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“‘Bakonomics’ Is Destructive for Artsakh”

The Nagorno Karabakh based opposition National Revival Party website has published an article titled “Bakonomics is Destructive for Artsakh” written by Stepanakert based political expert Tigran Grigoryan. Below is the English translation by Epress.am, with minor cuts in the original text.

– Often, there is a deficiency of terms when describing various economic and political processes in science and published works. In order to make these complex and intricate processes and phenomena more accessible to readers, analysts often have to use new terminology, hence creating neologisms. There are a few principles behind creating economic neologisms;

1. For creating new terms, either words or particles are attached together. For example, ‘Grexit’ (Greece, exit). That term was first used by Willem H. Butler and Ebrahim Rahbari, referring to Greece’s possible exit from the Eurozone.

2. New terms are also created by abbreviating the names of different countries. For example, ‘BRICS’ (Brazil, Russia, India, China, South Africa), PIIGS (Portugal, Italy, Ireland, Greece, Spain), etc.

3. The most well known ways of creating economic neologisms is attaching the names  of different political officials and an economic term together.

The latter medium became widespread in economics at the beginning of the 1980’s, when the term ‘Reaganomics’ was created to describe Ronald Reagan’s economic policy. Based on international experience, in the economic policy implemented in recent years in the Republic of Artsakh can appropriately be described as ‘Bakonomics’ [Bako Sahakyan is the current President of Nagorno-Karabakh]. Bakonomics represents a sort of unique model of quasi-capitalism which has been established in NKR in 2007. The model’s main characteristic feature is the fusion of political power and business. In this situation, successful businessmen in Artsakh can only be high ranking government officials or other statesmen who are close to the government. The main function of the state budget and institutions is, in the traditional meaning, to serve oligarch owned businesses. Because the abovementioned individuals, for the most part, have absolutely no entrepreneurial inclinations or knowledge of public administration, their guarantee to success is dependant on their administrative and state resources.

During Bakonomics, simplistic mechanisms and means were cultivated to contribute to the sustainability of the model. For example, the state rents space from buildings owned by high ranking officials or from those close to them, foreign guests invited for various events are served, through state means, by hotels and restaurants owned by different oligarchs among the ruling authorities, and the creation of businesses through public funds, which is presented to the public with the form of a strategic program. Bakonomics is destructive for the development of small and medium sized businesses in Artsakh.

The ordinary Artsakh citizen, who attempts to engage in entrepreneurship, is basically in a disadvantaged situation compared to the official-oligarch class who takes advantage of state resources. Just by touring the streets of Stepanakert, anyone could see the catastrophic consequences of Bakonomics. Just within the past few months, dozens of stores and kiosks have closed down in the Republics’s capital and are currently up for sale. This phenomenon is connected to the lacks of rules in the game, the privileged status of the stores and supermarkets owned by the oligarchs within the ruling authorities, the arbitrary use of the tax system by the authorities, racketeering implemented on the highest level and the seizure of businesses and property belonging to different independent entrepreneurs and a list of other similar factors.

During the Bakonomics era, outstanding officials have throughout the years begun to adopt the main principles of ‘Sashikism’ [referring to President Serzh Sargsyan’s brother, businessman Sashik Sargsyan] economic ideology found on the territory of the Republic of Armenia. They wish to control all the country’s resources and turn Artsakh into the property of a few oligarchs. Specific to the greed of individuals who have recently become wealthy, they have also made the army an integral part of their businesses. These people are not concerned with increasing the fighting ability of the armed forces or obtaining new types of weapons. The issue interesting them is about who will provide the army with lentils, bread, or mea. In contrast to all this, the security of the soldier on the border continues to depend on ‘technical equipment’ from the First World War, which is one of the main reasons for incidents and deaths on the border.

The existence of Bakonomics has turned into a crisis for relations between Artsakh and the Diaspora. Multiple Armenian philanthropists from the diaspora, who are no longer able to tolerate the level of plunder which has passed the limits of reason, have refused to have any connection with the corrupted authorities of Artsakh. The latter specifically refers to wealthy businessmen residing in Russia, who throughout the years have spent enormous sums with charitable intent in Artsakh, to only see the results of their input in the increase of supermarkets belonging to NKR’s oligarchs. It is not a coincidence that the Hayastan Pan-Armenian fund’s annual fundraiser dinner in Moscow did not take place last November. 

Bakonomics is destructive for Artsakh. It prevents the peaceful development and security of the country. Therefore, in the upcoming Parliamentary elections, the main issue must be the ridding of the Soviet warehouse manager mentality of the official-oligarch and the formation of a national elite, who would be capable of defining all the rules of the game in the economic sphere, secure property rights of entrepreneurs, eliminate the current plunder on the state level, struggle against all forms of corruption and create favorable business conditions.

Photograph from panoramio.com, Valery Khachatryan

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