The Fly Arna venture was declared by the government the “national carrier” before launching inaugural flights to a limited number of foreign destinations in 2022. The airline stopped the flights in January this year and was stripped of its operating license two months later. It has since been undergoing liquidation.
Multiple foreign and Armenian news websites reported late last week that Air Arabia, which is based in Sharjah, the United Arab Emirates (UAE), is preparing an arbitration case against the government. They gave no details of the legal action or reasons for it. The amount of damages sought by the Emirati carrier are also not known yet.
Fly Arna was equally co-owned by Air Arabia and the Armenian National Interests Fund (ANIF), with each of them having invested 4.4 billion drams ($11 million) in its operations. Earlier this year, Prime Minister Nikol Pashinian said that the joint venture went out of business because of failing to compete with other carriers.
Pashinian’s government also decided to liquidate ANIF, an agency which it set up in 2019 for the purpose of attracting foreign investment in Armenia. ANIF’s most notable achievement was a 2021 deal with the UAE’s Abu Dhabi Future Energy Company, also known as Masdar, which pledged to build Armenia’s first massive solar power plant. Masdar appears to have put the $174 million project on hold, however.
Although Pashinian claims to have eliminated “systemic” corruption and created a level playing field for all businesses, no large-scale Western investment projects have been launched in Armenia during his rule.
In 2018, Pashinian’s newly installed government helped to effectively disrupt a multimillion-dollar gold mining project launched by a British-American company, Lydian International, and strongly opposed by local environmentalists. The company filed for bankruptcy protection in Canada in late 2019 before being restructured and bought by two U.S. and Canadian equity firms specializing in mining.
The government pledged last year to help the new owners revive the Amulsar project. Meanwhile, some of Lydian’s former American shareholders filed an arbitration case against Armenia at the UN Commission on International Trade Law (UNCITRAL). The arbitration body opened hearings on the appeal in January.
Pashinian’s government is also facing a $1.2 billion lawsuit filed in June this year by a Cyprus-registered shell company that owns a minority stake in Armenia’s largest mining enterprise. The company, Walnort Finance, alleged a serious violation of its “legitimate shareholder rights” resulting from the October 2021 takeover of the Zangezur Copper-Molybdenum Combine (ZCMC) by entities linked to Russian billionaire Roman Trotsenko. The latter bought 75 percent of the ZCMC stock from a German metals group and immediately gifted a quarter of that stake to the government.
Suren Parsian, a Yerevan-based economist, on Monday described the Air Arabia lawsuit as another blow to Armenia’s attractiveness to foreign investors.
“The Armenian government has demonstrated that it’s a bad administrator and manager and that even its [investment] funds have no guarantees of long-term operations,” Parsian told RFE/RL’s Armenian Service.
