Armenian economist says expectations from Crossroads of Peace project are negative

YEREVAN, November 21. /ARKA/. In an exclusive interview with Novosti Armenia news agency Hrant Mikayelyan, an economist and researcher at the Caucasus Institute in Yerevan, said expectations from the Crossroads of Peace project, designed and promoted by the government of Armenia are negative.

The Crossroads of Peace project, unveiled first by Armenian PM Pashinyan at an international conference in Tbilisi, Georgia, aims to enhance communication between Armenia, Turkey, Azerbaijan and Iran through infrastructure development, including roads, railways, pipelines, cables and electricity lines.

Hrant Mikayelyan singled out Economy Minister Vahan Kerobyan who has been claiming that the opening of the border with Turkey would dramatically increase Armenia's GDP.

However, according to Mikayelyan, there is no evidence, no proof to that, except for some studies that have been conducted, mostly on the money of Western funds, as to what economic effect the open border would have.

‘In isolation from everything else, the impact was usually estimated at 1% additional growth per year, and this was the effect of increased foreign trade,’ according to Hrant Mikayelyan.

He noted that the studies did not take into account the fact that Turkey is much more competitive both in terms of output volumes, logistics and trade networks.

"The reverse effect was not taken into account by these studies and this effect consists in a noticeable increase of Turkish presence in the Armenian market not only by substituting goods from third countries such as Iran, Russia, Georgia, but also by substituting Armenia-manufactured goods. Accordingly, in this case the effect will be the opposite: imports will grow, local production will be reduced and the final result, purely macro-economic, will be obviously less than the added 1% per year," Mikayelyan argued.

At the same time, the economist noted that it is impossible to give an accurate assessment for the reason that all the parameters of the border opening are unknown.

"When they talk about the opening of the border, it is perceived as an abstraction: there is a barrier and it will open. In reality, any economic, political event is stipulated by a large list of conditions, and in this case it will be the same. We don't know all the conditions, we see that Turkey is not in a constructive mood and, in addition to economic conditions, it puts forward also political conditions, blackmailing Armenia and demanding that it negotiate with Azerbaijan on latter’s conditions," Mikayelyan said.

The expert also pointed to an even more important component, which cannot be excluded, even with economic analysis – the political consequences.

"The fact is that Turkey, for its part, already has clear goals to increase its influence in Armenia through both indirect creation of groups friendly to Turkey - we already see such representatives in the parliament, and the big business that is set to trade with Turkey, and direct presence - the direct presence of Turkish businesses, infiltration of Turkish agents. Accordingly, the growth of Turkey's influence will be diverse and it will be very difficult to fight it in the future, each such step will be associated with military risks. Therefore, it should be taken into account that any expansion of cooperation creates very serious levers for Turkey, which will be extremely difficult to respond to later," Mikayelyan argued.

Mikayelyan said that in this regard, expectations from the Crossroads of Peace are exceptionally negative. "It is wrong to seriously expect the country's situation to improve," he said.--0--