Contrary to popular belief, de facto monopolies do not necessarily hamper Armenia’s economic development, Economy Minister Karen Chshmaritian insisted on Friday.
“Even the world’s second and sixth largest economies have state-owned and private monopolies,” Chshmaritian told a news conference.
“I’m not saying that a monopoly is a good thing,” he said. “The challenge is to block or prevent abuse of that monopoly.”
A World Bank survey released last year said that oligopolies control 20 percent of economic activity in Armenia, making it the most monopolized economy in the former Soviet Union. Armenian state regulators enforcing anti-trust measures disputed that assertion.
The World Bank and the International Monetary Fund have for years been pressing successive Armenian governments to improve the business environment and, in particular, liberalize lucrative sectors of the Armenian economy controlled by a handful of government-linked entrepreneurs. Those include imports of essential foodstuffs and fuel.
Earlier this month, the head of the IMF’s Yerevan office, Teresa Daban Sanchez, deplored the fact that recent months’ sharp drop in international oil prices has not considerably reduced the prices of diesel fuel and other commodities in Armenia. She described it as further proof of the lack of competition. She argued that lower commodity prices would have enabled the country to better cope with the fallout from an unfolding economic recession in Russia.
Chshmaritian claimed that the small size of the Armenian market makes it practically impossible for the authorities to break up monopolies. “If we say that we ban monopolies in Armenia any large-scale manufacturing in our country can be deemed a monopoly,” he said.
Government critics denounced these remarks, saying that the monopolies are squeezing many small and medium-sized firms out of business because of enjoying privileged treatment by the government. Stepan Aslanian, the chairman of the Union of Small Businesses, claimed that thousands of such firms have faced bankruptcy this year alone.