Playing Armenia

ANDREW FINKEL

Playing Armenia

The real problem with the now infamous strategic exercise at Washington’s Hudson Institute was that the whole business was in such exorable taste.

The notion of grown men playing at worst-case, regional meltdown is as childish as if they had been fiddling with “Grand Theft Auto.” My more modest suggestion is that the next time someone wants to re-enact a regional crisis, they stage the game Turkish-Armenian relations. The object of the game would be to open the Turkish-Armenian border. This would be a more discrete exercise and one which might actually do some good. Let me set out the problem. This is a border which has remained shut since 1993, when Ankara imposed an embargo against Armenia during its war with Azerbaijan over Nagorno-Karabakh. It has remained shut, a hostage to the difficulties of resolving that thorny issue. Yerevan has the greater interest in seeing the border open. It pays the greater price for their southern conduit to the Mediterranean being shut. If it has three foreign policy priorities, to paraphrase the old adage, they are 1) border 2) border 3) border. It seems that Yerevan has no pre-conditions to restoring diplomatic relations (such as territorial claims for the return of Ararat or a demand for genocide recognition). Like the penalty for the decades-long stalemate in Cyprus, the price Turkey pays is a hidden, opportunity cost. The resumption of trade with Armenia would not make a huge difference to its overall balance of payments, but would breathe fresh life into declining economies of some of the poorest provinces in the country, Kars, Van, Iğdır and Ardahan. These provinces are not inexpert at influencing the rest of the country and Turkish public opinion is largely indifferent to the issue. Yet it is in the Turkish national and not just regional interest that the border be opened. For a start it looks bad on paper to keep it shut. Turkey kept its border open with Baghdad under Saddam Hussein; it kept its unofficial border open with northern Iraq after the first Gulf war. Syria was harboring Turkey’s public enemy number one, Abdullah Öcalan while he was still in control of the Kurdistan Workers’ Party (PKK) and the frontier was barb-wired and mined -- but the border crossing was open. Closing a border in circumstances short of war is a warning of trouble to come. That trouble is on its way, or at least two historical forces are in motion that will make the issue more, not less, difficult to solve as time goes by. (Here, I am indebted to my colleague Yavuz Baydar for setting out the issues.) The first is that Azerbaijan’s influence over Turkey is on the increase as it accumulates oil and gas revenues. Turkish solidarity with Baku will no longer be forged through emotional and ethnic solidarity but petrol dollars and cents. It is Baku’s prerogative to be more, not less, intransigent on the issue of Nagorno-Karabakh. The trouble from Turkey’s point of view is that its own influence in the Caucasus is being leveraged on this issue. The countervailing trend is that the damage Armenia can do to Turkey’s reputation will increase in the run-up to genocide commemorations that will inevitably take place worldwide in 2015. Turkish governments and the Turkish people must decide how much emotional capital they are going to invest in campaigning against genocide recognition. Yerevan has hinted that it will try to diffuse the demands of the Armenian diaspora in exchange for an open border -- although there must be enormous doubts whether it has the power to keep its word. What seems fairly obvious is that Turkey would be in a better position to neutralize the past if it could normalize the present. Solving its own problems would make Turkish offers to be an honest broker in other disputes (in the Middle East, for example) all the more credible and diffuse a potential landmine in its negotiations with the EU. I understand the Justice and Development Party (AK Party), not long after it was elected in 2002, looked favorably at a series of confidence-building measures that would lead to the borders reopening. These included open passage for diplomats or third party nationals. Pretty soon, the government decided to backtrack. So what is to be done? Over to the Game Boys at the Hudson!

CENTRAL BANK OF ARMENIA TO LAY NECESSARY GROUNDWORK FOR BANKING SECTOR'S 40-PERCENT GROWTH
ARKA News Agency, Armenia
July 9 2007

YEREVAN, July 9. /ARKA/. The Central Bank of Armenia is to lay
necessary groundwork for banking sector's 40-percent growth, the
Central Bank of Armenia Chairman Tigran Sargsyan said Monday in an
interview with Reuters.

"The thing is that financial mediation is underdeveloped in Armenia
now because of small market. However, Armenia wants to become the
regional financial center", he said.

At the same time, the CBA head said that banking sector grows 25%
every year outdoing twice GDP growth.

Sargsyan said that Armenian banking sector with its 21 banks and
50% of foreign participation in the capital, expects seven banks
appearance here.

These banks are German ProCreditBank, Austrian Raifaizen, Lebanese
Biblos, Russian Gasprombank and Dutch International Post Service.

Negotiations with two other banks are under way now.

Sargsyan also said that the Central Bank intends to develop the
insurance market by inviting large insurance companies from the
outside and developing securities market.

In his opinion, cooperation with Scandinavian OMX will contribute
to that.

According to the Central Bank's quarterly reports, Armenian banks'
aggregate assets made 19.57% of GDP by late March 2007 against 20.41%
earlier this year.