian Resilience

As we have already mentioned, the entire contradictory and turbulent history of the Armenians has taken place at the crossroads of civilizations, cultures, and religions. Living at the meeting point of Europe and Asia, of Ottoman, Persian, and Russian cultural environments, and of the Orthodox, Catholic, and Protestant branches of Christianity, Shia and Sunni Islam, 50

Zoroastrianism, Hinduism, etc., Armenians have reflected in their character and behavior specific aspects of their centuries-long existence. We refer particularly to the dominant features and patterns that have consistently determined how the people see themselves, and how others see them. However, these features are always relative and take diverse and varied forms. It should also be borne in mind that, depending on the model of existence, the same character traits may manifest themselves positively or negatively. Or they may become fossilized or fade away. Nevertheless, these dominant features are significant and need to be taken into account.

It is clear that the model of existence legitimizes certain modes of behavior. It is not easy to comprehend now how we might be capable of writing four million denunciations of our neighbors, colleagues, friends, and family, or that every morning, having had breakfast and kissed the wife and children, we might go to work, say, in Auschwitz. However, such models of existence did not seem unnatural to many Soviet citizens of the Stalin era or to Germans in Nazi Germany. It is hard to say what specific relationship there is between the conditions of existence of the ethnos and generally accepted standards of behavior. Nevertheless, such a relationship, which cuts both ways, is undoubtedly real, and we will address it more than once when discussing the present and the future of the Armenians.

Among the dominant traits of the Armenian character, we should first of all point out a feature that results from centuries of existing as an ethnic and religious minority within powerful empires, and from the need not only to survive but also to advance successfully within a heterogeneous context. The trait in question could be characterized as a broad mindset which can encompass a great variety of wide-ranging activities and can link together seemingly disparate aspects of political, economic, and cultural life within diverse civilizations. A sophisticated and subtle (not infrequently almost subconscious) understanding of differences in civilization has allowed the educated and active segment of the Armenian nation to act as mediator, facilitator, and ‘interpreter,’ taking on the role of bridge between various civilizations. It is perhaps significant that Armenians are the only nation to dedicate a feast day, the Targmanchats ton (Feast of the Holy Translators), to translators, thus paying tribute to the profession that enhances mutual understanding – although this began specifically as a tribute to the translators of the Bible.

The renowned scholar of Caucasian studies Nicholas Marr writes: “Settling down in centers of the European Enlightenment, in their old and new cultural environment, Armenians made conscious efforts to establish cultural facilities also in the Near East, thereby contributing to the expansion of international ties and facilitating the arrival of civilization there … Our attention in such matters is attracted, first of all, by the creative spirit of the Armenian people, their initiative and enterprise for the benefit of international cultural development. Being at the very center of the hub of global inter-ethnic relations not only of the present-day, living world but also of the now dead cultural nations of ancient times, Armenians were the first who back in the Middle Ages understood the significance of humankind’s common interests and The Past: From the dawn of civilization to the 19th Century 51

became aware of the idea of world history.”43 Reflecting on the traits which, in the historical context, contributed to the preservation of the people, we have become increasingly convinced that Armenians have thrived when they have had access to life on a larger stage. Perhaps the Armenian brain drain from the historical homeland is accounted for not only by economic factors but also by a desire for such wider horizons. Contrary to the common colloquial expression, Armenians prefer to be a small fish in a vast ocean than a whale in a tiny pond.

The need to survive forced Armenians to be more dynamic and active, and more enterprising and resourceful and sometimes, if you like, more assertive and audacious. For reasons of simplicity, those traits can be called competitiveness. At the same time, it is important to stress their ability to reach agreements by compromising here and insisting there, thus obtaining rights and privileges, ensuring safety for themselves, and opportunities for development. A striking example of this kind is a treaty concluded on July 22, 1688 between the East India Company and the ‘Armenian nation’, which was signed on behalf of the latter by the merchant Galandarian, who was originally from New Julfa but lived in London. Competing with the Portuguese and the French, the British were anxious to rapidly expand the presence of Armenian merchants in the Indian Ocean. The treaty granted Armenians special trade privileges, free choice in their place of residence, the right to travel and to practice their religion, and unlimited access to civil institutions, thereby equating them with British subjects. In this case, a private person concluded a treaty, on behalf of a stateless nation, with the most powerful European commercial company. The treaty allowed Armenian commercial vessels to sail in the Indian Ocean under their own flag (Fig. 5).

Fig 5: Reconstruction of the maritime trade flag of Armenian merchants44

Another feature that to a large extent ensured the survival and well-being of Armenians was their high degree of sensitivity to the future and their ability to anticipate change and behave proactively, in other words a large measure of what has been called ‘pre-adaptability’45.

43 N. I. Marr, Armenian culture: its roots and prehistoric links according to linguistic data, (in Russian) (Yerevan: Hayastan Publishers, 1990). 44 Frédéric Mauro, ‘Merchant communities: 1350–1750.’ In The rise of merchant empires: Long distance trade in the early modern world, 1350–1750, ed. James Tracy (Cambridge: Cambridge University Press, 1990), pp. 255–286. 45 See: Interview with Alexander Asmolov, Full Member of the Russian Academy of Sciences, Advisor to the President of the RANEPA (the Russian Presidential Academy of National Economy and Public Administration) (in Russian). https://www.ranepa.ru/sobytiya/novosti/intervyu-s-akademikom-rao- sovetnikom-rektora-ranhigs-aleksandrom-asmolovym (accessed March 13, 2018). 52

Armenians skillfully mastered other cultures, while at the same time retaining their own ‘self’ and national identity. The Armenians of Jerusalem, who have been living in that city for 16 centuries, provide a vivid example. They stayed in the city despite the vicissitudes of fate, both at the time of Caliph Umar ibn al-Khattab, one of Prophet Mohammed’s close associates, who expelled all Christians from the city, at the time of the Crusaders, who seized the city and massacred Muslims, and at the time of Salah ad-Din’s invasion. They preserved their religion and language and, thanks to their foresight, were able to get along with Islamic religious and political leaders, obtaining from them guarantees of safety.

However, there is no denying that adaptability, particularly in the Diaspora, has at times taken the form of a certain passivity, amounting to conformism and mimicry. Sooner or later, when ties with the historical lands weakened, that feature led to assimilation and dissolution in an initially alien society.

Armenians, especially those living in the Diaspora, were as a rule open and inclusive and did not arouse suspicion among their neighbors. For centuries they were able to involve non- Armenians in their social circle, thus creating and maintaining a climate of trust. Armenians did not tend to feel they were a people chosen by God (through the existence of a Covenant) or strive to isolate themselves and establish closed communities, as did, say, religious, non- assimilated Jews or Yezidis. However, it cannot be denied that Armenians may sometimes have had a certain feeling of exclusiveness resulting from an awareness of their higher level of education and competitiveness, which distinguished them from the mainstream local population.

We have already mentioned the Armenians’ ability to integrate into the culture and public life of other nations. The Byzantine Emperor Heraclius, the first prime minister of Egypt Nubar-Pasha, the above-mentioned dynasty of Balian architects in Istanbul, the so-called ‘Dictator of the Heart’ Count Loris-Melikov, the painter Ivan Ayvazovsky and the composer Mikael Tariverdiev in Russia, the filmmaker Sergey Parajanov in Georgia and Ukraine, the filmmaker and playwright Henri Verneuil and the Formula I racing driver Alain Prost in France, the painter Arshile Gorky, the tennis player and philanthropist André Agassi, the 35th Governor of California George Deukmejian, and the billionaire and philanthropist Kirk Kerkorian in the USA, are all seen in those countries as profoundly ‘their own;’ their countrymen at times do not even have a clue about those individuals’ Armenian roots.

Attention should also be paid to another characteristic feature that has played an ambiguous role in the evolution of the ethnos, namely the individualism of Armenians. A positive side of Armenian individualism finds its expression in creativity, skill, and professionalism. The typical Armenian hero is a free individualist, embodying the best traits of the national character. Perhaps that is one of the reasons why Armenians associate the achievements of the nation with selected representatives whom they regard as unique and matchless. In the collective memory there is one and only one inventor of the alphabet (Mesrop Mashtots), one and only one heroic king (Tigran the Great), one and only one inventor of a unique genre of Armenian music (), one and only one creator of modern Yerevan (Tamanian), etc. The Past: From the dawn of civilization to the 19th Century 53

At the same time, individualism has held back national development more than once, and still does so. For centuries Armenians were deprived of their own state not only because the country was constantly divided by stronger and more aggressive neighbors, but also because the Armenian elites were unwilling or unable to compromise and to unite in the interest of the nation at large. The paradox is that the national predilection for compromise was only directed outward. Armenians were able to make deals with foreigners, securing preferences and exclusive rights for themselves, but they experienced huge difficulties in reaching agreements with each other. Over the centuries, Armenian elites have had to choose between alternative orientations: either toward independence and sovereignty, or integration into Eastern or Western empires. It is the inherent individualism of elites and their unwillingness and inability to subordinate themselves to the common interests of the nation that have impeded the making of successful choices and the mobilization of national resources in order to achieve a shared goal. As a result, the people have paid a high price for their leaders’ selfish, uncoordinated actions.

It should also be noted that the character traits that we have discussed may manifest themselves in different ways, depending on the historical circumstances. Thus, the global network provided Armenians with a wide geographical presence in the world and with an enormous range of activities, even though being an ethnic minority scattered throughout the Diaspora naturally narrowed that range. The global network served as a multiplier for Armenian competitiveness, which was grounded in the veneration for education instilled within the family, and in respect for hard work and true professionalism, and it afforded a leading position in worldwide commerce. Living in an empire or in the countries of the Diaspora gave another boost to this specific character trait, so that Armenians tried above all to reach the highest level of excellence in their line of work, and to succeed in the host society. However, the ability to reach agreements, which helped them to conclude profitable contracts through the global network with states and foreign companies competing for dominance in maritime commerce, was considerably restricted in extractive political systems, being essentially reduced to obtaining favors and privileges from a shah, sultan, or tsar.

Theories of national prosperity

We are aware of four theories of the prosperity of nations. Let us address three of them here (we will discuss the fourth later).

There is a quite widespread theory that explains inequality between poor and rich nations by geographical and climatic conditions. Geographical determinism sees the process of national emergence and evolution as the result of the impact of natural factors such as landscape, climate, soil, flora, fauna, etc. According to the theory, it is those factors that determine the nature of a social system, the level of economic well-being of a country and even the physical and psychological characteristics of the people inhabiting it: their abilities, inclinations, and dispositions. This theory can explain the inequality between nations that manifests itself over long periods of time. However, it finds it hard to explain 54

the recent huge differences in the level of well-being of neighboring countries such as South and North Korea, or the Federal Republic of Germany and the German Democratic Republic.

In the section devoted to the global network we have already discussed the institutional theory that is often used to explain convincingly the gaps between rich and poor countries over the last five to six centuries. But this theory requires the existence of the more or less stable institutions of a sovereign state, whereas over many centuries Armenians did not have such institutions, except the Church, or during the relatively short periods of existence of independent Armenian kingdoms and principalities. That fact, however, does not invalidate the usefulness of the institutional theory for the analysis of the later period (20th and 21st centuries), and we will turn to it more than once.

Another well-known theory has its origins in Max Weber’s work, especially in his famous book The Protestant Ethic and the Spirit of Capitalism. Weber claims that the Reformation and the Protestant ethic engendered by it were the main factors in the rapid development of an industrial society in Western European countries. It was those factors that determined the success of these countries in comparison with countries in Central and Southern Europe, where the population was predominantly Catholic. Thus, the theory links the prosperity of a nation with cultural factors and has crucial significance for understanding the preservation and prosperity of the Armenian nation. As we have seen, all Armenian models of existence have proved shaky over the long term, while the cultural factors that ‘tie’ Armenians together into a single entity display considerably greater sustainability over that same period of time.

Let us get back to the questions that were posed at the beginning of this chapter. What has enabled Armenians to preserve their ethnic existence over the millennia, and what are the obstacles to prosperity? It is for good reason that this chapter has focused on what comprises the culture of a nation or, one might say, its cultural matrix. We share the view of the Russian scholar Daniil Dondurey, who argues that culture is not limited to works of art created by individual talented members of a nation. In his view, culture is “the designing of life and its cultivation. It is a world outlook, it is a value system, it is archetypes, stereotypes, moral norms, and examples and models of behavior.”46 The Russian economist Alexander Auzan believes that culture is an ‘invisible institution,’47 which has to be taken into account when discussing the role of political and economic institutions in national development. Obviously, it is difficult to give a straightforward answer to the question of which is more important. Does culture determine the nature of political and economic institutions (extractive or inclusive) or, on the other hand, do well-established institutions change cultural matrices? One way or

46 Iu. Saprykin, ‘Culture is sphere number twenty-seven, where people rest from life. Daniil Dondurey on the functions and significance of post-Soviet culture’, (in Russian)Colta , May 11, (2017). http://www. colta.ru/articles/specials/14748 (accessed June 22, 2017). 47 A. Auzan, Invisible institutions: socio-cultural economics, (in Russian) (Moscow: Institute for National Projects, 2017). The Past: From the dawn of civilization to the 19th Century 55

another, it can be safely assumed that cultural and other public institutions influence one another and evolve together. Therefore, leaving aside the theory of geographical determinism, we will in what follows try to find answers to the questions that we raised by synthesizing the institutional and cultural theories.

***

During their centuries-long existence, Armenians have succeeded in avoiding assimilation and in preserving their ethnic identity both in their historical lands, which for long periods of time were under the rule of foreign empires, and far away from that homeland. In the Middle Ages and the early modern era (until the early 18th century), while not having their own state, their cultural matrix enabled Armenians to acquire the role of intermediaries and to make an impact on global development. Later on, the global network of Armenian communities was unable to counter the onslaught of the West, to which the center of global development shifted and where, from the mid-17th century, powerful political and economic institutions were taking shape. The disunity of the Armenian elite at the critical moments of history prevented it from mobilizing and concentrating the human and financial resources required to create a unified nation. As a result, the framework within which the nation lived began to narrow and it contented itself with existing within the boundaries of the Ottoman, Persian, and Russian empires, which rested primarily on extractive institutions. For centuries, Armenians had the role of bridge between cultures and civilizations, but by the mid-18th century that role had begun to lose its relevance. Communities that had once been connected through a global trade network did not transform themselves into a global nation. By the end of the 19th century, the roles of intermediary and translator were replaced by that of a non-aggressive, useful ethnic minority within powerful empires that was able to come to an understanding with the imperial authorities. The Armenian people found themselves in the position of a community that enjoyed a culture which had endured for millennia but did not have its own state. That situation was extremely vulnerable, given the dynamic, constantly accelerating development of civilizations that left no room for them to preserve their special place in the world. The search for such a place is inseparable from examination of a whole number of questions. How should our national identity be construed today? What elements is it composed of? How can the scattered nation build on those pillars in order to achieve unity and prosperity? What value is there in preserving ethnic uniqueness in the era of globalization and the blurring of distinctions? What immunity has the past conferred on us so that we can resist assimilation, which has become a particularly real threat of late? Our rich history can suggest answers to these and other questions of national development. Chapter 2 The 20th Century

“The Armenian nation suffered physical, then spiritual, defeat and is now on the brink of intellectual destruction… Only those nations will survive that are in possession of an original, robust culture, so essential to humanity, and can dominate through the power of their intellect and soul… The Armenian nation needs both heroes who take up arms to fight and, especially, a noble intellectual class.” Kostan Zarian48

We deliberately devote a separate chapter to the 20th century. The Genocide radically changed the course of the nation’s history by splitting it into ‘before’ and ‘after.’ The ‘before’ was described in the previous chapter. Now we would like to focus on what emerged ‘after.’

The tragic events of the early 20th century were largely the result of a tectonic shift that went back several centuries. By that time the Armenian nation was no longer a significant contributor to the development of civilization. It became, and still is, a pawn in the geopolitical games of the great powers. In the 20th century our self-perception also changed: we began to regard ourselves primarily as a collective victim of the Genocide. That meant, inter alia, that in the eyes of the rest of the world we ceased to be a useful mediator nation. We had nothing to offer and nothing to share but our pain. Seeing ourselves as victims, we let our destiny slip through our fingers and allowed others to determine our fate. At present we do not have an answer to the question of what role we might envision for the Armenians in the 21st century. Meanwhile, we must clearly understand that the 20th century brought about a new world order, and that new models emerged. Our culture in its entirety (including pillars of national identity, traditional values, specific features of the national character, and behavior patterns) has undergone profound changes, and some of its aspects have been distorted. In this chapter we will try to share with readers our understanding of the nature of the nation’s internal crisis, which is a direct consequence of the events of the 20th century.

The Last Century in the Life of the Armenian Nation

Analyzing the most important events of the 20th century – much like discussing our future – is impossible without introducing the notion of the Armenian world. A caveat is in order here. We do not ascribe to this notion any imperial pretensions along the lines of Pax Britannica or the recently revived concept of the Russian world, which appears to have captured the minds of the Russian people. Instead, we are concerned solely with a cultural-historical supra-state community of people connected through their association with the Armenian ethnos and with those components of national identity that we addressed in the previous chapter. It is this community that was a player in the events and developments which we discuss below.

Firstly, during World War I, and for several years afterwards, Armenians were subjected to Genocide (Mets Yeghern), which was a continuation of the ethnic cleansing that had been

48 Writer and thinker (1885–1969). The 20th Century 57

perpetrated in the Ottoman Empire in 1894–1896 and even earlier. Within eight years, from 1915 to 1923, the Genocide claimed the lives of 1.5 million people. The majority of the Armenian population of the Ottoman Empire perished. We lost our elite, our cultural and religious heritage, and our accumulated material possessions, as well as the ancestral lands where a traditional Armenian way of life had been pursued for millennia.

Secondly, the Genocide was followed by the Sovietization of Armenia. That period lasted from 1921 to 1991. It was a period of remarkable demographic growth, industrial expansion, major developments in infrastructure and other innovations, and revival of the scientific and cultural elite. However, despite all its positive aspects, the influence of Sovietization was not always wholesome because the supranational communist ideology suppressed unique national identities. The 70-year Soviet period led to the emergence of a new Armenian sub-ethnos, namely Soviet Armenians. The values, behaviors, and other frames of reference specific to that sub-ethnos gave rise to differences between diasporan and post-Soviet Armenians. We will also examine in detail the specific features of life in Soviet Armenia in an attempt to understand how the imperial past affects us even today.

Moscow

[ to UK ]

[ to Europe ]

[ to Canada ] Southern Russia

[ to USA ] Marseille Bulgaria

Istanbul Ashkhabad Athens

Aleppo [ to South Tehran America ] Beirut Baghdad Palestine

[ to Australia ] Cario

Fig. 6. Migration triggered by the Armenian Genocide49

Thirdly, the Armenian Diaspora in Europe, North America, and Australia grew rapidly throughout the twentieth century. Initially, this was due to the refugees who had survived the Genocide, and later on to the Armenian migrants who were relocating from the Islamic states of the Middle East to Christian countries. By the end of the century, diasporan Armenians accounted for virtually three-fourths of all the Armenian inhabitants on the planet. Refugees from the Ottoman Empire both contributed to a numerical increase in diasporan communities in former centers of the global trade network, and established new communities far from the

49 The map was provided by the Charitable Foundation Initiatives for Development of Armenia (IDeA). 58

historical homeland (Fig. 6). Opportunities for contact between diasporan Armenians and Soviet Armenians were limited, thereby widening the gap in the world outlook and behavior of those two segments of the Armenian nation. Generation after generation grew up in the countries of dispersal and inevitably underwent assimilation, which is still going on.

Fourthly, in 1991, an independent Armenia emerged in a small part of the historical homeland. The new country immediately found itself in a most difficult economic situation, surrounded by hostile neighbors. Despite the obvious positive effect produced by the creation of a nation state and by victory in the war for the independence of Artsakh, it cannot be said that the Armenians established a firm basis on which to unite the fragmented nation. According to some estimates, about one million people have left Armenia over the last 25 years, comprising yet another massive wave of emigration50. It is a tragic paradox that having obtained long-awaited sovereignty, Armenians have not only not sought to return to the historical homeland but, on the contrary, have been and still are leaving of their own accord. Another aspect is also important: for the first time in our history we have started living in a monoethnic country. Armenians were always a part of great empires and, as we have already mentioned, even at the time of Tigran the Great, Armenians accounted for only a fraction of the population of Greater Armenia. The monoethnic nature of today’s Armenia is a serious challenge for a nation that has for centuries lived at the meeting point of civilizations and cultures. We will address this issue in the next chapter.

Thus, the present-day Armenian world, as we see it, is a result, firstly, of the Genocide of the Armenians in the Ottoman Empire, which led to the loss of the ancestral lands, the dispersal of Armenians the world over, and the formation of the modern Diaspora; and secondly, of the Sovietization of Armenia that ended with the emergence of an independent Armenia and the liberation of Artsakh.

The events of the early 20th century were a turning point in Armenian history: our traditional lifestyles were shattered and the normal trajectory of national development was interrupted, while the underlying models of national existence were to a large extent destroyed. The Armenian nation split into multiple sub-groups, which have been developing ever since in diasporan communities far from the historical homeland. Soviet Armenians were one such separate sub-ethnos. Today, therefore, we face extremely complex questions that require definitive answers.H ow do we shed the self-perception of a victim nation? How can post-Soviet Armenians and members of isolated diasporan groups that are being gradually assimilated be brought closer together? How can objects of shared pride be created in the near future, providing an incentive for present-day Armenians to achieve such a convergence? In order to find relevant answers we need to take a closer look at three elements that underlie the Armenian world of today, viz. the memory of the Genocide, the Diaspora, and the Republic of Armenia.

50 L. Harutyunyan, ‘Pick up your things and start boarding a plane, or what drives young people from Armenia’, (in Russian), Sputnik, September 8, (2017). https://ru.armeniasputnik.am/ society/20170908/8562681/pora-rvat-kogti-iz-armenii-pochemu-molodezh-hochet-uekhat.html (accessed January 11, 2018). The 20th Century 59

The Memory of the Genocide

During the 20th century, interaction between Soviet Armenians and diasporan Armenians was extremely limited. However all of them, regardless of where they lived and despite apparent ideological, mental, and behavioral differences, shared a common pain. This pain, which tied them all with invisible threads, was the memory of the Genocide.

A large number of learned treatises have been written on the Genocide of Armenians in the Ottoman Empire. Generations of scholars have studied the history of this humanitarian catastrophe, while writers and other artists have reflected it in their works. It still remains a topic of constant deliberation. We do not propose to analyze the causes and consequences of the Genocide. We will confine ourselves to noting that its causes emerged long before 1896, let alone 1915. They appeared back in the 17th and 18th centuries, when the center of economic development was shifting to the West, and the Ottoman Empire with its extractive institutions was in decline. That naturally led to a political and religious reaction, to the growth of nationalistic sentiments in Ottoman society, and to a search for internal enemies.

It may well be that the true significance of the Genocide asa tragic rupture in the natural succession of generations is not yet fully understood. Looking back, we see only rivers of blood, suffering and injustice rather than feeling the healing effect that the continuity of collective memory passed from one generation to the next can provide as the nation evolves.

We have gone through several stages in our perception of the Genocide and in our attitudes toward this tragedy. Now, one hundred years later, we realize that while the memory of the Genocide remains a most important linking element in the Armenian world, we cannot draw the strength and energy from it that will necessarily secure the unification and prosperity of the fragmented nation in the 21st century.

Evolution of attitudes toward the Genocide We identify five stages in that evolution:

Stage 1: Silence, denial and pain. The 1920s–1950s were characterized by silence and an unwillingness to recognize and discuss what happened, and by feelings of shame and powerlessness. The world community learned about the mass extermination of Armenians through the eyewitness accounts of the refugees who made it to Europe, and of foreign missionaries, diplomats, and the military. In a joint Declaration by the Entente Powers (United Kingdom, France, and Russia) dated May 24, 1915, the mass killing of Armenians was recognized for the first time in history as a crime against humanity. Funds were raised for refugees in Europe and the USA, but attempts by the world community to provide humanitarian aid to dying Armenians were thwarted by the Ottoman authorities. Those Armenians who survived the carnage left their ancestral lands and spread the world over, swelling the ranks of diasporan communities in dozens of countries whose people, full of compassion, received them kindly. Strong support for migrants was provided by the 60

Armenian General Benevolent Union (AGBU), founded in Cairo in 1906, and by the American charity Near East Relief (this organization worked in Soviet Armenia until 1929). At present, there are about one million Armenians who are the direct descendants of almost 120,000 orphans who were saved in those years by international humanitarian organizations. During that period, the first attempts were made to collect and archive documents for the purpose of studying the Genocide, and the first acts of retaliation were undertaken. From 1920 to 1922, in the course of the Nemesis operation, the individuals responsible for the Genocide, and their accomplices, including Armenian collaborators, were liquidated.

Stage 2: Acceptance and normalization. During the 1950s and 1960s, the Genocide became an object of systematic study and wide discussion. Scholarly publications and works of fiction about the Genocide appeared. The post-war period is characterized by the gradual normalization of the lifestyle of Armenian diasporan communities and by the relative stability of life in Soviet Armenia. During the years 1963-1964, diasporan Armenians were engaged in active preparations to mark the 50th anniversary of the Genocide in the Ottoman Empire, and in Soviet Armenia, on April 24, 1965, the first large-scale demonstration was also held to commemorate that anniversary. On that day, Pravda51 was published in two versions. The first, destined for Armenia, included an article about the Genocide, while the same article was dropped from the second version, which was distributed in the rest of the .

Stage 3: Revenge and lobbying. The 1970s–1980s were characterized by acts of terror and by lobbying efforts by diasporan Armenians. Political influence groups were established in countries with a high concentration of Armenians. The number of influential and well-to-do persons who helped to raise considerable funds increased in the US, France, and other countries. Research institutions were founded to study the Genocide, the Diaspora and Armenia-related issues (in particular, the Zorian Institute). In the early 1970s, Armenian armed organizations were established and committed several terrorist acts in Europe, the Middle East, and North America. These groups pursued the same goal of drawing the attention of the world public to the Armenian Question and of achieving recognition of the Genocide. The goal was partially attained in that a number of publications on the Genocide appeared in the international media. The Diaspora reacted to the actions of terrorist organizations in different ways. Some diasporan Armenians and organizations were sympathetic and provided financial, public, and political support, while others condemned those acts as crimes that were shameful and harmful to Armenians. This resulted in multiple splits in diasporan circles.

Stage 4: Demand for recognition. From the 1980s to the 2000s, Armenians became more insistent in their demand that the international community recognize the fact of the humanitarian catastrophe that their ancestors had endured. Many books were published containing eyewitness accounts of the persecution and killing of Armenians and of the atrocities perpetrated by the Ottoman authorities. Various political groups in

51 Then the official newspaper of the Communist Party of the Soviet Union. The 20th Century 61

the Diaspora began to compete more intensely for the right to be the only one demanding recognition of the Genocide and for a ‘monopoly’ on vengeance. Then came a moment when the priorities in the lobbying activities of American Armenians changed. After the dissolution of the Soviet Union and the establishment of the independent Republic of Armenia, the emphasis shifted to support for the new sovereign state. But the demand for recognition of the Genocide came to the fore again after the victory in the war for the independence of Artsakh. As a result, 31 countries, 48 out of 50 States in the US, as well as influential international organizations, have currently recognized and condemned the . Thanks to the efforts of the Armenian lobby, the California State Senate passed a law that authorized the State to review the issue of paying compensation to the descendants of those Armenians who had purchased insurance policies in 1915–1923. However, after the first claim was accepted, further demands by American Armenians for payment of compensation were rejected. By the end of the 20th century, the subject of the Genocide had nonetheless moved from the historical and humanitarian field to the political and legal. By that time, the Turkish authorities had started to spare no effort in lobbying against the so-called Armenian Question so as to avoid legal recognition of the fact of the Genocide. In the absence of consistent diplomatic, legal, and financial support from the government of the Republic of Armenia, the resources of the Diaspora were clearly inadequate for resolution of this issue at a global level. Nonetheless, US presidential candidates began to exploit the Genocide theme as they wanted not only to gain the votes of US Armenians in elections but also to attract the financial resources of Armenian foundations and organizations. However, election campaign promises have so far remained unfulfilled. By the end of the 20th century, with the passing away of eyewitnesses and survivors of the crimes committed by the Ottoman authorities, emotional ties to the tragedy began to weaken both among Armenians and in the global community.

Stage 5. Waning interest. During the period 2000–2015, while far from disappearing, interest in the Genocide started to wane. The term ‘genocide’ was coined by a Polish- American lawyer of Jewish descent, Lemkin, who studied the history of Jewish pogroms and, in particular, the mass extermination of Armenians in the Ottoman Empire. The term was granted international legal status only after World War II and the Holocaust. During the second half of the 20th century, the world witnessed a whole chain of heinous crimes against humanity in Cambodia, and Srebrenica, and elsewhere. At the end of the 20th century, the Armenian Genocide was recognized as the first of such crimes52, providing a model for many subsequent acts of genocide and ethnic cleansing. Recently, however, the earlier interest in this subject among the world community has been replaced by a certain indifference, given the sheer number of instances of bloodshed in the 20th and 21st centuries. The Armenian Genocide has gradually become part of world history, and with a generational change, the same process can be observed in respect of

52 The racial extermination of the Herero people in what is now Namibia is regarded as the first atrocity of its kind in the 20th century. 62

the Holocaust and other humanitarian catastrophes of the past century. The Armenian tragedy is no longer within living memory, which was the main mechanism for the intra- family transmission of knowledge about it.

The young generation of Armenians no longer feel an emotional tie to the Genocide as acutely as previous generations, even though they retain the memory of injustice and a consequent sense of resentment. The young want to see themselves not as victims but as a victorious nation with a heroic past. It is obvious that sooner or later the great powers will recognize the Genocide, and there is therefore increasing public discussion of how it should be interpreted and remembered.

The Diaspora after the Genocide: an Insider’s View

In itself, the evolution of the Armenian Diaspora that emerged after the Genocide is not unique: all exiles go through a similar period of adaptation to a new homeland and subsequent assimilation. We shall discuss the four generations of our Diaspora, describing the characteristic features of each and presenting to the best of our ability the current state of affairs.

For those who managed to escape, the first years in a foreign land (1915–1923) were a time of displacement. This was followed by a number of relocations and attempts to adapt to a new reality against the background of continuing massacres in the Ottoman Empire and the World War, which raged in Europe, the Middle East, and Africa until 1918. The Armenians who found refuge in various countries experienced not only an emotional but also a severe cultural shock which gave rise to critical and at times hostile attitudes toward new models of existence that were foreign to them. At the same time, they felt satisfaction and joy because they had the chance to preserve at least some of their traditional way of life within the family and their ethnic community. Realizing the importance of preserving their national identity, this first (and some of the second) generation of the Diaspora, from around 1923 until the late 1940s, established Armenian schools, churches, and clubs that were attended by the majority of children, who also went to local schools in their host countries. At that stage, diasporan Armenians still focused on maintaining their ethnic identity and the memory of their existence in their historical homeland.

The period from the 1940s until 1965, which spans the life of the second and some of the third generation of the Diaspora, was a time of gradual normalization. The most active and motivated diasporan Armenians strove to integrate into the local society, especially in non- Muslim countries. As a result, their ties to the ethnic community weakened and more often than not they refused to be associated with it. Small wonder that Armenian communities, which had by that time started to acquire some features of a ghetto, were not infrequently headed by the least capable members of the Diaspora. However, it should be pointed out that despite a pronounced tendency toward assimilation and an unwillingness to be involved in The 20th Century 63

their ethnic community, the tragedy of the Genocide, which was discussed in the public space more and more widely, remained for the second and third generations of diasporan Armenians a main element of collective memory, alongside family stories of escape and loss.

The most energetic members of the third generation (from 1965 through the 1990s) tried not merely to integrate into the society of their host countries but also to become a part of the local elite. Usually these attempts were accompanied by an outright or partial distancing from their ethnic identity, brought about to a large extent by the perception of the Genocide as a national defeat and by a reluctance to dwell on suffering.

Since the 1990s, we have witnessed the elation among the fourth generation of the Diaspora at the emergence of an independent Armenia. Now many diasporan Armenians wish to reflect afresh on their ethnic identity and their roots in order not only to preserve but also to reaffirm the unique and inimitable role of the Armenian nation. In the past two or three decades the world has changed drastically, and the new generation of diasporan Armenians live in circumstances very different from those of half a century ago. At the same time, the main institutions of the Diaspora (schools, clubs, non-governmental organizations, etc.), established for the most part in the 1940s–1970s, have become outdated. In particular, with few exceptions, today’s diasporan schools can hardly be recognized as true centers for maintaining national traditions or as advanced educational institutions. They clearly need to attract more highly qualified teaching staff and a student body of better quality, and to introduce state-of-the-art teaching methodologies. The greater accessibility of British, American, and other international schools has led to heightened competition in the education market. At the same time, the migration of Armenians from the Middle East has increased, bound for the US, Canada, and other countries, while the number of Armenian children receiving an Armenian education in Europe has decreased. That is one of the reasons for the recent closure of several well-known schools, including such landmark institutions as the Melkonian Educational Institute in and the Moorat-Raphael College in Venice.

The well-known businessman and philanthropist suggests the term ‘emigration from the Diaspora’ to describe the present-day assimilation process. The unwillingness of the most active, educated, and highly motivated Armenians, who are for the most part relatively young, to be associated with their traditional institutions, has often led them to cut their ties to their diasporan communities. The process is proceeding rapidly and resembles radiation. It is invisible and therefore many people are not aware of it but, as has been the case time and again in Armenian history, it is having catastrophic consequences: over time, Armenian communities will finally disintegrate and be assimilated. As we have already said, it is a natural transformation, which has been described by scholars and is common to many diasporas. The most frequent reaction among those who do foresee the tragic consequences of assimilation is to try to shut themselves out, to take a defensive position and to maintain the status quo. However, the situation requires us not to ignore the problem but to search for a new solution and to intensify our efforts.

At present, about seven billion people live on this planet. Some maintain that seven million of them are diasporan Armenians (Fig. 7). However, by our estimate, fewer than one 64

million are actively engaged in the life and activities of the Armenian world. How can we interest the others in becoming involved in its affairs? Today, since the younger generation of diasporan Armenians are trying to find their own unique identity in a globalizing world, we have an excellent opportunity to nurture their interest in their nation and their historical homeland.

RUSSIA CANADA 2,500,000+ 50,000+ EUROPE 1,000,000+ TURKEY 100,000+ USA BEIRUT TEHRAN 1,500,000+ 50,000+ 70,000+

SOUTH AMERICA 30,000+ AUSTRALIA 40,000+

Fig. 7. Major Armenian communities in various parts of the world53

The Diaspora after the Genocide: an Outsider’s view

An analysis carried out for the Aurora Humanitarian Initiative54 of how Armenians are perceived in the world demonstrates that there are now far fewer outstanding people in the Diaspora than in the past. Thus, in the second half of the 20th century, Armenians held prominent public posts and accounted for a considerable proportion of the scientific and cultural elites of both superpowers, i.e. the Soviet Union and the US. However, it is disheartening to note that by the end of the 20th century the numerical strength and significance of the Armenian elite in diasporan countries had begun to dwindle. At the same time, global migration was on the rise generally, and alongside the well-established Armenian, Jewish, Greek, Irish, and other diasporas, new diasporas were emerging: Turkish, Serbian, Georgian, Nigerian, Azeri, etc. This process, too, has made the presence of the Armenian Diaspora in different countries less conspicuous.

The results of the study clearly indicate a certain degree of indifference toward Armenians in the attitude of citizens in host countries. It is also significant that respondents who are

53 The map was provided by the Charitable Foundation Initiatives for Development of Armenia (IDeA). 54 In Chapter 5 we will discuss in detail this philanthropic project, which expresses the gratitude of Armenians to all those who saved them from the Genocide. The 20th Century 65

sympathetic to the Armenians are for the most part well-educated, have a relatively high income, and usually belong to older age groups than those having indifferent or negative attitudes. If things are allowed to take their own course, in the next 20 years the world will quite naturally become even more indifferent toward Armenians.

Results of a public opinion poll conducted on behalf of the Aurora Humanitarian Initiative55

The results of the public opinion poll conducted among non-Armenians in ten countries demonstrate that only four out of every ten respondents were aware of the existence of an Armenian community in their country (Fig. 8).

I knew there was an Armenian community living in your country

32% I had a vague idea of the 41% existence of an Armenian community living in your country but was not certain

I did not know about the 27% existence of an Armenian community living in your country before today

Fig. 8: Non-Armenian citizens’ awareness of the existence of an Armenian community (2015-2016)

There was recognition of the significant contribution of Armenian communities to the intellectual, cultural, social, and economic life of their respective countries: almost one-third of respondents stated that Armenian communities were important for their countries both at national and regional levels. However, the majority believed that Armenians played an insignificant role in the life of the country, over a third of respondents being unable to answer the question about the influence of the Armenian community (Fig. 9).

55 The public opinion poll was conducted in two stages by the London-based New Place Consultancy together with the Brussels branch of the TNS Opinion Agency and the Kantar Group, in March and June–July 2016 in ten countries (USA, Canada, France, Australia, Argentina, Denmark, Norway, Greece, Germany, and Russia). The results are presented more comprehensively at https://auroraprize.com. 66

Influence of Armenian communities in key countries has space for growth

USA 8% 25% 32% 35%

France 8% 14% 35% 43%

Australia 7% 18% 38% 37%

Canada 5% 17% 34% 43%

Argentina 5% 30% 38% 27%

It is a very important community which plays It is an important community which has a key role in the social fabric of my counrty a limited role and influence in my country

It is an important community, but it plays Don’t know a role at a more local (regions/cities) than national level in my country

Fig. 9: Assessment of the significance of Armenian communities

Within the context of our discussion it is important to note that two-thirds of respondents who were aware of the existence of an Armenian community did not personally know or have contact with Armenians (Fig. 10).

Two in three respondents do not know any Armenians

7%

I personally know many of its members – 10 or more

27% I know some of its members – 1 to 9

66% I do not know any of its members

Fig. 10: Level of personal contact with Armenians among respondents who knew about the existence of an Armenian community The 20th Century 67

Migration Flows in the Second Half of the 20th Century

For Armenians, the history of the 20th century is that of almost non-stop flight from the Middle East. The process is still continuing. The military coup in Egypt (in the 1950s), the revolution in Iran (in 1979), and the civil war in Lebanon (1975–1990s) forced the Armenian population to seek refuge in safer Christian countries. Migration also gained momentum after the dissolution of the Soviet Union and the massacres in Sumgait and Baku (Fig. 11). In Syria, the Armenian community virtually disappeared during the recent military conflict, and in Lebanon, the future of the thriving Armenian community is under threat. In other words, the events of the last several decades are a continuation of the terrible history of the 20th century. The Syrian civil war, indeed, erupted in places where Armenians had already suffered during the Genocide. It is therefore highly likely that refugees from armed conflict in the Muslim countries of the Middle East who are moving to safer Christian countries in the Old and New Worlds will initially increase the numbers of members of the Armenian communities there but will, like their host communities, gradually be assimilated. Observing the disappearance of Armenian diasporan communities in the Middle East, we can state with deep regret that as was the case in the Middle Ages and in the modern era, the migration flows of today are not centripetal. The overwhelming majority of refugees are not inclined to return to independent Armenia. They would rather ‘dissolve’ in a safer, more comfortable environment that provides opportunities for self-realization.

Iran Revolution 1979

Migration from Soviet Union Collapse 1980s - present

Lebanese Civil War Egyptian 1975-1990 Nationalism 1950s

Syrian Turmoil 2011-present

Fig. 11: Migration flows of the Armenian population in the 20th–21st centuries56

56 The map was provided by the Charitable Foundation Initiatives for Development of Armenia (IDeA). 68

Changing Attitudes toward the Historical Homeland among Diasporan Armenians

The first generation of the Diaspora witnessed the downfall of the First Republic, the Bolshevik takeover and the loss of historical Armenian lands under the 1921 Treaty of Kars57. The negative attitude toward Bolshevik power, which was typical of this generation, became even more hostile when the Bolsheviks began the persecution of the Church. Nevertheless, over 16,000 Armenians, mostly from Europe, relocated to the Armenian Soviet Socialist Republic (Armenian SSR) between 1929 and 1937. The ideological divide notwithstanding, some of the global Armenian elite accepted the invitation of the government of Soviet Armenia to settle in the country. These repatriated migrants constituted the core of the scientific and cultural elite of the young republic.

The life of the second and third generations coincided with the period of further Sovietization of Armenia, World War II, and the Cold War between the Soviet Union and the West. Cultural contacts between Soviet Armenia and the Diaspora were limited and strictly regulated, and the number of tourists from the Diaspora was insignificant. However, in 1946–1948, tens of thousands of Armenians from Greece, Syria, Egypt, Iran, France, and the US relocated to Soviet Armenia as a result of Stalin’s targeted policy of repatriation58. They enriched and diversified the social and cultural life of the Armenian SSR; they introduced jazz, knowledge of foreign languages, cozy sidewalk cafés, the national cuisines of the countries they came from, and the Western work ethic. However, some repatriated Armenians soon experienced disappointment and went back. Many others ended up in Gulag camps, and not all of them returned.

The fourth generation experienced a renaissance in relations between the Diaspora and Armenia, triggered by perestroika in the Soviet Union. The consequences of the devastating earthquake of 1988 in Spitak, , and some other localities elicited an effective response in various countries of the world. International humanitarian aid started to arrive in the Armenian SSR on a huge scale, chiefly from the Armenian Diaspora. In 1991, Armenia then gained independence, but this was marred by the ensuing blockade and war in Artsakh and adjacent areas. The Diaspora took pride in the independent Armenian state but at the same time feared the threats faced by the country. Armenians from all parts of the world came to the assistance of the young independent republic. This support was perceived as a moral duty. Diasporan Armenians not only helped Armenia economically, but some also joined the Armenian army as volunteers. They also invested money in the country’s future, building

57 The Treaty of Kars was a peace treaty that established the common borders between Turkey and the three Transcaucasian Soviet republics of Armenia, Azerbaijan and Georgia. The Russian Soviet Federative Socialist Republic was also a signatory to the Treaty. 58 On September 14, 1948, the Deputy Chairman of the USSR Council of Ministers G. M. Malenkov reported to I. V. Stalin: “By Decree of the USSR Council of Ministers, the repatriation of Armenians to the USSR has been completely canceled with immediate effect, and the admission of Armenian immigrants to Armenia, regardless of where the immigrants are coming from, has been prohibited.” See: ‘Armenians in the Soviet Union feel offended’, (in Russian), Kommersant, April 18 (2005). https://www.kommersant.ru/ doc/570883 (accessed March 27, 2018). The 20th Century 69

infrastructure facilities and establishing modern educational institutions. However, contrary to expectations, diasporan elites did not involve themselves in the key issues of modernizing the state and its economic institutions, for the most part adopting the position of outside observers. Unlike in the 1920s and 1930s, new Alexander Tamanians, Avetik Isahakians and Kostan Zarians did not relocate to the young independent Armenia59. Some time later, the emotional upsurge of the 1990s gave way to disappointment, and subsequently the Diaspora limited itself to the philanthropic role of providing occasional aid. Many diasporan Armenians started to perceive Armenia as a country toward which they had some obligations, paying a kind of ‘tax for belonging to the nation,’ but independent Armenia did not become a second homeland for them. By inertia, well-to-do Armenians continue to give money to charity, but with the exception of several dozen families, there are scarcely any prosperous young Armenians in the world who do so as systematically as was the case in the past. Unfortunately, financial aid from the Diaspora is in most cases not in the form of consistent material and non-material investment in the development projects that could secure a better future for our children.

The post-Soviet Diaspora is made up of those Armenians who left, and who continue to leave, the homeland after independence. Economic migrants account for the majority. Leaving in search of a better life and opportunities and earnings, Armenians are willing to perform the hardest work abroad, even if in their historical homeland they considered such work beneath them. They leave because they regard the events unfolding in independent Armenia as negative and have a skeptical view of its development prospects, but at the same time, most Armenians who left Armenia in the 1990s still financially support those who stayed behind. However, the consequences of this continuing wave of emigration are not only economic. Families become separated as fathers are forced to go abroad to seek work, leaving behind their wives and children, and if they start new families, their ties to Armenia become weaker still, aggravating the demographic and family crisis in Armenia. Members of the intellectual elite also emigrated on an enormous scale in the first decade after the dissolution of the Soviet Union, with catastrophic consequences for the young sovereign state.

Sad to say, today we have to admit that Armenia is no longer of interest to the majority of diasporan Armenians, especially to people in their middle years, when they are at their most productive. Diasporan Armenians have yet to realize that they have two homelands, two sources of pride, two places of strength, and two islands of safety, namely the countries that have provided shelter to their ancestors, and Armenia. And blame cannot be put squarely at the Diaspora’s door because every close relationship requires input from both parties. Armenia has not yet become a focus of vital interest to the fragmented nation, and a shared understanding that the prosperity of Armenia and the prosperity of the Diaspora are inextricably linked has not yet been reached.

59 In 1922, Kostan Zarian came to Armenia and settled in Yerevan. In 1924, he left Soviet Armenia and only returned almost forty years later, in 1962, at the invitation of the Supreme Patriarch and Catholicos of All Armenians . 70

“All nations that do not have a Motherland are doomed to die because there is no nation without a Motherland and there is no Motherland without a nation. However, when turning to history, our national public figures persistently deceive themselves in listing nations that have ceased to exist and adding invariably that we, unlike them, will not die out. This stubborn self-deception is based on two premises: a) that the life of the Armenian nation has lasted for millennia, and b) the deeply entrenched idea that it is impossible to eliminate a nation by force. Neither premise holds true. Millennia of life are not proof of immortality. …

Did our nation die a violent death and is it dying today, every day and every hour, or not? Today, Turkish Armenia and Turkish Armenians no longer exist. Whatever we may write, and however much we may try, the Diaspora, which is dispersed the world over, is doomed to die. …

We are gradually coming to the realization that all our efforts are useless and that bearing an Armenian child in France, America or even Syria, unless he draws strength and memory from the stone and earth of the Homeland, and learns the Armenian language, does not to make him an Armenian. …

Such is the reality, whether we like it or not. We will thus dwindle day after day until we cease to exist as a nation. In France a bit earlier, in Syria a bit later, but the result will be the same.”

Shahan Natali60

Soviet Armenia

The Armenian SSR was de facto a quasi-nation state on the periphery of a powerful empire, endowed with limited rights. Such a model of existence was not new or unnatural for Armenians because the Armenian nation had lacked sovereignty for many centuries. For example, the melikdoms61 of Khamsa (Karabagh)62 enjoyed similar rights of limited autonomy within an empire. It is important to bear in mind that this peripheral model of existence afforded unique opportunities for access to the huge resources of the empire, and it was primarily thanks to these opportunities that the Armenian SSR flourished, in a manner unmatched since the time of the Kingdom of Ani. At the same time, the status of a peripheral state did not allow Armenians to become full-fledged actors in global civilization because foreign policy was dictated by Moscow. The extractive internal political, economic, and public institutions of the peripheral quasi- nation state replicated those of the empire. The prefix ‘quasi’ in our definition is accounted

60 Shahan Natali, Turkism from Angora to Baku and Turkish orientation: The Turks and us, translated by C. S. May. (Stepanakert: Punik, 2002). 61 Mountain principalities mainly in the region of Karabagh (Artsakh). 62 Khamsa, also Khams (from Arabic Khamsah ‘five’) were five Armenian principalities (melikdoms) of Artsakh (Karabagh) in the 17th and mid-18th centuries, the relics of the Armenian nation-state. The 20th Century 71

for, firstly, by the fact that this model of existence was intended to protect the interests of Soviet Armenians but not of the Armenian nation as a whole and, secondly, by the fact that international communist ideology aimed to suppress national identity.

Let us review some positive and negative consequences of the 70-year Soviet period. The years of Soviet power were characterized by explosive population growth, which was a sine qua non for preservation of the nation that had suffered huge loss of life. It must not be forgotten that at the very beginning of its existence the young Soviet republic was faced with the formidable task of admitting and integrating 300,000 refugees who had survived the Genocide. With support from international humanitarian and charitable organizations, the republic successfully carried out this task. As with the establishment of the sovereign Kingdom of Ani in the 9th-10th centuries, which created favorable conditions for demographic growth, the founding of Soviet Armenia resulted in a dramatic increase in the population, from 880,000 in 1926 to 3.3 million in 198963, despite disproportionately huge losses during World War II. Moreover, this increase was mainly due to a rapidly rising birth rate rather than an influx of migrants. Within a short period of time Armenians made good their loss of population, and this should be recognized as one of the most positive results of the Soviet era.

Credit should be given to the government of the young republic, which succeeded in attracting the best minds of the time and in revitalizing the national scientific and cultural elites despite possible ideological differences. The imperial format not only gave Armenians access to the material and non-material external resources necessary for rapid development but also, as in the Ottoman and Russian empires, a wide range of employment opportunities (if not worldwide, at least within the boundaries of the Socialist bloc countries), thereby encouraging progress in science, education, and culture. That is another positive consequence of Sovietization.

In the post-World War II years, the construction of new towns became widespread, while industries, health, and education experienced rapid development. Let us cite a telling example. In 1956, Sergey Mergelian, the youngest Doctor of Sciences and Corresponding Member of the Academy of Sciences of the Soviet Union, and his colleagues, were tasked with founding the first Computer Research and Development Institute in the Soviet Union. The Armenian SSR became a center of innovative technologies for the superpower and joined the ranks of the most advanced countries of that time. The history of the Yerevan Computer Research and Development Institute is but one example of the successful use of imperial resources for the development of Armenia. Within merely thirty years (approximately from 1950 to 1980) Armenia made a huge leap from being a technologically backward country to become one of the world leaders in the field of computer technologies.

According to institutional theory, given that the institutions of the Soviet Union were extractive, growth was possible, though limited and unsustainable. We do not have at our disposal data on the level of per capita production and consumption in the constituent Union

63 See ‘Armenia’. https://ru.wikipedia.org/wiki/Demographics_of_Armenia (accessed June 22, 2017). 72

republics because such statistics were not collected in the Soviet Union. Nevertheless, the analysis made by Population Health Metrics demonstrates that per capita GDP in the Armenian SSR was one of the lowest among the Soviet republics, the figure being more than three times higher in the Russian SFSR64, the Ukrainian SSR and the three Baltic republics65. At the same time, those who knew the Soviet Union before its dissolution will remember that living standards in Soviet Armenia were considerably higher than in most other Union republics. This indicates that Armenians were quite skillful at making use of imperial resources. It is possible that the present-day nostalgia for Soviet times, which is typical of the older generation, can be accounted for by memories of such a ‘good life.’

There were also negative consequences to existence at the periphery of an empire. The downfall of the First Republic, the invasion of Armenia by the 11th Red Army, and the subsequent Sovietization of the country are still in need of unbiased analysis. Whatever conclusions might be reached, it is clear that those events led to a split within the nation and caused the emigration of many educated and affluent Armenians. The growing rapprochement between the Bolsheviks and Turkish Kemalists in the 1920s was perceived in an extremely negative light by the diasporan elite. Under the 1921 Treaty of Kars between Turkey and the Soviet authorities of the Transcaucasian Republics, Nakhchivan province became the Nakhchivan Autonomous Republic under the protection of Azerbaijan. The Plenum of the Caucasus Bureau of the Central Committee of the Communist (Bolshevik) Party of Russia also decided in the same year to place the region of Mountainous Karabagh within the Azerbaijan SSR, resulting in a further loss of historical Armenian lands, while Mount Ararat, which is of huge symbolic importance for Armenians, was ceded to Turkey. Thus the seeds of future military conflict were sown.

During those 70 years, one of our core institutions, the Church, which had been not only a religious and a moral force but also a provider of education for Armenians, was virtually destroyed. The losses that the nation, which had already been decimated by the Genocide, suffered in those years cannot be overstated. Thousands of members of the intellectual and political elites of the country, army officers, repatriated migrants, and ordinary citizens became victims of the Bolshevik reprisals that started immediately after the Soviet takeover of Armenia and were carried out over several decades. A mass deportation of Armenians to the Altai region in 1949 is still poorly researched. About half a million Armenians from Armenia and other Soviet Republics fought at the front in World War II, and one in two never came home (for comparison: the losses of the entire British army were 383,700 persons66).

During those 70 years, a new sub-ethnos, the Soviet Armenians, emerged. The very fact of its emergence is evidence of the further fragmentation of the nation, and in order

64 Soviet Federative Socialist Republic. 65 Spencer L. James, Paul Gubbins, et al., ‘Developing a comprehensive time series of GDP per capita for 210 countries from 1950 to 2015’, Population Health Metrics (2012). https://www.ncbi.nlm.nih.gov/pmc/ articles/PMC3487911/ (accessed January 17, 2018). 66 Commonwealth War Graves Commission Annual Report 2014–2015. http://www.cwgc.org/resources/ publications/annual-report.aspx (accessed August 24, 2017). The 20th Century 73

to understand the cultural differences that arose in the 20th century between Soviet and diasporan Armenians it is necessary to examine in detail the values and behavior patterns of what became known as Homo sovieticus. Alexander Asmolov regards this umbrella term, which became the subject of a series of studies by Yuri Levada and his colleagues, as an ‘extremely resilient construct.’

Soviet Man as a Cultural Phenomenon Yuri Levada is convinced that Homo sovieticus did not disappear after the dissolution of the Soviet Union but still exists in present-day Russia and is being reproduced in new generations. The same holds true for many former citizens of Soviet Armenia, who have retained a post-imperial mentality that encompasses not only Soviet but also Ottoman behavior patterns. For several generations, persecutions and reprisals, propaganda and feigned paternalistic care cultivated the skills of doublethink among Soviet citizens and conditioned them to exist in an atmosphere of international isolation. Conscious efforts were made to squeeze out from people the desire to take on responsibility for their own lives. The authors of this discussion paper were, each in his or her own way, embedded in the Soviet system. Therefore, the following thoughts about ‘Soviet Man’ and the ‘Soviet Armenian’ should be seen as a personal attempt to reflect on those concepts.

As Alexander Asmolov points out, “over a rather short period of time, the Soviet people developed a belief in the existence of a Center which knows everything, can do everything, understands everything and is capable of making all decisions for you.”67 This belief in an all-seeing and omnipotent Center is a legacy not only of the Soviet era. The overwhelming majority of Armenians lived for centuries in empires, where the model of existence quite naturally had a state-centric character. Asmolov contends that the cult of the Center gives rise also to a personality cult, to a belief in an omnipotent leader. It makes no difference what this leader is called: Emperor, Sultan, Shah, Tsar, Secretary General or President.

From generation to generation, Soviet citizens were ‘trained’ to expect that the state would pay them salaries, pensions, and social benefits and would provide them with housing, education, and healthcare for free. This instilled in them a welfare model of behavior, which was particularly convenient for totalitarian and authoritarian rulers. After the abolition of private ownership of the means of production and their expropriation by the state, we gradually unlearned how to be the owners. With the dissolution of the Soviet Union, private property again became the most important element of the state economic system that emerged in the former Soviet republics. However, Daniil Dondurey has observed that private property has not been rehabilitated in the post-imperial mentality any more than entrepreneurship, which was considered in the Soviet Union to be something shameful and even harmful. This habit of dependency is an extremely dangerous legacy of the Soviet period of our history.

67 ‘Soviet Man proved to be an extremely resilient construct’, (in Russian), Profile Business Weekly, October 31, (2017). http://www.profile.ru/obsch/item/121081-sovetskij-chelovek-okazalsya-na-redkost- moshchnoj-konstruktsiej (accessed January 24, 2017). 74

Soviet citizens shared a firm belief that they should abide not by the Constitution but by other, unwritten laws. However, this customary duality can by no means be associated with the Soviet period alone as its roots run much deeper68. That explains the current predominance of a code of criminal and semi-criminal ‘ethics’ in society. Moreover, since imperial laws were seen as alien and imposed from the outside, the skill of bypassing them was seen as a kind of test of valor and a sign of ingenuity. The task of eliminating this duality after the collapse of the USSR has proved difficult.

We tend to agree also with Daniil Dondurey’s other statement that the post-Soviet mentality is profoundly intolerant. It is dominated by the division of people into ‘us’ and ‘them,’ which determines the choices, actions, and decisions that people make in life. Any distinguishing feature such as ethnicity or social class, skin color, sexual orientation, political views, etc., can be sufficient to place a person in the category of ‘them.’ Holders of the post- Soviet mentality view ‘strangers’ with caution and look down on them dismissively.

“A key mechanism for the development of a Bolshevik and any fundamentalist regime is the perception of history through the prism of conflict; forH omo sovieticus conflict crowns human motives and history.”69 The existence of the omnipotent Center is justified in a situation of permanent conflict. This accounts for another peculiar feature of ‘Soviet Man,’ namely a constant search for an enemy, frequently an imaginary one. We blame our troubles on others instead of taking a sensible and pragmatic look at reality and becoming aware of our own responsibility for an unsatisfactory state of affairs in the country, in society, or indeed in our own home. Unwillingness to assume responsibility leads to avoidance of choice and of decision-making, what Erich Fromm calls ‘escape from freedom.’ Asmolov includes this feature in the list of characteristic traits of ‘Soviet Man.’

We were taught to live not in an anthropocentric but in a state-centric society, where the interests of the state prevailed decisively over the interests of the individual. Soviet ideology rejected individualistic values, and that stance clashed dramatically with the positive individualism of the Armenians that we discussed in the previous chapter. Our generation, very much like our parents’ generation, follows to some extent the models of behavior that were instilled in us during our childhood in the Soviet Union. More than that, we have passed on those models to our children one way or another, thereby preserving the mental and cultural differences between post-Soviet (or rather Soviet) Armenians and diasporan Armenians brought up under other conditions and in other social models.

68 One typical example is the conversation between the city mayor Gradoboyev and others in Alexander Ostrovsky’s comedy An Ardent Heart: Gradoboyev. God is way up on high, the Tsar is far away. Am I right? ... But I am here, close to you. It means I am your judge. ... If you are to be judged by the law, we have many laws … And all laws are strict. In one book they are strict and in another one they are even stricter, and the last book contains the strictest laws. ... So, my dear friends, what do you prefer? Shall I judge you according to law or according to my soul, as God dictates to my heart? Voices. Judge according to your soul, like a father, Serapion Mardrich.” See: A. Ostrovsky, An Ardent Heart (in Russian) (Moscow: Iskusstvo Publishers, 1987). 69 Asmolov, op. cit. The 20th Century 75

Let us clarify: we find no pleasure at all in excoriating ‘Soviet Man.’ We are interested not in condemning but in understanding clearly the patterns and stereotypes that have influenced present-day Armenian society, and in assessing its current situation. Comparing the old Armenian past with the more recent Soviet past, we can clearly see a whole host of contradictions and a break in the previous pattern of people’s lives that requires meticulous consideration. At the same time, the positive aspects of the current situation should not be underestimated, because there are similarities between the post-imperial mentality of Armenians and that of our closest neighbors. Those aspects, too, need to be borne in mind so as to strengthen and further develop multilateral ties in the post-Soviet context.

The mental and behavioral differences between ethnic Armenian sub-groups can only be overcome when there is greater awareness of those differences. But the picture of the internal crisis that Armenians are going through will be incomplete if we disregard the current state of the pillars of our national identity that we discussed in the previous chapter.

Erosion of Armenian National Identity in the 20th Century

In the last century, the Armenian language started to lose its earlier role as a shared means of communication because frontiers and national differences were gradually disappearing in a globalized world. As we have mentioned earlier, after World War II, diasporan Armenians were integrating more successfully into the socio-cultural environments of their host countries. Their ties with their historical homeland were becoming weaker with each successive generation, as was their internal motivation to learn their mother tongue, and the number of native Armenian speakers was dwindling. Armenian was no longer the language they used for thinking and as the main means of communication. In addition, Armenians were beginning to adopt English as the language for international contacts, although it is of course not only Armenian that has been experiencing such pressure in the present-day world, but many other languages as well.

Let us not forget that Russian was the lingua franca of the Warsaw Pact countries. Even though in Armenia and Georgia the native languages had the status of official state languages (nominally all languages in the Soviet Union were equal), those educational institutions where Russian was the language of instruction were regarded as more prestigious. Russian was dominant in administrative paperwork and was the main language of science. Life itself required that citizens of the Armenian SSR and of other Union republics should be proficient in the language of the central power because proficiency in Russian provided access to huge imperial resources and was in the overwhelming majority of cases a minimum requirement for advancement. Substantial funding was provided for the translation of national literatures into Russian, and much less was allocated to the translation of foreign literature into national languages. Knowledge of a foreign language (English, German, or French) was officially mandatory for high school graduates but in reality was of a very low standard. During the 20th century, Soviet Armenians were gradually losing the advantage of being a multilingual nation, and furthermore, they were becoming a nation that was less proficient in the mother tongue. 76

The Armenian Church, too, was gradually losing its centuries-old role as a provider of education, enlightenment, and moral guidance, which ensured the cohesion of Armenian communities. Even though new Armenian churches were built in the 20th century, the number of parishioners was and still is declining steadily.

This process of secularization of public life was of course not unique to the Soviet Union. It had been taking place in recent centuries in the West as well, and in the world in general. Seventy years of Sovietization, however, had a particularly negative impact on the Church, which had encouraged the establishment of the First Republic in 1918, provided wholehearted support to the re-establishment of an Armenian state, and therefore had a very mixed reaction to the Bolshevik invasion of Armenia. Thereafter, the Church was forced to demonstrate loyalty toward Soviet power, but that did not save the best clergy from repression. Nevertheless, the Church was subjected by certain circles within the Diaspora to constant accusations of collaboration with the state security services. Furthermore, Sovietization and, to a large extent, the ideological confrontation between the two superpowers during the Cold War, caused an ongoing hierarchical rift between the Catholicate of All Armenians at the Holy See of Echmiadzin and the Catholicate of Cilicia based in the Diaspora (Lebanon). Even today, it has not been possible to solve the problems inherited from the Soviet era, which only added to the wider global crisis of faith in the postmodern era.

In the 20th century, as the role of the state and its institutions grew in importance, the family and the community began to lose their institutional function of passing on traditions and knowledge. The other functions of the family, which we discussed in the first chapter, were lost too. The state assumed them. Moreover, the Genocide disrupted the continuity between generations. We should remember that numerous Armenian orphaned children grew up in foster families or in special institutions outside the family order that they had been used to. The ease with which people started to move around the world also contributed to the weakening of the institution of the family. When choosing a place of residence far from the historical homeland, Armenians based their decision on a search for material well-being and opportunities for self-realization, while kin relationships became less and less close. Furthermore, the situation in Armenia itself changed. In the past, several generations had lived as an extended family in one household, but in recent times, with migration from rural to urban areas gaining momentum and with booming house-building, more young people started to live separately from their parents. The birth rate declined, and the number of children in Armenian families decreased dramatically. It is a very serious problem for us because the birth rate in neighboring countries remains quite high.

Finally, let us touch on the significance of thehistorical homeland for Armenians. There are grounds to argue that the 20th century gave us a new national symbol, Mount Ararat, which is revered equally in Armenia and beyond its borders. There is a well-known apocryphal story about the depiction of Greater Ararat and on the of Armenia. The Turkish government allegedly lodged a protest because Mount Ararat is not part of Armenia. The People’s Commissar for Foreign Affairs, Georgy Chicherin, supposedly riposted: “The crescent is depicted on the Turkish flag but the moon does not belong to Turkey.” Most probably it is merely a myth but the Yerevan city plan, where the main squares and avenues The 20th Century 77

provide a magnificent view of Ararat, is an unquestionable reality. The architectural genius of Alexander Tamanian has granted generations of Armenians an opportunity to live under the symbolic shadow of the Biblical Mountain.

***

Unprecedented events occurred in the 20th century, once more dramatically affecting the evolution of the Armenian nation. While in the past our ethnic community was held together by language and the alphabet, by faith and the Church, by family and community, at present, as can be seen, the role of these uniting factors has been called into question. Do we sufficiently appreciate the gaps which have opened up over the decades between Armenian ethnic sub-groups, and the differences in mentality and behavior patterns? What needs to be done to prevent our becoming lost among the seven-billion-strong population of the planet? What makes each Armenian sub-ethnos unique, and can our diversity become a source of strength? How can the relics of post-imperial cultural and behavior patterns be eliminated, and what should replace them? How can assimilation and emigration from the Diaspora be stopped? We believe that in the 21st century the nation can exist only when it has a strong focal point, and that focal point should be today’s Armenia. Chapter 3 The Present: Independent Armenia (1991–2018)

"Past generations left us not so much ready solutions for problems as problems themselves." Seneca

Deprived of their own statehood after the downfall of the Kingdom of Cilicia in 1375, Armenians were for many centuries the subjects of great empires: the Byzantine, the Persian, the Ottoman, the Russian and the Soviet. They learned how to integrate and to successfully use the opportunities provided by the sheer size of those empires. Notwithstanding the tragic events that often forced our forefathers to go into exile, they never left their native lands completely and retained their ethnic unity. Despite losing sovereignty, they invariably resumed their struggle for the independence of Armenia, but they always relied on strong allies, as if seeking their approval and expecting outside help rather than mobilizing the nation’s internal resources to the full extent. Remaining pawns in the geopolitical intrigues of the great powers, Armenians failed to create the kind of true national liberation movement that was typical of 19th-century Europe and led to the formation of nation states as new players in global politics. Such a state did not exist in the Armenian lands until the 20th century.

The history of Armenian statehood in the 20th century encompasses the brief period of the First Republic (1918–1920), seven decades of the quasi-nation state existence of the Armenian SSR, and finally the proclamation of the independent Republic of Armenia. In our view, the paradox is that the independent Armenian state reappeared on the map of the world not as the outcome of the numerous attempts by the people to assert their right to sovereignty through diplomacy and armed struggle, but as a result of the collapse of the Soviet Union. The independence of Artsakh is a totally different matter. This had to be won by arms at a heavy cost.

In this chapter we will present our assessment of the model of existence that has emerged in Armenia over the 27 years of independence. We will also clarify its underlying causes and will discuss the possible consequences of preserving this model in the 21st century. While not wishing to anticipate our conclusions, we can already say that we take an extremely pessimistic view.

The Imperial Legacy: Opportunities and Obligations

The emergence of the independent Republic of Armenia gave rise to the hope that the nation-in-exile would finally have its own home, the Motherland, the unifying place of strength. Over the past quarter century we lived with this dream of an El Dorado, the happy country of Voltaire’s Candide which is governed by an enlightened and just ruler, where there are no judges and prisons, where its residents are innocent and virtuous. Today, that dream remains a blinding, dangerous illusion that prevents us from accepting reality. Since there is a huge mismatch between present-day Armenia and the image of the bright future that we conjured up for ourselves, the dream has become a source of constant disappointment. This disappointment forces Armenians to disperse the world over in search of a better future, The Present: Independent Armenia (1991–2018) 79

thereby depleting their historical land. This land, however, is our sovereign country which we were deprived of for centuries and is the most valuable asset that emerged from the imperial past. It is only here that we can live by our own rules rather than those imposed from outside, and can implement our own decisions based on our own choices. Today we are coming to realize that we were carried away by futile illusions and failed to come together to decide jointly what kind of country we wish to pass on to our children. We failed to reflect effectively on the colossal inheritance that we received with the dissolution of the Soviet Union and to understand that that heritage is not only a keystone of future prosperity but also a burden of great responsibility.

In the late 1980s, Armenia was in possession of the most advanced and innovative industrial capacity among the Soviet Republics. About 40% of all computers for the Soviet Ministry of Defense were designed and produced here. Armenia also held one of the leading positions in the electrical manufacturing industry. The overall capacity of the powerful military-industrial complex may to a large extent have been created to meet the needs of the empire and at the expense of the empire, but the upside was that in a centrally planned economy, the Republic did not have to provide a return on the capital investments made by the central government of the Soviet Union.

The Nairit chemical giant and the Armenian nuclear power plant are but a small part of our imperial inheritance. Only the largest countries in the world can boast production facilities on such a scale. But for small countries like Armenia, they are an unaffordable luxury, unless supported from outside. Alongside industries, we also inherited from the Union a large-scale hard infrastructure built according to the radial principle (from the country’s center to the periphery) that was designed to connect industrial facilities. However, with the dissolution of the Soviet Union this infrastructure proved largely unnecessary and even superfluous, while sources for its upkeep ran out.

Along with industrial assets and hard infrastructure, we also inherited a well-developed soft infrastructure. Our research centers and the Academy of Sciences, institutions of higher education and secondary vocational training, cultural institutions, voluntary and arts associations, and healthcare establishments were modeled on their imperial counterparts. Integrated into the soft infrastructure of the empire and propped up by its resources and intellectual potential, they were successfully evolving and often becoming an object of pride for us. However, in a small country with limited resources, many institutions of the former soft infrastructure became a prohibitively expensive luxury.

When the political, economic, scientific, and cultural ties with the Union and with the Comecon70 countries, established over a 70-year period, were severed, this entire inheritance required serious re-assessment. However, we went on living as if by inertia, at times feeling

70 The Council for Mutual Economic Assistance (English abbreviation COMECON) was an economic organization from 1949 to 1991 under the leadership of the Soviet Union that comprised the countries of the Eastern Bloc along with a number of communist states elsewhere in the world. 80

nostalgia for the Soviet past. We are seldom aware of the fact that the rapid development of the Armenian SSR in the second half of the 20th century was achieved thanks to the power and gigantic resources of the empire. The collapse of the empire granted us independence and, consequently, the right – and the need – to choose a model and a course for the further development of the country and the nation as a whole. But the evolution of the young Republic of Armenia, as we have already pointed out, was extremely difficult, and the Armenian political elite focused on its survival, so that long-term development strategy was not a priority. As for the Diaspora and, most importantly, the diasporan elite, they did not play a part in building the new institutions but remained, as a rule, on the sidelines of developments in the new Armenia.

Selecting the course of development

After the dissolution of the Soviet Union and the collapse of the Warsaw Pact, fifteen independent states, which had earlier been constituent parts of the Soviet Union, and seven new independent states of Central and Eastern Europe, appeared on the world map. All of them were faced with the challenge of choosing their own development model. Not infrequently, this already hazardous choice was aggravated by bloody ethnic conflicts and civil wars in both the former Soviet Republics (Artsakh, Abkhazia, South Ossetia, Chechnya, Tajikistan, Transnistria, etc.) and in the former Socialist bloc countries (the war in and dissolution of Yugoslavia).

The German Democratic Republic merged with the Federal Republic of Germany, while Czechoslovakia split into two independent countries, the Czech Republic and Slovakia. Those countries, together with Estonia, Latvia, Lithuania and other Eastern European states, eventually joined the . As a result of the war, Yugoslavia split into seven independent states. Slovenia and Croatia became members of the European Union, while the remaining five states (Macedonia, Kosovo, Montenegro, Bosnia and Herzegovina, and Serbia) made basically the same choice and expect to join a united Europe. Could Central and Eastern European countries have chosen an alternative course of development? Given their geographical location, the ruling elites in those countries probably had no viable alternative.

Two of the twelve remaining former Soviet Republics, Ukraine and Georgia, also set out to join the European community and selected developed Western European countries as reference points. As for the other ten countries71, including the Republic of Armenia, they established the Commonwealth of Independent States. When the Soviet Union collapsed, none of these countries therefore had close cultural, economic, and political ties with the leading Western countries or supranational entities of the late 20th century. They carried on as before and did not make full use of the right to choose a model of existence and a different course of development.

71 Georgia left the Commonwealth of Independent States (CIS), while Ukraine and Turkmenistan are associate members of CIS. The Present: Independent Armenia (1991–2018) 81

The model of existence to which we had been accustomed for many centuries in the Ottoman Empire and in the Soviet Union became embedded in our institutional memory. As a result of that, among other reasons, the young Republic of Armenia as if by inertia adopted an extractive, paternalistic, state-centric model of existence and a pro-Russian course of development. Before describing this model, we wish to say a few words about the project that we launched in the early 2000s, together with partners and like-minded individuals, because we saw how dangerous inertia was for the development of the new Armenia.

Project Armenia-2020: an Important Experiment

This project, a private initiative, was the first attempt at a joint discussion of our future undertaken after the Karabagh movement emerged and Armenia gained independence. We succeeded in drawing over 200 participants from Armenia and the Diaspora into the discussion. We can confidently say today that despite differences in our views, we were able to find common ground when discussing even the most sensitive issues and to come up with development scenarios through our joint efforts. The project Armenia-2020 afforded us an opportunity to meet some of the brilliant minds of the Armenian world and beyond, and to build up a circle of trust. The significance of the work done at that time to shape our vision of the future of Armenia and the Armenian nation can hardly be overestimated. All the development projects initiated by us in the past seventeen years are a direct result of the project Armenia-2020.

We never fooled ourselves that a general consensus could be reached immediately, and we expected that the development scenarios and the materials would be analyzed, discussed, and criticized. However, we did not anticipate that an active section of society would ignore them altogether. Unfortunately, we did not succeed in adequately engaging the elites of Armenia and the Diaspora in the discussion of the proposed scenarios. Moreover, the format of the discussion itself was not acceptable to the elites. None of the scenarios became the basis of a development strategy.

At present, fifteen years later, we as a nation are better prepared for a dialogue. Active individuals both in Armenia and in the Diaspora are aware of the necessity of such a dialogue and feel responsibility for the future of the nation and of our children.

The country’s development scenarios in the Armenia-2020 project

The project was implemented in 2002–2004 by the Armenian Center for Political and International Studies, McKinsey & Company, the Arak-29 Charitable Foundation, the Eurasia Group, the America Closed Joint Stock Company, and the Aslan Global and INDEM Foundation. Discussions in Prague, Athens, and Yerevan were held by scientists, academics, inventors, philosophers, entrepreneurs, and specialists with extensive experience in solving complex problems. Armenia-2020 brought together major Armenian and international organizations as well as talented individuals sincerely interested in the progressive development of society. 82

Meetings and discussions were conducted in the largest Armenian communities in Europe and the US. The project was presented in Brussels, New York, Cambridge (Harvard University) and Moscow, and in various cities and towns in Armenia (Yerevan, Gyumri, Vanadzor, etc.). Citizens of Armenia and individual members of the Armenian Diaspora from , the United Kingdom, Germany, Canada, Russia, the US and France, who were enthusiastic about the project and willing to contribute to the construction of the future of Armenia and to the improvement of the country’s image on the world stage, served as project consultants and experts.

The initiators of Armenia-2020 proceeded from the assumption that in the early 2000s the Armenian political elite did not have a clear idea about the country’s development in the medium and long term, triggering a sense of uncertainty and insecurity among both citizens of Armenia and concerned diasporan Armenians. On top of that, constructive dialogue between the country’s elite and the Diaspora was non-existent.

The readiness of some members of the Armenian Diaspora to unite in a joint search for solutions of benefit to Armenia was dictatedby the newly achieved independence of the Armenian state, which created unique opportunities for national progress, by the availability of the human and financial capital that could provide stability, security, and prosperity for the country, by the awareness that the future of Armenia would determine the future of the Armenian nation as a whole, and by an understanding of the need to move from one-off charitable donations to systemic investments that would accelerate the country’s development through social entrepreneurship.

The stated goals of Armenia-2020 were:

1. Creation of a better future through an open and sincere dialogue;

2. Expansion of public perceptions about future opportunities and scenarios for long- term development;

3. Formulation of an Action Plan for implementation of Armenia-2020 scenarios with the help of large-scale initiatives that take the regional and global political and economic situations into consideration;

4. Conduct of research and analysis leading to optimal decisions.

Out of a number of Armenia development scenarios reviewed within the project, four possible ones were selected in 2004:

‘Syrian’ scenario: A centralized state and a strong army have a dominant role. In the absence of a state based on the rule of law, a considerable part of the economy is concentrated in the informal sector and controlled by various ‘clans.’ Cheap labor The Present: Independent Armenia (1991–2018) 83

and dirigiste autocratic control are capable of providing only short-term growth, which will be quickly replaced by stagnation owing to regional isolation and a lack of investment in the reproduction of human and technological capital.

‘Russian’ scenario: De facto merger with Russia and transfer to Armenian soil of Russian contradictions and tensions between resource (traditionalist) and innovative economies. Economic growth can be expected; however, it will be uneven because it will be held back by such factors as chronic enmity with neighbors, a low level of regional integration, active emigration, and high domestic transaction costs affecting the cost of the goods produced.

‘European’ scenario: Armenia joins the European Union. Participation in a wider and more developed economic space will lead to sustainable economic growth. The country will undertake consistent liberalization of the economy and will thus ensure more rapid development. Adoption of European standards will result in a stronger democracy and civil society and larger investments in science and education. This scenario is difficult to implement and may encounter strong resistance from various groups, while the unpreparedness of Armenia to compete under current conditions may bring about loss of political independence.

‘Singaporean’ scenario: Fast transition of Armenia to an innovative development model. In the event of the implementation of this scenario, Armenia will effectively become a regional economic center, or, in other words, an innovative hub. A transportation network that connects the countries of the region is capable of laying the groundwork for shaping their new, single identity, which will eventually prevail over ethno-religious, cultural, and historical contradictions. The existence of a strong leader and public consensus is crucial for the implementation of this scenario.

The project Armenia-2020 was not limited to the designing of medium and long-term scenarios for the country’s development. Within the framework of the project, sectors of the Armenian economy with good prospects were identified and analyzed, and in-depth studies of some (tourism, IT, etc.) were conducted. Alternative forecasts for various development scenarios were made. A number of sociological studies were conducted in Armenia and in countries with the highest concentration of diasporan Armenians. Expert assessments of Armenia’s geopolitical situation within the global context were also presented (see Chapter 5 for more details).

The idea of a public-private partnership, promoted by Armenia-2020, materialized in the shape of the Foundation for National Competitiveness of Armenia, which was composed of members of the government of the Republic of Armenia and individual members of the Diaspora. 84

Coming to the topic of today’s Armenia, let us stress once again that we, as a nation, have the right to select our own model of existence and course of development. The question is whether we are ready to make use of that right, and what efforts are needed to do so. But first of all we have to clearly identify a point of departure, i.e. to analyze impartially and soberly the model of existence currently prevailing in Armenia and to understand whether it can become a satisfactory model for the prosperity of the country and the nation in the 21st century.

Still the Periphery of an Empire?

It has often been argued in the past several years that today’s independent Republic of Armenia is in effect a peripheral part of the Russian Federation. Experts put forward economic, political, and military strategy arguments to support this view. Indeed, Armenia’s largest assets have been acquired by the Russian state and private corporations, and significant infrastructure facilities are owned by Russian businesses. The Russian Federation is Armenia’s principal creditor, one of the most important export markets for our goods and services, and a labor market that attracts migrants from our country. Russia is Armenia’s top foreign policy and strategic military partner and arms supplier. The Russian armed forces stationed on our borders are the guarantor of our territorial integrity. The similarity in the mentalities of the Russian and Armenian ruling elites, whose skills of running a state were developed in the Soviet era, can also be added to that list. It should be borne in mind that, on the whole, those elites are composed of a generation that retains the Soviet mindset, as we have discussed above.

A peripheral model of existence is not unusual for us. However, present-day Russia does not have the resources that the Soviet Union had in the 1950s–1980s and is unable to support a periphery, even if it wanted to. While the Armenian SSR was undoubtedly a successful example of development as a peripheral country, the same cannot be unequivocally said of today’s Republic of Armenia: legally, Armenia is not a constituent unit of the Russian Federation and, unlike such units, does not have complete and free access to the Federation’s resources. It is also important that many members of the present-day Armenian elite do not have a good command of the Russian language, while social and cultural ties between younger members of the Armenian and Russian elites continue to weaken. The current model of existence in Armenia can be likened to living in a ‘bubble.’ By this we mean an autarky, a closed country, which is isolated from developments in the rest of the world, although the bubble is still sponsored by Russia. However, with the signing of the EU-Armenia Comprehensive and Enhanced Partnership Agreement in 2017, new prospects have opened up for us. In Chapter 5 we will return to the discussion of this issue.

The Dominant Model of Existence in Present-day Armenia

We all wish to see Armenia prosperous, just, and peaceful. At the same time, each one of us has his or her own opinions, value systems, priorities, and criteria of success, and will consequently take a broader or narrower view of the current state of affairs and the planning horizon. For some, the prosperity of Armenia boils down to stable economic growth and secure state borders, while for others it is the country’s role in world politics. Some put citizens’ well-being first, while others assign priority to the country’s ability to be the center of the The Present: Independent Armenia (1991–2018) 85

Armenian world. For some, the frame of reference is a medium-term perspective, while others are concerned about their children’s future, and yet others are thinking about several future generations of Armenians. Our vision seeks to encompass the whole nation in its entirety and diversity, while the planning horizon includes at least our children and grandchildren, who are just starting their life’s journey. We would like to ask readers to keep that in mind both now and, especially, when reading the subsequent two chapters, in which we shall discuss the future of Armenians in the 21st century.

As we have mentioned before, a dominant model of existence is a relative concept, ‘dominant’ meaning the model which has the greatest impact on the life of a society and is supported by its active majority. Thus, discussing the current state of affairs inevitably entails some oversimplification. Besides, both of us are aware that despite our involvement in the affairs of Armenia and the Diaspora, and our profound interest in the nation’s welfare, we do not live in Armenia permanently. Our assessment of a dominant model is to some extent a view from outside. Let us repeat again: we do not have the least desire to criticize any individuals and to engage in finger-pointing. Our goal is merely to carry out a sober and pragmatic situation analysis which will enable us to understand why the current model of existence in Armenia cannot be described as satisfactory in the long term.

Material Assets As we have said, a huge production potential was accumulated in Armenia during the Soviet years, placing the country among the industrially advanced nations of the second half of the 20th century. Through lack of demand, however, a sizeable part of those assets proved superfluous with the ending of the centrally planned economy. In addition, during the economic collapse of the early 1990s, the operating costs of maintaining those assets in working condition became prohibitive, while the capital investment previously flowing from the Soviet Union was no longer available. Factories and plants, as well as equipment and infrastructure, were for the most part privatized. What could be dismantled was subsequently resold, sometimes as scrap metal, and removed from the country, and many facilities were rendered completely inoperative. However, since the production and infrastructure capacities in the country were finite, the sales boom of the early 1990s did not last long. Furthermore, the new owners could not and at times did not want to attract investment in order to expand production capacities, so that these assets no longer had any role in creating added value and contributing to the country’s budget.

Armenia was one of the first republics of the former Soviet Union to privatize the economy and to start privatizing agricultural land and the state-owned housing stock. But much like production and infrastructure assets, land can also rapidly cease to be a means of accumulating personal wealth and of contributing to the state budget. When there is no prospect of economic growth, it is far from easy to resell a plot of land purchased earlier at a significantly higher price. In the early 2000s, a sharp increase in the country’s GDP was caused by a construction boom in Yerevan. Land plots of a high liquidity ratio were privatized as speedily as possible, and new buildings were constructed and sold, primarily to diasporan Armenians. However, the supply soon exceeded demand. Besides, the number of ‘desirable plots’ was limited, as was the opportunity for infills. Moreover, the construction boom of 86

the 2000s took a devastating toll on the historic architectural heritage of Yerevan. We lost the unique urban texture of our ‘Garden City’ and destroyed earlier views of Mount Ararat. Many buildings were constructed without regard for building standards, including standards of seismic safety.

Armenia’s natural resources, such as copper, molybdenum, gold, aluminum, and other non-ferrous metals, as well as building stone and semi-precious stones, are no less valuable assets. However, resources of this type are finite and non-renewable, and at present the extraction and sale of mineral resources is taking place against the background of plummeting, volatile global prices for raw materials. It is highly unlikely that new deposits will be discovered, and there are no grounds to expect a major increase in prices. By selling natural resources we are therefore not only depriving our children of sources of income but we are also creating a situation in which they will incur disproportionate expenditure. Mining operations change the landscape, causing damage to other industries (for example, tourism), while non-compliance with environmental protection standards causes irreparable damage to the environment and to people’s health, and will in the future require land reclamation and rehabilitation of bodies of water.

Thus, our material assets are being used not for creative activities but predominantly in an extractive manner for short-term gain.

Other Sources of Funds Let us now review the flow of funds to Armenia from other countries, through government borrowing, international aid, foreign investment, charitable donations from the Diaspora, and remittances from relatives living abroad. These flows are relatively insignificant for the simple reason that Armenia is a small country by world standards.

Just as material assets are finite, there is also a limit to the external debt of a small country like Armenia. The state cannot endlessly increase the debt by transferring today’s expenses on to the shoulders of future generations. As for the scale of the international aid provided to Armenia, it is insufficient to keep the country viable. Besides, international aid is not unlimited either and, more importantly, it is unstable.

In recent years it has become more difficult for developing countries to attract international investment in comprehensive development projects. Competition for such investment is becoming more intense, while the lack of an overall vision of the future on the part of the government makes the country less attractive for institutional investors. Thus, according to UNCTAD data, direct foreign investment in Armenia in 2015 and 2016 was USD178 million and USD338 million respectively, whereas direct foreign investment in Georgia in the same years was USD1,576 million and USD1,661 million respectively72.

72 United Nations Conference on Trade and Development, World Investment Report 2017: Investment and the digital economy (Geneva: United Nations Publications, 2017). http://unctad.org/en/pages/ PublicationWebflyer.aspx?publicationid=1782 (accessed August 29, 2017). The Present: Independent Armenia (1991–2018) 87

In the formative years of the Republic of Armenia, considerable donations from wealthy diasporan Armenians and institutions were of great help to the country and its citizens. However, it can be expected that when the Kerkorians, Manukians, Cafesjians, and other well-to-do representatives of the third and fourth generations of the Diaspora pass away, this source will dry up. Their heirs, who are becoming more and more assimilated, will hardly wish to keep up the traditions of their fathers and grandfathers. In any case, charitable aid is not invested in development projects. It does not encourage entrepreneurship and does not create added value. It remains a source of easy money and merely fosters an exploitative attitude, a dole mentality, among Armenian citizens.

Considerable amounts of money come from members of the new Armenian Diaspora, i.e. from those Armenians who left the country in the 1990s. But for the most part, this is again charitable aid rather than investment. True, the new Diaspora has also invested money in land and construction and purchased real estate in Armenia. Even in those cases, however, investors were motivated by emotional, nostalgic, rather than pragmatic reasons. Their investments did not create added value worthy of mention. It should also be borne in mind that the supply of money through this channel is quite volatile as it depends on changes in the economic situation in the countries of residence of philanthropists and investors.

The abundant remittances from relatives living abroad that have become customary are an income-generating business of sorts, in which an affluent relative becomes an asset that yields a regular income. As in the previous case, however, these remittances are subject to volatility as their size varies depending on the economic situation outside Armenia. Many individuals in this new Diaspora are content with such a state of affairs: regularly sending remittances to their relatives seems to confirm the wisdom of their decision to leave Armenia. There are also emigrants who feel that they are forced to send remittances against their will. They realize that they have become a source of unearned income for their relatives, and they strive to associate themselves with Armenia as little as possible.

With each passing day, the stream of money flowing into the country is diminishing, and the absence of visible positive changes inside Armenia will bring about donor fatigue sooner or later, whoever the donors are. Even if in the near future the flow of money should start to increase again for one reason or another, it will not be of much significance because any upsurge of that kind is not long-lasting. Under existing conditions, an influx of external funds does not enable the country to make systemic changes and to create mechanisms for long- term investment in development.

How is the Money Spent? At present, the funds received are used for the most part to cover immediate costs. The state is still an institution which, by distributing the dwindling flow of funds to the population and paying salaries to numerous officials of various ranks, satisfies its social obligations and meets current social needs. Such a compact between the state and society is a legacy of the Soviet period and suits both the ruling elite and the overwhelming majority of citizens. But as a result, the ’s share of the funds available to the country is not invested in development and does not produce a return. 88

Undoubtedly, the state must fulfill its social obligations. The problem is that given the current situation, the aggregate flow of money does not enable it to fulfill those obligations adequately. There are not sufficient funds for the social infrastructure, such as the large-scale construction and operation of modern facilities in healthcare, education, science, and culture, despite the fact that the population of Armenia is gradually decreasing.

Armenia was among the leading republics of the Soviet Union in terms of research and development. However, after gaining independence, we did not provide the conditions needed for this work to continue productively. Many specialists were forced to leave the country. As a result, our scientific and technical development, with rare exceptions, came to a halt. In this respect Armenia remains at the level of the second half of the 20th century and is even regressing. The brain drain, which we will discuss in the next chapter, is depriving us of the most valuable and hard-to-replace national asset. Science cannot move ahead solely thanks to international aid or irregular charitable donations from the Diaspora. It requires considerable investment on the basis of long-term planning, not allocation of funds according to the principle of ‘whatever is left in the budget.’ Moreover, in the era of globalization, science cannot progress in isolation. It needs full integration into the scientific institutions of the world.

A valuable part of the Soviet heritage was culture. In the post-war years, the pre- revolution cultural figures who survived Stalin’s purges formed the basis of a new cultural elite whose ranks were swelled by the returning emigrants invited to Armenia by the Soviet government and the Armenian Apostolic Church. However, when we became independent but no longer had access to external sources of funding, we lost a sizeable part of the national cultural heritage with astonishing speed. In the extractive system, culture, like science, is given ‘whatever is left in the budget.’

Against the Current Despite the prevalence of extractive institutions, entrepreneurial projects that create added value and focus on innovative development are being implemented in the country. The majority of these projects are designed with the participation of diasporan Armenians. The most successful of them are inclusive in nature, combining the experience, knowledge, and professional skills of local and diasporan Armenians. These projects afford an opportunity to incorporate the best scientific and technological achievements of the day and thus at times result in innovative breakthroughs.

Creative destruction

This idea, expounded by Joseph Schumpeter, presupposes constant development and growth of the market economy on the basis of healthy competition, the fostering of innovations, and natural displacement of outdated technologies, infrastructure, business and management models, as well as a redistribution of resources in favor of companies that use a more productive approach. The Present: Independent Armenia (1991–2018) 89

According to the institutional theory of the prosperity of nations, inclusive institutions favor creative destruction and, as a consequence, they facilitate a sustainable long-term increase in prosperity. On the other hand, extractive institutions allow innovations only on a limited scale because their beneficiaries, who own the main assets, worry that creative destruction will destabilize the existing political system. The growth that such institutions can achieve quite quickly reaches its natural upper limit.

Today, it would seem that two different Armenias exist. In one, remarkably innovative projects are being implemented, by bodies such as the TUMO Center for Creative Technologies, the Ayb School, the American University of Armenia and UWC Dilijan in the education sector; by Zvartnots International Airport and the Tufenkian chain of hotels in the tourism industry; by Progresstech, Instigate Design, PicsArt and Synopsys in the advanced technologies sector; by Zorah Wines and Go Green Armenia in the agriculture sector; by the Armenia Tree Project in the field of environmental protection, etc. The other Armenia is a country that does not promote creative activities but relies on extraction of unearned wealth. The main type of tax revenue in the Armenian state budget is not a tax on company profits but value-added tax and income tax, which account for about 80% of revenue. However, where the tax revenue generated by business as a share of the state budget is relatively small, the conclusion is grim: businesses either do not progress or do not pay tax. Therefore, the economy of such a country does not possess the resources required for a breakthrough in development.

The above-mentioned ‘islets’ of creative innovation are clearly insufficient for a change in the overall paradigm. At present, people with entrepreneurial drive are being squeezed out of the country, and if they decide not to leave, they have to work under highly unfavorable conditions, facing a profound lack of understanding or even opposition on the part of various levels of the state apparatus.

The Extractive System and National Security Let us consider the two main aspects of security, i.e. defense and demographics. In the past ten years, annual defense expenditure in Armenia accounted for 14 to 16% of the state budget (Fig. 13). That allows the country to repel Azerbaijan’s aggressive actions along the whole length of the border and in Artsakh. However, fighting capacity and the availability of military equipment should not be determined solely by the share of the state budget allocated to defense. We need a level of defense capability that will deter anyone from even contemplating an attack on our borders. Can the extractive model existing today provide such a level? In our view, it cannot.

Rather than indulging in idle speculation, let us refer to comparable data on Israel and South Korea. Like Armenia, those countries are located in areas of tension created by hostile neighbors. In relative terms, defense spending is higher in Armenia than in those two countries (according to the data for 2016, it comprises 15.5% of all state expenditures in Armenia, whereas in Israel and South Korea it is 14.1% and 12.5% respectively). However, in absolute terms, Armenia’s defense spending is much smaller. Thanks to its economic model, Israel succeeded in increasing defense spending annually over the ten years 2006 to 2016, 90

even though it decreased in relative terms. Defense spending by South Korea over the same time period also increased in absolute terms, while in relative terms it remained constant. In 2016, Israel’s defense expenditure was USD18 billion, and that of South Korea USD37 billion, while Armenia’s defense expenditure was USD431 million (Figs. 12 and 13). Per capita defense spending in 2016 was USD148 in Armenia, while in Israel and South Korea it was USD2,194 and USD729 respectively.

At present, the country is unable to accumulate the funds needed to create an innovative defense capability that would deter any attempt to use military force against Armenia and Artsakh. This means that aggression will continue, along with the consequent fatalities among our soldiers and civilians on Armenia’s borders.

Ninety years ago, addressing Armenian intellectuals, Garegin Nzhdeh, a hero of the Armenian national liberation movement, wrote about the vulnerability of Armenia: “… One glance at the map will suffice to show what awaits us. All the strategically important positions of tiny Armenia have been seized. She is surrounded by our eternal enemy. This encirclement has been carried out with the obvious intention of eliminating all Armenians within the shortest possible time and with the least possible casualties. Armenia is vulnerable at many different points. In just a few hours Turkey can break through our positions to separate the Armenian provinces from one another and to connect with Azerbaijan. The enemy is very determined to exterminate us…”73 Since then, nothing much has changed, unfortunately.

Military expenditure by country, in millions of US$ at current prices and exchange rates

Armenia Korea, South Azerbaijan Israel

$37,286 $36,433 $36,777 $34,354

$31,952 $30,992

$28,175 $27,726 $26,072 $25,177 $24,576

$22,160

$18,106 $17,977 $16,874 $16,764 $15,373 $14,742 $14,095 $13,979 $14,559 $11,995 $10,817 $11,443

$3,368 $3,427 $1,608 $1,473 $1,477 $3,080 $3,246 $3,021 $1,379 $305 $717 $947 $396 $280 $359 $395 $431 $141 $188 $391 $381 $445 $458 $447

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Fig.12. Defense expenditure, million US dollars

73 Garegin Nzhdeh, ‘Open letters to Armenian intellectuals’, (in Russian, translated from the Armenian), Aniv, No. 1 (4), (2006). http://aniv.ru/archive/30/otkrytye-pisma-armjanskoj-intelligentsiiperevod-s- armjanskogo-garegin-nzhde/ (accessed March 26, 2018). The Present: Independent Armenia (1991–2018) 91

Yet another extremely important aspect of security is the decline in population due to emigration. When the country survives by redistributing remittances from abroad in order to cover current social needs, emigration is profitable not only for the ruling elite but also, paradoxically, for the majority of citizens. The fewer the people who remain in Armenia and the more who leave and send money back home to their relatives, the less cash has to be found by government to meet its social obligations. Moreover, the citizens remaining in the country feel more confident and secure, relying more on the support provided by the family members who have left and less on the state.

Over several decades the country has been losing its most enterprising, educated, competitive, hardworking, and adventurous citizens. Whereas in the late 20th century it was the scientific and cultural elites who were leaving, at present it is the young people born in an independent Armenia who are going. According to official statistics, the population of Armenia in 2017 was 3,041,29074. At the same time, the opinion is often expressed that this indicator does not take labor migration into account and that the number of permanent residents is only about two million. Let us leave the question of exact numbers to the professionals and simply say that in any event the country’s small population, as compared to that of our immediate neighbors, poses a serious threat to the future of Armenia. Let us recall that at present the population of Georgia is 3.9 million, with 10.05 million in Azerbaijan, 81.3 million in Iran, 81.6 million in Turkey and 146.4 million in Russia.

Military expenditure by country as percentage of government spending

Armenia Korea, South Azerbaijan Israel

16.7% 16.9% 16.8% 16.4% 16.3% 15.9% 16.1% 16.0% 16.1% 15.7% 15.4% 15.5% 15.2% 14.7% 14.5% 15.3% 14.6% 14.6% 14.1% 14.6% 14.1% 13.9% 14.0% 14.1% 13.9% 13.2% 13.6% 12.8% 12.7% 12.8% 12.6% 12.5% 12.6% 12.5% 12.3% 13.0% 12.7% 12.1% 12.7% 12.6% 11.5% 11.9% 10.9%

10.1% 10.3% 9.9%

8.8% 8.9%

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Fig.13. Defense expenditure as a proportion of total state expenditures75

74 Here and hereinafter we use the population data published by the Population Division of the UN Department of Economic and Social Affairs. 75 The diagrams in Figs. 12 and 13 are based on data published by the Stockholm International Peace Research Institute (SIPRI). https://www.sipri.org/databases/milex (accessed March 27, 2018). 92

Armenia and Israel

The absolute numbers of the population are sobering, but even more worrying is a comparative analysis of the increase or decrease in population over a period of time. To illustrate this point let us consider data on Armenia and Israel from 1955 onward (Fig. 14). Such a comparison is justified because:

1. the formation of the independent state of Israel (in 1948) and the beginning of the remarkable economic recovery and development of the Armenian SSR in the aftermath of World War II virtually coincided in time;

2. both nations have an extended diaspora and are roughly comparable in terms of numerical strength: there are about 10 million Armenians and 16 million Jews in the world;

3. both states exist in a hostile environment.

Population Growth

Israel 8,323,248 Armenia 8,192,463 8,064,036 7,420,368

6,603,677 6,013,711 5,331,622

4,499,161 4,082,781 3,744,667 3,336,760 3,076,098 2,849,623 3,544,695 2,963,496 3,026,048 2,522,530 3,339,147 3,223,173 3,096,298 3,017,712 3,031,670 2,089,891 2,825,650 3,014,917 1,718,955 2,518,408 2,204,650 1,867,396 1,563,508

1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2016 2017

Fig.14: Dynamics of population growth in Armenia and Israel (1955–2017)76

The above diagram demonstrates that from 1955 to 1990 the population size of both states was roughly equal and the growth dynamics were similar. But for the events of the last 27 years, the population of Armenia today could have been about 6.5–7 million.

Not only the dwindling population but also its average age can serve as an indicator of the unsustainability of today’s model of existence. While average age values are roughly comparable in Armenia, Georgia, and Russia (34.6, 38.0 and 39.3 years respectively), in

76 The diagram is based on publications issued by the Population Division of the UN Department of Economic and Social Affairs. The Present: Independent Armenia (1991–2018) 93

countries such as Azerbaijan, Turkey, and Iran they are much lower (30.9 – 30.5 – 29.4 years respectively)77. The dwindling and ageing population limits development opportunities because the labor market comes up against a demographic limit. At the same time, state expenditure on social needs and pension payments increases. This makes the country less attractive to international development institutions, institutional investors and advanced donor states. When the migration outflow from Armenia reaches a critical threshold, we will be faced with the pressing issue of the security of our state and Artsakh. It is high time we all understood that in the event of the population falling below two million, and a low birth rate, we will once again be faced with the alarming problem of the nation’s physical survival.

Armenia’s leadership is aware of how profound the demographic crisis is and has set itself the task of increasing the country’s population to four million people by 2040. We welcome the adoption of state programs aimed at increasing the birth rate, stimulating repatriation, etc. However, at the same time we are convinced that sustainable incentives to meet the target of population growth cannot be provided while the dominant extractive institutions exist.

Access to Money and Monopolization of Power Any extractive model of existence presupposes control by a certain group of people over money. The main sources of money in our case are the state budget and international aid, including Russian aid. Less significant sources are customs duties imposed on imported goods, along with construction, the raw materials sector, gas, electric power generation and its infrastructure, and agriculture, not to mention the production of counterfeit goods and other unlawful activities. However, what matters is not a list of money flows butthe extractive nature of the entire monetary pyramid. It is only natural that individuals with access to that pyramid should wish to maintain and strengthen their control.

According to Acemoglu and Robinson’s institutional theory, extractive economic institutions are established and maintained by extractive political institutions and not vice versa. Inclusive economic institutions cannot exist where extractive political institutions dominate. Politics, the economy, and business are inseparable in such states. The main task of political institutions in countries with an extractive economy is control over and distribution of the flow of money and material assets. A necessary and sufficient condition for such a situation is the concentration of administrative resources, which provides fertile ground for corruption. Civil servants in an extractive system enrich themselves by making ‘appropriate’ decisions when distributing assets and public contracts, and by securing cushy jobs for ‘their own’ people. This practice creates dependency among employees, while international aid and grants are used extremely ineffectively because the continuity of money flows serves as the criterion of success, rather than economic and social development. In general, personal success is measured not by the level of education, hard work, professionalism, creativity and resourcefulness but by the ability to gain access to administrative resources and the money pyramid.

77 Data from the CIA World Factbook, accessed August 30–31, 2017. 94

As a result, the elite in present-day Armenia is for the most part concentrated around government positions that ensure a high social status and opportunities to secure jobs for friends and family, and/or to start one’s own business and protect it against attacks by regulatory bodies and law-enforcement agencies. When civil servants are dismissed, they lose their place in the elite and cease to be treated with reverence and servility. While having an adverse impact on public life, such a state of affairs is typical of all countries with extractive institutions. Armenia, alas, is no exception.

Multi-Party System and Social Structure The main problem is that the structure of power in today’s Armenia does not reflect the real diversity of the social structure. A sizeable group of the population finds it difficult to see where it belongs and cannot therefore support this or that political party. As a result, the interests of an active part of civil society are poorly represented in parliament. Political competition is replaced by competition for access to resources, and the groups in power are not infrequently clan-like.

As in other similar countries, civil society institutions in Armenia are not properly developed. Essentially, we do not see ourselves as full citizens of our own independent state, partly because in the Armenian SSR we were primarily Soviet citizens rather than citizens of Armenia. During the first years of independence, civil society institutions, including the mass media, were actively developing, but gradually they lost momentum. That development was not surprising: the more intensive the extractiveness and the stronger the centralization of power, the more likely are civil society institutions to be marginalized and to lose their relevance. Mature civic consciousness cannot develop in such conditions since people do not see themselves as owners of the state and do not regard the state as an institution that reconciles conflicting interests and serves the public good.

Monopolization of the Economy The concentration of assets in the hands of an oligarchic elite, and monopolization of the market, are inevitable consequences of the extractive system. The absence of competition results in lower quality of goods and services. The economy loses its export orientation and its competitiveness and has nothing valuable to offer to the world. Monopolies cultivate protectionism and closed markets and block creative destruction, seeing it as a threat to their existence.

Under these circumstances, meritocracy and respect for professionalism are out of the question. Employees are hired for the most part in accordance with the principle of ‘us and them,’ and the lack of incentives results in poor labor productivity, which is lower in Armenia than in other countries. While it is true that a sizeable part of the country’s population is engaged in agriculture, where productivity is naturally not that high, statistical data speak The Present: Independent Armenia (1991–2018) 95

for themselves: one Norwegian produces as much as ten Armenians, one American as much as eight, one Russian as much as three, and one Bulgarian as much as two Armenians78. Given such a low level of labor productivity, there is little prospect of economic development.

Institutionalization and Personalization When mature, functioning civil society institutions do not exist, the state operates in what might be called ‘manual control mode.’ The decision-making process has no institutional foundation, and we are faced with personalized micromanagement that has little to do with medium and long-term development objectives. The state apparatus depends on personal relations, its operations are far from efficient, and there are virtually no independent research centers to regularly monitor the social situation, analyze information, check how decisions are implemented, and offer expert assessment of quality. Without the smooth operation of such centers it is impossible to conduct a constructive dialogue between the ruling elites and society at large and to establish mechanisms for regular assessment of development results. It goes without saying that what cannot be measured, cannot be managed effectively.

Widespread violation of standards and regulations in various sectors of the economy (construction, agriculture, food processing, and mining industries), or a total lack of such standards, is the inevitable consequence of the refusal to establish an institutionalized approach to the decision-making process. Moreover, where regulations do exist, they are often well below what is considered acceptable in the developed world. What is left is purely a source of wealth, which is successfully extracted by administrators at various levels, not only by top civil servants but by any individual endowed with power. And this has a direct impact on the goods and services produced in the country or imported from abroad: low quality of air, drinking water, foodstuffs, drugs, housing, roads, education, healthcare, etc. It is a ticking time bomb that jeopardizes people’s health and well-being.

The approaches and practices of state institutions in present-day Armenia are of a selective rather than a systemic nature. For example, customs and VAT (value-added tax) exemptions granted by the government undoubtedly have a positive effect in terms of attracting direct investment. However, these measures should be based not on personal agreements with individual entrepreneurs but on understandable and transparent rules that are the same for all potential investors and take overall national interests into account.

Extractive institutions, as a rule, are aimed at securing new sources of income rather than at creating long-term incentives for entrepreneurship. For example, recent initiatives by the Armenian government to tax companies founded by diasporan Armenians, most of them from Russia, may be instrumental in increasing budget revenues in the short term but

78 The Conference Board, The Conference Board Total Economy Database – Output, labor, and labor productivity, 1950–2013 (January 2014). Eurostat, Labor productivity per hour worked (ESA95). https:// en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)_per_hour_worked (accessed November 20, 2018). 96

are essentially nothing more than another way of extracting wealth. They do not promote ‘creative destruction’ and do not encourage investment. Their only purpose is to strengthen traditional forms of business in order to spend the funds received, as usual, on current needs.

A telling example of the non-inclusive nature of Armenia’s political institutions is the mandatory requirement for those applying for positions of public responsibility to be citizens of the Republic of Armenia and/or to have many years’ experience in civil service and a knowledge of the Armenian language. High-ranking officials of the state should no doubt be nationals of the country but there should also be an awareness that three-fourths of the nation are in the Diaspora and that when we impose such limitations even at middle- management levels, we forgo an opportunity to attract the best minds to work for the benefit of the country.

Let us address the issue of corruption once again. It is a very sensitive issue. According to the Corruption Perceptions Index for 2017, Armenia is ranked 107th alongside Ethiopia, Macedonia, and Vietnam79. (According to the Index, countries with the lowest levels of corruption are New Zealand, Denmark, Finland, Norway, and Switzerland). In today’s Armenia, virtually everywhere we encounter so-called petty corruption, an inseparable part of the wealth-extraction system. Any civil servant endowed with some power, whether a low-level official, policeman, doctor or teacher, can demand an additional consideration for their services. Furthermore, not infrequently people are willing to offer ‘remuneration’ for the quick resolution of a problem or for a reduction in the penalty in the case of a misdemeanor. People have grown accustomed to this practice and it would seem that they ignore the fact that the rest of the world has gained extensive experience of how to combat corruption. In particular, our closest neighbor Georgia provides an example of a successful fight against this phenomenon, by improving the legal and statutory frameworks that regulate the functioning of the state apparatus, enhancing its transparency, and establishing an institutional framework for interactions between civil servants and the public. A much more difficult problem is posed by corruption at the highest level of government, which is grounded in the collusion between political, economic, and shadowy elites and infects state agencies, international organizations, and the courts. Such corruption exists not only in developing but also in developed countries, and it should be borne in mind that it is impossible to eliminate both types of corruption through laws alone or the efforts of the law enforcement agencies. By preserving a dominant extractive system, however, we will not be able to eliminate even petty corruption.

Selective Justice An extremely sensitive aspect of any model of societal existence is the system of justice, i.e. the written and unwritten laws which determine the norms of behavior in a given society, and the formal and informal institutions that ensure compliance with those laws. History provides examples of communities that successfully existed and progressed outside

79 The Corruption Perceptions Index is an annual survey conducted by Transparency International, the global coalition against corruption. The Index is used to rank countries by their perceived levels of public sector corruption according to experts and businesspeople. The full version of the Corruption Perceptions Index 2017 is accessible at https://www.transparency.org. The Present: Independent Armenia (1991–2018) 97

political institutions. However, a human community cannot exist without a judicial system, legal regulation, and generally accepted norms of behavior. For instance, the global network established by Armenian merchants from New Julfa functioned successfully outside the political institutions of the Safavid Empire but would not have been able to exist without its own commercial laws, the Assembly of Merchants and the institution of good reputation.

In the early 1990s, it was a popular notion in the Republic of Armenia, as well as in other post-Soviet states, that a multi-party system and universal suffrage would automatically ensure the supremacy of law and a fair court system. Unsparing efforts were made at that time to establish legal and regulatory frameworks for the new state. However, we hit two unexpected hurdles. Firstly, the formal codification of democratic principles of statehood and universal suffrage, and the existence of new legal and regulatory frameworks, do not in and of themselves bring about the supremacy of law in public life. Secondly, having to exist for centuries in countries without the rule of law had instilled in us a classic doublethink, i.e. the custom of living not by the Constitution but by unwritten laws.

In inclusive systems, the elite adopts laws in the knowledge that it is a part of society and will have to comply with them. In extractive systems, the elite adopts laws to curb public activism, while making exceptions for itself because it wishes to keep control over material and administrative resources. The problem, however, is not only the elite but society itself which, as we have already mentioned, is reproducing the traditional anomie at every level. Armenian citizens still see the state not as a shared home but as an institution of oppression, and the ability to cheat officials is still regarded as a virtue and proof of gumption.

Traditional Values The Republic of Armenia is one of the most monoethnic countries in the world since the main ethnic group comprises about 98% of the population. Over the last 27 years we have for the first time in the past seven centuries lived in a sovereign nation state. It is both a huge advantage and a drawback. In the past, Armenians were a bridge between civilizations, whereas now in their own country they not infrequently display a considerable lack of tolerance toward people of different culture, skin color, religion, or views. We are no longer used to living side by side with ‘others.’ We have become arrogant and, paradoxically, prone to discriminate against minorities. The existence of the Diaspora notwithstanding, today’s Armenia appears to be a country detached from the world and withdrawn into itself. We take little interest in what happens outside the country and we do not adopt the best foreign practices. We have lost broad-mindedness and traditional competitiveness in the global arena. Our extractive system has the solid support of ‘invisible institutions,’ and our cultural and behavioral stereotypes and restrictive attitudes are approved by the majority. They erode and distort our moral values and reinforce a vicious circle of extractiveness. At the same time, as Academician Dmitry Likhachov rightly notes, “Without morality, the social, economic, historical, and other laws which are fundamental to the well-being and self-awareness of humanity, will not take proper effect.”80

80 D. S. Likhachov, Reflections (in Russian) (Moscow, n.p. 1991). 98

We no longer value knowledge. Today, knowledge is replaced by diplomas and certificates. Our parents strove to give their children access to the best possible education, not infrequently sacrificing the material well-being of the family. In present-day Armenia, true knowledge is valued much less. Intelligent, educated people who possess critical thinking, and even simply polite and courteous people, no longer enjoy social respect. It is extremely difficult for them to achieve success in an atmosphere of criminal machismo, when any interaction boils down to asserting one’s own superiority in the eyes of other people rather than to trying to start a dialogue and to find a common solution to a problem. It should be recognized that today Armenia arouses neither admiration nor the desire to be associated with it. Armenia does not attract the attention of other countries and, furthermore, is not of interest to the Diaspora. Citizens continue to leave the country in their thousands. In our closed country, the level of ambition is not high and closely matches that of more ‘ordinary’ peripheral countries, of which there are more than a hundred in the world. While even in the recent past we could be proud of numerous remarkable individuals in science, culture, the economy, sport, etc., today, as a rule, we are content with ‘satisfactory’ results, happy with being average and mediocre. The only exception, perhaps, is chess. Among our contemporaries there are only a few members of the younger generation who have achieved success in life and who associate themselves with Armenia. The actress Kim Kardashian and, even more recently, the footballer are well-known in the West, and although their spheres of activity are different, each of them does much to popularize Armenia and the Armenian world. Nevertheless, there are only two of them at the present time.

We no longer value hard work and professionalism. Respect is given by society not to hard- working, enterprising individuals but to those who ‘do well for themselves.’ The paternalistic system nurtured the psychology of dependency in us, and although the state now shares some of its responsibilities with big corporations and oligarchs, basically little has changed. Most people, especially young people, seek either to become civil servants or to get a job in a state-owned or private corporation, reproducing their parents’ attitudes in the new situation. If a young person seeks fulfillment, the stifling atmosphere of the closed society forces him or her sooner or later to leave the country.

We no longer value professional reputation. In today’s Armenian society, a teacher, a doctor, or an expert in any field, is no longer regarded as a role model.

The Problem of the Elite The problem of the elite is closely related to the problem of role models in society. Unfortunately, in present-day Armenia, as in many other countries, membership of the elite is predicated on power and/or money but not on superior intellect, competencies, and moral qualities. While in the past, the aristocracy could boast of possessing both power, money, and education, the political and business elites no longer regard intellect, for the most part, as the key to success. Those with the power lack financial resources, the business elite with the resources lacks power, and the intellectual elite has neither power nor resources: individuals who have intellect, power, and money are rare exceptions. Moreover, the members of the various elites do not meaningfully interact with each other, do not ‘enrich’ each other, and in general the overall quality of the elites has gone noticeably down. As a rule, they do not discuss The Present: Independent Armenia (1991–2018) 99

together the burning issues of societal development. Nor do they plan for the future or realize their responsibility for the nation’s destiny. We will discuss in Chapter 5 the tangible positive effect which can be produced by bringing together various elites for the implementation of large-scale projects.

It is generally believed that the elite, together with the most active part of society, comprise about 2% of any given nation. In absolute terms there should therefore be about 60,000 such persons at present in Armenia and 200,000 in the entire Armenian world. We do not know whether that many exist, but judging by what we observe, outstanding personalities are scarce in the Armenian elite, which is not nationwide and does not fulfill the role traditionally ascribed by society to its best members. We have encountered a generation crisis. Today, there are far fewer outstanding individuals among Armenians of productive age (40–60 year-olds) who could become role models for their younger contemporaries.

There are obvious gaps in the cohesion of the various elites. Thus, on the day marking the centennial of the Armenian Genocide, the three living Presidents of Armenia did not stand together in Tsitsernakaberd to embody the unity of the country’s political leadership. On the other hand, both Catholicoses were present, which distinguished them favorably from the secular authorities and symbolized the nation’s unity in faith. It is very important that despite their internal disagreements and contradictions, the ruling elites should demonstrate solidarity, especially at such critical moments that bring the nation together.

Crisis of National Identity in Present-day Armenia IIn Chapter 2 we addressed the issue of erosion of national identity in the 20th century. In theory, the situation should have changed for the better in the independent monoethnic state. However, this is not happening. The emergence of the independent Armenian state has not consolidated Armenian ethnic sub-groups or strengthened national unity.

Armenian language. It must be acknowledged that over the past 27 years, the Armenian language has become the preferred language of communication between citizens of the country. This is certainly a positive result of sovereignty. Nevertheless, the level of language culture is declining. Language is becoming more primitive, less elegant, and is being contaminated by obscene and ‘filler’ words. Criminal jargon is invading the spoken language, the print media, TV and fiction, confirming the assertion that “it is at the turning points of history that many slang words enter the standard language.”81 One interesting phenomenon, albeit a sad one, is the spread of a self-conscious machismo, as we noted above. This manifests itself not just in behavior but also in the spoken language and in business communications.

81 M. Grachov, ‘Intervention of the underworld’s language,’ (in Russian), Science and Life, no. 4, (2009). https://www.nkj.ru/archive/articles/15574/ (accessed March 29, 2018). 100

We greatly value the activities undertaken by institutions, individual scholars, and educators to preserve and further develop the Armenian language, but we think it appropriate to remind our readers that the wealth and beauty of the mother tongue cannot be preserved through the efforts of specialists alone. The Armenian language is our common responsibility.

Faith and the Church. In an Armenian sovereign state the role of the Armenian Apostolic Church in regulating and maintaining a pattern of life based on family and clan is no longer relevant. Moreover, the Church can no longer function as a national spiritual center and a consolidating core because of the declining moral and intellectual standards of the clergy. Even though an overwhelming majority of the residents of Armenia consider themselves Christian82, only 11.3% of believers go to church at least once a week83. Unless the Church solves the problems accumulated during the 70 years of Sovietization, it can hardly expect to gain public trust. The presence of two Catholicoses in the Armenian Apostolic Church could be justified when Armenians did not have their own state. Today, however, this situation needs to be remedied since the lack of unity at the head of the Church reflects disunity in the Church as a whole.

Raising children in present-day Armenia

To illustrate a negative impact of the extractive system on our culture we will cite the findings of an analysis made as part of the World Values Survey84 (Fig. 15). The replies by respondents from five predominantly inclusive countries (Germany, Sweden, South Korea, Singapore, and Japan) and five predominantly extractive countries (Armenia, Georgia, Azerbaijan, Russia, and Turkey) were analyzed. Respondents were asked which qualities they believed it was important to instill in their children. The qualities listed were a feeling of responsibility, tolerance and respect for others, unselfishness, hard work, religious faith, obedience, independence, determination and perseverance, thrift, self-expression, and imagination.

Parents in all countries found a feeling of responsibility, tolerance and respect for others, and unselfishness to be equally important. In extractive counties, parents also attached considerably more importance to hard work, religious faith, and obedience. At the same time such qualities as independence, determination and perseverance, thrift, self-expression, and imagination were less important for them. Tolerance and respect for others, independence, determination and perseverance, thrift, self-expression, and imagination were less important for Armenian parents not only in comparison with parents from inclusive countries but also with our neighbors from extractive countries.

82 According to the 2011 Census data, out of 2.987 million people who have a religious affiliation, 2.796 million consider themselves affiliated with the Armenian Apostolic Church. 83 According to the World Values Survey data. 84 World Values Survey. http://www.worldvaluessurvey.org/WVSOnline.jsp (accessed April 2, 2018). The Present: Independent Armenia (1991–2018) 101

The Survey findings carry a disturbing message for all of us. Who do we want to pass on our country to? To responsible and obedient workaholics or critically thinking, independent, determined, and persevering young people who have imagination and the ability to express themselves? The World Values Survey data demonstrate that we are raising children who conform with the templates of our imperial past. These children will not be prepared to adequately address the challenges of the current era that we shall discuss in Chapter 4.

Qualities important in children

Extractive countries Inclusive countries Armenia

90.0

81.9 80.0 79.6 70.0

60.0 56.3 50.0

40.0 38.1 32.8 30.0 28.0 28.5 24.1 24.2 19.7 20.0

10.0 6.1 – Feeling of Unselfishness Hard work Obedience Independence Thrift saving Imagination responsibility money & things Tolerance Religious faith Determination, & Respect for others perseverance Self-expression

Fig. 15. Qualities that residents of different countries find important to instill in children85

Family and community. It is unfortunate that in today’s Armenia women’s workload exceeds that of men, while at the same time women remain disempowered and downtrodden. In the past 27 years the role of men in Armenia has changed dramatically. They feel uncertain about the future, and are concerned lest they should lose their social status and their role of providing for a family. Not infrequently therefore, they experience frustration, which at times is externalized through compensatory aggression and intolerance.

Despondency and apathy prevail in the country. The most determined and energetic citizens are leaving Armenia. These people are prepared to take a risk so that their children have the chance of a better future, even if far from their homeland. One of the most serious problems in today’s Armenia is a loss of faith in the ability of the country to look after its citizens’ well-being. The level of mutual trust in society is also falling, and the attitude of many Armenians can be described by the well-known Gulag maxim: “Trust no one, fear no one, ask no one!” And all this despite the fact that at some point trust was our unique advantage. Thanks to this quality, Armenians were able to establish a global network. In the words of Confucius, a prerequisite for the success of any nation and any state is a functioning family,

85 The diagram is drawn up on the basis of the World Values Survey. 102

the existence of values, traditions and a rules system, and a leader with noble and elevated goals. In our view, this list should also include a broad circle of trust involving many members of the society and a long-term horizon for planning, which is carried out by a competent government.

***

An extractive system relies on the extraction of income from material assets. It is quite attractive for ruling elites and is widespread throughout the world. However, unlike Kuwait or Qatar, it is highly unlikely that Armenia will strike gold and become a prosperous country as a result. At the same time, the very negative role of extractive institutions, which erode the economic and legal system and undermine science and culture, pushes citizens to emigrate and infects society with pessimism and distrust. We have described above its pernicious effect on the life of society and the nation.

In the past year and a half, some cosmetic attempts have been made to bring about change. New individuals have come to the corridors of power, and foreign policy activities have been energized. However, the situation essentially remains the same because both the government and the overwhelming majority of the general public seem broadly content with it. Faith in the possibility of concluding a new social contract and of moving to a partnership between society at large and the elite is gradually waning. However much we may criticize the existing system, we have to admit the unpleasant truth: that we ourselves support and reproduce this system from generation to generation. The time has come to understand that the main asset in the present and in the future is and will be human beings. Armenia will only create and retain productive human beings if it offers opportunities for self-realization, quality education and healthcare, and a healthy and comfortable environment. If we continue to mark time, we will inevitably face defeat in the international competition for this most valuable asset of the 21st century.

Effects of Retaining the Extractive System

According to the authors of the institutional theory, economic growth is possible within the confines of extractive institutions. However, it will not be sustainable because the establishment controlling the extractive institutions only allows a limited number of groups to profit, at the expense of society at large. That makes political power desirable and sooner or later leads to destabilization. In an extractive model, economic growth further stratifies society into rich and poor. In comparison with other countries that have a similar level of development, the Gini coefficient in Armenia is not that high, but it is constantly increasing, showing that inequality is steadily rising86.

86 According to World Bank data, the Gini coefficient that measures inequality in income distribution has been growing annually in Armenia at an average rate of 1.5% (29.6% in 2009 and 32.4% in 2015). The Present: Independent Armenia (1991–2018) 103

As the so-called Arab Spring demonstrated, no good can come of such a tendency. In the Arab world a similar situation had been observed for a long time, namely the irremovability of an ageing elite, large-scale corruption, and a high level of youth unemployment, while the literacy level was relatively high. The combination of all those factors led to the social upheavals which started in the late 2010s and are still going on. The results of sociological surveys conducted in Armenia in the past ten years also indicate that the number of citizens displeased with corruption and injustice has been growing.

Potential partners of the state

The survey Armenians in Armenia and in the Diaspora was conducted in 2003 and 2013 (Figs. 16 and 17). Comparison of the findings leads to a sad conclusion. Over ten years, there was a sharp decline in the number of people interested in forming partnerships with the state and in helping its economic development. There is a marked loss of trust in the authorities.

Disappointed capitalists have lost hope that Armenia’s problems can be solved. They think that the public sector should not be predominant in the economy, but at the same time they do not believe that the private sector is capable of making the necessary transformation.

Complacent optimists do not have definite views on economic and social issues. These people are simply proud of being Armenians.

Corruption fighters are confident that corruption and bureaucracy are the main problems that impede Armenia’s development.

Industrious extras believe that the public sector should be predominant in the domestic economy and they do not see corruption and bureaucracy as serious threats.

Confident partners have an optimistic view of the future and are open to change. They consider the private sector sufficiently competent and regard the state as a reliable and valuable partner. These individuals comprise the main group with whom the state could cooperate. The problem is that over a ten-year period their proportion within society plummeted from 30% to 2%. 104

low Level of State intervention high

0,9 high 0,8 30%

0,7 Confident 11% partners

Disappointed capitalists Level of trust Level 0,6 20% 23% 16% 0,5 low Complacent Industrious optimists Curruption extras fighters

0,4 4,0 4,5 5,0 5,5 6,0 6,5

Fig. 16. Portrait of society in Armenia – 2003. Source: Armenians in Armenia and in the Diaspora. Aslan Global, 2003 (in Russian)

low Level of State intervention high

0,9 high 0,8 2%

Confident partners

0,7 22%

Disappointed capitalists Level of trust Level 0,6 30% 3% 43%

Complacent Industrious 0,5 optimists low extras

Curruption fighters 0,4 4,0 4,5 5,0 5,5 6,0 6,5

Fig. 17. Portrait of society in Armenia – 2013 Source: Caucasus Barometer. CRRC, 2013.

Today’s Armenia is similar to a superheated steam boiler. All attempts to maintain the status quo by resorting to brute force have only a short-term effect and merely enhance the overall discontent. Sooner or later the boiler will explode and the consequences of the explosion will be unpredictable and, in the worst-case scenario, disastrous. Such a social explosion may be sparked by anything, an Armenian family in Gyumri being shot and killed by a Russian military serviceman perhaps, by higher utilities costs, by a build-up of frustration over the The Present: Independent Armenia (1991–2018) 105

unresolved Artsakh conflict and the deaths of our soldiers and civilians at the borders, etc. However, the underlying reason is much more profound. And the instinct for self-preservation should prompt us to look jointly for mechanisms that allow the pent-up steam to escape.

Political competition and legal opposition should serve as a safety valve. There are individuals in the ruling elite who clearly understand that, but they are a minority since the prevailing tendency is toward monopolistic control over political institutions, turning legal opposition into a dependent and manipulated claque. Under these circumstances, it can be expected that the existing radical terrorist movements will be strengthened and new ones will emerge and, as the recent example of the Sasna Tsrer group demonstrates, legitimate opposition groups will go beyond the legal framework. One cannot predict when a ‘black swan’87 may turn up in Armenia. One thing is clear: going with the flow will inevitably result in disaster, and hostile outside forces will immediately take advantage of the consequences.

Among the many external risks are the likelihood of a full-scale war with Azerbaijan, a change in Russia’s stance on Azerbaijan (e.g. arms deals or an attempt to reach an agreement with Azerbaijan behind Armenia’s back at the latter’s expense), the unpredictability of Russian-Turkish relations, and the possibility of a new state, Kurdistan, emerging on the world map. Sadly, we still remain a pawn rather than a player in geopolitical developments, and our position in the explosive region is still extremely vulnerable.

Preservation of an extractive system is always fraught with the danger of a violent coup accompanied by a large number of casualties, but without delivering the desired changes. It is evident from history that attempts to replace an elite only aggravate the problem, and the country ends up in a worse situation. In such instances, what actually happens is that a small group tries to seize control of the limited resources available, while the system, though sometimes undergoing superficial changes, remains intact.

An example of reproduction of an extractive system

The Russian Empire was a classic example of an extractive system that served the interests of the aristocracy. Relative resilience and stability were maintained in the state until the emergence of an industrial bourgeoisie during the Industrial Revolution. This social class gradually undermined the system by demanding reforms, in other words, greater inclusion, and some of its members supported radical revolutionary organizations. The ruling elite did not wish to expand political representation, and over a period of several decades tried to stay in power through the use of force. Pressure in the social steam boiler was constantly building up. The shot fired in Sarajevo that started World War I was merely one of the ‘black swan’ events which precipitated the collapse of the

87 A well-known theory proposed by Nassim Taleb in his book The black swan: The impact of the highly improbable. It focuses on those events that are difficult to predict, are unexpected and have significant consequences. 106

system. It is pointless to accuse Germany and other states of destabilizing Russia. They merely took advantage of the situation in order to resolve their own problems, but they were not the source of the problems that had accumulated in Russia. The root cause of the catastrophe that occurred was the unwillingness of the Establishment to adapt to the changing structure of society and to broaden social inclusion. As a result, a new, Bolshevik Establishment came to power, which reproduced the former imperial model in a crueler form, while assigning the role of the elite to its party nomenklatura.

The extractive system is dangerous also because it perpetuates rigid behavioral stereotypes. Paternalism on the part of the authorities accustoms citizens to dependency, to the avoidance of personal responsibility and to a belief in an omnipotent Center that can secure access to resources. As a result, approval is given to those politicians who promise to increase the flow of money from abroad and to guarantee ‘stability’ and the satisfaction of social needs. In the system that has taken shape over 27 years, the existence of such a ‘benevolent baron’ is a fiction that suits both society at large and the Establishment. In consequence, a change in the ruling elite, whether through democratic elections or a coup d’état, will not lead to the elimination of the extractive system. A new social contract is needed between the powers that be and the general public, a contract which is based on shared views of the nation’s future and lays the groundwork for a transition to inclusive institutions.

Theory of ignorance

In Chapter 1 we reviewed three theories that can be used to explain the prosperity of nations, geographical, cultural, and institutional. There is also a fourth theory: that of ignorance. It can conveniently be discussed using the examples of two states, Singapore and Zimbabwe, which in the mid-20th century had similar starting positions. Why did Singapore make a phenomenal breakthrough, while Zimbabwe experienced an obvious decline in the second half of the 20th century? Was Lee Kuan Yew better educated than Robert Mugabe? Or did he rely on advisers who had better expertise? As Acemoglu and Robinson point out, the theory of ignorance explains the poverty of some countries by the fact that in the past their economists and ruling elites followed flawed recommendations and then were unable to rectify the misguided policies that led to the faulty operation of their market mechanisms, whereas enlightened leaders of rich countries were able to pursue effective policies that corrected the failures of those mechanisms. The authors of the institutional theory disagree. The key to Singapore’s success was not, they argue, the level of Lee Kuan Yew’s education but his awareness of the need to build inclusive political institutions which contributed to sustainable economic growth, and his ability to find like-minded partners. Mugabe strove only to preserve his personal power and to increase his wealth through profiteering, building a political system that fitted those goals. As a result, over a 50-year period, the population of Singapore, where there are no The Present: Independent Armenia (1991–2018) 107

natural resources, increased fourfold, the GDP 195-fold and GDP per capita 54-fold. The population of Zimbabwe over the same period of time increased 4.3-fold, GDP 15-fold and GDP per capita 3.6-fold.

We cannot sit and wait for a Lee Kuan Yew with an Armenian . Besides, no leader, however talented, should assume sole responsibility for the destiny of the country and the nation. It is a backbreaking burden. It should also be borne in mind that in the absence of inclusive institutions, unlimited power can lead to a cult of personality.

It should be stressed once again: changing the ruling Establishment does not change the extractive nature of the system. This simple truth was expressed with remarkable precision by Evgeny Schwarz in his play The Dragon, written in the early 1940s. The Burgomaster discovers that power falls into his hands when the dragon is slaughtered, and states categorically: “Everything that the dragon was brazenly appropriating is now in the best possible hands. That is, mine. And partially Heinrich’s. Which is absolutely proper.” The successor of the defeated dragon becomes a dragon himself, at times even more insatiable than his predecessor. Only the person who can overcome the dragon within him/herself can truly kill the dragon. In our situation, the key to change is to move toward inclusiveness and to establish institutions that will preserve and promote it. To kill one’s own dragon means to overcome one’s fear of those changes.

What Motivates Us and What Are We Afraid of?

People may sometimes act out of less than desirable motives, such as a craving for power, greed, or the quest for pleasure. We would certainly not like our nation, or its elite, to be motivated by such sentiments. They do not bring about sustainable well-being, and in any case they entail moral degradation.

Undoubtedly, love is the most powerful productive motivation. “Poor, unarmed people remove kings from thrones out of love for their fellows. Out of love for their homeland, soldiers defy death, which flees without looking back. Wise men rise into the heavens and plunge into hell out of love for the truth,” says another character in Schwarz’s play The Ordinary Miracle. But fear, the opposite sentiment, is a no less powerful motivating force. Sometimes fear forces people to marshal all their strength and to accomplish more than they would in ordinary life. But the effect of such actions is short-lived. Besides, fear has another side as well: it can paralyze, it can give rise to a wish to hide and to lie low in the hope that the danger will pass of its own accord. Sometimes fear becomes a source of spite and prevents a person from pragmatically analyzing the situation and finding a satisfactory solution.

Every person feels some fear. We fear the misfortune that our friends and family may suffer, we fear losing our accumulated material possessions and social status, and finding ourselves living on the sidelines. We fear losing the proverbial bird in the hand. We fear 108

change and we fear making mistakes. As for Armenians, amot (shame) plagues each and every one of us. We fear appearing weak and asking for help even from people closest to us, to say nothing of strangers.

However, all our personal fears pale in comparison with fear of a more general, higher order. The authors of this discussion paper are petrified by the thought that Armenians may disappear as an ethnic unit. There is a strong likelihood of such a sad end as our Diaspora becomes assimilated, our culture fades, and our national identity is eroded. And the danger of physical extermination of Armenians is no less real than a hundred years ago since we still live in a region of geopolitical instability and have hostile states as our neighbors. It makes us shudder to think that we may lose our motherland and that we may lose Artsakh, in which case our long-suffering people will also lose their political sovereignty. It is frightening to imagine that at some point we will have to ask our children for forgiveness and to live with a sense of guilt toward future generations because we did not do all in our power to preserve our Armenian heritage and to ensure its continuity for the generations to come.

In 1985, when one of the authors was a first-year student at Moscow State University, a full member of the Russian Academy of Sciences, Abel Aganbegyan, who was at that time an advisor to Mikhail Gorbachev, gave a talk to students. He said, “We have set a huge pendulum swinging but we do not know whether we have chosen the right direction in which it is moving. If we have got it wrong, it may demolish all the load-bearing walls in our collective home.” He turned out to be amazingly prescient since the process triggered by perestroika (restructuring) demolished the load-bearing walls that held up the entire structure of the Soviet Union. Thirty years after the start of perestroika, the mistakes seem obvious. The bigger question, however, is what made the Soviet Communist party nomenklatura set the pendulum swinging? In April 1985, the Plenum of the Central Committee of the Communist Party of the Soviet Union, which set out the aims of accelerated development that led to perestroika and glasnost (openness/transparency), was not reacting to the discontent of the masses. At that time, the masses remained obediently silent. The reason for changing course was different. By the mid-1980s, some Communist Party bosses came to realize that the existing system was doomed, while the artificial prolongation of its agony posed the threat of an overall social catastrophe. This awareness of the scale of the systemic threat overcame the personal fears of the most progressive apparatchiks and forced them to initiate reforms. Let us note in passing that the reforms that Deng Xiaoping initiated in China, a country where the economy and culture had been devastated by the Cultural Revolution, broadened inclusion somewhat and proved rather more successful. However, the reforms were grounded in a similar awareness of systemic threats, which overcame the personal concerns of the leaders.

Compared with the existing systemic threat, the personal concerns of Armenians are inconsequential. Our present does not have a future. Today’s order of things poses a threat to the security of the country and the nation as a whole. This affects not only our grandchildren and great-grandchildren but our own immediate future as well, and the future of our children, who are beginning to come of age. At present, time is flying much faster than several decades ago. We have so far been merely prolonging the agony. Fear of leaving our personal comfort zone, of losing apparent existing stability, and of gaining nothing in return, pales in comparison The Present: Independent Armenia (1991–2018) 109

with the very real threat that we may lose our country tomorrow. Then Armenians will again have to wander and to suffer, complaining of their cruel destiny and accusing the rest of the world of injustice.

Alongside love for the homeland and fear of losing it, healthy ambition, taking pride in our own achievements, in our children’s successes, in our own cities, country and nation, in a word in everything that can inspire others’ respect, must become a powerful motivating factor. This pride has nothing to do with arrogance, with self-aggrandizement and belittlement of others. No one can delete from history the glorious pages of the Armenian past, but we have to admit that our present offers no cause for shared pride.

Artsakh: A source of fear or an object of pride?

Fear of losing Artsakh is a strong emotion that unites the Armenian people. However, frustrating though it is, the victory in the war for the independence of Artsakh has not become a source of national pride. Hostilities in Artsakh are not seen as a common cause. Furthermore, there is some discussion of the advisability of reaching a ‘deal’ on Artsakh which, it is argued, will attract significant financial aid and investment to Armenia. We believe that such a position is erroneous and extremely dangerous. The majority of Armenia’s residents have not been to Artsakh and have no idea what we were fighting for. For these people, victory in Artsakh is an abstract victory. Society is not aware that the Armenian army is the nation’s pride and the guarantor of its security. The children of the elite usually try to dodge the draft and are not subjected to public censure. Restoration of the cultural and spiritual heritage of Artsakh (and not only its Christian heritage) has not become a goal for the entire Armenian world. The Four-Day War in April 2016 clearly demonstrated the fragility of our accomplishments, our dependence on others, the vulnerability of the economic and military systems of Armenia, and our technological shortcomings. The incident was a wake-up call for us. Nonetheless, victory in Artsakh contradicts the victim complex embedded in our national psyche. Strange as it may be, seeing ourselves as winners rather than losers is very unusual for us.

We wish to be proud of our victories but we have yet to learn how to be victorious. Independent Armenia and Artsakh could become sources of pride, but that has not happened yet. Healthy ambition has not displaced personal fears and has not become a driver capable of uniting the nation. Nor have we fully appreciated the existence of the common threat. We are trying to allay our fears with fleeting pleasures, hiding our heads in the sand.

Compromise by the Elites

The mechanisms that usually transform a society as it evolves are well-known. They are: revolution, which is a radical, fundamental transformation of society and a complete break with its former state; repression, which relies on violence against sections of society and total intimidation; reform, which causes changes to the norms of society that are undertaken by 110

the elite out of necessity and do not affect the basis of the social order; and evolution, which entails a gradual change in the composition and state of a society and may either be beneficial or lead to a crisis. In the Soviet Union (and many people can still recall its realities) none of those mechanisms was instrumental in improving well-being. The revolution replaced the upper echelon of power with a new nomenklatura elite, who benefited by extracting an income from it. Repression helped the all-seeing Center to consolidate power and, at the cost of unconscionable human lives, to effect a major industrial breakthrough, although even this was unable to ensure sustainable, long-term prosperity. And the reforms introduced by Khrushchev (what we call today ‘the thaw’) and Kosigyn88 were a forced attempt by the rulers of the country, which had been severely crippled by World War II and a long period of Stalinism, to improve the living conditions of the population and thus to retain the power of the Center. However, those measures likewise did not create incentives for development but merely increased the gap between the nomenklatura and the rest of society, and stagnation during Brezhnev’s regime brought about the final demise of the system. The issue is not what mechanism of change is chosen, but whose interests are served by the change, and what goals are pursued.

Thus, we can see that neither revolution nor reform can guarantee prosperity for Armenia. As for evolution, maintaining the existing system in the hope of gradual change means at best an extremely slow process, to say nothing of the fact that this scenario has absolutely no future because of limited resources and an extremely vulnerable geopolitical situation. If we also exclude repression from our discussion, what mechanism should we select? Let us turn to the history of England.

The Glorious Revolution

England was the first nation to make the breakthrough and ensure sustained economic growth in the 17th century. Major economic changes in the English economy were preceded by drastic changes in political institutions, which after the Glorious Revolution of 1688 became much more inclusive than ever before. Expansion of political participation became the foundation for creating pluralism. If all those opposing the Stuart dynasty had had the same interests, deposing the Stuarts would have been similar to the victory of the House of Lancaster over the House of York in the Wars of the Roses, i.e. the ruling elite would have been changed but not the extractive system.

New political institutions were the result of a power struggle between various actors, who questioned each other’s legitimacy and initially attempted to establish institutions that favored themselves. The conflict that took place in the 16th–17th centuries culminated in two events: the Civil War (1642–1651) and the bloodless Glorious Revolution (1688), which limited the power of the king and his ministers and endowed the parliament with powers

88 Alexei Nikolayevich Kosygin (1904–1980), Soviet statesman, chairman of the Council of Ministers of the Soviet Union (1964–1980). The Present: Independent Armenia (1991–2018) 111

that allowed it to change the nature of the economy and of public life. A broad coalition in parliament expressed the wish of various groups in society to establish pluralistic political institutions that would reconcile economic and other interests. Parliament even had to consider petitions from social groups that were not represented in it, including the disenfranchised. It is just such a mechanism that can thwart attempts by any one group to establish an economic monopoly to the detriment of others.

After 1688, the system became much more inclusive and created conditions of relative equality in England. While in 1621 there were several hundred monopolies, in the aftermath of 1688 they were virtually abolished. The state established a system of institutions that stimulated investment, innovation, and trade. It firmly protected property rights, including rights to ideas through patents, which was crucially important for encouraging innovation. While maintaining law and order in the country, the state also extended the principles of English law to all citizens, an unprecedented development in English history. There was no more arbitrary imposition of new taxes.

The Glorious Revolution was thus instrumental in introducing the rule of law, and the ruling elite throughout the United Kingdom were far more constrained by this principle than they had expected. While the government was still able to pass draconian, repressive laws to the detriment of the majority of the population, it did not do so because it feared the return of authoritarian rule.

Source: Daron Acemoglu and James A. Robinson, Why nations fail: The origins of power, prosperity, and poverty (New York: Crown Publishing Group, 2012).

The British model of bloodless revolution is both a revolution and a reform at one and the same time and is clearly distinct from the revolutions that were carried out in the Russian Empire and the Soviet Union. It took place thanks to a general understanding that the legitimacy of the ruling elite in the eyes of the public is secured primarily by real political competition, and that a system in which some people constantly grow rich at the expense of others has to be changed. Opportunities therefore had to be created for a ‘rising tide that lifts all boats,’ without bloodshed or destabilization. The Glorious Revolution created a framework for continued reform of society through interaction between institutions rather than through confrontation between individuals. Such transformations help the general public to blow off steam and, in the interests of the majority, avert an undesirable course of events. The Glorious Revolution was a revolution in the collective consciousness and provided an impressive example of victory over the dragon.

We all wish to see Armenia prosper. We wish it to become a safe home which is able to provide shelter to any member of the dispersed nation. Even if reformed, today’s system will never make Armenia such a country. We need therefore to select an alternative model of existence which can ensure a prosperous existence for the nation in the 21st century. Let us repeat once again: we lost our political influence several centuries ago and since then we have been a pawn in the geopolitical games of the major world powers. In the past 27 years, the world community has regarded independent Armenia as peripheral, the least significant 112

of the three states in the South Caucasus. Armenia is less important than Georgia, which has become a strategic partner of developed countries, and than Azerbaijan, which holds large oil reserves. However, having signed the EU-Armenia Comprehensive and Enhanced Partnership Agreement in November 2017, Armenia has gained the real opportunity to engage as a full participant in the emerging triangle Brussels-Moscow-Tehran. Nor is that the only possible development scenario for our country. We will address this issue in Chapter 5.

***

We have presented our interpretation of the current situation and the existing risks. We will, in the near future, have to find answers to a number of important questions.What model of existence is dominant in today’s Armenia, and what development model is best for us in the 21st century? What is the interrelationship between political, economic, and so-called ‘invisible’ institutions, and how should it be taken into consideration in the discussion of our future? How can we ensure transparency, meritocratic principles, professionalism, and uniform rules for all in relations between non-governmental entities and institutions? What internal incentives (fear, pride, or other sentiments) can mobilize the nation and allow it to make a historic breakthrough? Can we transform ourselves from being a pawn of geopolitics into a full participant, or will we choose isolation and adaptation as the direction of our development?

Attempts to preserve the closed nature of Armenian society and the extractive system will inevitably result in further economic and political absorption of the country by stronger economies, marginalization in the world community, rising social inequality, increased tensions and eventually, probably, the loss of sovereignty, at least de facto if not de jure. In that event it is impossible to foresee a future for Artsakh.

Fortunately, we do not have the ‘curse of natural resources.’ We can pin our hopes only on individuals capable of producing original, innovative products. Human beings should become our most important development asset in the 21st century. But the most competitive, qualified, and adventurous citizens who have left the country in the past quarter century will not return to a closed country. The Diaspora that we currently use only as a donor is unlikely to change its attitude toward such an Armenia. Unless we succeed in attracting educated, talented, and active people, we will be faced with depopulation, which may have the most dire consequences, given the high birth rates in the neighboring countries. Without human resources of quality, Armenia will not be able to solve domestic political and economic problems and to make a breakthrough in the foreign policy arena.

We are convinced that Armenia must become an open country (we will deal with this issue in greater detail in Chapter 5). At the same time, we need a strong Armenia. And this need is not ours only. The Diaspora that is going through a serious crisis needs a prosperous Armenia every bit as much. We need together to find the optimal balance between network‘ nation’ and ‘strong country.’ In other words, there needs to be a restructuring of relations between, on the one side, the Armenian communities in the various countries and the Armenian Diaspora as a whole, and on the other, present-day Armenia. This will entail an intensive dialogue and a search for compromises. Our elites should be tasked with establishing The Present: Independent Armenia (1991–2018) 113

a substantive and productive interaction between sections of the dispersed nation, while at the same time overcoming Armenian individualism. The Diaspora will support Armenia for real only if Armenia supports the Diaspora.

For seven centuries Armenians lived with the dream of Ankakh Hayastan (Independent Armenia), of having their own state on the Biblical land, and of a safe and prosperous homeland for all Armenians. But even now this dream remains a dream which is far removed from reality. Independent Armenia has not become such a homeland. At present, it is merely one more Armenian community, with a constantly dwindling population at that. As it is, it cannot act as the central core, connecting and uniting the Armenian world. The country will only be able to fulfill this historic role properly if it offers the Diaspora a multilateral creative partnership, which will pave the way for a productive synthesis of isolated parts of the nation. Chapter 4 The World in the 21st Century: A New Reality

“Any kind of security that democracy and individuality can provide depends not on the prevention of inevitable contingencies and the vicissitudes of human destiny but on being aware of them and boldly countering their consequences.” Zygmunt Bauman89

The present-day world is going through a number of interrelated crises. Judging by the level of ongoing disruption, we live in are comparable to the period when early Christianity gained a stronghold in the Roman Empire (3rd–4th centuries), to the Industrial Revolution that changed the face of Western Europe (18th–19th centuries), or to the years of World War II and immediately after. A radical transformation of the world order is taking place before our eyes. But every crisis offers opportunities. And in this and the next chapter we aim to discover how the Armenians might use this unique opportunity to rethink their role and place in the world. We could go with the flow and ignore the chances we are given – though quite possibly this may be the last opportunity we are given as a nation to avoid further marginalization, assimilation, and loss of sovereignty. Alternatively, we could make a concerted effort to find the mechanisms and resources needed for national revival.

Dismantling of the Bipolar World and the Crisis of International Institutions

The 20th century was an era when three ideologies clashed: fascism, communism, and liberal democracy. With the end of the confrontation between the two superpowers, the world order, for which the groundwork had been laid in the aftermath of World War II, was shattered. Zygmunt Bauman calls the 21st century ‘liquid modernity,’ an epoch of total uncertainty, when ties were severed and structural instability increased90. Today, the familiar bipolar world belongs to history, while a clear and unambiguous vision of the future is yet to be formed. The ideological vacuum that remained after the dismantling of the bipolar world increases the overall volatility of the situation.

Relations between states have been transformed in the course of globalization. The borders that impede the movement of goods, capital, labor, and information are disappearing. There are virtually no countries that are entirely isolated from the political, economic, social, and cultural developments in the world. Everything is interconnected and interdependent in today’s world: changes in domestic policies in the USA and in the European Union, for example, influence the flow of financial aid to developing countries and hence affect their

89 Polish and British sociologist, researcher of contemporary society (1925–2017). 90 ‘Liquid’ is a favorite concept of Bauman, who often uses it in his latest works: Liquid modernity (2000), Liquid love: On the frailty of human bonds (2003), Liquid life (2005), Liquid fear (2006), and Liquid times: Living in an age of uncertainty (2006). In Bauman’s view, it is a state of constant movement, dissolution and overflow that precedes the emergence of a new reality. The World in the 21st Century: A New Reality 115

economic and social circumstances. At the same time, developments in military conflict zones (Afghanistan, Iraq, Syria, and Libya) directly impact on the situation in more prosperous regions. This has been clearly demonstrated by the migration crisis in Europe. Problems arise which no country can solve on its own, such as environmental disasters, influx of refugees, and terrorism.

The international institutions established after World War II (the UN, the World Bank, the International Bank for Reconstruction and Development, etc.) are not always capable of effectively responding to urgent challenges. They each work to too narrow an agenda and they are forced to operate through often unresponsive and corrupt governments. Moreover, the bureaucrats working in these organizations are frequently far removed from reality and have only a vague idea of what is going on in the countries they serve. Below we will review the role of international development institutions in greater detail. For now, let us add that the hopes that we placed in the transnational corporations and international non-commercial organizations which once seemed capable of addressing global challenges, are fading, and a large part of the responsibility has now shifted from institutions to individuals. We find ourselves largely unprepared to deal with the challenges of the 21st century.

Nation States in a Globalizing World

Present-day states are incapable of defending us adequately from emerging threats, not only global but also local. Generally speaking, developing countries, be it tiny Armenia or vast Russia, face the same difficulties, namely inefficient institutions and, consequently, a high degree of reliance on personalized decision-making, a predominance of bureaucracy and corruption, the absence of a long-term development program, and a lack of the investment needed to transform the economy. In such countries, state institutions and services are of inferior quality and frequently malfunction. In developed countries too, the state is frequently subject to criticism due to its inefficiencies. More than ever before, the state is outsourcing to the private sector the strategic industries which for decades were its undisputed monopoly. In 2006, for example, NASA concluded a contract with Elon Musk’s company SpaceX to deliver cargoes to the space station, thus giving up its monopoly on space exploration.

According to the eminent economist Klaus Schwab, President of the World Economic Forum in Davos, the world in the 21st century is moving to ‘talentism:’ the competitive edge is gained not so much by the ability to obtain capital as by the capacity to attract and nurture talent91. The main asset in the age of feudalism was land, then the paradigm shifted to money as capitalism gained dominance. Now it is human beings and their talents that have become the main asset. It is for this asset that countries and institutions are fiercely competing in the present-day world. Today, the author of a unique idea can attract the investment and personnel required to implement it on his or her own. It is no longer necessary to drill boreholes or build factories in order to be successful.

91 William Henry, ‘World changer: World Economic Forum’, The New Economy, December 13 (13.12.2011). https://www.theneweconomy.com/strategy/world-changer-world-economic-forum (accessed June 21, 2017). 116

As Schwab points out, the Fourth Industrial Revolution is changing the nation state’s modus operandi92: new technologies are increasing the influence that authorities and citizens have on each other. Through surveillance systems and the rapidly growing digital infrastructure, the ruling elites are gaining new tools of governance and control, while citizens are empowered as never before to collaborate with government, to express their opinions, to coordinate their efforts, and even to circumvent the surveillance systems used by the authorities. In the near future, governments will be under increased pressure to critically review the ways in which they address their citizens. New technologies will provide new mechanisms for redistribution and decentralization of power and decision-making. The future of the nation state will largely depend on its ability to successfully adapt to new conditions and to meet the requirements of transparency and efficiency.

Outdated models in the spheres of public and private administration that suited outdated means of production are historically doomed. Nevertheless, they still coexist with modern management models. Even today, some public institutions are run in a so-called ‘mafia’ or ‘military’ manner, relying on favoritism at court and personal loyalties, and there still persist some even more archaic arrangements that resemble ‘slave labor’ overseen by a ‘big boss.’ However, society is gradually rejecting such methods. More progressive models are coming to the fore, in which the paradigm ‘boss vs. subordinate’ is replaced by relations of a different type, more akin to a ‘family’ or ‘partnership.’ At the next stage, technological platforms can be expected to secure complete transparency of the decision-making process, and will create a new quality of interaction between people in what may be called ‘systemic chaos.’ Thus, even the most talented or intellectually superior boss will not have a complete overview, and will in turn be monitored by others through blockchains93. The decision-making process will be decentralized, and the relations between individuals will be determined by pre-set algorithms. Intermediaries such as public servants, travel agents, realtors, and other managers, will become redundant. Their functions will be algorithmized and optimized.

At present, the gaps between countries are widening, and can increasingly be explained by the dominant mode of production and the degree of modernization of the public administration system. Thus, Finland and Singapore, which do not have natural resources, are today in the forefront of the movement from capitalism to talentism. Investment in human development and the creation of a favorable environment (education, healthcare, environmental protection) account for a sizeable share of the state budget in those countries. They will inevitably be transformed, will ‘transition’ into cyberspace, and in due time will probably start using cutting-edge technological platforms such as blockchains to provide efficient and high-quality services to their citizens.

The majority of developing countries, including Armenia, are at the opposite end of the spectrum. A capitalist, and sometimes even a feudal, mode of production predominates.

92 Klaus Schwab, The fourth industrial revolution. (London, etc.: Penguin, 2017). 93 A blockchain is a growing list of records, called blocks, which are linked using cryptography. Each block contains a cryptographic hash of the previous block, a timestamp, and transaction data which allow for enhanced transparency. The World in the 21st Century: A New Reality 117

It is therefore no surprise that their public administration systems are not anthropocentric but state-centric. If these countries retain their outdated institutional design, they will, within the lifetime of the present generation, completely lose any chance of influencing world affairs.

Will Nation States Survive?

The nation state is a fairly recent phenomenon that emerged after the Napoleonic wars in Europe in the first half of the 19th century. It was preceded for centuries by various forms of collective, ranging from Ancient Greek city states to mighty empires and kingdoms. While the majority of political scientists believe that the present-day nation state system ensures the stability of the world order, there are others who question its future prospects. Those who share this view believe that the idea of state sovereignty limited to a specific territory is losing its influence, so that the very notion of a ‘nation’ is becoming blurred. The perception of the state as an institution that protects the interests of a nation and is based on territorial sovereignty, which was typical of the 20th century, is becoming obsolete in the new century. Indeed, at present, population mobility is increasing significantly, and so-called world citizens, who keep changing cities and countries of residence, are becoming commonplace. If a person was born in one country, has the citizenship of another country, and works in a third country, while his or her family lives in a fourth country, that person may have a hard time pledging allegiance to a given nation state and identifying with a specific cultural community.

The Swedish economist Kjell Nordström claims that the nation state will steadily lose its appeal and that 50 years hence, the roughly 200 countries that we know today will be transformed into around 600 city agglomerations somewhat reminiscent of the city states of Antiquity94. This transformation will be fueled by, among other things, the way we transmit and perceive information, advances in transportation and technology, and growing global migration.

Global Migration

In order to comprehend the new reality, we have to have a clear idea of the role that global migration plays in the world we live in. In 2015, according to UN Refugee Agency data, 65.3 million people were regarded as forcibly displaced persons. Of this number 40.8% were internally displaced and 24.5 million were cross-border displaced persons. In recent years, the media covering the crisis triggered by an influx of refugees from Middle Eastern and North African countries into Europe, have reinforced the negative view of migration and migrants in the public mind, which was already predisposed to believe entrenched stereotypes.

Indeed, isolationism and nationalism have taken root in broad segments of the general public. According to the 2017 Aurora Humanitarian Index, a majority of respondents agree that refugees deserve help, but only 37% would welcome refugees into their own country, while

94 Mike Sturm, ‘Kjell A. Nordström’s weird, wired world’, Nordic Business Report, March 3 (2017). https://www.nbforum.com/nbreport/kjell-nordstroms-weird-wired-world/ (accessed September 20, 2017). 118

42% feel their country has already taken in too many refugees95. Similarly, 34% of respondents agree that immigrants make their country a better place to live, yet one-third view migrants as a threat to their religious beliefs, and 44% feel their country is threatened by migrants. This figure rises significantly in the UK (56%), Kenya (56%), Turkey (55%) and France (54%)96. This pursuit of isolation is to a considerable extent boosted by terrorist acts in Europe, often committed by radical young citizens of EU countries who are second generation immigrants.

Global migration changes the existing cultural matrices and familiar lifestyle. For example, if the present-day rate of migration persists in the Netherlands, it is not unlikely that in 20 years Muslims will form a significant segment of the population of that country. These Muslims will be citizens of the Netherlands and will pursue patterns of behavior that are not as yet particularly widespread. The feeling of fear which is triggered by global migration gives rise to a desire to shield oneself from the influence of foreign cultures and in extreme cases may turn into aggressive xenophobia.

The information that we receive from the mass media does not enable us to assess the full significance of migration. We need to realize, firstly, that 247 million people, i.e. 3.4% of the global population and 2.5 times more than in 1960, currently live in a country other than the one in which they were born97. Secondly, 223 million of these (90%) migrated voluntarily, usually for economic reasons. Only 24 million (10%) migrated to escape conflict and political reprisals. Thirdly, when the so-called economic migrants move to countries with higher workforce productivity, they make a positive impact on global GDP. In 2015, their contribution in monetary terms was about USD 6.7 trillion, or 9.4% of global GDP. Had they continued to live and work in their countries of origin, their contribution would have been some USD 3 trillion less. Thus, contrary to long-entrenched perceptions, economic migrants on the whole make a positive economic contribution to the countries that are their new homes by using their knowledge and skills in entrepreneurship and innovation. Moreover, the widespread opinion that locals lose jobs to migrants is not supported by academic research. We should rather say that migrants free up natives for higher-value work. And fourthly, migrants change the demographic composition of countries, lowering the median age of the population. This, in its turn, has a positive impact on macroeconomic indices.

It is generally believed that migrants from developing countries only seek to move to developed countries. This is not quite true. At present, many migrants move to neighboring countries or to other countries in the same region. While 119.5 million of today’s economic

95 This Index is compiled annually by the Aurora Humanitarian Initiative. It is a special survey that examines public perceptions of major humanitarian issues (and is presented in greater detail in Chapter 5). For the 2017 Aurora Humanitarian Index, 6,466 individuals in 12 countries were surveyed. The survey was conducted by the Kantar public company and the results were interpreted by the Université Libre de Bruxelles. 96 The 2017 Aurora Humanitarian Index. https://auroraprize.com/ru/aurora/article/humanitarian_ index/10840/-2017/2017 (accessed September 6, 2017). 97 See: Jonathan Woetzel, Anu Madgavkar, et al., Global migration’s impact and opportunity (New York: McKinsey Global Institute, 2016). http://www.mckinsey.com/global-themes/employment-and-growth/ global-migrations-impact-and-opportunity (accessed September 6, 2017). The World in the 21st Century: A New Reality 119

migrants moved from developing to developed countries, some 79.6 million preferred to move from one developing country to another. In addition, contrary to the stereotypical view prevalent in the late 20th century, present-day migration flows do not run principally along a South-North or East-West axis. This is evident from the table below98.

Number Main migration flows of people (millions)

1 From developing countries of Eastern Europe and Central Asia to other developing 22.9 countries in those regions

2 From developing Latin American countries to North America 22.1

3 From Sub-Saharan African countries to other developing countries in the region 15.0

4 From Western European countries to other countries in the region 12.1

5 From Middle Eastern and North African countries to other countries in those regions 10.1

6 From developing countries in Eastern Europe and Central Asia to Western Europe 10.0

7 From Middle Eastern and North African countries to Western Europe 9.7

8 From India to Gulf countries 8.2

9 From South Asia (excluding India) to Gulf countries 7.2

The motives behind the movement of voluntary migrants, who predominate in the global flow, are diverse. There are three main types of migration:

1. Economic migration from from developing countries, such as Armenia, to developed countries (USA, France) or to another developing country (Russia). The main reason for migration is people’s desire to secure higher living standards and stable living conditions for themselves and their families.

2. The brain drain is accounted for primarily by people’s desire for self-realization. This category of migrants is composed of qualified specialists who wish to live and work among people like themselves. They move to places where there are many educated individuals, i.e. centers of research, innovation and entrepreneurship such as Silicon

98 The data are for the year 2015. See: Jonathan Woetzel, Anu Madgavkar, et al., op. cit. 120

Valley in California. The example of Switzerland is interesting. For decades, the country was a global financial center, but in recent years it has attracted outstanding specialists in high-tech fields from various countries, and has made a quantum leap in that domain.

3. Migration of capital is driven by the desire of well-to-do people to find the most favorable tax regime or to find a country with a more attractive investment climate. Not infrequently we hear of yet another notable public figure from the world of business or culture who has decided to change country of residence. Quite often it is older people who leave their homeland because for some reason they wish to spend the rest of their lives in another country. Numerically this category of migrants is insignificant, but such movements lead to a concentration of capital in the countries of destination, which undoubtedly has a positive effect on the economy of those countries.

These migration flows are creating new clusters of intellectual power and capital. As a result, we can observe a major shift of centers of civilizational development from the developed countries of Western Europe and North America to Singapore, South Korea, Switzerland, Finland, and some others.

A Crisis of Trust

During public speeches, one of the authors of this discussion paper often puts the following question to the audience: How many people and institutions do you trust? The responses indicate that a person’s circle of trusted individuals may be quite large, while the number of trusted institutions is much smaller, generally no more than three. In recent years, the level of trust in institutions has been declining dramatically. It is becoming a serious social and economic problem because distrust automatically increases transaction costs, reduces the effectiveness of decision-making and has an adverse impact on our willingness to undertake risks and, as a consequence, to make progress.

In 2017, public trust in four key institutions in 27 countries – government, business, NGOs, and the media – was the lowest since 201299. These findings are in direct correlation with a growing feeling of fear in society, with an awareness of the unfairness of current societal arrangements, with a loss of confidence in the future, and with a loss of hope in a change for the better. The overwhelming majority of respondents do not believe that these institutions operate for their benefit. That being so, the apprehension arising from globalization, the spread of innovations that are changing the labor market, and the erosion of traditional values and established behavior norms, is leading to the growth of populist movements observed in Western countries. We live in a society of total distrust. Maximizing the circle of trust is the key to the stable development of society and the groundwork for the future. It is also directly relevant to the implementation of long-term projects with a planning horizon of 20–30 years.

99 According to the data of the Trust Barometer, an international study of the level of trust, which is conducted annually by the Edelman Company (in 2017 the research covered 28 countries). See: 2017 Edelman Trust Barometer. http://www.edelman.com/trust2017/ (accessed June 21, 2017). The World in the 21st Century: A New Reality 121

At present, we observe a growing discrepancy between the number of ‘friends’ we choose to connect with through trusted social networks, and the number of people and institutions that enjoy our trust in the real world. These social platforms are increasingly used not only for information exchange but also as means of bringing people together and enabling them to act in unison, bypassing traditional institutions. New technologies afford unprecedented transparency, and that also contributes to increasing trust. The loss of trust in familiar institutions will in consequence be accompanied by a growth in trust in individuals and in networks which unite people. We believe that technological platforms for networking and interaction will become an instrument for expressing trust and establishing reputability.

The Technological Revolution and its Impact

The new revolution which is currently taking place is bringing about major changes not only in technologies but also in economic, political, social, and educational spheres. Space and time are both being condensed. Transportation networks span the entire world and make it possible to travel around the world not in 80 days, as in Jules Verne’s novel, but in less than 80 hours. Information technologies are evolving alongside society: the more complex the latter, the faster and easier communication and interaction between people become. Today we can contact other people instantly, wherever they may be, provided they have access to the internet. Mechanisms for providing and maintaining ties between people are being transformed rapidly. According to Pew Research Center data, the number of friends of an average Facebook user exceeds 200100, which is greater than the Dunbar number – the limit to the number of people with whom one can maintain stable social relationships.

Present-day technologies are changing the nature of infrastructure, markets, and commodities, the structure of business, and the organization of production. Three Industrial Revolutions mechanized mass production and finally automated it. The Fourth Revolution is expected to bring about a transition from basic digitization to the mass introduction of systems based on a synthesis of various technologies. In the industrial society, infrastructure was physical: machine-tools, factories, bridges, and roads. In the post-industrial economy, a new page in the history of automation and control systems is being written by the emergence of cellular networks and an increase in computation capacity.

Let us briefly summarize the ideas expressed by Tim Urban in his well-known article The AI Revolution: The Road to Superintelligence101. In 1993, sci-fi writer and professor of mathematics Vernor Vinge applied the term ‘singularity’ to the turning point in history when artificial intelligence will exceed human intelligence. Artificial Intelligence (AI) can be divided into three categories: Weak Artificial Intelligence that specializes in one given field; Strong Artificial Intelligence, which is a human-level AI that has the ability to learn

100 ‘6 new facts about Facebook’, Pew Research Center, February 3 (2014). http://www.pewresearch.org/fact- tank/2014/02/03/6-new-facts-about-facebook/ (accessed April 26, 2017). 101 Tim Urban, The AI revolution: The road to superintelligence. Part 1 (2015). https://waitbutwhy. com/2015/01/artificial-intelligence-revolution-1.html; Part 2: https://waitbutwhy.com/2015/01/ artificial-intelligence-revolution-2.html (accessed September 20, 2017). 122

from experience; and Artificial Superintelligence, which exceeds human cognitive abilities. The revolution in the sphere of Artificial Intelligence is the road from weak to strong AI and then to superintelligence. Discussions are being held on the timeframe of the emergence of second and third-degree AI. Most experts believe that human-level AI will become a reality in 15–20 years102. As regards control of AI by humans, a leading thinker in this field, Nick Bostrom, distinguishes four possible approaches. Tool AI only executes its program; Oracle AI is capable of recognizing speech and answering questions (probably a system will be created eventually that understands not only words but also intentions); Genie AI carries out a high- level command and even guesses the wishes of the human who gives the command; and finally, Sovereign AI acts autonomously toward a given goal, and once the system has been activated, it will not be possible to stop or redirect it.

For several decades, the inventor and futurist Ray Kurzweil has been regarded as an authority on AI. In scientific circles there is no uniform attitude toward his projections, but 80% of his predictions have materialized. Kurzweil claims that by 2029 we will create human- level AI, and by 2045, artificial superintelligence, whereupon the speed of technological progress will approximate to the infinite and we will start living in a totally different world. Like Vinge, Kurzweil also calls that moment a singularity103. In his opinion, a decisive breakthrough in 2045 will be brought about by three simultaneously occurring revolutions, in biotechnologies, nanotechnologies and, especially, AI. Many scientists consider Kurzweil’s predictions exaggerated but given the rapid development of weak AI systems in the past 15 years, a growing number of experts tend to agree with him.

The predictions of futurists produce a surreal picture, and many people feel the urge to shut themselves off from it. It is quite possible that AI will appear during our lifetime, but it is hard to foresee what type of Artificial Intelligence will be subsequently created and to what extent it will be safe and controllable. However, when discussing the future of the nation and the country, we cannot ignore the rapid development of the latest technologies. In all likelihood, some communities, whether they are countries or agglomerations, will indeed make an unprecedented breakthrough in the 21st century. Others may be left behind and become objects of ‘technological colonialism’ and then, possibly, will forever lose the opportunity of participating in the global development of civilization.

Disappearance of Familiar Occupations and Increase in Inequality

While the Fourth Industrial Revolution, like the three previous ones, may improve the overall quality of our lives, at the same time, as economists Erik Brynjolfsson and Andrew

102 V.C. Müller and N. Bostrom, ‘Future progress in Artificial Intelligence: A survey of expert opinion.’ In Fundamental issues of Artificial Intelligence, ed. V. C. Müller. (Synthese Library Studies in Epistemology, Logic, Methodology, and Philosophy of Science), Vol. 376, (2016). Cf. James Barrat, Our Final Invention: Artificial Intelligence and the end of the human era (New York: Thomas Dunne, 2013). 103 Ray Kurzweil, The singularity is near: When humans transcend biology (London etc.: Penguin, 2006). The World in the 21st Century: A New Reality 123

McAfee emphasize, it will exacerbate inequality104. Robots and AI systems are ideal implementers of algorithmized procedures. Digitization and robotization are transforming labor markets, and it is expected that many of the present-day occupations which can be algorithmized will disappear. According to a Bank of America report, by 2025 robots will perform 45% of production tasks in the US (the current figure is 10%)105. The disappearance of familiar occupations as a result of scientific and technological progress is not a new phenomenon. It was observed time and again in relatively recent history. For example, in the late 19th century, hundreds of lamplighters were employed in Saint-Petersburg to service street kerosene and gas lamps. With the arrival of electricity, they were found to be no longer necessary, and in the 1930s the city was completely equipped with electric lighting.

Just as lamplighters and telephone operators disappeared at some point in time, many other familiar occupations will be a thing of the past. The spread of fully self-driving vehicles clearly threatens the occupations of car, truck, and taxicab drivers. New AI systems will appear with the ability to imitate the operations of financial analysts and to compile business news that is no worse than that prepared by professional reporters. According to CNN Money, occupations in the fields of production, data processing, and administration are at risk. Improvements in machine learning, and speech and facial recognition technologies, will result in robots replacing humans even in occupations that require human interaction. In 2016, researchers from the Oxford Martin School concluded that there is a 90 percent likelihood that by 2035, human resources functions such as recruitment and administration will be completely automated. Of course, at the same time new occupations will appear, thereby requiring retraining and requalification.

The liquid modernity that Bauman writes about inevitably increases social tensions. People are concerned about their future and the future of their children. During the entire 20th century the middle class was the basis for the development and prosperity of the liberal democracies. However, today it is the middle class that is particularly worried by the changes triggered by the Fourth Industrial Revolution. At the same time, it is accepted that humans will continue to play a major role even in this new situation because many aspects of team work cannot in principle be algorithmized and digitized. In the ‘humanless economy’, people will have to learn to solve the intellectual problems that cannot be algorithmized. Consequently, those occupations that require intuition, empathy, and social interaction, will be held in high esteem. Creative thinking and the ability to make non-standard decisions and to analyze information flows, turning the knowledge acquired into an end-product, will offer a competitive advantage.

104 Erik Brynjolfson, Andrew McAfee, and Michael Spence, ‘New world order: Labor, capital, and ideas in the power law economy’, Foreign Affairs (July/August 2015). https://www.foreignaffairs.com/articles/united- states/2014-06-04/new-world-order (accessed August 28, 2017). 105 Ivana Kottasova, ‘Smart robots could soon steal your job’, CNN Money, January 15 (2016). http://money. .com/2016/01/15/news/economy/smart-robots-stealing-jobs-davos/index.html (accessed August 28, 2017). 124

Crisis of Global Education

Thus, many existing occupations, the so-called retiree occupations, may soon disappear. They will be replaced by new ones, for instance by network communicators. Such specialists are tasked with establishing communication between various groups of people, helping them to understand each other and interact successfully. This occupation requires advanced cognitive and managerial skills, and a broad cognitive horizon. It is not improbable that, just as in the Roman Empire in its period of decline, in the near future 2% of the planet’s population will be engaged in creative activities, while about 20% will provide services to them one way or another. One cannot but pause to reflect on the fate of the remaining 80% who will have no place in the labor market once their functions are performed by robots. While in the past it took at least 30 years for a new occupation to appear, at present the list grows every two to three years. Today we do not know the names of the occupations that will appear in the 2030s. This uncertainty is exacerbated by the fact that no one can predict what knowledge and skills may be in demand in the near future. The World Economic Forum in Davos regularly undertakes research to identify the competencies in highest demand. A comparison of the results for 2015 and the forecasts for 2020 demonstrates how rapidly transformations are taking place (Fig. 18).

Top 10 skills

In 2020 In 2015

1. Complex Problem Solving 1. Complex Problem Solving 2. Critical Thinking 2. Coordinating with Others 3. Creativity 3. People Management 4. People Management 4. Critical Thinking 5. Coordinating with Others 5. Negotiation 6. Emotional Intelligence 6. Quality Control 7. Judgment and Decision Making 7. Service Orientation 8. Service Orientation 8. Judgment and Decision Making 9. Negotiation 9. Active Listening 10. Cognitive Flexibility 10. Creativity

Fig. 18: Ten competencies in highest demand in 2015 and 2020.106

The existing system of education is grounded in the principle of long-term planning. However, in the era of uncertainty, people face increasing difficulty in drawing up long-term plans for their educational and professional growth. It is not just that new occupations are emerging and the requirements for professional competencies are being transformed

106 World Economic Forum, Future of Jobs Report (2016). http://reports.weforum.org/future-of-jobs-2016/ (accessed February 9, 2018). The World in the 21st Century: A New Reality 125

accordingly. Skills also need to be acquired much faster. In the near future, the education system will have to respond very quickly to changing demand, not providing training for specialists over a five-year period or longer, as it did before, but within five months. Even now, global education can no longer respond adequately to the challenges brought about by the diversity and complexity of the new era, but still insists on imposing outdated educational methods on young generations whose mentality is drastically different.

On the one hand, education is a large modern industry in which growing demand constantly outstrips supply. Today, the value of the global education market exceeds five trillion US dollars, eight times that of the software market and three times that of the media and entertainment market. On the other hand, education is in serious crisis. Sustainable models that can provide an adequate level of education to the huge number of students (in other words, to combine qualitative with quantitative indices) have yet to be found. The prestige and respect educators enjoyed in the past has been declining everywhere, along with the quality of educational administration and the productivity of labor. The commercialization of education has not solved the problem and does not guarantee the presence of qualified educators and motivated students in educational institutions. Not infrequently, such institutions sell diplomas rather than knowledge. In 2015, the Organization for Economic Co-operation and Development conducted a survey of the quality of school education, involving 540,000 15–16-year-old students in 72 countries. It found that every fifth teenager performed below the basic level107. Students in Singapore showed the best results, followed by Japan, Estonia, Finland, and Canada.

Another important aspect of the problem should be mentioned: in any country, education is an inseparable part of state policy, and will remain so as long as the state exists. A contradiction therefore arises: unlike businesses, the state is not an institution that creates added value. However, representatives of the business sector, with the exception of super-rich persons such as Bill Gates, Mark Zuckerberg, etc., do not draw up the educational agenda. Nor do the consumers of education. They merely have the opportunity to choose from the educational products on offer. This situation is yet another source of the contemporary crisis in the education industry.

The education system also fails to meet urgent needs because it continues to focus on narrow specialization. Today, when even the most specialized information is accessible and can easily be found, we are becoming increasingly aware that it is not so much narrow specialization that is required but versatility and the ability to cross the dividing lines between occupations and branches of knowledge. For example, a good biologist now also needs to be a bioengineer and a psychologist in order to compete. A rigid division between specialists in the humanities and specialists in technological fields is now superfluous and may even be counterproductive. The world has become so complicated that a specialist is first of all

107 Organization for Economic Co-operation and Development (OECD), PISA 2015 Results in Focus (2016). http://www.oecd.org/pisa/pisa-2015-results-in-focus.pdf (accessed August 28, 2017). 126

required to see a given situation in its multidimensionality and its entirety, to determine where major gaps appear between the old and the emerging new, and to eradicate these gaps by means of a comprehensive approach.

Increasing Life Expectancy

The results of the progress in the medical sciences in the 20th century, which until recently only benefitted the rich, have now become almost universally accessible. According to WHO108 data published in 2014, life expectancy is on the rise. The Organization estimates that a girl born in 2012 can expect to live to around 73 years, and a boy to the age of 68. That is six years longer than the average global life expectancy for a child born in 1990109. Moreover, Dr. Margaret Chan, WHO Director-General (2007–2017), states that people in high-income countries continue to have a good chance of living longer. The longest life expectancy for women is in Japan (87 years), Spain, Switzerland, and Singapore, while the longest life expectancy for males is in Iceland, Switzerland, and Australia (80 years or more). Even in Armenia and Russia, life expectancy for women is 78 and 76 years and for men 72 and 65 years respectively. Life expectancy has in fact increased so much that former age boundaries have shifted: “Oh, à propos: Larin’s a dear, simple old lady,” says Eugene Onegin about Tatyana and Olga’s mother who, according to some opinions, is a 36-year-old. The criteria of adulthood have changed too. Not so long ago, it was generally believed that the criteria were marriage, the birth of children, financial independence, and living away from parents. Up to the second half of the 20th century, a person started adult life quite early. While in the 1970s, young women in Russia married on average at the age of 20.8 years and young men at the age of 23.2 years, in 2008, the average age was 26.2 and 28.0 years respectively110. Todays’ millennials (the cohort of individuals born after 1981) consider making a career to be more important than starting a family, especially because the latest technologies in reproductive medicine allow them not to rush to have children. More and more frequently, the search for an occupation lasts for a long time, pushing back the moment of reaching adulthood. Furthermore, an occupation selected in youth may be changed more than once, and given the disappearance of some occupations and the emergence of others, this trend will increase in the future.

In the coming years there will inevitably be a growing demand in the labor market for older employees. The number of retirees who are capable of working is growing fast, with their overall number on the planet exceeding one billion. However, no more than 40% of the working population, and only 5% of retirees, opt for retraining or attend further education institutions111. In the era of a knowledge economy that requires constant professional development, it is therefore the middle-aged and older-age individuals who will become the

108 World Health Organization. 109 World Health Organization, World Health Statistics 2014. Large gains in life expectancy, World Health Organization, news release, May 15, (2014). http://www.who.int/mediacentre/news/releases/2014/ world-health-statistics-2014/en/ (accessed August 28, 2017). 110 N.N. Tolstykh, ‘Present-day maturation’, Psyjournals.ru, no. 4 (2015). http://psyjournals.ru/files/79933/ kpip_2015_n4_tolstykh.pdf (accessed September 15, 2017). 111 D. Konanchuk, ‘A lifelong lesson’, (in Russian). http://hbr-russia.ru/innovatsii/trendy/a18851/ (accessed August 28, 2017). The World in the 21st Century: A New Reality 127

new consumers of education. The existing education system is aimed largely at individuals in the 15–30 age bracket, but increasing life expectancy and changing skills requirements call for lifelong education. The establishment of new programs for students in their middle years (30–55) and older (55+) is an objective for the next two decades, and there are grounds to believe that advanced countries will attain it.

For the first time in human history we have lived for over 70 years without a pandemic or a world war. In other words, for the first time in many centuries the world population is not decreasing because of armed conflicts, natural disasters or pandemics. At the same time, many countries in the world face serious demographic problems. As in many European countries, the birth rate in Russia is low, the population is ageing, and it is not replacing itself. In China, the one family one child policy was instrumental in ensuring impressive economic results but will soon lead to a growing number of older persons having no one to take care of them. The overall dependency ratio, the ratio of the overall number of children and aged persons (under 15 and over 65 years of age) to those of labor force age (from 15 to 64), has on average been declining in the world. While in the mid-1960s, it was almost 76%, in 2013 it was only 52%. The declining birth rate has played a decisive role. However, in the coming decades the demographic burden will inevitably increase due to rising life expectancy and the growing number of the elderly. According to forecasts, by 2030 the dependency ratio will reach 54%; subsequently, its increase will accelerate, and by the end of the century it will reach 66%. In developed countries the situation is more worrisome. By 2020, the dependency ratio may increase to 56%, and by the year 2050 reach 76%. In developing countries it will exceed 56% by 2050112.

Are we ready for the overall ageing of humanity? A growing dependency ratio will have a serious impact on social security mechanisms, in particular on pension systems which are funded by taxes collected from the working population. Some experts believe that the traditional pension system will disappear by the mid-21st century. People will therefore have to remain in the labor market for as long as possible, taking charge of their own savings and investing money in their own education and healthcare. The need to transform pension systems will force governments to make unpopular decisions that may provoke a social upheaval or cause a serious political crisis.

Amounts of Public Debt

We somehow survived the world financial crisis of 2008 by pouring public funds into global financial institutions. The world, however, will go on experiencing financial crises, and those who shape the global financial system will benefit from them. Among the negative effects will be the movement of financial assets from financial peripheries to financial centers, exacerbating inequality. Already, the Western world has squandered the assets of

112 E. Shcherbakova, ‘The period of the lowest dependency ratio is over’, (in Russian), Demoscope.ru, (2016). http://demoscope.ru/weekly/2016/0709/barom03.php (accessed August 28, 2017). 128

future generations, namely the pension funds that were one of the most important sources of economic development. There is also a high probability that in the 21st century major assets will either change hands or be eliminated.

We cannot give an exact date for the next crisis, but it is clear that in the near future we will have to live through turbulence. The combined volume of the global economy today is about 70 trillion US dollars, while the amount of virtual money is many times larger, about 1.5 quadrillion. Governments will have to make very painful decisions, and the number of instruments that can be used to regulate the economy is limited. Some states that can print money are doing that non-stop. Others are trying to shift debt on to the next generation. Still others are looking for ways to obtain loans. All of this may lead to hyperinflation and bring about social upheavals or, even worse, to war as a last resort, allowing governments to write off accumulated debts.

Humans in the Era of Uncertainty

In the 21st century, which so far has seen tremendous technological, political, economic, social, demographic, and biological changes, human beings have therefore become the main asset and the principal driving force. More often than not, people have to make decisions on their own, relying less and less on familiar institutions. Individual responsibility is increasing, but people are not ready to shoulder it. They are not able to adequately respond to the demands of a world that is constantly growing more complex. While in the past, when people left education, they would enter an occupation that determined their journey through life, in today’s world such stability is an unaffordable luxury, and people have to acquire different types of knowledge and to improve their skills throughout their entire lifetime. Demands have been steadily increasing. The mechanistic ‘conveyor’ principle of the organization of labor is giving way to multidimensional, flexible activities and to the ability to solve complex problems, not only by oneself but also in a team. Notwithstanding all the positive aspects of this approach to education, there is a real danger that the new knowledge and skills acquired by individuals will turn out to be merely superficial. This entire situation puts tremendous pressure on people and instils fear in them.

Indeed, it is easier now to communicate through social networks than to establish real relations. Many of us share our emotions and opinions through social networks, not only with friends but also with strangers, and sometimes even details of our personal life. At the same time, we avoid frank discussion even with friends and family; we go out into the street wearing earphones, shutting ourselves off from others, and we look nervously at a passer-by who asks us a question. We live in an environment of collective individualism: during our meetings with friends we do not let go of our personal digital devices, burying our faces in smartphones. The social isolation phenomenon is obvious: in the comfort of the virtual world, people can allow themselves to behave aggressively, to be rude and to troll other users, and they are fearful of real life. And the more they are scared of reality, the more aggressively they behave in social networks. The World in the 21st Century: A New Reality 129

Today’s world is so complex and multidimensional that people try to simplify it, depicting it in black and white. Reducing infinite diversity to symbolic ‘likes’ and ‘dislikes’ is a reaction to increasing uncertainty. By striving to simplify a complex environment we devalue it. We are not willing to hear the truth if it does not coincide with our attitudes and our superficial perceptions of reality. A vast flow of information rushes past us but we merely cast a cursory glance at its surface. Thanks to the internet, we have access to all manner of information, but we do not make the effort to seek out what really matters. Instead, we flip through pictures and posts from random people, ‘killing time.’

We are thus easy prey for manipulation. Data technologies make us predictable. They monitor our preferences and offer us what they reckon we might like, so that many things never appear on our screen and our mental picture of the world becomes two-dimensional. Tools become smarter, while people become more stupid. The networks and algorithms ‘program’ our emotions, moods, assessments of current events, etc. Instances are known of psychosomatic disorders caused by dependency on social networks. In Belgrade, for example, a certain Snezana Pavlovic ended up in a psychiatric clinic when her Facebook post failed to arouse her friends’ interest. Doctors in the clinic named this case ‘Snezana Syndrome’ and explained the patient’s illness by her unmet need for social contacts.

Not infrequently we live with a sense that the present is simply a rough draft which we will be able to rewrite properly, and that real life is still ahead of us. Few people make rational plans for one, two or three years ahead. The majority would seem to put life on hold. In 2016, the Public Opinion Foundation conducted a survey of Russian citizens’ thoughts about their country’s future in 20 years’ time. Only 6% of respondents looked ten or more years ahead, and 20% three to five years. The planning horizon of 48% of respondents was less than a year, while 24% never stopped to think about the future113. Apparently, such perceptions are typical not only of Russians.

In an era of uncertainty, people find it difficult to define their identity. Religious affiliation and ideological beliefs are no longer unambiguous reference points. Failing to find answers to essential questions, people end up in a value vacuum which cannot be filled by the ‘mission’ of the commercial or non-governmental organization where they work. Ethnic and civic identity is also being eroded, and the feeling of belonging to a nuclear or extended family or community is becoming weaker. Whereas in the past, the notion of permissible, decent behavior, and of following tradition, was our ‘social navigator,’ today such notions are frequently questioned. We are not prepared for the fact that in this new world we have to make responsible decisions at our own risk. Family, religious institutions, corporations, political parties, state and international organizations cannot help us because they themselves are in crisis. As a result, each person tries one way or another, consciously or unconsciously, to overcome this confusion by seeking an acceptable way of coping with it. Some choose to integrate into a dominant model, some seek to find some form of acceptable compromise,

113 Public Opinion Foundation, ‘Russian citizens’ vision of their country’s future in 20 years’ time’, (in Russian), (2017). http://fom.ru/Budushchee/13169 (accessed March 16, 2018). 130

some choose what is called internal migration, some emigrate to another country in search of a better life, and some try to change the prevailing model by whatever means are available. However, none of these options provides protection from the paradoxes of modernity and the challenges that we face today.

It is for good reason that we have paid so much attention to these challenges. It is human beings that are at the center of our vision for the future of the Armenian nation. And the final chapter of this paper is devoted to that vision.

Courses and Models of Development in the 21st Century

In recent decades the rate of entropy has increased so much that it is impossible to make long-term linear predictions. A strategy is not a clearly drawn line but a carefully chosen development scenario that includes an in-depth analysis of its numerous potential divergences. When making strategic choices, we establish a portfolio of reforms and algorithms of behavior for use in unpredictable situations. In doing so, we should not be guided purely by our own assessments and preferences, and we should not blindly follow the recommendations of experts, however well-known and respected they may be. Moreover, reforms are only legitimized when they are based on a social contract. Let us repeat once again: our goal is to propose courses of development and possible scenarios and models in order to initiate a discussion that will help to create such a social contract.

Opportunities for the fruitful development of countries such as Armenia are not usually limited to one of the poles of such binary opposites as ‘globalization vs. localization’ or ‘cosmopolitanism vs. nationalism.’ They arise rather from a synthesis of the above. We will point out three possible courses of development, focusing on the merits and demerits of each. It might be helpful to bear in mind that a choice often has to be made not just by states and nations but also by corporations, not-for-profit organizations and, in some instances, individuals.

Isolation is an attempt to withdraw from global developments and is usually driven by fear of uncertainty. The country shuts itself off and stews in its own juice, amply seasoned with ethnocentric and/or quasi-religious tradition. An isolationist course is often characterized by ideological propaganda and, as a consequence, by a decline in the quality of decision-making. Limited resources are used ineffectively, while corruption increases. A doctrine of defense is prevalent in foreign policy, economic affairs, and public life. This choice can be justified in the short term because it allows a country to survive under conditions of uncertainty. But in the long term, it will be virtually impossible to exist within such a confined space. Sooner or later, the course of development will have to be changed.

Adaptability is the willingness to be an object of change, born of an awareness of one’s inability to affect global processes and of the need to go with the flow, adapting to existing trends. This course requires the pooling of all available resources in an attempt to address the country’s development problems, and it can ensure some progress in the short term. The World in the 21st Century: A New Reality 131

However, if the leading powers and international institutions are themselves incapable of solving global problems, the country will in time inevitably encounter the same global obstacles to its development.

‘Glocalization’ is a conscious choice to play an active part in change in order to solve global and local problems in concert with others. It is part of the process of economic, social, and cultural development characterized by the coexistence of opposing trends. Alongside integration into a global context (globalization), local and national identity is preserved, and may even become stronger, against all expectations, in a seemingly ‘reformatted’ form. This choice entails a search for new mechanisms of interaction and joint solutions. It requires the kind of networking mentioned earlier. In other words, in order to pursue this course of development, it is necessary to overcome fear and to enter into a dialogue not only with familiar counterparts but also with those who are harder to understand, alien, and at times hostile. In the short term, glocalization may question the traditional pillars of national identity. It can therefore be considered the most difficult course of action because it requires a serious revision of familiar behavior patterns. On the other hand, despite its complex and contradictory nature, this course of action is the most productive in the long term.

Below we will review the development models directly related to the above-mentioned courses of development. Any one of them can ensure at least medium-term, if not long- term, prosperity. The key question is, once this or that model has been selected, how it can be implemented most advantageously so as to benefit the nation at large. Using objective criteria, it is possible to say which models are most likely to be suited to which country. It should also be noted that several models may coexist, overlapping somewhat at any given time and in any given country, and that a variety of policy orientations may be combined in a country’s development path. Nevertheless, we find it sensible to identify five possible models and to offer relevant examples. All these models are to some degree artificial, as are the names that we have assigned to them.

Heavyweight This development model is followed by large, powerful states that play a significant role in international relations and have a major influence on the world at large. In some cases, they gravitate toward an imperial model, seeking to secure ideological influence and a global resource base. They may even indulge in territorial expansion, either through direct aggression or through the formation of alliances. The Soviet Union, which espoused a unique communist ideology, had the largest territory in the world, abundance of natural and human resources, and nuclear weapons. All that allowed the Soviet empire to exist for 70 years. Today, Iran is demonstrating imperial ambitions. It is difficult to predict the future, but at present there are grounds to believe that Iran may become a new empire with huge human and natural resources and its own religious ideology, Shi’ism, which also predominates in some neighboring states (Azerbaijan, Iraq) and is partly practiced in some others (Afghanistan, Turkey).

Still backwater This development model is associated with small countries that are not leading geopolitical actors and enables them to survive for a long time without the threat of destruction. 132

Countries such as Slovenia, Liechtenstein, El Salvador, etc., are to some extent integrated into the world community and engaged in global developments, but they play no major part. On the other hand, they are not as badly affected by global disasters as larger heavyweight countries.

Capsule By this we mean an isolated model that is minimally involved in global developments and is therefore less vulnerable to external disasters. In most such cases, Bhutan, for example, North Korea, or Turkmenistan, the isolation is a conscious choice made by the ruling elite and presupposes localization, archaization, etc., and often entails a high risk of losing sovereignty (as happened to Tibet). This does not mean that the model is bound to fail. It can be reasonably successful, if a country’s leaders can set up a reliable security system, attract the necessary resources on their own, and create a favorable environment that provides a disincentive for the population to emigrate.

Peripheral state Comprehensive integration into a larger state entails a partial or total surrender of sovereignty over certain aspects of foreign, domestic, economic, and cultural policy. The selection of this model raises two major questions for a country. Firstly, which ‘empire’ will be most beneficial for the development of the peripheral state? Secondly, how can the country become an advanced peripheral state rather than a backwater? Elites must pragmatically assess the advantages and drawbacks of each potential ‘empire.’ If they choose correctly, they ought to be able to extract the maximum advantage from a mutually beneficial exchange with the central power, avoiding being a backward province but being fully aware that the development of the periphery is not a priority for the center. In that case, the elites will achieve stable prosperity for their country, and their decision can be regarded as successful. We remember that the Armenian SSR used its status as a peripheral state within an empire for its own benefit, and that is not the only example in the history of our nation. Today, while remaining an inseparable part of the Russian Federation, the Chechen Republic uses a peripheral model quite successfully to guarantee its prosperity.

Hub As a rule, hub countries have a small territory, a small population, and modest armed forces. Nevertheless, their creative potential is immense, and they wield considerable influence in the world. These countries manage relatively quickly to acquire unique niche competencies that allow them to become significant players in the global community. They generally welcome other cultures, have a tolerant attitude toward members of non-titular ethnic groups, and create favorable conditions for the assimilation of minorities, at times jeopardizing the preservation of their own ethnic identity. Singapore, South Korea, Switzerland, Finland, etc. are sectoral or industrial hubs, their success being attributable primarily to their ability to develop competencies in carefully selected sectors of the economy and/or the public sphere. An important caveat is that it is not only countries that can be hubs, but also mega-cities (agglomerations). Silicon Valley in California is a technological hub, while New York is both The World in the 21st Century: A New Reality 133

a fashion hub and a financial hub, and these global hubs are interconnected: financial hubs (New York, Frankfurt, London, and Singapore) comprise a single system, as do international fashion hubs (Paris, London, , New York, and Hong Kong).

The key factors in the successful development of hubs are the identification of specific areas for breakthrough development, the ability to offer the world a set of unique competencies, the creation of regulations that are attractive regionally and/or globally, and the full mobilization of internal and external, material and non-material resources through networking.

The models that we have described in general terms are static, but countries sometimes change their course of development and move from one model to another. In the last ten years we have observed considerable changes of that kind. The United Kingdom conducted a nationwide referendum and decided to leave the European Union. In line with the decisions of their ruling elites, Russia and Turkey have pursued an isolationist course. At the same time, Switzerland is moving toward the European Union and somewhat losing its stance of neutrality, while Singapore and Hong Kong have enhanced their role as international hubs in the field of high technologies.

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Thus, today we are going through a series of tectonic changes. A new reality is emerging, in which global integration and growing interdependency are accompanied by loss of trust in traditional institutions. The technological revolution and waves of global migration are deepening the divides between states and communities. The world is moving from capitalism to talentism, whereas we, in Armenia, still preserve a feudal-capitalist extractive model and continue to rely on income from limited assets and resources, some of which are nearing exhaustion. The world is gradually relinquishing archaic governance systems, while we still cling to them, blocking social advances and abandoning meritocratic principles. Singapore and South Korea effected a dramatic breakthrough because they embarked at the right time on a course of integration into the global economy, science, and culture, while we continue to live in a closed country, trying to retain control over dwindling cash flows. While other countries are seeking to attract the best brains and investments, we are incapable of keeping the most talented and active citizens and are pushing them to emigrate. The world invests in innovative research and development, in the search for new educational and medical technologies, and in the creation of a healthy environment, whereas we spend our extremely limited means on current needs because the dominant extractive model does not enable us to attract the necessary investment or to develop new ideas – and the list of shortcomings could be continued. It is high time we understood and thought about the place of the Armenian nation in the new uncertain world and determined what actions will allow us to play an active rather than a passive role in the development of civilization. To that end we will have to find answers to a number of essential questions. How will modern technologies change the nature of relations between the ruling elites and society at large? How can they be made an instrument for social inclusion? How can serious investment be attracted to the country, and how can breakthrough development projects that 134

meet international standards of quality be initiated? How can the attitude toward education be changed, and how can people of varying age groups form the habit of lifelong learning and thus find a worthwhile place for themselves in a rapidly changing world?

Problems of International Development

The problems currently being experienced by Armenia are not unique. Not only Armenia but other countries as well need a new paradigm of sustainable development. A high Gross National Income (GNI) per capita cannot serve as the one and only indicator of well-being because average numbers do not reflect social inequality. However, it is this indicator that is traditionally used to compare levels of national development. According to World Bank data for the year 2016, only 77 out of 217 countries and territories where GNI per capita is above 12,235 US dollars can be regarded as economically developed114. The remaining 140 are categorized as developing countries. The situation in these countries needs to be improved; otherwise problems of inequality will remain, contributing to the tensions and destabilization that are generating endless economic migration.

GDP per capita (PPP, current $, 2016) Median 3.8% 16,000 Macedonia

14,000

12,000 Mongolia

Kosovo 10,000 Jordan Georgia Armenia El Salvador Bhutan 8,000 Eswatini

Cabo Verde Nicaragua 6,000 Lao PDR Median Honduras Moldova 5,540$ 4,000 Micronesia Kyrgyz Republic Vanuatu Lesotho Mauritania Tajikistan Sao Tome and 2,000 West Bank Principe and Gaza Solomon Kiribati Islands

0 0 1 2 3 4 5 6 7 8 GDP growth (CAGR 2012-2016, %)

Fig. 19: GDP per capita in countries similar to Armenia115

114 World Bank. List of countries by Gross National Income (GNI) per capita. Data as at July 1, 2016. https:// en.wikipedia.org/wiki/List_of_countries_by_GNI_(nominal,_Atlas_method)_per_capita (accessed February 26, 2018). 115 The diagram was created by the Charitable Foundation Initiatives for Development of Armenia (IDeA) on the basis of its own assessments. The World in the 21st Century: A New Reality 135

We have identified 25 countries that are similar to Armenia in population size, surface area and GDP per capita. Over the past 30 years these countries have experienced unsustainable (it would be better to say, illusory) development (Fig. 19).

The lion’s share of international aid to developing countries goes to the so-called lower middle-income group (1,006–3,995 US dollars), whereas countries (including Armenia) with incomes from 3,956 to 12,235 US dollars suffer from lack of resources for breakthrough development. These countries have a modest economy and their role in the world is small. They are almost unnoticeable. The mismatch between the investment needed for their development and expected profitability is so immense that these countries simply do not appear on the radar of international institutions and donor states, which prefer to implement such projects in larger countries. Usually, countries such as Armenia only attract attention when there is a tragic event such as a natural or man-made disaster or military action. The global community is then mobilized to provide aid, but like any such mobilization, these efforts are usually limited and aim merely to stabilize the situation. As recent decades have shown, the resources of international institutions are inadequate to propel such countries onto a trajectory of long-term sustainable development.

Sustainable Development Goals in the 21st Century In September 2000, the UN General Assembly adopted the Millennium Declaration116, which set out eight goals for global development117. Fifteen years later, some progress was noted in the implementation of these MDGs, but at the same time it was recognized118 that the program needed considerable expansion. In September 2015, the UN General Assembly therefore approved 17 Sustainable Development Goals (SDGs), which were to become benchmarks for the next fifteen years. The new goals are comprehensive and are intended to ensure a balance between the three components of sustainable development: economic, social, and environmental.

116 The UN Millennium Declaration. http://www.un.org/millennium/declaration/ares552e.htm (accessed June 23, 2017). 117 Millennium Development Goals. http://www.un.org/millenniumgoals/ (accessed June 23, 2017). 118 BRICS Business Magazine, (in Russian). https://www.bricsmagazine.com/ru/articles/perevorot- ustoychivosti (accessed June 23, 2017). 136

UN: 17 Sustainable Development Goals119:

1. End poverty in all its forms everywhere. 2. End hunger, achieve food security and improved nutrition and promote sustainable agriculture. 3. Ensure healthy lives and promote well-being for all at all ages. 4. Ensure inclusive and equitable quality education and promote lifelong learning opportunities for all. 5. Achieve gender equality and empower all women and girls. 6. Ensure availability and sustainable management of water and sanitation for all. 7. Ensure access to affordable, reliable, sustainable, and modern energy for all. 8. Promote sustained, inclusive and sustainable economic growth, full and productive employment, and decent work for all. 9. Build resilient infrastructure, promote inclusive and sustainable industrialization, and foster innovation. 10. Reduce inequality within and among countries. 11. Make cities and human settlements inclusive, safe, resilient, and sustainable. 12. Ensure sustainable consumption and production patterns. 13. Take urgent action to combat climate change and its impacts. 14. Conserve and sustainably use the oceans, seas, and marine resources for sustainable development. 15. Protect, restore, and promote sustainable use of terrestrial ecosystems, sustainably manage forests, combat desertification, and halt and reverse land degradation and halt biodiversity loss. 16. Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels. 17. Strengthen the means of implementation and revitalize the global partnership for sustainable development.

While achieving the Millennium Development Goals (MDGs) presupposed the spending of up to 400 billion US dollars annually, implementing the new program (SDGs), according to expert assessments, will need much larger funds, up to 3.9 trillion US dollars. At present, only 1.4 trillion US dollars are available, and it is impossible to make up the huge shortfall without attracting private capital. Below we will address the serious problems associated with that. But even if we assume that the required funds can be raised, traditional institutions will

119 Sustainable Development Goals. https://www.un.org/sustainabledevelopment/sustainable- development-goals/ (accessed June 23, 2017). The World in the 21st Century: A New Reality 137

face complex problems in undertaking and implementing truly efficient development programs. It is not enough to attract 3.9 trillion US dollars; they have to be adequately and productively deployed.

Drawbacks of Current International Institutions After World War II and the elimination of the colonial system, expenditure on development and humanitarian aid to developing countries began to take a significant share of state budgets in developed countries. Numerous international development organizations also appeared at that time. This is not the place for their detailed analysis. Let us merely note that in general they adopted similar approaches and methods.

In the early 21st century, the advisability of financial aid from developed countries is increasingly being questioned. Criticisms are also leveled at international institutions for making funding conditional on the Washington Consensus, which among other things requires developing countries to open up their markets to transnational corporations120. This means that a state in receipt of aid has to give up some control over its economy. Moreover, a significant portion of the funds is set aside to cover the costly services of consultants rather than the implementation of projects. The US-based international research and advisory organization Global Financial Integrity (GFI), which monitors illicit financial flows, and the Center for Applied Research at the Norwegian School of Economics, assessed as comprehensively as possible the financial and non-financial resources that are transferred annually between rich and poor countries121, and came to the conclusion that the inflow of financial resources from rich countries to poor ones does not compare to the plentiful capital flowing in the opposite direction. For every US dollar of aid that developing countries receive from the West, they lose 24 US dollars in net outflows. Summing up the results of the study, Jason Hickel, the author of an article in The Guardian, says, “Poor countries don’t need charity. They need justice.”122

At present, international institutions do not have sufficient quality control mechanisms for development projects, designing and implementing them on a turn-key basis. That explains the mismatch between the funding organizations and the implementing organizations on site. Not infrequently, corrupt governments of developing countries become ‘clients’ of international institutions: allocated funds are not properly used, ending up in the offshore accounts of corrupt officials, while the nation bears the burden of repaying loans for many years to come. For the leadership of international organizations, what matters is not so much the results of the implementation of projects that they fund as the ability to retain their place in

120 The Washington Consensus requires aid recipients to comply with ten recommendations including lowering of marginal tax rates, liberalization of foreign trade (primarily reduction of import duties), privatization, and deregulation of the economy. 121 The assessment covered the volume of financial aid, foreign investments, and trade flows, as well as the volume of annulled debts and unilateral private transfers (transfers sent by relatives to the homeland), and unrecorded capital outflows. 122 Jason Hickel, ‘Aid in reverse: how poor countries develop rich countries’, The Guardian, January 14, (2017). https://www.theguardian.com/global-development-professionals-network/2017/jan/14/aid-in- reverse-how-poor-countries-develop-rich-countries (accessed June 24, 2017). 138

the process of distributing funds for development. It is only recently that these organizations have started to revise their strategy. In general, contemporary global problems are still being addressed using approaches that evolved in the 20th century.

Other paradoxes of international development are also drawing attention. Interdependency between countries is constantly increasing in the context of globalization, for example, but at the same time nationalistic, isolationist tendencies are also on the rise. Developing countries’ need for funding is increasing, while real aid is decreasing because of changes in US and European Union domestic policies. The Trump administration has already declared its intention of reducing its contributions to the UN budget, and a similar adjustment of the European Union budget can be expected after Brexit.

We often hear of corruption scandals in international organizations caused by lack of transparency and control over their administration (FIFA is just one such case). The fact that those with the greatest wealth do not bequeath their multi-billion fortunes to the UN, which could use them to implement programs in sustainable development, is evidence of a low level of trust between the business sector, on the one hand, and state and supra-state organizations, on the other. The example of Warren Buffet, who transferred huge amounts of money to the Bill and Melinda Gates Foundation and to other private foundations, is particularly illustrative. Here lies another contradiction: funding by developed countries is decreasing and private capital is urgently needed, but mechanisms allowing traditional institutions and the private sector to work on development problems jointly have not yet been established.

New Actors in the International Development Sector It is likely that in the foreseeable future new actors will start investing in development alongside traditional donors (states and international institutions). High Net Worth Individuals (HNWIs) such as millennials who inherited wealth or made money relatively early through the opportunities provided by the digital economy, can be expected to play a significant role among such actors. The values of the industrial consumer society are alien to these young people, who grew up in an age of technological revolution with its uncertainty, total distrust in traditional institutions, and greater reliance on networking. The world is entering an era of talentism and collaborative consumption which encompasses the sharing economy, in which responsible social behavior will be highly valued. It is this attitude that is persuading millennials to leave traditional industries for the fields of charity and social entrepreneurship. The same also applies to middle-aged well-to-do professionals who change careers radically, and to those in the senior age group with large amounts of capital. These people are dissatisfied with the usual instruments of charity, such as endowment funds with their archaic principles, rigid mandates, and lack of transparency in measuring results.

The volume of accumulated funds allows HNWIs and financial institutions that manage their fortunes to influence the international development agenda.

In the next 10 to 15 years, private capital valued at 60–70 trillion US dollars will be in the hands of baby-boomers in North America and Western Europe who are about 60 years of age today. The situation in Russia, China, and other developing countries is somewhat The World in the 21st Century: A New Reality 139

different: the fortunes accumulated within the last 30 years of rapid economic development are in the hands of 20–30-year-olds, who become the owners of huge financial resources even before they reach middle age. This is apparently a large-scale trend, and while the motives and precise forms of participation of such actors may vary, it can be expected that they will become a serious driving force for future development projects.

It should also be borne in mind that the arrival of new owners of wealth entails new strategies and new approaches to management. Family businesses that until recently were quite local are now becoming global. It is only natural that their owners should have a broader view on issues of international development, increasingly taking into account the social impact of their expanding activities alongside the usual project profitability criteria. They are gradually moving away from traditional forms of charity, preferring corporate social responsibility and social entrepreneurship.

Asset Transfers and Charity The millennials’ appearance in the charity sphere raises a vital question with regard to the main topic of our paper: the destiny of Armenia and Armenians in the present-day world. Will the heirs of the Kerkorians, Manoukians, and Eurnekians continue their families’ traditions of charity? Are they prepared to invest sizeable parts of the fortunes accumulated by the older generation in the development of Armenia and the Armenian nation?

Since the majority of young diasporan Armenians live in Russia, let us turn to the Russian experience of wealth transfer. After the dissolution of the Soviet Union, for the first time in a hundred years there appeared people who could transfer considerable fortunes to their children. But while the people taking possession of family wealth in Russia are 20–30-year- olds, in the West they are usually much older, 50–60-year-olds. Are the young heirs of post- Soviet businessmen prepared to take on new responsibilities? As we have already said in this chapter, the rapid progress of technology and modern medicine are leading to increased life expectancy. We now have the first generation that may live on average to 90–100 years of age. In these circumstances, no one wishes to rush either into marriage or into accepting the responsibility of managing family fortunes.

This problem has another aspect as well. The institution of private property in most former Soviet republics has been in existence for a relatively short period of time and has not yet taken a definitive form. People are not used to the feeling of ownership or, more importantly, to the realization that this brings with it huge responsibilities. The existing traditions of continuity and the legal mechanisms for the transfer of wealth cannot be called mature. The level of awareness is low, the regulatory environment is inadequate, and there is little experience of discussing and dealing with the many issues related to this sensitive matter. Drawing up a will and hoping for its flawless execution is not the same as ensuring that wealth is actually handed over. Provision needs to be made for the smooth operation of this process and for control of all its stages.

A study conducted in 2015 by the SKOLKOVO Wealth Transformation Centre found that only one-third of major entrepreneurs had drawn up a detailed wealth transfer plan, 140

while another one-third had not thought about such plans at all123. Relatively few owners see their business as an asset that will one day have to be transferred to other family members. This is to a large extent attributable to the fact that the overwhelming majority of Russian companies make their profits not from capitalization and dividends but directly from the cash flow of the business. Moreover, certain large businesses were established during the initial stage of free-market reform, when the boundaries of what is acceptable were blurred. It is quite possible that some owners will not want, or will not be able, to transfer their assets. Another difficulty is that some large businesses were founded on informal agreements which are non-transferable and frequently cannot be made public. There is a high likelihood that these businesses will eventually be sold at a discount. No similar study has been conducted in Armenia, but we have grounds to believe that the situation is in many respects the same, the difference being only one of scale, the size of the assets concerned.

The issue of transferring businesses and capital directly affects the sustainability of a country’s economy. If, 20 years later, thousands of disputes between relatives have to be settled simultaneously in court, many assets will be paralyzed and businesses will not be able to grow. The transfer process requires not only substantial legal and financial refinement, but also consideration of its purpose. From a study of the best world practices and discussion with the owners of considerable assets in various countries, we conclude that the range of current approaches can be summarized as follows:

> I will sell all my assets and divide the proceeds among my heirs.

> I will select a successor and prepare him/her to inherit the business and material wealth.

> I will transfer the accumulated fortune or business to a professional manager and the profit will be distributed among my heirs.

> I will not leave anything to anyone. I will spend everything while I live.

> I have not thought about an inheritance strategy: après moi, le déluge.

> I will give everything to charity.

It is possible to distinguish several main motives that lead people to engage in charity. In all these cases, the focus is primarily on the need to change the current state of affairs or to leave a mark on history, rather than on laying the groundwork for systemic growth and development.

123 ‘Study of capital owners of Russia 2015’ (in Russian). http://wtc.skolkovo.ru/ru/wtc-home/research/ vladeltsy-kapitalov-rossii (accessed February 27, 2018). The World in the 21st Century: A New Reality 141

Emotional attachment to a certain place, institution, etc., a desire to do something good for it. For example, a person donates money to a hospital where a friend or family member was cured of a serious illness or goes there to work as a volunteer.

Desire to be a member of the ‘club’ of respected people. A good example is alumni who set up associations and donate considerable amounts of money to their alma mater over many years.

Desire to leave behind a legacy. There are many such examples. Let us mention the creation of numerous awards, the most famous being the Nobel Prize, the establishment of educational institutions (such as the Saïd Business School, which bears the name of the Syrian-Saudi financial tycoon Wafic Saïd), and family charitable foundations (for example, the Bill and Melinda Gates Foundation).

Understanding that one has to share with those in need. This understanding is accompanied by an idea of social responsibility and sometimes a peculiar feeling of guilt. Multimillionaire and philanthropist Andrew Carnegie believed that “Surplus wealth is a sacred trust which its possessor is bound to administer in his lifetime for the good of the community.”

Religious principles. All world religions instruct us to donate money to good causes.

A ‘bargain’ struck with the authorities. This is so-called forced charity, which cannot be regarded as true charity, i.e. selfless giving. Not infrequently, an underlying reason for charitable initiatives is to secure preferential treatment by the authorities.

Launching charitable projects in Armenia in the early 2000s, we soon realized that sporadic donations do not lead to systemic change and do not create the conditions for stable prosperity. While such noble endeavors are worthwhile, charities primarily seek to address humanitarian problems by compensating for the inadequacy of state funding. Most charities do not analyze project effectiveness and do not use free-market instruments. Sometimes their staff make decisions based on emotions rather than rational considerations. We came to the conclusion that the most efficient form of charity is one that lays the groundwork for long-term progressive development.

New Approaches to Sustainable Development Venture philanthropy combines the methods of venture business with philanthropy, initiating with the help of financial instruments development projects that change human lives for the better. Being close to the philosophy of social entrepreneurship, it is one of the elements of investment with a social impact or impact investing. In recent years there has been a rapid expansion in the ways in which traditional finances play a part in development projects (the term ‘impact investing’ appeared only in 2007). This has been driven by the growing number of social entrepreneurs, venture philanthropists, and ‘glocal’ HNWIs using impact investing as an instrument to transform traditional capital into social capital. According to a 142

survey conducted in 2017 by the Global Impact Investing Network, the total volume of assets managed by the 208 impact-investors who took part in the survey was 114 billion US dollars. In 2013–2015, the volume of assets in this sector grew annually by 18%124.

Investment with a social impact is an entirely free-market instrument, which can take the form of a loan or an equity stake and presupposes a return on the investment. Today there are certain barriers to the expansion of such investments in the area of international development which need to be overcome. Firstly, there is still a dearth of well-designed, intelligible development initiatives with a long-term planning horizon attractive to impact investors. Secondly, there is no transparent and universally accepted method of assessing the long-term measurable results of such projects. Nor is there a clear idea of the desirable balance between financial profitability and the social good created by these projects. Thirdly, many initiatives entail some form of interaction between the private sector, the public sector, and international institutions, but appropriate models for such collaboration have not yet been designed or taken institutional form.

We have no doubt whatsoever that it will be possible to overcome all these barriers in the coming years. As a number of experts indicate, new actors are carefully considering opportunities for investment with a social impact. The Sustainable Development Goals set by the United Nations will require the active involvement of the private sector, and we are confident that impact investing will become an important and effective instrument in that process.

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In any country, what people want above all is opportunities to fulfill their potential, a satisfactory and safe living environment, and affordable, high-quality healthcare and education. Those states that successfully combine all three elements will be the most competitive, and surveys conducted in different countries reveal the general consensus that full access to quality education, not only in developing but also in developed countries, is the first step to achieving all 17 Sustainable Development Goals. It is this factor – education – that is crucial to a country’s development, since it helps to eliminate hunger, poverty, and unemployment, to improve healthcare, and to combat environmental pollution and unwise use of natural resources. Finally, it will enable aid recipient countries to considerably decrease their dependence on international institutions and the governments of developed countries. That, in its turn, will result in a reduction in migration and global inequality in the present-day world, where fewer than one-third of states are capable of providing a decent standard of living for their citizens.

However, the limited resources and the existing agendas of traditional institutions are increasingly losing public trust. There is a need for new actors willing to participate in

124 The Global Impact Investing Network, How big is the impact investing market? https://thegiin.org/ impact-investing/need-to-know/#how-big-is-the-impact-investing-market (accessed February 28, 2017). The World in the 21st Century: A New Reality 143

development projects on an equal basis with these institutions, investing financial, intellectual, and professional resources in those projects and relying on networking. In the 21st century, private rather than national or supra-national initiatives will become the main driving force for development. It is therefore necessary to rethink the traditional concept of public-private partnership and to emphasize the private as the lead agent of development.

Survival, Preservation, Prosperity

For many centuries Armenians faced the threat of physical extermination. Our nation became accustomed to existing in survival mode in hostile environments and developed a strong resilience. This is reflected in Armenian culture, traditions, and everyday life. It even extends to our national cuisine: lavash, ttu, ghavurma, basturma (pastrami), sudjuk, and choratan, dried goods that can be stored for a long period in times of trouble, along with the herbs used in cooking and medicine.

In the mid-20th century we moved from survival mode to preservation mode. This was reflected, on the one hand, in the migration of Armenians from Muslim to Christian countries and, as a consequence, in a diminished immediate physical threat, and, on the other hand, in a relatively peaceful period of national development. But having adapted to this preservation mode, we have for a long time done almost nothing to improve our situation. Alexander Asmolov calls such adaptation to a reduced range of existence ‘a simplification of life.’ Such simplification results in archaization and even barbarization of the social order. Asmolov writes that “Ideals of adaptability and ideals of security top the social and economic systems and block their development.” The desire to maintain the status quo will only lead to decline.

In today’s world, only those are successful who, in the words of Asmolov, “choose a strategy of ‘pre-adaptability,’” that is to say, the ability to anticipate change rather than reacting to changes imposed by others. Herein lies our opportunity. We need to take as a guideline for action a famous phrase from Alice through the Looking-Glass: “It takes all the running you can do, to keep in the same place. If you want to get somewhere else, you must run at least twice as fast as that!” In the 21st century we must move from preservation mode to prosperity mode. This presupposes a complex, stereoscopic vision of the present-day world and a desire for lofty goals. What are our competitive advantages? Shall we be able to skillfully use them and become aware of our weaknesses and neutralize or minimize their negative effects? How can we integrate the nation and the country into the global environment, where competition is extremely intense, and not lose our distinctive national identity in the process? Chapter 5 Our Vision of the Future

“Would you tell me, please, which way I ought to go from here?” “That depends a good deal on where you want to get to.” “I don’t much care where –” “Then it doesn’t matter which way you go.” Lewis Carroll, Alice in Wonderland

“There is no favorable wind for the sailor who doesn’t know where to go.” Seneca

In the words of Fridtjof Nansen, a famous polar explorer who in the final years of his life was the League of Nations High Commissioner for Refugees, the history of the Armenian people has been a continuous experiment in survival. As we understand it, our history has been a long process of alternately gaining and losing the ability to be a meaningful player in global events. During the eight centuries that separate the downfall of the Kingdom of Ani from the establishment of the First Republic in the early 20th century, Armenians were unable to achieve sovereignty in their homeland, the Armenian Plateau. Furthermore, the direction of migration in recent centuries has been from rather than to the historical homeland – with the exception of the early 19th century resettlement of Armenians from the Persian and Ottoman empires, the flight from the Ottoman Empire to the Yerevan Governorate during the Armenian Genocide, and the short-lived period of repatriation to Soviet Armenia. In the modern era, the attempts to restore our lost independence have been made, as a rule, by prominent representatives of the Armenian elite who were not in a position to mobilize the entire nation and were forced to opt for either a pro-Western or a pro-Russian orientation.

However, we should not equate the influence which people may exert on global affairs solely with the notion of sovereignty. The historically successful role of ‘intermediary’ and ‘interpreter’ enabled Armenians, even in the absence of a sovereign state, to preserve their unique identity while exerting a certain creative influence on global developments. However, from the mid-18th century, Armenians gradually lost that role. In general, it can be argued that in the four centuries since the collapse of the global network of merchants from New Julfa, Armenians have been the victims rather than the drivers of civilizational changes, pawns on someone else’s geopolitical chessboard.

The fact that our fate has been dependent on others is one of the main reasons why the Genocide was possible, the Genocide that tore away and devastated a whole generation and destroyed the natural succession, which is a prerequisite for the evolution of any ethnic group. At present, we see ourselves not so much as descendants of the ancient people that contributed to world civilization but as a victim nation, capable only of sharing its pain with others and unable to devise a meaningful development agenda. This inert, passive state is accompanied paradoxically by an illusory conviction that the Genocide is a thing of the past. We should not forget that the genocidal program of hatred that the Ottoman authorities started to implement long before 1915 is not yet over today. Its echoes have been felt in the expulsions and massacres of Armenians in Sumgait and Baku, in the attempts to rewrite the Our Vision of the Future 145

history of Eastern Armenia, in anti-Armenian propaganda in kindergartens and schools in Azerbaijan, and in the horrendous murder of a sleeping Armenian officer and glorification of his murderer. This hatred, which is still being fanned, may at an opportune moment encourage certain circles to try once again to achieve the ‘final solution’ of the Armenian Question.

For over a quarter of a century the Republic of Armenia has been an independent nation state, but it has not yet played an active part in world affairs. Today, Armenia is still incapable of defending itself from possible full-scale military aggression. Nor is it able to provide decent living standards for its citizens. Instead, just as we did a hundred years ago, we again pin our hopes of protection on some friendly power, which leads to dangerous self- delusion. Deep down, all thinking Armenians understand this perfectly well. Twenty-seven years of independence, of which our ancestors dreamed for centuries, have not turned Armenia into a country that is capable of preventing its young, talented citizens from emigrating. In September 2017 at the Forum ‘Armenia – Diaspora,’ Aram I, Catholicos of the Great House of Cilicia, said: “Armenia is not merely a tourist attraction, a market for business, or a passport. Shame on us if this is how we approach Armenia.” He condemned the shopping-mall attitude toward independence which is often seen as a way of making money. Unless the situation is changed, it is highly likely that in 2041 we will not be celebrating the 50th anniversary of independence. The destiny of Artsakh, for the liberation of which so much blood was spilled, is unpredictable too. In 2041, our generation will be approximately 65–75 years of age. We do not want to feel regret and guilt at the end of our lives.

According to some (not particularly reliable) estimates, at present there are about ten million Armenians living in more than one hundred countries. What unites us? One can hardly give a single and exhaustive answer to that question. One thing is clear: if a fragmented nation does not come up with a shared vision of the future, and an optimistic vision at that, each of those fragments will eventually die off.

Today’s Armenians cannot be regarded as a global network nation. If we are to safeguard the existence and development of the Armenian people, we need first of all tostop separating in our minds Armenian citizens and diasporan Armenians. Since Soviet times, we have seen the Diaspora only as a source of charitable aid to people of the same ethnicity living on the historical land. That explains the deep-seated feeling of disconnection, disappointment, and disorientation experienced by diasporan Armenians. They increasingly feel indifference toward Armenia and the common destiny of the Armenian people. This indifference is the perfect formula for the nation’s complete assimilation and disappearance.

The internal crisis of the Armenian nation, which we described in the second and third chapters, has recently been exacerbated by the overall crisis in the world order and the emergence of a new reality, which no one can yet adequately describe. We are living through a perfect storm of numerous countervailing negative developments with a huge multiplication effect, which is undermining the familiar order with unprecedented force. In such a difficult situation, politicians are tempted to offer simplistic solutions. Frequently, that results in populist slogans which promote nationalism and isolationism, and an appeal to the well- known and understandable past (such as the slogan Make America Great Again in the USA, or 146

the emphasis on victory in World War II and space exploration in Russia). Fear of the unknown future paralyzes the will to look for long-term systemic solutions and prevents individuals from assuming responsibility.

“As the citizens of the fin-de-siècle tapped their way through the global fog that surrounded them … all they knew for certain was that an era of history had ended. They knew very little else.”125 The fear that we are talking about gives rise to opposite reactions. It is typical of most people to desire stability. Even when they are discontent with the quality of life, they are willing to wait patiently and to not change anything, preferring to cling to the past, to familiar forms of existence. Horror-struck at the realization that they will not be able to preserve those forms, such people tend to isolate themselves and to go into so-called inner emigration, or to adapt passively to the existing order of things. Only a small minority consciously embrace change and deliberately decide to make suitable preparation for it. For anyone at such a crossroads who is trying to anticipate an uncertain future, the most obvious strategy is to seek to change the existing model through active participation in public life, in political parties and other institutions, and in civil society organizations. There is, however, an alternative route, albeit a longer and more tortuous one.

My three lives (Ruben Vardanian)

I am an extraordinarily lucky man. In contrast to those who did not live through the times of turmoil and dramatic historical changes, I had lived three very different lives by the time I turned fifty.

The first life began in the Soviet Union. In my youth I was successfully integrated into the dominant model. I studied political economy, got straight As as a student, was a Komsomol leader and then a communist. I accepted the then rules of the game and, hoping for Chinese-style reforms, I tried to modernize the old system within the existing framework because I understood how the system worked, what its weaknesses were, and what could and needed to be changed in it.

My second life began with the collapse of the Soviet Union. At that time, my partners and I found ourselves trying to build a start-up enterprise on the ruins of a crumbling empire. Fortunately, we had advanced world practices at our disposal and could make use of these. Thus, while in the first case, making changes was similar to renovating an old house, in the second case it was as if we had to construct a new house using existing technical drawings, which we adapted and fitted for the purpose. We used the experience of others but were creating an economic and social system that was new to us.

125 Eric Hobsbawm, Age of extremes. The short twentieth century: 1914–1991 (London: Abacus, 1995), pp. 558–559. Our Vision of the Future 147

My third life – today’s – is being played out amid an ideal storm. At this point, no one can offer a ready-made and comprehensive solution to complex global and local problems. We need not merely to build a new house, but to design it and to create the necessary technical documentation, a work plan, etc. I try to be guided by my personal experience, which encompasses both successes and mistakes, and by an awareness of the cyclical nature of history. We know that humanity has already experienced whatever is happening today, and on this new coil of the spiral of history, that knowledge is needed if we are to search for new solutions. That is why I have chosen for myself the role of ‘glocal’ venture philanthropist, social investor, and entrepreneur. I facilitate the solving of local problems in a global context, and to that end I have been engaged in the search for new breakthrough initiatives.

I have a certain vision of the future, and in my present-day actions I am inspired by that vision. In a sense I ‘have emigrated to the future’ and I am already working there in the hope that emerging fragments of reality will attract one another, will fuse into a new system, and will restructure the situation more effectively than traditional methods which seek to improve existing economic, social, and legal conditions only gradually. That is what makes my approach fundamentally different. I check out the past, reflect on the present, and act in line with the vision of the future that arises on that basis. At the same time, I proceed from the idea that in the world of today everything is interconnected and interdependent. Thus, no matter how hard we try to change the state of affairs within a single state or the life of a single nation, we will sooner or later have to take into account the global context and the need for international cooperation.

We should remember that history is cyclical. And that the superpowers of today may, like the powerful empires of Byzantium and Persia, disappear off the face of the earth. Nor is humanity immune to global pandemics, hyperinflation, and wars. At present, time flies much faster and the world is changing with incredible speed. Where will hundreds of thousands of Armenians in the North Caucasus and the southern parts of Russia head to in the event of a social disaster, the underlying causes of which have been building up for a number of decades? Where would numerous Armenians in California head to in the event, say, of a catastrophic earthquake? A protracted armed conflict is going on right on our doorstep and may easily escalate into a full-scale war in the Middle East. Where will tens of thousands of Armenians from Iran, Iraq, Syria, Lebanon and Turkey find shelter in that case? The situation of Armenians in Armenia, which is a plaything of geopolitical games in an extremely explosive region, is cause for very serious concern: by itself, the country cannot guarantee the safety of its citizens and repatriates.

We are not fortune-tellers but we know that upheavals may occur at any moment and that the Ark needs to be built before the flood. However, we do not know what structure and design the Ark should have. Those are yet to be defined. It would therefore be helpful to have several options, so that when events take a dangerous turn we can act according to the situation, act fast, flexibly and, most importantly, independently. We have nowhere to run and no one will defend us. We cannot just sit and wait for our destiny to be determined 148

for us. That has happened more than once and we know what a heavy price we had to pay. Yes, we are not a numerically large nation, but during an ideal storm it is not the strongest but the best prepared who survive – and this does not depend on population size or GNI per capita. During difficult periods in our past history, as a nation we were resourceful enough to anticipate and embrace change. Such ‘pre-adaptability’ is a feature of our national character that has helped us survive over two millennia, and we should harness it and make ample use of it in the face of the serious challenges that the 21st century may throw at us.

The changing world order of today gives us a unique and, probably, a final opportunity in our history to redefine our role and place among the nations.The 21st century can become our century, if we mobilize the intellectual and material resources of the nation, summon up the courage to slaughter the dragon inside us, use the links to our national roots realistically and constructively, reflect anew on the foundations of our commonality, and lay the groundwork for realization of the best traits of our national character, thanks to which we have survived through the centuries. Only very few developing countries, such as Argentina, Brazil, and Georgia, have in the recent past made advances in research, technology, production, infrastructure, and cultural innovations. Even though development may then have declined again, the citizens of those countries will still recall the experience of living and working in much more favorable conditions, and their collective memory has given them an advantage in the quest for breakthrough development. We may have lost a lot in the past 27 years, but it is crucial that we do not start writing a new chapter from scratch. There are grounds to believe that the chance of Armenians attaining prosperity again is quite good. We just need to make wise use of our collective memory of a previous good life and to learn from our mistakes.

We and our partners have a dream of unifying the fragmented nation and revitalizing the principle of a global network in the 21st century. Hence we are pioneering a new approach to development, and we have established a number of initiatives in Armenia and beyond to make this dream come true. Here we want to draw our readers' attention to the following: throughout this Chapter, the words 'we' and 'our' stand for Noubar Afeyan and Ruben Vardanyan jointly, together with all those involved in creating and realizing the projects mentioned here.

Think to Connect! Think to Create! Think to Act!

Our nation is global and mobile. It does not fit within the conventional boundaries of a nation state and of traditional diasporan communities. Familiar hierarchical institutions alone cannot solve the problem of national unification and pave the way for prosperity. Within their framework it is impossible to reach a holistic understanding of the mechanisms of breakthrough development, to accumulate the required resources, and to obtain the relevant mandate. Meanwhile, the solution of the problem that we are confronted with requires consolidation of unprecedented intellectual, professional, and material resources, which is feasible only through new forms of multilateral cooperation. Since they are governed by linear logic and tunnel vision, the existing institutions are ill-equipped to react adequately to the systemic changes that humanity is facing in the 21st century. We look at the new state of the world from the perspective of chaos theory. Systemic chaos is not a mess. It has its own patterns, which are correlated with the initial conditions and causal relationships. But it also Our Vision of the Future 149

provides opportunities for self-organization. In these circumstances we must look for new forms of association and move together toward agreed creative plans that will then need to be implemented through joint efforts.

Think to Connect: Networking Principles In conditions of systemic chaos, the networking of people who trust each other, who do not have narrow tunnel vision and are capable of linking what could not be connected in the past, provides a starting point. In our view, the global and local problems of today can only be solved by that type of interaction. Networks have existed throughout human history and, as was shown in Chapter 1, this form of joint activity is quite natural for Armenians. One might say indeed that each of us now expands his or her personal network throughout life. Networking is, by its nature, particularly suited to conditions of systemic chaos and loss of trust in traditional hierarchical institutions. When trust is combined with a code of honor, the networking approach to development can ensure a quality of interactions which is far- reaching and is more effective than the approaches typical of rigid hierarchies.

The remembrance of the Genocide has a huge emotional impact and, consequently, is an undoubted unifying force. But it does not contain positive incentives which can bring fragmented parts of the nation together. We prefer to rely on the principle of maximum inclusion. We do not divide people by ties of blood or language, religion, or citizenship. We believe that to be an Armenian today is first of all a manifestation of an individual’s free will and a conscious choice, a willingness to identify with the nation and to go beyond the narrow boundaries of private interests. We firmly believe that joint activities by such people, who strive to make a reality of their vision of the future, can kick-start the process of unifying Armenians who are disunited today.

The slogan ‘Think to Connect!’ implies that those individuals who are prepared to join efforts to revitalize the nation as a global network, recognize that we will not be able to attain prosperity in isolation from one another or in isolation from the world. Our partially lost historical role of international ‘binding element’ is again relevant and in demand. It is important to understand that by acting in the interests of humanity, we are acting in the interests of the Armenian nation, and vice versa; when we forget that we are part of the world, we ourselves place limits on our own advancement.

At present, most people are not willing to confine themselves to standard consumer notions of well-being. The human beings of today wish to enjoy a life that is emotionally satisfying. That requires professional fulfillment in a comfortable and safe environment, access to modern systems of healthcare and education, and a climate of trust. In our view, several components need to converge so that a nation can prosper, regardless of where its members reside. Those components are growing well-being, a pleasant environment, advanced cultural development, and enhanced identity. None of those components should predominate and/or be artificially promoted at the expense of the others. Realization of our dream is impossible without a harmonious balance. 150

In the past, the truly global scope of our activities has been conducive to their development and success. Today, Armenians reside in over one hundred countries of the world. Networking ‘respects’ no state borders and for the sake of our common goal, we aim to bring together individuals who are ready to think and act across geographical barriers and outside rigid territorial boundaries. We may be Russian or American, Argentinian or French nationals, but we are still Armenians at heart and by choice. That is our strength and our wealth and our unique glocality. In the words of William Saroyan: “I’m no Armenian. I’m an American. Well, the truth is I am both and neither. I love Armenia and I love America and I belong to both, but I am only this: an inhabitant of the earth, and so are you, whoever you are. I tried to forget Armenia but I couldn’t do it.”

Think to Create: Anchor Projects Constantly trying to catch up and copy is a clearly flawed approach, condemning a nation to lag behind forever. We need a dramatic breakthrough, and this is possible only thanks to people who are free of tunnel vision. By interacting, such people are capable of coming up with exceptional projects that can change the familiar pattern of societal evolution in a most unpredictable way, can lay the groundwork for a genuine breakthrough in development and, most importantly, can draw in other people. A chain of such productive changes is triggered by ‘anchor projects.’ We are not so rich that we can waste our scarce resources. Anchor projects are therefore audacious, multi-purpose breakthrough projects which serve the interests of the country, the nation and the entire world, and are implemented in Armenia and in various parts of the world. By collectively producing a multiplier effect, they can unite both the fragmented Armenian nation and people of other ethnic groups who are attracted by fresh ideas. We see this as the most promising way to the future.

Networking as a source of mutually beneficial ideas

It is crucially important to us that not only the citizens of Armenia and Artsakh, and diasporan Armenians, but also nationals of other countries should be beneficiaries of anchor projects.

A good example is the TUMO Center for Creative Technologies. This after-school education center was established by Sam Simonian, a US entrepreneur of Armenian descent, in Yerevan in 2011. At the Center, young people aged 12–18 are taught IT academic disciplines with the use of the latest educational methods. As of now, over 14,000 children have received training in the Center in four areas: animation, development of computer games, web design, and digital media.

In 2013, with support from the , the TUMO Center launched a training program in Dilijan. In partnership with the Armenian General Benevolent Union (AGBU), the TUMO Center then opened a branch in Gyumri in May 2015, and in the city of Stepanakert (Artsakh) in September 2015. Soon TUMO will come to Kogbh and Masis. Our Vision of the Future 151

In 2016, the TUMO Center was ranked Number 1 among the world’s best innovative schools, according to the French magazine We demain. TUMO branches will soon open in Paris126 and Beirut.

The Center, initially conceived as an educational facility for young residents of Yerevan, has thus been gradually expanding its network of branches to other cities and towns in Armenia and Artsakh. That is not all. The project is establishing a presence at an international level. Quite soon, it will have young residents of Paris as its beneficiaries, and not only from the local Armenian Diaspora. Our goal is just that: we should not merely unite Armenians from various diasporan communities, linking them together through mutual pride, but we should also engage people from other ethnic groups in the Armenian project and make training at our Center prestigious and attractive from the perspective of a future professional career.

Anchor projects require not only the consolidation of considerable diverse resources such as capital, intellectual potential, professional knowledge and skills, but also the combined efforts of private investors, the state, international institutions, the Church, non-governmental organizations, etc. At the same time, we should be aware that in the 21st century only private initiatives can be the main drivers of anchor projects. Other agencies are capable of assisting in the implementation of such projects, but they cannot be the prime movers because they are constrained by their mandate, budget, resources, etc. Only private individuals can take genuinely ambitious, resolute, and audacious steps that result in significant socio-economic change. Private initiatives do not replace state and traditional international development institutions, but they are increasingly transforming conventional public-private partnerships into private-public partnerships that open up new opportunities.

The implementation of anchor projects requires ‘long money.’ The social impact of such programs emerges slowly and manifests itself in its entirety only 20–25 years later. The investments offered by international institutions (with the exception of pension funds and insurance companies, for whom developing countries are not of paramount interest) are essentially ‘short money’ and are expected to yield results quickly, within ten years at the most. Only private initiative is capable of combining various types of funding and, no less importantly, of attracting money from previously untapped sources. This variability and flexibility in financial resource mobilization allows the planning horizon to expand from the usual ten years to a quarter of a century or more. The impact of long-term socio-economic development programs that are more complex than ordinary business projects can only be traced stage by stage over time.

We attach great importance to the quality of our anchor projects. Such projects must set high standards and push the boundaries of what is thought possible, uniting people in a

126 The manuscript was completed in July 2018. TUMO in Paris opened in October 2018. 152

clear understanding of the advantages of participating, and giving them and other project beneficiaries a sense of pride. It is no less important to make sure that all projects are interrelated, gradually creating a single system of change.

A holistic approach to development

Each of our development initiatives has its own goals, planning horizon and funding sources. However, at the same time they are correlated with one another and are aimed at jointly maximizing the socio-economic impact. Thus, in addtion to its humanitarian and educational goals, the Aurora Humanitarian Initiative also serves to position Armenia on the global stage and to attract the attention of the international community and talented representatives of the Diaspora. With the help of the Open Skies project we aim to open the country to the maximum number of foreign airlines, to enable everyone to fly to and via Armenia, and to increase the influx of tourists to the country. The development of standards for the tourism industry and training programs for local entrepreneurs should enhance the quality of goods and services that are offered to tourists. The restored Tatev monastery and the Wings of Tatev aerial tramway (we will be discussing this anchor project in greater detail below) offer an attractive tourist product both to residents of Armenia and to visitors. The Ameriabank project, which aims to develop the financial infrastructure, offers local entrepreneurs an opportunity to attract funding for creating and improving their own businesses.

In other words, in order to attract investment to a project (e.g. to start a small bed & breakfast business in Tatev), an entrepreneur has to ensure that it is profitable and attractive. For that to happen, all our projects have to be successfully implemented, from the Aurora Humanitarian Initiative to the restoration of Tatev monastery and Ameriabank (Fig. 20). That is the essence of the holistic approach to development.

Service Aurora standards for –Tatev Restoration Open Skies Wings of Tatev Bed & breakfast Humanitarian tourism & transportation of Tatev Ameriabank project hotel in Tatev Initiative project hospitality infrastructure monastery industry

Fig. 20: Components of integral development.

In our anchor projects we seek a chain reaction potential, enhanced by a multiplier effect. The projects are intended to spark off a number of new development projects which will gradually change for the better the environment in which we live. Our Vision of the Future 153

Multi-purpose approach to development

In 2008, one of the authors, who turned 40 at the time, proposed a new project – the Tatev Revival. From the very start we did not want the project to focus solely on the restoration of the monastery, even though there were a number of benefactors who were willing to donate funds for the restoration. Something totally new was envisioned. Simultaneously with the restoration of the monastery we intended to promote economic growth in the economically stagnant region, to help the residents of nearby villages, to improve the infrastructure, and to make the monastery accessible to tourists. Therefore, from the very beginning we decided to make our project comprehensive, multi-purpose, and long-term, and to build the Wings of Tatev aerial tramway for that purpose. We did not want to fall behind the best world standards and therefore we commissioned the Austrian- Swiss company Doppelmayr Garaventa Group, which is a leader in that field, to carry out the work. Investment in the construction of Wings of Tatev was entirely philanthropic in nature, with no expectation of financial returns. In fact, it could be classified as venture philanthropy investment since the aim was to trigger a further inflow of investment that would set off a chain of consecutive changes in the region. The Wings of Tatev became an anchor project that attracted a significant inflow of tourists to an otherwise inaccessible monastery and started to generate income that was then devoted to the restoration of the medieval architectural masterpiece. This in turn created the conditions for attracting government funding (from funds allocated by the World Bank), for the reconstruction of the transport infrastructure. Soon an opportunity arose for private funding of the hospitality industry as well as local food and souvenir production. About 40 new B&B hotels opened in , Tatev and nearby villages.

Sisian–Tatev Tourist infrastructure Increase in transportation (restaurants, hotels, employment and Wings of Tatev infrastructure souvenir & other shops, well-being, Restoration of Tatev aerial tramway tourist services) educational monastery State funding with programs for local Venture World Bank Commercial investments communities Charity philanthropy participation Investments with social impact

Fig. 21: An example of interconnected projects: “Tatev Revival”. 154

Taken separately, neither the construction of the aerial tramway nor the restoration of the monastery could have secured comprehensive development of the area. We were well aware that a long-term socio-economic impact can be expected only where there is well-established cooperation between various agents of change (Fig. 21).

Our projects are not only ‘anchors’ that act as a starting point for a whole number of other initiatives but are also ‘beacons,’ reference points that change the mentality of the local community. These projects do not seek piecemeal improvement or stabilization of the situation. We give much thought to what decisions need to be made today in order to get where we want to be in 25 years’ time. The development programs that we propose provide an impetus for momentous changes in society and encourage people who come into contact with them to have more open minds and to overcome stereotypical perceptions and entrenched habits.

Think to Act: Platforms for Cooperation The majority of international development organizations are interested first of all in maintaining an uninterrupted flow of funding for projects aimed at making changes in the countries that they support, whereas we are interested in the outcome of each project and in its contribution to the country’s future. We are flexible in our approach to implementing anchor projects. Sometimes we implement our projects by ourselves, sometimes we resort to outsourcing, and at other times we undertake a part of the work, while giving the rest to others. Since these projects are large-scale and innovative, their implementation requires advanced knowledge and experience. That is why we invite the best specialists to join us, and train our own personnel. However, cooperation between participants from different countries, with different skills and competences, can be productive only when there is a certain institutional basis that meets and at times exceeds the best standards, pushing us to seek innovative approaches. Such a basis is formed by a set of platforms. A platform concentrates resources and activities, and is a real or virtual foundation for cooperation in systemic chaos. A set of platforms is the invisible tip of an iceberg. Without them it is impossible to move from the idea to its implementation. Platforms afford an opportunity to organize and unite participants, make necessary calculations, carry out day-to-day management, etc. At present, technological, humanitarian, educational, healthcare, charity, entrepreneurial, financial, tourist, and urban platforms are being set up, along with a platform for social entrepreneurship. While creating the infrastructure needed to translate the projects that have already been initiated into reality, platforms also stimulate the emergence of new initiatives and thereby enhance the overall cumulative socio-economic impact.

Platforms play an important part in minimizing costs. On the basis of one and the same platform, both large-scale and small-scale projects can be implemented, using existing services. The principle of shared services is highly cost-effective. In particular, it is beneficial that our platforms can be used not only to implement projects initiated by us but also to launch other projects, provided their initiators share our vision of the future.

In the past ten years we have been creating space for projects that pursue a common goal. All these projects rely on platforms that will merge into a new Institute of Socio-Economic Our Vision of the Future 155

Development, which will use networking principles instead of a traditional hierarchical structure. It will be a new kind of private-public partnership that will define ideology, methodology, and development strategies in various areas. Within the framework of the Institute there will be a foundation which will structure mixed funding for anchor projects and will ensure a high level of transparency and attractiveness (Initiatives for Development of Armenia, IDeA). In addition, together with our partners, we will design the assessment methodology of our own projects, which will be tested in real time. The Institute which is being established aims to draw in talent, improve networking structures, and increase the circle of trust. It will also serve as an incubator for future anchor projects and their turnkey solutions. One of its most important functions will be maintaining a new type of communication which, we firmly believe, is a significant factor in success. This will rely not on slogans and appeals but on well-developed, coherent, and detailed exposition of intent, thereby helping to overcome distrust and to engage people in a common cause. It will also focus not on an amorphous ‘target audience’ but on specific persons with whom bilateral communication needs to be established through a range of channels. Extra time will naturally have to be allowed for such communication, which will require additional human and financial resources and new approaches to the organization of the process itself.

The principles and approaches of the new institution are universal and can be used in any country and in any community in need of development. We hope that the Institute will rapidly be able to make successful use of its competences at a global level and become a valuable player among existing international development institutions. The underlying principle is that of glocality, i.e. global ideology and methodology realized through local action. We expect the new Institute to become a tool for gradually changing the world, one country, one community at a time. We also expect Armenians to set an example of innovative approaches to development and, of course, we are ready to share those approaches with others.

We are neither a commercial organization nor a charity. We are impact-investors striving to balance the economic and social aspects of our activities and re-investing the profits derived in development projects. Our client in each case, the ultimate beneficiary of the project that we implement, will not be the state or its institutions but an actual person, a nation, or society at large. Our plans have a long-term perspective, and this is what makes us different from existing state or international organizations. We shall therefore pay close attention to development of platforms and their funding. This work requires considerable investment, and very few people are prepared to cover such costs: traditional institutions wish to fund projects but not platforms. However, metaphorically speaking, before building a house one must have the necessary technical documentation and hence allocate the money to prepare it. We proceed from the assumption that platform formation and operational costs will ultimately help in the implementation of numerous diverse projects.

Usually, development projects are legitimized either ‘from above’ (for example, the state building a road) or ‘from below’ (for example, local businesses renovating a school with participation by residents). At times it is difficult to explain to the authorities and local communities the advisability of development projects promoted by private initiative, because these projects do not immediately address the most acute and urgent problems of day-to- 156

day life. In such cases we believe that the requisite support should be obtained in a natural and healthy manner, by avoiding behind-the-scenes secret deals, maintaining complete transparency, conducting constant dialogue, ensuring feedback, and being open to criticism. Against the background of a universal loss of trust in the state, private and charitable institutions, and the media, such coordination seems very complicated. But we sincerely believe that the ability to engage members of society’s various elites, and independent and highly educated individuals, in intellectual discussion so that optimal decisions are reached in the end, is a source of legitimacy for anchor development projects in the 21st century.

At the same time we are making every effort to ensure that the network structure we are setting up does not degenerate into a traditional hierarchy similar to some of the uncontrollable supranational institutions mentioned above. In time these institutions turn into bureaucratic structures and, like the International Olympic Committee or FIFA, become a source of public scandal. We are deeply concerned about such prospects and therefore we establish governance structures and decision-making procedures in advance in order to create a robust system of checks and balances.

Legitimacy does not appear from nowhere. It results from the successful implementation of projects, reinforced by the reputation of their initiators and participants, who come to enjoy the trust and support of local communities, international institutions, and the Diaspora. In our activities we never try to duplicate the state and we do not promote our own political agenda. We work with the state as with any other partner, and we reserve the right to lobby for legislative initiatives in the development field. We are in fact building a social business which will make a positive impact on society, the country, and the nation as a whole. Our approach is holistic and harmonious because we do not sacrifice the humanitarian and social aspects of development in order to increase well-being per se, and we are capable of combining various funding sources.

We can no longer tolerate a situation in which people have to settle for an average income of 24 US dollars a day127 and to live in a country that is ranked 121st among 156 countries of the world by level of happiness128, and 107th among 180 countries on the Corruption Perceptions Index129. We are concerned not only with material well-being; we also want to see a future that is peaceful, safe, and happy. We want Armenians to regain vitality and self-confidence so that they can in their own eyes and in the eyes of the entire world take their rightful place among the innovators who are generating new ideas and original solutions to the problems that abound in the present-day world of systemic chaos.

127 Gross National Income (GNI) per capita by purchasing power parity. World Bank data as at 1 July 2016. 128 According to the World happiness report 2017. http://worldhappiness.report/ed/2017/ (accessed April 28, 2018). 129 Corruption Perceptions Index 2017. https://www.transparency.org/news/feature/corruption_ perceptions_index_2017?gclid=EAIaIQobChMIgvPizrGV3gIVBKMYCh3H_A3mEAAYASAAEgLEdPD_BwE (accessed April 2, 2018). Our Vision of the Future 157

This dream will come true only if others subscribe to it. We are sharing our vision of the future because we hope that it will not leave readers indifferent but will encourage them to join our common cause. We are far from thinking that the model we propose below is flawless and that the path to its implementation is without bumps. We are not dogmatic and we welcome constructive criticism and a joint search for alternatives. While defending our conceptual framework, we intend at the same time to modify it and we are grateful to all those who have worked with us in Armenia and beyond its borders for almost 20 years to launch the development projects that are bringing closer the future we have discussed here.

What Kind of Future do we Want to See?

Our vision of the future in the 21st century is the result of many years of reflection, discussion, and debate with partners, friends and family, as well as with opponents. Any attempt at unifying the fragmented nation requires a clear idea of its past, its current situation, and its place in the present-day world. It is this idea that we have sought to clarify in the four preceding chapters.

Currently, we have to try to synthesize the existing material and non-material assets of the nation. Our wealth today is, firstly, what many generations of our ancestors were denied, namely a homeland, sovereign Armenia and Artsakh; secondly, it is our unique position at a crossroads of civilization and our sensitivity to civilizational differences; thirdly, it is our Diaspora (we are a global nation and there are good grounds for us to become also a network nation involving diasporan Armenians in the common cause of revival); fourthly, it is our culture, the ‘invisible institutions’ that are so much in demand in this age of uncertainty, when the global order is being overturned and a new reality is emerging; and finally, fifthly, it is the individual as a key value in the age of ‘talentism.’

Let us try to formulate briefly our vision of the future for Armenia and Armenians.

We want Armenians to become again a global network nation united through creative activities for the benefit of the nation and the world.

We want Armenia to become a hub country, a valuable partner for all states whose people treat us and our values with respect.

We want Armenia to become a focal point for the global network nation, its locus of power, a generator of ideas, and an incubator for innovations.

We want Armenia to become an inclusive ecosystem which provides individuals with opportunities for fulfillment and a sense of security, and ensures the preservation of national identity. 158

Using some examples of anchor projects, both our own and those of our partners, we aim to illustrate how our vision is being implemented. Of course, the implementation of these projects is far from complete; much remains to be done. We have come a long way and are learning from our mistakes, but the main thing is that work is progressing and is already promoting change for the better.

Global Network Nation

One of the authors has in recent years visited almost every country with a considerable Armenian Diaspora, has established contacts there, met with many influential representatives of local Armenian intellectual, business, and political elites, and with other individuals of Armenian descent, and has many a time traveled to cities where our cultural heritage still exists but the Diaspora has been essentially assimilated. He has also flown many times from various parts of the world to Armenia. Observing passengers who are flying to Yerevan, one has no difficulty distinguishing persons of Armenian descent from foreign tourists. Something elusively Armenian has been preserved in all the Armenians he has met with and talked to as well as in Armenians he has observed from a distance. It is reflected in their appearance and demeanor and in the way they talk. However, the passengers flying to Armenia from France, Iran, or Russia are very different! And American Armenians differ considerably from Armenians from India! Preserving almost imperceptible, albeit unmistakable Armenianness, all of them have absorbed the culture and traditions of the countries of their permanent residence. While their ethnic origin is still visible, their differences and fragmentation are even more visible.

In describing the current state of Armenian diasporan communities, we have already mentioned their closed nature and their focus on themselves. Armenians from different countries, and even from different groups within one and the same city, have little contact with each other. Diasporan communities do not nourish one another and do not merge their interests even now, in the early 21st century. The question therefore arises: can we still argue that today’s Armenians are a network nation? The answer is, not really, but with a caveat. While our identity is being gradually eroded and it would seem that very little unites us, in critical moments it is as though the nation suddenly wakes up, comes together and starts acting in a coordinated manner to achieve a shared goal. That was what happened during the earthquake, the blockade, the war, and the civil unrest in Armenia. No matter how far from each other we may live, we are not indifferent to what happens in Armenia or to the disasters faced by Armenians in the Middle East. The problem is that this emotional mobilization is short-lived: sooner or later we again enter a walking dream. However, members of the ‘new’ Diaspora who left Armenia in the past 25 years – over 805,000130 of them – are more willing to interact with each other and at times to work together successfully. It is possible that the ‘new’ Diaspora could pave the way and promote the closer links between the ‘old’ Diaspora and Armenia.

130 Source: United Nations, Department of Economic and Social Affairs, Population Division, Trends in international migrant stock: The 2017 revision (United Nations database, POP/DB/MIG/Stock/Rev.2017). http://www.un.org/en/development/desa/population/migration/data/estimates2/estimates17.shtml (accessed May 24, 2018). Our Vision of the Future 159

For the fragmented nation to reunite on a systemic basis rather than occasionally because of some disaster, joint activities are required which will bring Armenians together regardless of where they live. In other words, common goals and interests are needed. Only then will our nation truly become a network nation, capable of feeling global unity and acting at a local level. Therefore, our particular interest is in projects that are implemented outside Armenia. Often questions are asked about the advisability of such projects, and whether we are wasting scarce resources. Why, for example, should we renovate the church of St. George in Tbilisi and establish a cultural-educational center affiliated with the church, why should we restore the garrison church in faraway Potsdam, and why should we participate in the construction of the Armenian spiritual and educational center in Moscow? Why did we and our partners support the Biennale of Modern Art on the island of in Venice and projects in Istanbul, Singapore and Jerusalem? In all such cases we use three criteria:

1. The presence of a rich Armenian cultural, architectural and historical heritage that requires renovation, preservation, or conceptualization. As Armenians, we are responsible for preserving and transferring to future generations the invaluable heritage that our ancestors left in various cities and countries of the world, in Paris, Venice, Vienna, Krakow, Munich, Moscow, St. Petersburg, Rostov-on-Don, Baku, Jerusalem, Beirut, Istanbul, Aleppo, Tabris, New Julfa, Kolkata, Mumbai and Hong Kong, as well as in Egypt, Ethiopia, Singapore, etc.

2. The presence of diasporan Armenians in a given country or territory. The most significant places in that respect are Moscow and southern Russia, Tbilisi and Javakheti in Georgia, Beirut in Lebanon, Isfahan in Iran, Sydney and Melbourne in Australia, Paris, Lyons, and Marseilles in France, Antwerp in Belgium, Los Angeles, New York, Boston, and Washington in the USA, Montreal and Toronto in Canada, and Buenos Aires, Cordoba, Montevideo and São Paulo in Latin America.

3. An opportunity to implement joint projects in priority development areas. In that respect such cities and countries as Seoul, Beijing, Shanghai, Hong Kong, Beirut, Dubai, Singapore, Switzerland, Costa Rica, Ireland, Finland, etc. should be emphasized.

We firmly believe that the world around us can be changed only through creative activities. By uniting people through networking, we provide them with a foundation in life and a sense of ownership of the common cause, and we help them to realize their talents. People should have the opportunity to choose a sphere of activities that is important and meaningful to them, to move around the planet, to cooperate with others, and to be creative in an atmosphere that gives them the confidence to do so. Involvement in such cooperation only partly rests on emotional choice. To a large extent it is grounded in a quite rational understanding of wider economic, cultural, and professional prospects. Let us demonstrate this by taking one of our platforms as an example, the Foundation for Armenian Science and Technology (FAST). 160

Finland St. Petersburg Moscow Ireland Antwerp Rostov-on-Don Krakow Toronto Montreal Akhaltsikhe Beijing Vienna Seoul Boston Paris Munich Tbilisi Lyon Venice Baku LA Marseille Istanbul Armenia Aleppo Switzerland Isfahan Hong Kong Washington, D.C. Kolkata Egypt Beirut Jerusalem Dubai

Mumbai

Ethiopia Costa Rica Singapore

São Paulo

Sydney Cordoba Montevideo Armenian Diaspora Melbourne Armenian Heritage Partners Hubs Buenos Aires

Fig. 22: Hubs of the global network.

HiTech: FAST

For a long time, innovations in science and technology were the result of efforts by solitary scientists. In the late 16th century in Europe, the first scientific societies emerged, and in the late 17th and early 18th centuries, the first research laboratories were established in universities. In the late 19th century, the prototypes of the present-day research and development institutions were set up, where scientists from various fields worked together. Today the commercialization of scientific and research work, which has been typical for the past several centuries, is combined with globalization, i.e. with inter- disciplinary and transnational interaction, thanks to which the research and development sphere is reaching a new level.

In order to create a favorable environment for innovations in the country and to mobilize the intellectual, managerial, and financial resources of Armenia and the Diaspora, the Foundation for Armenian Science and Technology (FAST) was established in 2016. FAST combines non-commercial and commercial elements: education and science, start-ups and production. The main activities of FAST are the design of educational programs and the organization of conferences for scientists and entrepreneurs, grants for fundamental and applied research, introduction of best world standards, traditional and venture funding for companies and projects at an early stage of their development, and funding of the industrial introduction of the most promising technologies, and of other high-tech foundations and initiatives in Armenia. Our Vision of the Future 161

The priorities for FAST are four spheres where Armenia can become a world center of knowledge and competencies: theory and methods of data analysis, including artificial intelligence; computer-based training, data modeling and ‘big data’; biotechnologies; and new materials and microelectronics. The task of FAST as the ‘fund of funds’ is to create a platform for the implementation of projects in those areas. The platform will secure the functioning of a networked scientific structure and will make it possible to coordinate and consolidate the efforts of project participants and to combine the resources of Armenia, the Diaspora (several thousand scientists of Armenian descent work in various countries), and the entire world. Serving as a catalyst for change in the high-tech field, which is a priority for the development of Armenia, FAST will create optimal conditions for cooperation between the best minds, enabling the implementation of unique projects in Armenia which will be instrumental in gradually turning the country into a scientific- technological hub. FAST will enable Armenian scientists (above all young scientists) to conduct fundamental and applied research and to use their results to address the most important global and local problems. The most promising approaches will be exported as know-how to other countries of the world on a commercial basis. The Foundation will facilitate the introduction of advanced innovations that improve people’s lives. As world practice shows, the consistent introduction of scientific research results into various branches of the economy creates a multiplier effect and enhances their common progress significantly.

We have managed to bring together outstanding scientists, entrepreneurs, and professional managers from various countries on the Consultative Board of the Foundation. The Board members are:

> Noubar Afeyan, founder and CEO of Flagship Pioneering, Senior Lecturer (in 2000– 2016) and currently member of the Board of Trustees at Massachusetts Institute of Technology (USA) > Naira Hovakimyan, Professor of Mechanical Science and Engineering at the University of Illinois (USA) > David Yan, founder and Board member of ABBYY group of companies (USA, Russia) > Professor Lord Ara Darzi, Director of the Institute of Global Health Innovations, Minister of State for Health (2007–2009) (UK) > Serge Tchuruk, former Executive Director of Alcatel and Total SA (France) > Karapet Andranikyan, President of Hamburg University of Technology (Germany) > Mikhail Pogosyan, President of Moscow Aviation Institute (Russia) > Yuri Oganessian, Scientific Leader of the Laboratory of Nuclear Reactions at the Joint Institute for Nuclear Research, Full Member of the Russian Academy of Sciences and of the Armenian National Academy of Sciences (Russia) > André Andonian, Managing Partner at McKinsey and Company (Japan) > Armen Gevorgyan, Chief of Staff of Presidential administration (Armenia)131

131 In September 2018, the Minister of Education and Science of the Republic of Armenia Araik Harutyunyan took the place of Armen Gevorkian on the Consultative Board. 162

> Hovhannes Avoyan, Founder of PicsArt Company (Armenia, USA) > Vardan Sahakyan, Deputy Chairman of the Armenian State Committee of Science, PhD in Physics (Armenia)

It was possible to put together such an expert Board largely thanks to the attention that the Aurora Humanitarian Initiative had drawn to Armenia. We hope that new members will join the Board in the future.

The founders of FAST provided initial funding of 13 million US dollars and announced a global fundraising campaign with a view to increasing the fund amount to 250 million US dollars in the next five years.

Bridging the cultural gaps that have emerged over time between ethnic Armenian groups, and gradually uniting the nation, will require post-Soviet Armenians to discard certain familiar mental stereotypes. This will only happen if the residents of Armenia are prepared to expand their own cultural space, incorporating into it Armenians from other countries. Both post-Soviet and diasporan sub-groups indeed need to renew their mutual perceptions of each other. This is possible only if, firstly, there is an in-depth study and a sober analysis of national history which takes account of the specifics of each sub-ethnos and, secondly, cultural, business, and intellectual exchanges are encouraged between groups. This will also help diasporan communities, which do not form a cohesive whole. A tolerant and inquiring attitude toward the differences that have emerged between our ethnic groups in the course of history is a key to the enrichment of our common culture and the crystallization of Armenian identity in the 21st century.

It is our hope that useful joint activities will not only bring Armenians closer to one another and help to bridge cultural gaps, but will also restore our reputation in the world. We will start trusting each other more, and the trust that others have in us will increase too. Thus, we will regain the lost social capital which an ‘interpreter nation’ needs. This is extremely important in the present-day world, where trust in institutions is dwindling (especially in developing countries with a high level of corruption) and, conversely, trust in networking is on the rise. It should be recalled that networking was perfected by our ancestors and was for a long time one of our strengths.

As we have said more than once, in developing an awareness of our identity we must overcome the victim-nation complex and change our self-perception, recovering a feeling of dignity and quiet pride. We also want to change how the rest of the world perceives Armenians. That is why we decided to launch the Aurora initiative, which helps to bring Armenians together irrespective of where they live, and draws the world community’s attention to Armenia. Our Vision of the Future 163

Aurora Humanitarian Initiative

We have mentioned on a number of occasions the connecting role that the memory of the Genocide has played and continues to play in the lives of generations of Armenians all over the world. As the centennial anniversary of the national tragedy approached, we and our partners gave much thought to what could be done in commemoration. We wanted to carefully re-think and reflect the events of the past in the context of the new era. Despite the systematic extermination of Armenians and annihilation of our cultural heritage, the Ottoman authorities did not achieve their goal of wiping our peоple out of existence and of destroying even the memory of us. Having suffered tremendous loss and been deprived of its lands and accumulated material wealth, the Armenian nation nevertheless survived. In reflecting on this fact, we arrived at the conclusion that the best symbolic response to the crimes of the past would be life-asserting success, and not just mourning for those who lost their lives. When we examined the history of the Genocide and the horrific events in the lives of our families, we found truly incredible instances of heroism among individuals and organizations. While there are many accounts of victims and murderers, testimony concerning survivors and saviors is much rarer. We therefore set out to tell the general public about the forgotten heroic deeds of those who saved Armenian lives in the Ottoman Empire, and to express our gratitude to their descendants now living in different countries. Risking their own lives, their great-grandparents saved about 120,000 Armenian children, thereby giving the chance of life to almost one million Armenians living today. We want the theme of humanism, gratitude, selflessness, and the triumph of the human spirit, to become truly pertinent in the modern world.

On 23 April 2015, the Armenian Apostolic Church canonized 1.5 million victims of the Genocide. From now on they are recognized as saints and martyrs for their faith. It was a celebration of life’s victory over death and a most important act which, in our view, should allow Armenians to stop seeing themselves as a victim nation. In 2015, the project 100 LIVES was launched. We created a multi-functional online platform in six languages in which we revealed to ourselves and the world Genocide chronicles that had not been previously widely known. This online platform, the Aurora Humanitarian Initiative, contains many stories about those who were saved and those who saved them. It was named in honor of , a woman who pioneered the raising of awareness of the Genocide among the world community through her book (1918), which describes the horrors that she had gone through. Her book, and the eponymous film in which Aurora played a leading role, spurred millions of Americans to donate money to help Armenians, Greeks, and Assyrians. All in all, 115 million US dollars were collected (2.8 billion in today’s dollars).

During the first four years of the Aurora Initiative we have succeeded in arousing profound interest in the acute humanitarian problems of the present day, and we have encouraged people to think about their possible personal contribution to solving those problems. Invitations to 164

nominate candidates for the Aurora Prize have generated an extremely strong response: while in the first year nominations were received from 27 countries, in the second year there were nominations from 66 countries, and in 2017 there were 750 nominations from 115 countries.

Originally conceived as an initiative designed to help the nation to shed its victim complex, to pay homage to those who perished in the Genocide years, and to express gratitude to the saviors of Armenians, Aurora has evolved into an international humanitarian movement to honor today’s heroes and to express our national gratitude through action. We were helped to survive, and today we help those fearless individuals who save the most vulnerable members of society at their own risk. This global ‘relay race’ of goodness, which once helped us to survive, reminds the world community about the importance of universal human values and about the need to change attitudes toward humanitarian issues facing the world. The stories of present-day heroes urge people to go beyond passive sympathy and to move to action. Armenians are a nation that has immense experience of survival. That gives them the right and the obligation to take a leading role in advancing the global humanitarian agenda. By drawing the attention of the world to Armenia, which launched this initiative, Aurora serves as a source of pride for Armenians and identifies them as a nation that has rejected victimhood and opted for an active role in the modern world.

We are glad we have become pioneers in this field: despite the wide scope of the global humanitarian agenda, there is not a single award that recognizes those valiant individuals who consistently risk their lives to save others on a daily basis. The Aurora Prize is also unique in that for the first time these wonderful individuals can not only apply for grants but give grants to others. Each laureate of the annual Aurora Prize receives 100,000 US dollars for their own humanitarian project and is entitled to distribute one million US dollars among three organizations of their choice. Thus, the first Aurora Prize laureate, Marguerite Barankitse, a founder of Maison Shalom and REMA Hospital in , who saved thousands of children and provided aid to orphans and refugees affected by the civil war in that country, supported humanitarian initiatives that pursued the same goals in Brazil, the Democratic Republic of Congo, and Rwanda. The Aurora Prize laureate in 2017, Dr. Tom Catena from the Mother of Mercy hospital, the only surgeon in the rebel-controlled territory in the Nuba Mountains of Sudan, who had saved thousands of lives, decided to give one million US dollars to humanitarian organizations that sponsor missionary hospitals in the remotest and most disadvantaged areas of Africa, where the local population is particularly affected by lack of access to medical assistance. The third Aurora Prize was awarded to lawyer Kyaw Hla Aung, who is fighting for the rights of the ethnic Rohingya group in Myanmar. Muslim by religion, the Rohingya people have for many years been subjected to harassment. The laureate divided his prize among three international organizations that provide medical assistance to refugees in Myanmar.

Thus, acting together with the organizations selected by the Aurora Prize laureates, the Aurora Humanitarian Initiative has by now supported 23 projects in healthcare, education, and refugee assistance in 15 countries. Our Vision of the Future 165

The Aurora Prize award ceremony is characterized by unusual grandeur and spectacle, while usually such ceremonies are more modest. We deliberately organize it that way in order to promote wide interest in our agenda. According to a public opinion poll conducted in 2017 among non-Armenians in eight countries and diasporan Armenians in five countries, 8% of non-Armenian respondents and 15% of Armenian respondents were aware of the Aurora Prize. When compared with the previous year’s data, the level of awareness had significantly increased. In addition, the survey included questions about Armenia, and the respondents’ answers demonstrated that interest in our country had grown considerably.

As part of our initiative, a survey called the Aurora Humanitarian Index is also conducted annually. Its goal is to probe public perceptions of humanitarian issues and the effectiveness of humanitarian interventions in various countries, and to understand what factors inspire empathy in people and motivate them to act in the interests of others. The Aurora Humanitarian Index is invariably discussed during the Aurora Dialogues, which are held in different countries and, of course, in Armenia. Leading humanitarians, philanthropists, academics and journalists take part in these events. A special platform is provided for young people to discuss humanitarian issues.

The format that we have selected allows us to draw considerable attention to the Initiative and to attract substantial aid from donors. Aurora brings together five categories of participants, viz. representatives of the business community, politicians (Armenian and international), humanitarians, major foundations, and leading media outlets. Such a diverse range of participants distinguishes our initiative from any other. The identity of the Aurora founders, the world reputation of members of the Prize Selection Committee, the original nature of the award ceremony, a powerful initial impulse (Gratitude in Action, described below), and the broad scope of participants, attract major donors who would have been far less inspired by any other similar project. The Aurora Initiative has become a global humanitarian movement. It has brought together 400 partners and friends, and over 2,000 volunteers have applied to take part in Aurora activities.

The Aurora Humanitarian Index has revealed the issue of so-called passive compassion, i.e. a gap between the compassion that people feel for victims and the willingness to provide practical help to them. Most people are sympathetic to refugees and believe that they should be helped. However, at the same time they are skeptical about their ability to make a difference as they believe that it is states and international organizations that should deal with humanitarian issues. Yet, help can be of different kinds. One can do something useful even without huge resources.

The Aurora Gratitude Projects deserve special mention. These are humanitarian and educational initiatives which help children, refugees, and other at-risk groups. Through these projects, the descendants of the survivors of the Armenian Genocide symbolically express their gratitude to those individuals who at that time helped their great-grandparents to survive. Besides creating tangible public good, these projects 166

play another important role as well. In today’s world they are expanding the constantly narrowing circle of trust by including very different people, regardless of their influence, connections, and financial resources.

A scholarship fund has been set up within Aurora Gratitude Projects to allow children from Middle Eastern countries who are affected by wars and conflicts and find themselves in a vulnerable situation, to study at UWC colleges in 16 countries of the world, including Armenia (UWC in Dilijan). We use this opportunity to express gratitude on behalf of the entire Armenian nation to peoples in the Middle East who one hundred years ago saved Armenians from the Genocide and are living through difficult times today. Funds are also allocated to aid programs for Syrian Armenians. We provide aid to those who have remained in Syria, those looking for temporary shelter elsewhere, and those who have decided to settle in Armenia and are looking for assistance with integration and finding a job.

Sometimes we face the criticism that in a developing country such as Armenia, a country which is in a difficult economic situation and de facto at war, costly private initiatives such as Aurora are an unaffordable luxury. of this view contend that the considerable financial resources that are invested in Aurora should be devoted to the development of Armenia rather than to supporting humanitarian initiatives in far-off countries. In our view, it is important to do both. There are no scales by which it is possible to weigh the significance of modernizing the infrastructure in one’s own country against reviving the moral and intellectual core of the nation.

Armenia as a Hub

Let us turn to the discussion of the main issue that prompted us to write this paper, namely the issue of selecting the optimal development model for today’s Armenia. Earlier, in Chapter 4, we examined possible development scenarios for Armenia and alternative models which the country might adopt. The first two models, the ‘heavyweight’ and the ‘still backwater’, are clearly unrealistic. Taken together, Armenia, Artsakh, and the Diaspora have a very small population and do not have sufficient resources to aspire to the role of a heavyweight. And the still backwater option is not relevant in our case because of the geopolitical situation of the country, located among a cluster of sharp regional divisions. Only three options remain: a capsule, a peripheral state and a hub.

When analyzing the model of existence of present-day Armenia in Chapter 3, we concluded that it is the symbiosis of a capsule and the semi-periphery of a powerful centralized state (represented by Russia), something like North Korea in relation to China or Cuba to the Soviet Union. At present, while remaining a capsule that is historically aligned with Russia, we have started establishing relations with Europe and Iran. But that is not sufficient to ensure the sustainability of our model of existence. We can hardly hope to play a full part in world affairs if we retain our familiar isolation. More than once we have stressed the harmfulness and general exhaustion of the current form of existence in Armenia and, before the point of no return has been reached, we believe Armenia must choose one of the three realistic Our Vision of the Future 167

development models, namely a capsule (in the full sense of the term), a peripheral state (with a clear understanding of which country is the ‘imperial’ power), or a hub. And then, as we have stated in Chapter 4, we should implement the selected model as advantageously as possible.

A capsule can be regarded as the preferred model only if we agree from the outset that the best response to global challenges is isolation. In that case, we will have to decide how to attract the material and non-material resources needed for Armenian citizens to progress, while cutting ourselves off from the outside world and preserving our distinctiveness and identity. It can be assumed that Armenia will then rely on its own internal resources and, to some degree, on those of the Diaspora. Direct foreign investment and international aid can also be expected, but to a lesser extent. However, the capsule model raises the complex question of how to involve in our common cause at least half the diasporan Armenians (about four million people) and to encourage them to invest material and intellectual resources in the development of Armenia, whose population is only two to three million and is highly unlikely to rise significantly. How could ‘capsule’ Armenia attract diasporan Armenians and become the focus of their interests? Through reasoned discussion it might be possible to find a more or less acceptable solution, but on the whole this model seems to lead to an impasse. One of the main reasons why it does not offer prospects for development is that Armenia has historically been a mediating nation, to which isolation is alien. Of course, it would preserve our distinctiveness, but this very distinctiveness is at this point problematic, given today’s identity crisis in a closed, monoethnic country and the gaps between Armenian ethnic groups elsewhere132.

A peripheral state can be regarded as acceptable if we agree that for us, as for many small states, the best option is humble acceptance of force majeure in response to geopolitical risks and the need to ensure security. In that case, the question arises of how to avoid being an insignificant appendage and to become a prosperous and well-off peripheral state which is attractive to the country’s citizens, to the Diaspora and to the central power itself. For centuries we existed as a periphery of the Roman, Persian, Byzantine, and other empires, and then of the Soviet Union. That mode of existence became familiar to us, if not entirely natural. However, it should be realized that the development of the periphery is far from a priority for a centralized power. In addition, coordinating various spheres of life with the imperial center means that the resources of the center rather than those of the peripheral state itself are the main source of development. Moreover, this model entails socio-cultural harmonization between the periphery and the center, which may lead to further erosion of national identity and to the emergence of new obstacles to the bridging of gaps between Armenian ethnic groups. It should be borne in mind that the long-standing orientation toward Russia has not yet turned Armenia into an entirely peripheral state because, as we stated in Chapter 3, we failed to productively use the bountiful resources of the center. Meanwhile, the EU-Armenia Comprehensive and Enhanced Partnership Agreement that was recently signed opens up new

132 Talented film director and screenwriter Karen Gevorkyan presented his vision of Armenia’s development, which is largely similar to the model that we call a ‘capsule.’ His article was published fifteen years ago but is still relevant. See: K. Gevorkyan, K., ‘State-family, state-fortress,’ (in Russian), Literaturnaya Armenia, No. 3, (2003). 168

opportunities, and Iran, too, cannot be ignored. Sooner or later, the sanctions imposed on that country will be lifted, and we have long-standing relations with Iran, the roots of which go back to the distant past. Today, as so often over the centuries, we are faced with the need to select not only a development model but also an alliance. We will have to choose between the Russian Federation, Iran, and the European Union.

It should also be taken into account that the role of the state is totally different in the ‘capsule’ and ‘peripheral state’ models. In a ‘capsule’ country, the state acts as a fundraiser and a recipient of resources originating in other countries, and as the protector of the nation from within. In a country which is at the periphery of an ‘empire,’ the state tries to preserve the nation from within by relying primarily on the central power. Notwithstanding their merits, both of these models have serious flaws.

Our readers will already have understood that we are proponents of a ‘glocal’ future for Armenia and that we prefer a hub model, and we want Armenia to start moving toward this. We need to decide whether our nation is willing to remain a passive observer of world developments, settling for the most comfortable existence possible for its population and visitors within its historical territory, or is capable of becoming a genuine player in global political, economic, and cultural life. We are confident that a hub model will ensure Armenia’s full integration into the world, will restore Armenians’ age-old mission of being effective intermediaries between nations, and will at the same time make our country a focal point for the global nation. We also believe that in the age of uncertainty, this historical role of ours, which has now been lost to a large extent, is in demand. While in the past the role of ‘intermediary’ and ‘interpreter’ was assumed by individual members of the Armenian people, today a sovereign state and its residents can perform it.

A hub-state model which can create incentives for mutually beneficial exchanges on the global level requires above all mobilization of the resources of diasporan Armenians. That means concentrating valuable niche competencies and assets, using highly qualified specialists from different countries, as well as a wide network of contacts and ties. Armenia must become a focal point for the majority of Armenians. Existing Armenian communities need to be politically, economically, and culturally integrated on a common national basis. It is only by this means that we will be able to attract foreign investment, while inside the country we need to release capital from the shadow economy and to locate internal resources. It is this model that will enable us to access cutting-edge technologies and their development methods, and to bring to Armenia the best specialists of various nationalities and faiths who want to share our dream with us.

A clear advantage of the hub model is that close involvement in global activities will allow us to make a transition from preservation to prosperity quite quickly, because it will provide access not only to the resources of our Diaspora but also to direct foreign investment and to investment by international organizations. Of course, this model will require a competent choice of breakthrough areas of development; it is important to minimize mistakes in making forecasts because the cost of missed opportunities will be very high. In the projects Armenia-2020 and Armenia-2031 we identified priority areas for development Our Vision of the Future 169

so that Armenia can start moving toward becoming a hub. These areas are global education, medicine and healthcare, information technologies and science, and intra-regional and international relations. We therefore opened an international college in Dilijan as part of the international system of UWC colleges. In consequence, the Dilijan UWC has established contact with leading educational hubs throughout the world. In other words, it has become a participant in a global network, as described in the Note below.

Our geographical location, which was a cause of our national tragedy in the past, is one of the main advantages today, and we must make use of it to the maximum extent. Our immediate neighbors Georgia and Azerbaijan cannot claim to be hub countries because they do not have such a large, extensive, and influential Diaspora in the region and in the world. Our diasporan connections in the Middle East, including Armenians who have recently left Syria, Lebanon, Iraq, Iran, and Turkey, are an additional ‘trump card,’ which we need to make skillful use of. Our knowledge of the former Soviet Republics, and our ties in those countries, some of which have been preserved, can also benefit us. We must make efficient use of all available opportunities despite closed borders with Turkey and Azerbaijan. Even though there are no diplomatic relations between Armenia and Turkey and Armenia and Azerbaijan, contacts should be established via non-governmental entities (and closed borders are not a barrier in the world of digital communications).

We share the opinion of Vladislav Inozemtsev, Director of the Moscow-based Center for Research on Post-Industrial Societies, who believes that “Armenia should engage in fresh thinking about opportunities that open up due to her geographical location, unenviable though it is in many respects. The events of the last few years, viz. the lifting of economic sanctions on Iran and the latter’s return to global geopolitics, Turkey’s backsliding into authoritarianism and taking an anti-Western stance, Chinese ‘Silk Road’ projects…. All that makes it necessary to establish close ties with Iran and to build an infrastructure that connects Iran with the Black Sea coast (possibly with the participation of an international consortium of investors).133” According to Inozemtsev, Armenia should also start thinking about the development of aviation, given that Zvartnots airport is located more than a thousand miles away from the main regional air hubs.

However, we can only partly agree with the author’s contention that the success of such infrastructure projects will make Armenia an important transit country. In our view, Armenia should not limit itself to that status (even though the fulfillment of such a task can in itself attract considerable investment and provide new jobs). We should be more audacious and strive for the role of a full-fledged hub that serves the interests of all Middle Eastern countries and others. We believe that in such a role Armenia can claim the status of a neutral territory of sorts, the ‘Switzerland’ of the Middle East, i.e. a convenient and profitable area for regional and international integration in the region, where the situation is constantly changing and sometimes becomes explosive. As we have already said, transition to such a model requires

133 ‘The : Challenges and prospects,’ (in Russian), Golos Armenii, 03 July (2017). http:// golosarmenii.am/article/55384/ekonomika-armenii-vyzovy-i-perspektivy (accessed May 16, 2018). 170

a drastic increase in the quality of hard and soft infrastructure, the availability of a modern, well-designed airport, regular and inexpensive flights to at least thirty cities, high standards of hospitality, a friendly social climate for non-Armenians who decide to live and work in Armenia, an advanced, soft tax regime for individuals and legal entities, progressive legislation favorable to creative activities, and measures to attract funding for advanced, unique research and development projects. It would be profitable for Russia, Iran, the Arab countries, the emerging Kurdistan, and the European Union to cooperate with such an Armenia. Under such circumstances Armenia could remain neutral, holding fast to her own interests.

The move to become a hub will require considerable intellectual efforts on the part of our elites because we will have to find a delicate balance between the interests of the world at large and of a numerically small and fragmented nation, if we are to clearly define and defend our own position. We face a most complex task of convincing our powerful neighbors that it is more profitable for them to have Armenia as a regional hub than to regard the country as their own periphery. To that end it is necessary, inter alia, to establish an easy-going, friendly environment for business cooperation within the country. This task can be accomplished only through extremely intensive and well-coordinated actions by the national elite.

In relation to Armenia’s transition to an open form of existence, let us mention once again Lee Kuan Yew, who was one of the architects of Singapore’s economic miracle. When he came to power, Singapore was a backward country with no natural resources and was surrounded by neighbors which, like Singapore, could not boast a high level of development. The new leader realized that progress was possible only if radical changes took place in the minds of the people. In order to accomplish this, Singapore’s residents needed to be exposed to the best practices the world could offer, and to experience at first hand differences in the quality of economic and social life. One cannot really appreciate the difference between a Trabant and a Mercedes until one has moved from one to the other. Therefore, during the first ten years of his time in office Lee Kuan Yew managed to send a good half of aged 18–45 to the United States, Europe, and Japan so that they could see and experience for themselves the best practices that their country should be inspired by and would stop comparing themselves with less developed neighbors such as Malaysia and Indonesia. Later on, Lee Kuan Yew said, “If we hadn’t had the example of the West in front of our eyes, we would have never gotten ahead.” Of course, it is not a question of copying Singapore, especially since that country is very different from Armenia and is not a model democracy. However, some elements of the Singaporean experience could prove useful for us. This was shown during discussions with Lee, who visited Armenia at the invitation of one of the authors of this paper. In particular, in opening up the country to the rest of the world, we should not limit ourselves to maintaining mutually beneficial relations with our familiar counterparts, but should also choose those who may become our benchmarks and productive partners in the intellectual sphere. Ireland, Finland, Singapore itself, etc., can be regarded as such countries. Armenia should establish special relations with the countries that it wants to emulate, in other words with countries that have mastered the role of a hub in their regions: Switzerland, the UAE, Luxembourg, etc.

Of course, the hub model raises serious issues of cultural development and requires joint reflection on our identity, taking into consideration new world realities. We need Our Vision of the Future 171

simultaneously to improve our linguistic culture and to expand the learning of foreign languages, European as well as Oriental, such as Farsi, Arabic, Turkish, Kurdish, Georgian, etc. We must become a polyglot nation in order to have an advantage over our neighbors. We have to learn to receive not only Americans, the Japanese and Europeans but also to offer understanding and tolerance to representatives of the nations that are our regional neighbors. While preserving and strengthening our national identity, we should not be apprehensive of the arrival of people of different nationalities and faiths in Armenia. Of course, openness creates not only new opportunities but also new challenges. In particular, it considerably increases demands on the competitiveness of the local population. However, we should accept that we have little choice. Enhanced by a unique geopolitical location, our cultural values can become a guarantee of our security. If a country can offer its neighbors and the world something truly new and attractive, that will in itself be an important key to its security and sustainable development. Therefore, all our initiatives which are implemented in Armenia are aimed at enabling the country to become a hub. It is impossible to foresee a precise timing; however, this movement needs to start now, and we are doing just that through the projects Armenia-2031 and, with a longer-term perspective, Armenia-2041.

In the present-day world it will be impossible to retain and attract talented individuals if the country lacks advanced educational institutions, world-class medical centers and high- quality urban infrastructure. The country’s citizens will be willing to go on living there, and diasporan Armenians and foreigners will be willing to come to Armenia to work, even at lower salaries, if they can be sure that their families will be provided with modern healthcare and a pleasant living environment, and their children will receive a decent education. One of our anchor projects, described below, serves such an educational purpose.

United World College Dilijan

Education and enlightenment have been one of the main values of the Armenian nation throughout its entire history. Therefore, we saw that one of our primary tasks was to open a unique educational center in Armenia that would meet the highest international standards. We also thought it exceptionally important to implement such an ambitious project because the establishment of an international school in a monoethnic country was to some extent a return to the traditional Armenian role of mediator, and at the same time it would bring out our best qualities.

If, back in 2008, we had asked Armenian government officials and representatives of the general public what educational project should receive priority, they would have certainly suggested that we donate a large sum to the existing schools in Armenia in order to improve educational provision and infrastructure. We realized the importance of such aid but we wanted to embark on more profound, systemic changes. Our decision to open an international school in Dilijan for children from a variety of countries with differing ethnic origins matched our vision of Armenia’s future as a hub country that would serve 172

the region and the world. We also clearly realized that we would not be able to attract high- quality foreign specialists and to create incentives for the return of diasporan Armenians unless there was a school in Armenia which met high international standards.

It was our conscious decision to join the United World Colleges (UWC) movement which, besides UWC Dilijan, comprises 16 international colleges and uses a centralized system of selection of talented children regardless of their parents’ financial circumstances. UWC membership enabled us to attract students and teachers to Armenia from a range of countries and to introduce advanced teaching practices. Today, four years after its opening, over 200 children from over 80 countries are studying at UWC Dilijan. Prior to arriving in Dilijan, most were not aware of the existence of Armenia. All non-Armenian students at UWC Dilijan take a six-week basic course in Armenian language and culture. The students are taught by 40 instructors from 17 countries. The selection process of the instructors is very rigorous. A new approach to education makes it possible to develop basic qualities that students need in the 21st century, viz. skills of interaction with people from differing social groups, ethnicities and races, flexibility, and the ability to take risks, to think out of the box, to take a creative approach to the solution of any task, and to properly express their thoughts and ideas.

UWC membership gives Armenian students the opportunity to enjoy high-quality, advanced international education, and to use the skills and knowledge acquired for the benefit of the homeland upon their return from a UWC college abroad. The UWC National Committee in Armenia is tasked with selecting local students who want to study at the UWC Colleges. The Committee started operating in 2011. Since then, 54 Armenian students have had the chance to study at UWC Colleges in 15 countries of the world, apart from the College in Dilijan. Most students receive grants that cover entirely or partly the tuition and accommodation costs.

When opening the international school in Dilijan, we thought it essential to ensure interaction between students and residents, especially young residents of the town and nearby villages. To that end the Dilijan Community Center was established, an information and educational platform that organizes education for local children and adults and promotes their active involvement in the life of the town. Today, about one thousand residents of Dilijan are taking part in the on-going programs of the Center. Open lectures, master classes, courses in English and Russian, training sessions for the creation and management of social projects, tours to other towns and countries for the exchange of experience, etc. are arranged. All these activities create a broad range of opportunities for local residents by urging them to engage in social entrepreneurship. An important aspect of the Center’s operation is self-realization for women, and their involvement in the socio-economic life of the local community. Thanks to the Center, Dilijan has been included in the UNESCO Global Network of Learning Cities. Café #2, a special social project for young residents of Dilijan, has already been operating for two years on the shore of the lake. Here they acquire skills for working in the hospitality industry, making acquaintances and spending time together. In the summer of 2018 about Our Vision of the Future 173

50 UWC graduates came to Dilijan and other cities and towns in Armenia to take part in some of our projects (IDeA, FAST, etc.). Moreover, seeing what a wonderful educational institution the College has become, children in Dilijan have begun to strive for learning. At present, ten adolescents from Dilijan are enrolled at UWC Colleges around the world.

The presence of state-of-the-art educational institutions in Dilijan that meet 21st century standards, such as the Ayb School, the TUMO Center for Creative Technologies and the Monte Melkonian Military and Sports College, proves that different educational models can coexist in Armenia.

The next step will be the establishment of a Dilijan educational cluster on the basis of our Scholae Mundi educational platform. This cluster is a special urban environment which, on the one hand, will help children and adults to acquire skills necessary for success in a post-industrial society while, on the other hand, it will help train specialists in the field of education, attracting the best of the best to this profession. We hope that eventually both Dilijan and the whole of Armenia will become an international educational hub.

Focal Point for the Global Nation

Numerous meetings with members of the Diaspora have indicated clearly that until the task of making Armenia a prosperous country becomes a nationwide project, it does not make sense to talk about the deeper involvement of diasporan Armenians in our common cause. At present, major business people of Armenian descent, whose combined fortune is several times larger than Armenia’s GDP, donate money to charity but do not invest in the country’s future. We have to face the truth: 200–300 million US dollars of direct foreign investment within the last two years (the lion’s share of which is money coming from the Armenian Diaspora) looks pathetic against the background of an annual amount of 2.3 billion US dollars of remittances that migrants make for the livelihood of their families in Armenia. This excessively modest figure demonstrates that during the 27 years of independence Armenia has not become a focus of vital interest for the Diaspora. The joint projects that are being implemented today in Armenia by its citizens and by diasporan Armenians are highly successful, but they are still rare exceptions.

The Armenian domestic market is rather small, and that makes it difficult to attract considerable direct investment in the various sectors of our economy by transnational corporations. It means that we need to look for non-trivial ways to attract investment in innovative projects which could subsequently be successfully exported to other countries in the form of new technologies and know-how. Armenia must become a center of gravity for the best minds, who, by pooling their efforts and exchanging experience, will be able to generate fresh ideas. First and foremost, we mean members of our Diaspora, but it can be expected that these talented people will, by using their wide contacts in various countries of the world, attract others as well. 174

Let us then outline a number of problems that can be solved only in a collegial manner. First of all, we need to realize what the notion of being a nodal center of a global network means when applied to present-day conditions. The existing model of relations with the Diaspora is regulated by the Ministry of the Diaspora, a successor to the Soviet Committee for Cultural Relations with Armenians Abroad established in 1964. As a government agency, the Ministry has a clearly defined mandate and claims a share of the state budget. There are also stand- alone public-private institutions, the Center for Strategic Initiatives, for example, whose mission is to establish a dialogue between the state and members of the Armenian Diaspora, chiefly in order to attract investment to the country. The existing hierarchical model which governs the relationships between the country and the Diaspora was undoubtedly the only model that was possible in the Soviet Union, but it still largely predominates in present-day independent Armenia, and it holds back the transition to a networked, integrated global nation. Furthermore, the traditional hierarchical institutions of the 20th century are not capable of regulating networks. There is a good example, the Ministry of Aliyah and Integration in Israel, which facilitates the repatriation of Jews. However, we should strive for a more flexible and modern form of national integration. We need to establish, firstly, a Ministry of Absorption, to provide assistance to Armenian repatriates and to all those who want to live and work in Armenia and, secondly, a Committee for the Diaspora, a private-public body which would include representatives of Armenian Diasporas in Russia, Iran, USA, France, Lebanon, and other countries, and would deal with diasporan problems in the entire world.

Since we are living in an age of globalization, we often meet people whose interests lie in various parts of the world, forcing them to be constantly on the move. Among Armenians, who have always been an extremely mobile nation, there are quite a few such individuals, and with the passage of time there will be more of them. We call for a broader approach and for recognition that in order to establish and maintain ties with Armenia it is not necessary to be constantly present in the country. In practical terms, let us rephrase the question in the following way: “What kind of economic and legal institutions do we need in order to encourage diasporan Armenians and citizens of the country to initiate entrepreneurial projects in Armenia?” And another question is: “What kind of tax legislation for legal entities and individuals do we need for Armenia to become a profitable place and to retain earnings and savings within the country? Are we willing to establish a highly favorable tax regime for individuals who plan to live in Armenia in their old age and pass on their wealth to their children?” A creative and reasonable approach to reforming the tax system will allow Armenia to attract considerable financial resources and thus provide ‘fuel’ for economic growth. We should make arrangements to ensure that every Armenian not only has an emotional connection but is also moved by practical, pragmatic considerations, and feels more than a guest in the country, while at the same time being able to freely move around the world and spend several months or weeks a year in the homeland.

We should be conscious of the fact that the Armenian Diaspora is not a single unified organism with clearly outlined priorities and expectations with regard to Armenia. It is an illusion to hope that diasporan Armenians will of their own free will engage actively in the affairs of the country while the existing extractive system persists. In order to reverse the current perilous trend, we should start with ourselves. On the one hand, we need to understand Our Vision of the Future 175

what Armenia is capable of and willing to offer to the Diaspora, taking into consideration the full diversity of the latter, while, on the other hand, we should assess pragmatically and constructively what the present-day Diaspora, given its fragmented nature, expects of Armenia134. At present, we do not have the results of in-depth studies of the expectations of the various diasporan groups. Therefore, what we touch upon below are conclusions based on our experience of interaction with members of the global Armenian community.

We assume that a certain part of the Diaspora would like to see Armenia as a safe haven in the event of a real threat of physical extermination or persecution, most probably some cataclysm that forces people to flee their familiar place of residence. Is the Armenian state prepared to provide security for all diasporan Armenians, irrespective of the reasons that force them to seek protection, i.e. to disregard in some situations existing international conventions? A similar state policy has been conducted for decades by Israel with regard to Jews who have been subjected to persecution outside the country, regardless of whether or not those individuals hold the citizenship of Israel. Operation Moses and the subsequent operations Joshua and Solomon to airlift Ethiopian Jews to Israel from the civil war zone in Sudan were undertaken over fifteen years starting in 1984 and were instrumental in saving thousands of lives, even though norms of international law were violated in the process. This is a dramatic example of organized exodus and salvation; however, not infrequently we witness similar actions undertaken by states with regard to their ethnic brethren on a smaller scale. We do not know what natural, political, or economic disasters the future has in store for us, but we can be certain that these will occur from time to time. Is Armenia today ready to admit diasporan Armenians and to become a safe haven for them?

Over the period of the last one hundred years, efforts by members of the Armenian Diaspora to achieve international recognition of the Armenian Genocide and to receive financial compensation have not been supported by the Armenian state. Trials in various international courts have taken place and are taking place without the participation of official representatives of the Republic of Armenia because the Armenian state is not, legally speaking, an aggrieved party. As a full member of various international institutions, the Republic of Armenia exclusively represents the interests of its citizens but not of the Armenian people as a whole and in consequence, it would seem, meets with the disapproval of certain diasporan circles. We are not specialists in international law or international relations, but we believe that Armenia must change its stance on the global stage, if it indeed wants to represent the interests of all Armenians.

Of course, government institutions have their limitations. However, non-governmental organizations can exist today in Armenia. When necessary, they are capable of providing effective assistance to diasporan Armenians in distress. For example, the unfortunate residents of Kessab in Syria and Havresk in Iraq who resisted Islamic State troops, needed

134 In March 2017, a new study, the Armenian Diaspora Survey, was initiated. This examines the connections between Armenian diasporan communities and individuals throughout the world. The project is led by Dr. Susan Pattie (Armenian Institute, London). 176

such assistance. There should be more such civic organizations. Frustrating though it is to realize, the Armenian General Benevolent Union managed to collect only five million US dollars in donations for aid to Syrian Armenians, and only 20,000 Syrian Armenians moved to Armenia from the civil war zones. Unfortunately, we also failed in terms of preserving our huge cultural heritage in Syria, which was seriously damaged during hostilities.

In recent years, civil society in Armenia and some diasporan circles have discussed issues such as granting citizenship to members of the Diaspora and electoral rights for expatriate Armenian citizens. It is a matter of involving the Diaspora in the life of Armenia, on the one hand, and of ensuring the principle of inclusiveness for its citizens, on the other. We propose to place this issue in a wider context. Is the Republic of Armenia willing to create transparent technological mechanisms (based on block chains) that will allow citizens residing abroad and diasporan Armenians to take part in referendums on specific problems relating to the development of the country and the nation? Given a lack of trust in the authorities, it is necessary to look for new ways of arriving at a national consensus.

For decades, developing countries have been trying to follow in the steps of developed countries, often imitating their ‘recipes’ for success as if trying to catch a fast moving train and clinging to the proverbial last car. However, in the age of liquid modernity it is not enough to follow someone else’s example. It is worth rethinking the role of the state, especially in the context of moving toward the hub-country model of a focus of interest for a global networking nation. People are increasingly becoming citizens of several states and make a conscious choice of place of residence away from their historical homeland. How can the state ensure the safety of such citizens and their compliance with the law? How will the widespread introduction of new technologies affect the system of public administration when serving people spread around the globe?

The Israeli historian Yuval N. Harari believes that ‘big data’ will in the future allow the results of any democratic election to be forecast with a high probability of accuracy, thereby ensuring a regular rotation of power and even exerting an influence on the results135. Now that there is universal access to the internet, we already allow the new technologies to do similar things by expressing our likes and attitudes through social networks. Do ‘big data’ therefore devalue democratic elections? Maybe it would be better to use blockchains and big data to conduct referendums on issues in public life, thereby expanding the circle of participants in the decision-making process, which was previously delegated to elected representatives.

We do not aim to describe all the problems that may require solutions in the future. We are even less inclined to call for revision of the underlyging principle of democracy. However, we are aware of the need to discuss at least some of these issues, those that are most urgent. No one can stop the changes taking place in the world. We are concerned that in present-day Armenia, the issues that are dictated by these changes are not only left unaddressed but are

135 Yuval Noah Harari. Homo deus: A brief history of tomorrow (London., etc.: HarperCollins, 2017). Our Vision of the Future 177

not even on the agenda. It is also regrettable that in copying Western models, most developing countries, including Armenia, do not take account of the realities of the 21st century and do not look for new models that suit them.

The issues that need to be addressed will increase in number and become more acute if Armenia starts moving toward the hub model by consolidating the resources of the entire global nation. Moving towards the hub will pose difficult questions for those who tend to define Armenians by ‘blood’ (they will also have to decide how to determine the ethnicity of individuals from mixed marriages). As we have already remarked, quite a few people wonder in earnest whether Muslim Armenians, Catholic Armenians and members of other denominations, not to mention atheists, agnostics, etc., can be regarded as genuine Armenians. Can a non- Armenian obtain Armenian citizenship with all the rights and obligations that that entails? Is belonging to the nation determined by knowledge of the language? Is it reasonable to retain the notion of a titular nationality in a hub country? All these questions are crucially important and need to be discussed openly in a monoethnic closed society which reacts with particular sensitivity to issues of ethnic identity.

The Diaspora needs a strong Armenia no less than Armenia needs a strong Diaspora. However, the question of whether our nation should in principle have a single center in the 21st century is extremely complex. We have often been the target of well-reasoned criticism over the advisability of a single center in a world of systemic chaos, especially as it may be destroyed. Today, as was the case in the Middle Ages, for a global network nation to prosper it needs several powerful clusters interconnected through common activities. The Hanseatic League, a political and economic union of free German cities, can serve as an example. In the 16th and 17th centuries, the League controlled the flow of commodities in the North Sea and Baltic region and played a significant role in the development of trade, diplomatic, and cultural ties between the countries of Northern and Western Europe, the Baltic countries, and Russia.

Inclusive Ecosystem

In independent Armenia we have the right to decide independently how we should live and develop. We are confident that if the existing extractive system is preserved as it is, we cannot even dream of a better future for Armenia and the nation. Therefore, in place of the current piecemeal, imprecise, and unsustainable mode of existence, we propose an inclusive ecosystem. By ‘ecosystem’ we mean a community, an environment, and a system of ties that ensures productive interaction between people within a framework of efficient political, economic, civic, and cultural institutions. By ‘inclusiveness’ we mean, firstly, that such a system is intended to create incentives and motivations for breakthrough developments which will simultaneously decrease social inequality; and, secondly, that it is open to the world and is welcoming. The most important indicator of the successful establishment of an inclusive ecosystem in Armenia should be the ability of that system to reverse migration flows, directing them not out of the country but into the country. That applies to both the new Diaspora that appeared after the collapse of the Soviet Union, and to Armenian refugees from the zones of military conflict in the Middle East and beyond. 178

It is much more difficult to establish an inclusive ecosystem than to increase GNI per capita. This task cannot be accomplished until the public at large comes to realize that the current mode of existence in Armenia has a limited potential which will soon be exhausted.

From income per capita to level of happiness and inclusive development

After World War II, countries were classified as either industrially developed, developing or underdeveloped. One of the basic indicators of development is Gross National Income (GNI), which is frequently identified as the indicator of the standard of living and the level of well-being in a country. Thus, the World Bank classifies countries of the world by their GNI per capita. However, per capita income is no longer rigidly correlated with what is commonly called the level of happiness.

In July 2011, the UN General Assembly adopted a Resolution calling on member states to consider happiness the proper measure of social progress and the goal of public policy. In 2012, the first World Happiness Report was published, and later on became annual. These reports indicate that residents of the most developed countries do not necessarily enjoy the highest level of happiness. Thus, according to the 2017 World Happiness Report, Costa Rica ranked 12th on the happiness scale, while it was 83rd in the World Bank’s GNI per capita ranking. For the sake of comparison, Singapore, which is much more highly developed, was ranked 26th on the happiness scale and 19th by GNI per capita, while South Korea was ranked 55th and 45th respectively. Jeffrey Sachs, the director of the Sustainable Development Solutions Network that publishes the World Happiness Report, says, “Happy countries are the ones that have a healthy balance of prosperity, as conventionally measured, and social capital, meaning a high degree of trust in a society, low inequality and confidence in government.”

Armenia is ranked 121st by happiness level and 134th by GNI per capita136. World practice has demonstrated that in countries where extractive institutions are predominant, an increase in per capita income does not entail an automatic increase in happiness. Rather, it leads to greater inequality and to social polarization. Unfortunately, Armenia provides clear confirmation of that pattern. Over the last five years, per capita income has grown by approximately 4% a year, while the statistical indicator of inequality in wealth distribution (the Gini coefficient) has grown by approximately 10% a year. In other words, the increase in per capita income in Armenia over a five-year period resulted in the rich becoming richer at the expense of society at large, while the rest, at best, did not get any poorer.

In 2017, the World Economic Forum started publishing the Inclusive Development Index, a composite indicator that takes into account the Program of Action of each

136 World Bank, Gross National Income per capita ranking based on purchasing power parity, data as at 1 July 2016. https://datacatalog.worldbank.org/dataset/gni-capita-ranking-atlas-method-and-ppp-based (accessed May 18, 2018). Our Vision of the Future 179

country’s government in seven principal and fifteen additional areas, alongside traditional macroeconomic variables. The index has identified a set of structural factors that have a particularly strong impact on citizens who are affected by the process of economic growth and make use of its benefits and opportunities. It shows that societies which succeed in creating a robust middle class while decreasing poverty and social exclusion, consistently establish effective economic institutions and systemic incentives in many of those areas, but at the same time pursue a firm macroeconomic policy and reforms aimed at increasing labor productivity.

Today, Armenia is ranked 50th by the Inclusive Development Index among 79 developing countries. The country thus has serious potential for the growth of economic prosperity and, at the same time, for a reduction in social inequality.

Pillar 1: Pillar 2: Pillar 3: Pillar 4: Pillar 5: Pillar 6: Pillar 7: Education Basic Services Corruption Financial Asset Building Employment Fiscal and Skills and and Rents Intermediation & Entrepre- and Labor Transfers Infrastructure of Real neurship Compensation Economy Investments

Access Basic and Business and Financial Small Productive Tax Code Digital Political System Business Employment Infrastructure Ethics Inclusion Ownership

Quality Health-Related Concentration Intermediation Home and Wage and Social Services and of Rents of Business Financial Non-Wage Protection Infrastructure Investment Asset Compensation Ownership

Equity

Fig. 23: Principal and secondary indicators of the Inclusive Development Index.

Let us now describe in greater detail the conditions necessary for establishing an inclusive ecosystem in Armenia. Among them are: creation of incentives that ensure growth of well-being, well-designed and accessible infrastructure, balanced regional development, and a harmonious environment.

Incentives that Ensure Growth

As numerous examples demonstrate, breakthrough development in today’s world is inconceivable without integration into global activities. The country has to be competitive on a global level, but we clearly lack the resources for large-scale competition. Therefore, we must identify the sectors and niches of the economy where we can within the shortest possible time start producing commodities and services that are in demand in the world. Speaking earlier about the concept of a hub, we distinguished several such priority areas. While developing 180

them, we must secure an increase in labor productivity, which is unacceptably low in Armenia, and decrease unemployment among all strata of the population, especially among the young and women. In other words, we must expand the inclusivity of our ecosystem.

Armenia-2020 project: A view from 2018

As part of the Armenia-2020 project, an international consulting company whose services we had commissioned in the early 2000s identified five sectors of the economy that should become a priority for Armenia. It was claimed that these sectors would play a leading role in solving two main problems that impede economic growth, by simultaneously increasing labor productivity and decreasing the level of unemployment. An obvious difficulty is that an increase in labor productivity is accompanied by an increase in unemployment because the demand for labor declines. Therefore, it was necessary to identify the sectors where those two aims, increasing labor productivity and creating new jobs, could be achieved simultaneously.

The five sectors identified were: > Banking and insurance > Tourism > Healthcare > Mining and metallurgy industries > Information technologies and software development

An analysis of agriculture, one of the major sectors of the economy, was not included in the Armenia-2020 project, but other potentially significant sectors of the economy were also identified (Fig. 24):

> Telecommunications > Food industry > Electronics and precision machinery > Jewelry and diamonds

Even though the government did not make use of the Armenia-2020 project and did not create effective incentives for investment in priority sectors, stable growth was observed in those sectors in 2000–2015. The only exception was the healthcare sector, which required large, long-term capital investment. As we have said, construction, chiefly in Yerevan, played a very important role in Armenia’s economic growth in 2004–2008. This sector produced a quick but unfortunately short-term effect, which contributed for some time to overall economic growth. Aware of the lack of prospects for sustainable growth in construction, our consultants did not recommend that this sector should be designated a priority. Our Vision of the Future 181

Healthcare

Electronics & Textile & precision machinery Banks & clothing insurance

Production IT, software High 10%) equipment development Telecommunications Food industry (annual growth rate: (annual growth Wholesale & retail trade Transport Tourism & Jewelry & restaurants diamonds

Metallurgy Mining industry productivity of labor productivity 5–10%) Medium

Potential for growth of real of real growth for Potential Construction &

(annual growth rate: (annual growth development Building materials

Negative Low High (annual growth rate: -5–0%) (annual growth rate: 0–5%) (annual growth rate: 5–10%)

Potential for growth of jobs in the sector

Three groups of sectors: Priority Potential Other

Fig. 24: Estimated potential for growth of jobs and productivity of labor in selected sectors.

Moreover, the output of agriculture has risen considerably in Armenia in the past fifteen years, and food production has increased. However, those two sectors depend heavily on weather conditions, which are unstable and not entirely predictable, and on compliance with quality standards, which are not always sufficiently high in Armenia. The sector is also hampered by the high cost of logistics and distribution.

Besides the development scenarios for Armenia discussed in Chapter 3, forecast scenarios for economic growth in the priority sectors were also produced. The four forecasts presented below used the growth rates for Singapore, Ireland, Israel, and Paraguay as benchmarks (indicated below in brackets):

Singaporean (6.1%): Armenia becomes a locomotive of integration and a business center for the region.

Irish (4.5%): Armenia is firmly integrated into European institutions; the amount of foreign investment in the country grows.

Israeli (2.6%): Armenia experiences dependence on Russia, low growth in traditional sectors, and a small amount of foreign investment.

Paraguayan (0.1%): regional and domestic instability impedes growth; some traditional sectors fall into decay because of formidable competition. 182

25,00

20,00

6,1 15,00

12,6

10,3 4,5 10,00 9,3 8,3 6,6 7,9 5,9 6,9 6,4 Real GDP per capita, US dollars Real GDP per capita, 6,0 2,6 5,0 5,6 5,00 5,3 5,4 5,1 4,9 5,3 4,7 4,5 2,7 3,9 0,1 2,1 0,00 1990 1994 1998 2002 2006 2010 2014 2018 2022

Fig. 25: View from 2003 Possible scenarios of Armenia’s economic growth.

25,00

6,1 20,6 20,00

4,5 16,2 15,9

15,00 13,3 12,8 2,6 11,6 10,1 11,2 10,5 9,4 10,00 9,5 8,5 8,7 8,2 0,1 7,9 Real GDP per capita, US dollars Real GDP per capita, 8,6 6,4 5,00

0,00 2014 2018 2022 2026 2030

Fig. 26: View from 2014 Possible scenarios of Armenia’s economic growth. Source: IMF World Economic Outlook Database.

One could argue that in the past decade and a half, the economic growth rates were close to the Singaporean, with the main driver being construction. From 2012, however, the growth stopped because of a slowdown in construction and a fall in diasporan real estate Our Vision of the Future 183

investment. Assessing that period in retrospect, we can conclude that the government did not pursue a wise economic policy and establish inclusive economic institutions and a system of incentives for balanced growth in the priority sectors of the economy. It may well be that the government did not even consider it important to prioritize these issues while the extractive economic and political institutions continued to dominate. Nonetheless, for us and our partners the recommendations of the Armenia-2020 project became the basis for our activities over this period.

In 2015, while working on the Armenia-2031 project, we revised the list of priority sectors and included new ones, among them agriculture and agro-processing. We consider those sectors no less important for achieving economic growth that enhances labor productivity and, simultaneously, creates employment. The revised list looks like this:

> Technologies and alternative energy > Financial services > Tourism > Agriculture and agro-processing137 > Mining and metallurgy; stone extraction and processing

According to estimates produced by the Armenia-2031 project, if Armenia can attract investment worth half a billion US dollars annually, the country will be quite capable of doubling GNI per capita by 2030. In that case, by 2031 Armenian GDP per capita will reach the current level of Eastern European countries. However, as has been mentioned earlier, GDP cannot be the sole indicator of a nation’s well-being. Besides, we believe that Armenia should go much further in its aspirations and aim not to double but to triple GDP per capita.

An inclusive ecosystem should not have artificial monopolies that serve to enrich elites. The only exception may be natural monopolies, the existence of which is in the interest of the entire nation. However, at the same time it is important to reach a public consensus as to the advisability of retaining such monopolies, and to ensure the transparency of their operation. The state should put an end to protectionist laws, benefits, and privileges that protect the interests of a narrow group of individuals, and should create incentives for healthy competition, especially in the sectors that are a priority for development.

The rule of law and legal protection are undoubtedly a necessary but not a sufficient condition for creating an inclusive ecosystem. To ensure transparent and clear rules of engagement, not only are new laws required (protection of intellectual property, accessibility of financial services, etc.), but earlier restrictive laws that impede the involvement of new actors in economic activities need to be abolished. However, this cannot be done blindly. Before

137 At this point our involvement in this sector is limited to the design of ecological standards and implementation of small-scale projects. 184

policies are adopted by the state to stimulate overall growth in well-being, it is necessary to make a comprehensive inventory of the material and non-material assets of the country and the global nation.

Today, as in any country with an extractive system, we have a vicious circle in Armenia. Extractive economic institutions are supported by extractive political institutions, which are reinforced in turn by the economy. Competition in the economy requires rejection of extractive political institutions, and from that it follows that real political competition, pluralism, transparency, and openness are necessary. Otherwise, the active and thinking strata of society will keep questioning the legitimacy of the ruling elite. Consolidation of an inclusive ecosystem is impossible without stronger public trust in the authorities. It is therefore clear that the entrenched powers need to abandon an archaic model of governance and to stimulate the maximum development of civil society and to interact with citizens, treating them as partners.

An example of the successful building of relations between the authorities and the public

Principles of Lee Kuan Yew, one of the architects of Singapore’s economic miracle

> Pragmatism. Do what you can accomplish! Do not try to change everything at once: choose the main tasks and move on to others!

> Consistency. Three things are worst of all. The first is wavering, a desire to please one and all. The second is unfinished projects. Even if you made a mistake, finish what you started! The third is non-compliance with the rules of the game. Once the rules have been announced, they cannot be applied selectively or changed in the process.

> Openness. Explain to others all that you do, even if it is difficult and causes rejection!

> Meritocracy. If you want to be successful, hire the best. Let them know that this job will bring them professional growth and decent remuneration.

> Large scale. Focus on strategic anchor projects! Small victories are also necessary but they are soon forgotten.

> Passion. It is impossible to achieve something unless you are passionate about your occupation and are ready to sacrifice everything for the sake of success.

> The quest for uniqueness. Understand what your advantage is and use it!

> Common sense. There is nothing stronger than usual common sense. Our Vision of the Future 185

> Competition. Only competition makes it possible to move ahead and to change any situation for the better. But bear in mind: victory should not be obtained at any cost!

> Fearlessness. Do not be afraid to make mistakes, even though there will always be individuals who will want to cynically make use of your mistake! If you are honest and open, you will be given a second chance.

> Respect for people. The human being is the main value, the basis of everything. Even if you punish someone, retain respect for that person!

Main principle: The state exists for society and not society for the state. The state is not an institution of violence: it should help society to find a meaningful balance between its various elements, contributing to evolutionary development and avoiding both catastrophes and stagnation.

Since no economic incentives have yet been institutionally formulated, we have been guided by the recommendations made by the Armenia-2020 and Armenia-2031 projects, which served as points of departure in planning our anchor development projects. In the field of financial services the project is Ameriabank; in the field of tourism it is the Tatev Revival project; in the field of high technology it is FAST, etc.

Tatev Revival

The tourism industry occupies a leading position in the global economy. In our case it is a locomotive for change that allows a whole range of challenges to be addressed, such as reducing poverty, ensuring sustainable development of the environment, maintaining a cultural dialogue between Armenia and the world, and reducing inequality in living standards in urban and rural settings. Tatev Revival project is a unique example of development of a backward territory based on a synthesis of the old and the new. This comprehensive project has embraced both the construction of the Wings of Tatev ultra-modern aerial tramway and the restoration of the monastery of Tatev, which is a candidate for inclusion in the UNESCO World Heritage list.

There are many beautiful monasteries in Armenia, and we should explain why we chose Tatev. In the early 2000s, the district where the monastery is located, in Syunik region, was among the most depressed and difficult-to-reach areas, with a high level of unemployment and minimal opportunities to attract investment. In principle, Tatev could be a key point on a tourist route that connects Yerevan with Artsakh and the south of Armenia. However, owing to its remote location it had little chance of being included in programs of organized tourism. The local authorities did not have the funds to rebuild the road to the monastery, and given the severe winters and the sparse population of the surrounding villages, they did not regard such an undertaking as advisable. It was 186

clear that the restoration of the monastery was not sufficient in itself. An out-of-the-box solution was necessary that would make this pearl of medieval accessible. The Wings of Tatev reversible aerial tramway, which connects the two sides of the Vorotan gorge, provided the solution.

In 2009, about 5,000 tourists visited the monastery of Tatev. Only a few individuals dared to drive to the monastery along a broken-down road with quite dangerous switchbacks. At the planning stage of Wings of Tatev, consultants recommended building an aerial tramway with one cable car that would accommodate 25–120 persons because they thought that the number of tourists might increase fourfold, reaching 16,000–20,000 a year. At that time, neither they nor we could imagine that the aerial tramway would carry over 100,000 people a year (over 135,000 in 2017), paying a fare of about 10 USD each (5,000 Armenian drams).

The example of Tatev shows why we did not follow the path of gradual development by investing in the regional infrastructure but preferred instead to implement an anchor project which would become a driver of growth and a catalyst for change. Constructed in 2010, the aerial tramway shortened the journey time from Halidzor to Tatev to twelve minutes. It solved the transportation problem not only for tourists but also for local residents, who had previously been practically cut off from the world, especially in winter time. As a result, the number of visitors to Tatev has increased by a factor of several dozen. Today it attracts about 20% of the overall tourist flow to Armenia. The Wings of Tatev is included in the Guinness Book of Records as the longest reversible aerial tramway in the world and it has become a new landmark in its own right. Over 640,000 tourists have made use of the aerial tramway since its launch (and about the same number came to Tatev monastery in their own cars). In 2014, the Wings of Tatev reached full operational cost-recovery level. The profit yielded by the aerial tramway is devoted entirely to the restoration of the monastery and local development projects.

Over 20 new B&B hotels have been opened in the vicinity of Tatev, and nearly the same number in Goris, while those hotels that existed prior to the launching of the aerial tramway have been refurbished and their capacity has increased several-fold. We have launched educational programs to teach local residents the basics of the hotel and restaurant business and entrepreneurial skills, and we provide support for them in the process of drafting business plans and obtaining loans. From the launch date of the aerial tramway until the end of the reporting period (December 2017), 3.2 million US dollars in tax were contributed to the country’s budget, including 2.3 million US dollars in VAT. In the future, the number of employees will increase because it is planned to establish new tourist routes and services.

In our program to restore the monastery, revive the monastic brotherhood and bring back the educational significance of Tatev, we constantly coordinate our actions with the Armenian Apostolic Church and the Ministry of . Together with the other parties concerned, we are engaged in the development of physical facilities Our Vision of the Future 187

and the educational infrastructure in nearby villages. We improve the water supply and street lighting, enhance road safety, build playgrounds for children, renovate schools and preschool institutions, open engineering and technological laboratories in local schools, etc. We also take care of environmental protection by ensuring tree planting, garbage collection, and placement of dumpsters and maintenance of nature reserves.

For the implementation of Tatev Revival project it was necessary to solve a number of infrastructure problems. The Armenian government, with support from the World Bank, undertook the reconstruction of the 12-kilometer Sisian-Tatev road and granted a deferral of VAT payment for importing the necessary construction equipment. This was the first precedent of its kind in Armenia. The project is scheduled to be completed in 2021, with further development of the Tatev community in the future. We plan to expand the network of hotels and recreational zones and to create a new national park with the involvement of the WWF-Armenia charitable organization. Our goal is to create a modern tourist infrastructure that will allow tourists not only to visit Tatev but also to stay in the region for several days, discovering for themselves the entire south of the country, namely Goris, Sisian, Kapan, Meghri and Vayots Dzor. The Tatev-Goris area was selected as a base for our large-scale project on the long-term development of . Ultimately, our initiatives will help to transform Armenia into a tourist hub.

Whereas ten years ago residents were leaving the region of Tatev on a massive scale, the flow of tourists today provides them with decent employment and a more regular income. This situation drives competition between small businesses, which in turn leads to improved standards of services and quality of goods produced. Our projects have stimulated the emergence of new initiatives by other entrepreneurs. Specialists not only from Yerevan but also from other countries have moved to the region, bringing new knowledge and skills with them. In Syunik, a new ecosystem is being created, which abounds in new opportunities and distinguishes Syunik from other regions of the country.

Tatev Revival project is being implemented thanks to the support of numerous donors, quite a few of whom are diasporan Armenians who have not taken part before in the development of their historical homeland. Since 2008, 162 donors from 11 countries have invested almost 34 million US dollars in the project, which has given them a unique opportunity to join in a worthwhile task.

Modern Infrastructure

Inclusiveness implies modernization of the existing hard and soft infrastructure to provide the broadest possible access and affordability for Armenia’s residents and visitors. The hard infrastructure, i.e. the system of utility lines, roads and telecommunications, and public transportation, was inherited from Soviet times, and for decades lacked the capital investment for modernization. Not only its material and technological basis, but also the underlying principles, have become obsolete. To a large extent they do not meet the requirements of inclusive growth. For example, the road and transport infrastructure was designed with a view 188

to strengthening ties within the centrally planned economy and integrating the Armenian Soviet Socialist Republic into the imperial system, in which the other Soviet republics and Comecon countries were the main consumers and suppliers of commodities and services. The infrastructure was predominantly centripetal. It was designed not so much to ensure the mobility of the population and the movement of commodities and services within the territory of Armenia but to connect the capital city (Moscow) and other big cities radially.

It is clear that new economic and geopolitical realities require radical revision of the principles of the 1950s and 1960s. Transport, too, has changed much. The stock of vehicles has become much larger and more diverse, and their speed has increased dramatically. These processes have made roads more dangerous and the environment more polluted. Transition to unmanned private, public, and heavy vehicle transportation will require huge transformation of the hard infrastructure and the urban texture of our cities. Roads, parking lots, garages, and other elements of the hard infrastructure will become progressively less in demand as we move to shared usage of unmanned vehicles.

While the hard infrastructure of the 20th century was under the monopolistic control of the state, these days the Armenian state does not have the necessary funds to create an infrastructure for the 21st century. Moreover, it does not possess the requisite managerial competences for the deployment and efficient use of investment. The hard infrastructure is the ‘blood supply system’ of any economic organism that aims to grow, and in an inclusive Armenia it requires new long-term approaches to planning. In the interest of the public, the state needs to take account of relevant scientific and technological innovations, to set the highest standards of quality, to monitor compliance with these, and to engage the private sector in the implementation of infrastructure projects.

The same applies to the ‘soft’ infrastructure, i.e. to financial, healthcare, educational, cultural, and social institutions as well as emergency services, non-governmental organizations, etc. Non-discriminatory access to production and consumption of services in the health and education sectors is a necessary condition for inclusive growth. It is not a sufficient condition, however. Even if Armenia achieves gradual improvement of the existing system by equipping school classrooms with the latest computers, purchasing state-of-the-art CT and MRI scanners, etc., breakthrough development cannot be expected. The country should be opened up as soon as possible to the best world practices and should play a part in the global search for advances in education and medicine. In today’s Armenia, educational institutions that use widely differing models and standards, such as the American, French, and Slavonic universities (to say nothing of our own institutions of higher learning), coexist successfully. Our flexibility, the ability to combine different systems while avoiding extremes, will assist in reforming, say, the healthcare sector, where institutions using American, European, Korean, Japanese, and Armenian treatment methods can work side by side.

Inclusive soft infrastructure implies also full access to and affordability of financial products, not only for businesses but also for individuals. Entry into active economic life is also facilitated by seemingly secondary characteristics of the soft infrastructure, such as transparency, simplicity, and a low-cost tax payment procedure, the speed and cost of executing Our Vision of the Future 189

contracts, and solutions for insolvency and bankruptcy problems. All these factors lead to improvement of well-being and reduction of social divisions. We should also mention the particularly important role which high-speed, mobile internet access plays in today’s economy.

Balanced Regional Development An inclusive ecosystem cannot be limited to the capital and two or three major cities. In a situation in which one-third of the country’s population lives in the capital city, while the number of residents in the next largest city is ten times smaller, it is no use speaking about equality of opportunity, especially as another third of the population lives in rural areas. We have therefore set the goal of decreasing the differences and ensuring regional development across the whole of Armenia and Artsakh. Five basic zones have been selected, where our anchor projects are concentrated (Fig. 27):

1. Tatev – Goris 2. Stepanakert – Shushi 3. Dilijan – Sevan 4. Gyumri – Ani 5. Yerevan – Echmiadzin

The selection was based on an in-depth analysis of the hidden assets which, in our view, it is necessary to develop. Each priority region has its unique features. In ‘Tatev-Goris’ it is cultural heritage and tourism; in ‘Dilijan-Sevan’ it is education, medicine, and international relations; in ‘Yerevan-Echmiadzin’ it is culture, heritage, tourism, technologies, and banking; in ‘Stepanakert-Shushi’ it is ecotourism and culture; and in ‘Gyumri-Ani’ it is tourism, culture, technologies, crafts, etc.

In fact, all our development projects and programs represent a single, interrelated system of change. Using the tourism industry as an example, let us show why this is important. Today, a tourist spends two and a half days on average in Armenia, and the total contribution of the tourism industry to the country’s GDP is 14%138. In 2013, about one million foreign tourists visited Armenia, and their number is constantly growing. It is necessary to improve the tourist flow by attracting at least three million tourists per year, and to try to increase the average revenue from each tourist (the value of this indicator has, unfortunately, been declining in recent years). If attractive tourism products can be offered in the five areas, which are separated by two to three hours’ drive at most, the average tourist’s length of stay in Armenia could be increased to seven to ten days (on the assumption that tourists spend two days in each area). This would, on the one hand, result in a dramatic growth in the funds circulating in the tourism sector, and on the other, it would increase the inflow of investment into this sector, ultimately making a positive impact on the lives of all Armenian citizens. In addition, such a qualitative shift in the hospitality industry would considerably improve the country’s international image.

138 The Authority on World Travel & Tourism, Travel & tourism economic impact 2017: Armenia (London: World Travel & Tourism Council, 2017). 190

Tbilisi

Cultural-Education Surb Gevorg Center Church

3 h. 30 min 190 km Dilijan and Adjacent UWC Dilijan Communities Dilijan Dilijan Pit GEORGIA Dilijan Educational Development Healthcare Art Stop College Cluster Initiative (EU PRDP) Hub Initiative

Alaverdi

Project Hope* Vanadzor Ijevan Gyumri 1 h. Dilijan 63 km 30 min 4 36 km 3 1 h. 50 km Friendship Ani 1 h. 30 min 56 km 35 km Pit Park Ani Tsaghkadzor 3 Shorzha Stops Viewpoint Aparan Sevan Talin 1 h. 30 min Artsakh Wedding and 99 km 2 h. Artsakh Kids Initiatives 122 km 2 h. Zvartnots 126 km International Airport 1 h. 30 min Martakert Yerevan 99 km Stepanakert-Shushi 5 30 min 5 Vardenis Etchmiadzin 20 km Martuni 1 h. 30 min Ropeway Karvatchar 93 km ARMENIA Orbelian’s Vank Caravanserai Askeran 2 h. 30 min Ecovillage Victory 123 km Ararat 34 km Stepanakert 2 Areni Jermuk Martuni Park Koor 30 min Wine 1 h. Vorotan 14 km 47 km Pass 2 Yeghegnadzor Shushi Vayk Shushi Cafesjian Center 2 h. 2 h. Berdzor 115 km Goris 115 km Mosque for the Arts Hadrut Sisian 1 Pit 30 min 21 km ARTSAKH Old Yerevan Stops Tatev Project 1 Kapan Larger Tatev Tatev Erebuni Tatev Gateway Monastery Museum

Meghri Meghri Free Economic Zone Armenia-Iran IRAN

SECTORS ENABLERS TO TARGETED TO ENSURE PROMOTE GEOGRAPHICAL DAILY FREQUENT 5 PROSPERITY 5 HUMANITY 5 LOCATIONS CONNECTION CONNECTION + + Moscow 3 h Paris 5 h Tourism Education 1 Tatev – Goris Tbilisi 30 min Vienna 4 h Financial Healthcare Tehran 1 h 30 min Warsaw 4 h 2 Stepanakert – Shushi Dubai 3 h Infrastructure Infrastructure Doha 3 h Technology and Urban Dilijan – Sevan Energy Development 3 Agroecology and Cultural Heritage Gyumri – Ani h. min Sustainability Preservation 4 km Identity Engagement/ Mining Positioning of Armenia 5 Yerevan – Etchmiadzin

Fig. 27: Priority development spheres and implemented projects.

A Harmonious Environment Firstly, a harmonious environment must be safe and secure. Safety, however, is not limited to a high defense capability which will discourage anyone from contemplating hostile action against the country and its citizens. We mean a broader, comprehensive notion. Safety means that citizens are not worried about their children outside their home, about the lives of their sons and daughters in the border regions, or about unjust treatment and abuse by authorities or peers. In order to achieve this, efficient law-enforcement agencies and an independent judicial and legal system are not enough. In addition, the law must not be applied selectively in the interest of the elite but equally for all citizens. People are highly sensitive to injustice, Our Vision of the Future 191

especially when the matter concerns their property and civil rights. Lawful violence is a necessary condition for the existence of any state, but the legitimacy of the state should be secured by the inclusiveness of its institutions and by the general understanding that discrimination against citizens who are not part of the elite is out of the question.

The health of a nation is also a part of national security, but it is not sufficient to have good hospitals and outpatient clinics equipped with state-of-the-art technical devices and staffed by qualified personnel. It is necessary not only to cure the sick but also to minimize morbidity. Strict compliance with quality standards with regard to imported and local foodstuffs, accessibility to clean drinking water, and a high level of sanitation, are particularly important. The social security system cannot be based on the principle of evenly spreading diminishing resources but should concentrate on providing support to those individuals who are finding their feet after temporary setbacks or who are unable to provide for themselves. The state of the housing stock is also an aspect of the nation’s health. At present, there are too many slums and derelict buildings in the country, which faces high seismic risks. Protection of the biosphere, an end to the barbarous exploitation of natural resources, a healthy urban environment, safe transportation and construction infrastructure, and the abolition of hazardous production methods, are also aspects of the health of the nation. Alongside citizens’ physical safety, these requirements should be prioritized in economic development projects. Expert assessment of such projects should be based on the relevant standards.

Psychological well-being is also a priority. Fear-mongering and intimidation, which are allegedly necessary for social mobilization and cohesion, are foreign to a healthy society. Citizens should not be afraid of losing face, experiencing entrepreneurial failure, and asking for help. They should know that trying and taking risks are not as terrible as missing out on a valuable opportunity and then feeling sorry.

An inclusive ecosystem offers new opportunities to individuals, but at the same time it makes new demands and encourages people to constantly raise the level of their professional knowledge and skills and, when necessary, to switch to another occupation and to gain new qualifications. That, in turn, facilitates the search for qualified specialists, helps to eliminate cronyism, nepotism and discrimination based on age, gender, ethnicity and race, and establishes principles of meritocracy. As a result, people will develop a responsible attitude toward their own health and intellectual growth.

It should be borne in mind that in the present-day world an educated and healthy person is more than merely a holder of a university degree and an ‘A1’ medical record. Thanks to the information revolution we have access to a huge quantity and range of knowledge, which hits us on a daily basis like a waterfall. The skill of not drowning in the whirlpool, of separating the wheat from the chaff, of synthesizing information from various fields of knowledge, and of seeing the gaps and producing new, interdisciplinary knowledge, is crucial. At present, familiar social roles and rigid distinctions between professions have started gradually to fade into insignificance. 192

A healthy person is characterized first of all by a conscious and responsible attitude toward physical and psychological well-being, which is to a large extent dependent on a sense of self. Such a person exists not in an abstract space, in a vacuum, but within a historical context that is governed by a network of traditions, values, moral reference points, and experience. People who are aware of this can better understand the goals of the creative activities in which they are engaged, and are capable of joining with others in order to implement their schemes. Such people are characterized by an interconnection between thoughts, feelings, and behavior. That provides a basis for the coherent whole, allowing them to distinguish one person from another and not merely to pigeon-hole them according to social characteristics such as gender, age, marital status, social status, etc., as is the case in a personnel file or a tax declaration. Grown-ups are very fond of numbers. “When you tell them that you have made a new friend, they never ask you questions about essential matters. They never say to you, ‘What does his voice sound like? What games does he love best? Does he collect butterflies?’ Instead, they ask: ‘How old is he? How many brothers has he? How much does he weigh? How much money does his father make?’ Only from these figures do they think they have learned anything about him.”139

In the 21st century, we want all the best qualities of the Armenians that we spoke about in the earlier chapters to be deployed in Armenia: a broad open-mindedness and preparedness for change, competitiveness and superb education, creative individualism and diligence, and an ability to share with the world the most valuable things that we possess. We are fond of the word ‘glocality’ because it ideally describes the quality that we would like to see in present-day Armenians, namely the ability to preserve national distinctiveness, while at the same time remaining open to the rapidly globalizing world outside, to become part of that world and to succeed in it. It is our wish that everyone will want to live and work in Armenia, including local residents, repatriates, and non-Armenians. There should be no redundant people in Armenia. We are all different, but our diversity is what makes the world in which we live beautiful.

Transforming Armenia into an inclusive ecosystem should become a prerequisite for slowing emigration, for the return of Armenians who have left the homeland in the past few decades, for involving members of the Armenian Diaspora in the life of the country, and for making Armenia more attractive in the eyes of foreigners intending to live and work here. We highly value the successful repatriation efforts of the Repat Armenia Foundation. However, the activities of one organization in this sphere are insufficient. A full-fledged, long-term program is required, combining the efforts of the state, society at large and private individuals.

***

It goes without saying that the ideas presented above are only an outline, a general sketch that needs to be widely and openly discussed, and to be adjusted and refined. It is important to bear in mind that none of these ideas can be pursued in isolation, outside the

139 Antoine de Saint-Exupéry, The Little Prince. Our Vision of the Future 193

general context. As experience has demonstrated, such an approach minimizes the impact, if not destroying it completely. Furthermore, in a situation of systemic chaos, the effect may be negative. It would therefore be better to move ahead on the basis of a holistic vision of the future, garnering the support of all those concerned who are willing to find a productive consensus, despite the likely diversity of their opinions. We have written this paper in the hope of a sincere and substantive discussion, in the course of which the merits and demerits of each model will be reviewed.

In particular, the concept of Armenia as a focal point for the global network nation can take various forms. This must also be a subject of discussion. Whatever the outcome may be, one thing is clear: the core of the network needs to offer obvious advantages both within the country and to the Diaspora. The networks and clusters that we have described can become a genuine mechanism for integration if they start yielding tangible benefits to all Armenians. A proud feeling of belonging to a global network nation, and conscious fear of assimilation, can become drivers that will help us to make a leap forward from the third tier to the first, to play a full part in global activities, to change the image of Armenians in world affairs, and to occupy an honored place among those who are changing the world for the better. Afterwords

We have done our best to present as comprehensively and candidly as possible our views on the most topical issues facing the development of the Armenian nation. We can hardly expect that our thoughts and conclusions will be endorsed unequivocally, even though they are shared by quite a wide circle of friends. We would nonetheless like to invite people who are concerned about the destiny of Armenia and Armenians to take part in a broad, informed discussion, regardless of their ethnicity or citizenship. Let us formulate once again the questions that are of concern to us and that may be a subject for discussion for those who see reunification of the fragmented nation as a necessity.

How should we construe our national identity? What elements does it consist of? How can the fragmented nation build on those elements in its progress toward unity and prosperity? What value does ethnic uniqueness have in the age of globalization and fading distinctions? What immunity has the past given us to assimilation, which is becoming a serious threat? What content does the concept of ‘national culture’ have? How can we preserve the Armenian language as a means of communication among Armenians when English is the new Esperanto? How can the teaching of Armenian as a mother tongue be improved? How can research on the classical Armenian language (Grabar) as part of the world cultural heritage be encouraged and supported? To what extent is the existence of two variants (Western and Eastern) of the Armenian language an insurmountable obstacle to the unification of the nation? How can the customs and traditions of the Armenian people be preserved and popularized? How can the attention of younger generations of Armenians and others be drawn to them? How can centers of our religion and culture, which are dispersed throughout the world, be preserved? How can interest in our historical monuments be aroused regardless of their geographical location? How can our religious traditions be protected in the context of global secularization? Is our Church capable of representing the Armenian people in the dialogue with other peoples? How can the transmission of family values, traditions, and knowledge be supported in a new situation, when conventional family ties are becoming progressively weaker? How can the role and place of the family be reinterpreted in the present-day context? How can we ignite in our children the feeling of national identity, if we ourselves are losing it? How can the significance of personal reputation be restored, and how can respect for a high level of education, work, and professionalism be regained? What is the nature of Armenian resilience in the present-day world, and what behavior patterns should be promoted within the family and in society? Finally, can the Armenian Plateau and Mount Ararat be considered a symbolic ‘capital’ that binds us together?

Does the Armenian world exist today and if so, what does it mean? How can Armenians reconnect with and understand each other? Do we recognize the gaps between ethnic Armenian groups that have become more profound over the decades, and the differences in mentality and behavior patterns? What are the underlying causes of those gaps and how Afterwords 195

could they be bridged? Will we be able to shed the post-Genocide complex of victimhood and to create new sources of pride that unite us and preserve our identity among the seven billion people on this planet? What makes each ethnic Armenian group unique, and can our diversity become a source of strength? How can we shed relics of post-imperial cultural and behavior patterns, which impede inclusion, and what can replace them? What role models and what moral leaders should we be guided by? How can a responsible national elite be formed? How can we ensure that the number of people making a conscious decision to regard themselves as Armenians is increased?

What is a global network nation in the 21st century? What are its advantages in the age of globalization and networking? What broad rationale can be put forward to preserve emotional ties among Armenians from various parts of the world? Should the global network have only one central cluster, or should there be several? What kind of Armenian global institutions should there be to protect and promote the position of the nation in the world? Can the government of independent Armenia represent the interests of the entire Armenian world? How can Armenia breathe life into the existing diasporan institutions? How can relations between various Armenian diasporan communities be strengthened, and how can ‘emigration from the Diaspora’ be stopped? What are our material and non-material assets? How do we spend our limited resources on addressing problems that are important for our nation? How can we involve capable, interested and talented people in our common cause? How can the shrinking circle of trust be expanded? What internal incentives (fear, pride, or other sentiments) can mobilize our nation and let it achieve a historic breakthrough?

How can Armenia be made a focal center for the global nation? What kind of country should Armenia become in five, ten, fifty years, and what steps should be taken so that the overwhelming majority of Armenians want to become involved in their historical motherland? What do diasporan Armenians expect of Armenia, and what can the country offer them? Is Armenia ready to grant diasporan Armenians the right to participate in questions decided by referendum? How can migration be reversed and redirected toward Armenia? Can Armenia become a safe haven for Armenians in the event of natural disasters, pandemics, or wars? Will we be able to attract to the country individuals who are capable of being part of the national cultural and scientific elite, as was the case in Soviet Armenia?

How can Armenia be made prosperous? What is the dominant model of existence in today’s Armenia, and what development model is best for us in the 21st century? Where are the main points of bifurcation? What is the interrelationship between political, economic, and so-called ‘invisible’ institutions, and what role should it play in the debate about our future? How can transparency, meritocratic principles, professionalism, and the same rules for all, be guaranteed in relations between non-governmental entities and institutions, and how can the circle of public trust be expanded? How will present-day technologies change the nature of relations between the authorities and the rest of society? How can these become an instrument for enhancing inclusion? What are the main sources of investment in meaningful development? How can significant investment be attracted to the country, and how can breakthrough development projects that meet international quality standards be initiated? How can a manifold increase in such investment in Armenia and throughout the Armenian 196

world be secured? How can we become a polyglot nation that exists at the crossroads of cultures, while at the same time protecting our mother tongue? Are we prepared to admit to our homeland people of other ethnicities, faiths, sexual orientations, etc., or do we see the future Armenia as a monoethnic country? Are we prepared for global competition?

What place do we want Armenia and Armenians to occupy in the modern world? What are we striving for, and what legacy do we want to hand down to future generations? What do we expect of the world and what are we prepared to offer in return? Can our historical role of ‘interpreter nation’ serve as a foundation for our security and as a keystone for prosperity in the 21st century? Can we transform ourselves from the pawn of geopolitics into a full-fledged participant, or shall we choose isolation and conformism? If the former, what development models best fit our aspiration? What institutions can play a major role in strengthening that status? What image of Armenians and independent Armenia do we wish to project to the world? How can we increase the number of young people who become the ‘business card’ of the nation? What can we offer to our immediate neighbors in order to establish mutually beneficial relations? What do we expect of the leading global powers, and where do we see possible common ground with them? What countries would we like to learn from and who, in our turn, would we like to share our experience with?

However significant our differences may be, and however far fate has dispersed us the world over, we all wish to see Armenia prosperous, and our people looking toward the future with confidence. We want the overcoming of internal and external difficulties to be our common cause, and we turn to all readers with the plea that they take part in that endeavor. The only thing that gives us concern is indifference. We are faced with a task which is unprecedented in scale and complexity, but we are confident that we can cope with this task through joint, concerted efforts. For notes 197

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