Since the collapse of the Soviet Union in 1991, the states of the post-Soviet space have been said to be undergoing a “transition”. This term subsumes the general shift of these states from an ostensibly socialist, command economy-oriented system to a neoliberal, free-market based system. In this lecture, Dr Armine Ishkanian focused specifically on the “transition” period of Armenia, analysing the country’s political and socio-economic developments over the past twenty-five years, and placing these developments in their international context. The emphasis was placed on social justice and democracy in Armenia during this period, addressing issues of poverty, inequality, oligarchy, and the role of the neoliberal agenda in the moulding of Armenia’s “transition”.
Dr Armine Ishkanian is an Associate Professor and the Programme Director of the MSc in Social Policy & Development (State and NGO Streams) in the Department of Social Policy at the London School of Economics (LSE). Her research examines the relationship between civil society, democracy, development, and social transformation. She has examined how civil society organisations and social movements engage in policy processes and transformative politics in a number of countries, including Armenia, Egypt, Greece, and the UK. She is the author of two books and numerous peer reviewed academic articles, and is co-editor of the openMovements page on openDemocracy.net. This lecture was organised by Dr Krikor Moskofian, Director of the Programme of Armenian Studies, and chairing the event was Dr Hratch Tchilingirian, Associate Faculty Member at the Faculty of Oriental Studies in Oxford University.
In a first for the Programme of Armenian Studies is proud to say that this lecture was live streamed, allowing an online audience to engage in the discussion and pose questions. Providing a remote platform to interested people who are unable to attend our events in person, this is a significant development for the Programme.
The neoliberal model of development
The philosophy of neoliberalism in its modern form draws much of its ideological content from the Austrian economist and philosopher Friedrich Hayek. Its ideas were taken on board by the Chicago School in America and were propagated by academics such as Milton Friedman. Neoliberalism as an active politico-economic ideology emerged in the 1970s as a reaction to state developmentalism. In the context of social policy, neoliberalism sees state intervention as anathema, seeking instead to forge a society in which non-State actors, including private or third sector actors, are expected to play a more prominent role in welfare delivery and the meeting of needs. The pooling of resources and their redistribution as social welfare is to be discouraged, as individual responsibility is encouraged. This model has been presented by advocates of neoliberalism as the most efficient mechanism for providing the goods and services that fulfil human needs.
At times referred to as the Washington Consensus, there was an assumption throughout most of the globe during the onset of the collapse of the Soviet Union that all the countries which would emerge from the union would eventually go through a “transition” process in which neoliberal, free-market economic and political models would reign. The American political scientist Francis Fukuyama claimed in his book The End of History and the Last Man that the implementation of liberal democracy and free-market capitalism would spread throughout the world, spelling an “end of history”, and representing the triumph of liberalism in its modern form and the needlessness of seeking alternatives to this system. Dr Ishkanian sought to problematise this idea of “transition”, since it is apparent that the past twenty-five years have not seen the implementation of this model with any great success in the post-Soviet world, and that it is not clear that neoliberalism is the most fruitful system for fostering social justice and democracy.
When analysing the neoliberal model of development in a given country, there are various actors whose involvement must be taken into account, including the state, the private sector, international organisations, civil society, and private individuals. One must understand the power imbalances and intentions that exist between these actors. The notion of power in the political decision-making process enjoys a prominent role in critiques of neoliberalism; those with political and ideological power are able to set the agenda, and implement policies that directly affect all citizens.
Neoliberalism emphasises individual responsibility and self-reliance rather than social rights , and this political preference for individualism has an enormous impact on social justice and relations between citizens on a social level. Critics, such as anthropologist David Harvey, claim that this utopian idea is not viable, as not all citizens are on a level playing field, and so the concepts of individual responsibility and self-reliance are endowed with widely differing meanings according to the individual’s socio-economic status.
Armenia’s socio-economic and political realities
Dr Ishkanian referred to the blind acceptance of the neoliberal model in the post-Soviet world as a symptom of what Joseph Stiglitz has called “market fundamentalism”, in which the gradual development of the free-market economic model is not questioned. Dr Ishkanian notes that this unquestioning acceptance is partly a result of the fear of returning to the Soviet past, and partly because there is no prevalent alternative available. Consequently, Armenia has been on the path of neoliberal development since independence from the Soviet Union.
The role of international organisations in the implementation of neoliberal policies should not be understated. One prominent example that Dr Ishkanian brought to light is that of the PRSP (Poverty Reduction Strategy Paper) initiative. The initiative, designed to foster economic growth and reduce poverty in “developing” countries, involved both international financial institutions (IFIs) such as the World Bank and International Monetary Fund in collaboration with domestic stakeholders. In 2000, several Armenian researchers, including anthropologist Hranush Kharatyan, took part in the PRSP process and drafted reports on the situation of people living in poverty in Armenia and their problems by conducting ethnographic studies and interviews, which were compiled and published as a book titled, Stories about Poverty (Աղքատության մասին պատմություններ). Ishkanian discussed how her research on the civil society participation in Armenia’s PRSP process, which is published in the Journal of International Development (2006), illustrates how the IFIs rejected recommendations for redistributive policies and a focus on governance issues, which were made in the provisional draft of the PRSP. The provisional draft was authored by Armenian civil society organisations following an extensive and participatory consultation process. In keeping with their neoliberal agenda, instead of redistributive policies, the IFIs advanced the same macro-economic growth policies as a means of tackling poverty. The whole episode demonstrates the power imbalances that lie between international organisations, the state, NGOs, civil society, and individuals, in the context of social policy shaping and implementation.
Ishkanian cited evidence of how the privatisation of enterprises in Armenia has led to the formation of an oligarchy, in which a number of families control vast amounts of resources and assets. She referenced the National Poverty Statistics of 2016 which show that approximately 900,000 people in Armenia, out of a population of around 3 million, are considered to be “poor”. One of the most serious issues is that of child poverty; the dismal situation of young people will have severe consequences in the long-term, as they grow up with a lack of opportunities to flourish and start to negatively affect the well-being of the general population. There is a risk of the emergence of a cycle of poverty among those already less well-off, as structural politico-economic challenges are not being addressed, but rather further entrenched.
According to the Armenian National Statistic Service report (2016), “To overcome poverty, Armenia would need AMD 71.4 billion [approx.. £11.5 million GBP], or an amount equal to 1.4% of GDP, in addition to the resources already allocated to social assistance assuming that such assistance would be efficiently targeted to the poor only” (p. 46). The authors of the report add that eradicating “extreme poverty” would require “around AMD 1.8 billion [approx.. £2.9 million GBP], or 0.04% of GDP” http://www.armstat.am/file/article/poverty_2016_eng_2.pdf.
In relative terms these figures are not enormous, and it is therefore necessary to ask why the money circulating within Armenia is not being directed at solving the not insurmountable problem of poverty.
One significant driver of economic growth in Armenia that Dr Ishkanian mentions is that of mining, which is said to have the potential to be a solution to the country’s severe economic woes. According to the World Bank, the mining industry’s exports between 2011-2016 amounted to around $500 million annually, making it Armenia’s “top sector in terms of export and inflow of foreign exchange”http://www.worldbank.org/en/news/press-release/2016/06/07/world-bank-assessment-of-armenian-mining-sector-indicates-opportunities-for-growth
. There is evidence to indicate that the profits generated from mining have not yet been shared equitably among the population, and there is little transparency regarding where and to whom this money is going. In addition, the lack of care for the environment as a result of unclean mining has led to health problems for inhabitants living close to mining activities. Dr Ishkanian mentioned that in March 2017 the Armenian Government joined the Extractive Industries Transparency Initiative (EITI), adding that this was a positive step, but it was too early to predict how it would affect the situation.
The past decade or so has seen a number of protests organised by individuals and civil society groups who are raising issues linked to social justice in Armenia. Nevertheless, these bouts of protests seem to have only been useful in providing a channel for catharsis within Armenian society, without actually penetrating deep into the structural nature of the country’s political and socio-economic problems.
The Armenian diaspora has undoubtedly had a role (or roles) to play in the “transition” phase of Armenia. Diasporans have been keen to provide financial support to the country and establish charities. Such charitable initiatives may indeed be of help to the less well-off and vulnerable in Armenian society, but they by no means address issues of structural inequality. Dr Ishkanian emphasised the importance of focusing on rights rather than charity as a way of overcoming poverty.
The global context
Dr Ishkanian quoted the Oxfam statistic that the eighty richest people in the world own the same wealth as 3.5 billion of the poorest people in the world, adding that one of the main causes of this severe inequality is tax avoidance. Globally, offshore accounts and tax dodging by high net-worth individuals and large corporations are the order of the day, and Armenian oligarchs have been more than ready to take advantage of this international system.
Dr Ishkanian gave the example of the son of the Minister of Finance of Armenia, formerly the Minister of State Revenue Committee (the Armenian equivalent of the British HMRC). The son, along with his brother, purchased an $11 million mansion in Los Angeles, now on the market for $35 million. She questioned how a civil servant was able to land such sums of money, only to then spend it on luxury property.
Dr Ishkanian argues that we are now at the end of the “transition” phase, as the sounding of the trumpets of liberal democracy and the free-market slowly quietens. The notion of democracy existing alongside capitalism is also being questioned more frequently by academics and some policy pundits. The very idea of democracy as introduced during the “transition” period in Armenia has been heavily associated with the development of the precarious socio-economic conditions of the country since the collapse of the Soviet Union; as it collapsed, much of the social safety net that had previously existed was suddenly replaced by a free-market regime and privatisation of resources and the extreme scaling back of crucial social services.
Discussions revolving around inequality are becoming increasingly prevalent throughout the world today. However, Dr Ishkanian noted that this discourse does not seem to be pervasive in Armenia, where there appears to be a lack of concern for social justice as a result of the de-politicisation of very political issues that are related to social justice.
From a global perspective, the international system is suffering from a number of acute crises: from armed conflicts to financial meltdowns and environmental issues, and the so-called “death of democracy”. Despite claims by some academics that the 2008 financial crisis would lead to a retrenchment of neoliberal policies, the opposite in fact has occurred in that neoliberal policies have been further engrained, with austerity measures being implemented across broad swathe of countries over the past decade. Meanwhile, as Loic Wacquant has argued, state spending has been concentrated in defence and policing rather than health, education, and general social care.
The frustration within societies that form this international system is sometimes expressed negatively through right-wing populism based on xenophobia. Although differences in culture have been raised as a point of conflict between citizens in modern multicultural societies, economic issues are generally regarded as the main cause of this frustration. With the continued advancement of technology, unskilled workers are being pushed aside, leading to higher levels of unemployment. The nature of economic competition and the demand-supply economy exacerbates the problems that arise out of technological progress, and the rise of far-right movements in Europe and the election of Donald Trump are consequences of this global politics of anger and discontent.
One economic solution to inequality that has been proposed and also implemented in some countries is the Universal Basic Income Grant. The governments of Finland and Switzerland have trialled the idea, and it has also come to the fore in “developing” countries. For example, the South African government spent 3.4% of its GDP to distribute such grants to 30% of the population (16 million people). In just ten years, the country managed to half the rate of poverty and reduce the rate of hunger from 29% to 12%.
Armenia is a part of the global context outlined by Dr Ishkanian – its problems are inextricably connected to the international political and economic system. Whatever solutions are to be sought to deal with the political and socio-economic woes of the country will always be linked to developments happening across the globe. Any initiatives directed towards social justice in a globalising world must involve all societies, and if Armenia is to participate in this process, its citizens and concerned diasporans should step up to the plate.
During the question and answer session, a member of the audience raised a question about the issue of diasporans sending money to Armenia, asking whether this was the right approach to support Armenia’s ailing economy. Dr Ishkanian emphasised that one should separate the money entering Armenia as remittances from funds that are funnelled into charitable projects. The former is an essential source of livelihood for some Armenian families, and putting obstacles in the way of remittances may put poorer parts of the population at serious risk. The funding of projects in Armenia financed by diasporans is, however, an issue that requires more scrutiny; much of this money does not end up in the hands of those that are in need as a result of poor governance and mismanagement of funds, and the lack of transparency and accountability allows for widespread corruption.
One member of the diaspora in the audience noted that those Armenians living far away from Armenia are simply not aware of the issues that face the country, and so any involvement from a distance may actually have a negative impact. Dr Ishkanian responded by saying that the only way for “global” Armenians to play a meaningful role in the development of Armenia is to do their research and discuss the issues facing the country with friends before making a decision to send money or aid charitable projects. Dr Tchilingirian also asserted that the capability of the diaspora to help is often overestimated.
An online viewer of the lecture asked whether it would be wiser for charities working on the ground in Armenia to pool their resources together and merge to operate in tandem. Dr Ishkanian noted a preference for diversity in the charity field, as each charity focuses on specific issues. Nevertheless, since all issues in any given society are always interrelated, she emphasised the need for dialogue and cooperation between charities, rather than allowing them to act on their own or pushing them towards the formation of a monolithic, merged entity.