And who can blame them? While a few years ago Armenia reported double digit growth, today the picture looks very bleak with high unemployment and soaring living costs. Armenia's economy is in dire straits and was recently ranked the second worst economy in the world (after Madagascar) by Forbes Magazine. With two closed borders and its exclusion from regional energy and transport projects because of its dispute with Azerbaijan over Nagorno-Karabakh -- which Armenia continues to control -- along with occupying seven other Azerbaijani territories, Armenia has become overly dependent on Russia and Iran.
Russia practically owns everything that is worth having in Armenia, controlling over 70 percent of the Armenian economy, while Iran has over 40 agreements with Armenia, including accords on gas and oil. Armenia also gets significant remittances by way of aid from international organizations because of its huge diaspora community.
Since 2008 roughly 200,000 people have left Armenia to start new lives abroad. Given Armenia's tiny population of less than 3.5 million, this is a high percentage -- a dangerous demographic situation for Armenia -- and if this trend continues it may soon find itself without a labor force. Around two-thirds have gone to Russia, while the rest have moved to the US or Europe.
The Russians have developed an interesting “compatriots” immigration scheme that aims to boost their own demographic downturn. The scheme, launched five years ago, encourages Russian speakers to take up residence in Russia in order to help boost Russia's flagging population. Emissaries from Russia travel around villages handing out application forms. Thousands of Armenians have signed-up, with numbers set to increase as the country sinks deeper into an economic abyss.
There is an urgent need to create new jobs and improve the social system as the dismal living standards have become a major source of social tension in recent months. While the government is trying to overcome this by implementing various schemes, including initiatives aimed at improving Armenia's flagging agricultural sector, they are unlikely to have any considerable impact. Armenia needs to face up to the fact that the only real “exit” is to normalize relations with Turkey and Azerbaijan.
An initial, brave attempt at rapprochement between Armenia and Turkey crashed just over a year ago when both countries failed to ratify two protocols that were signed in Switzerland earlier in the year. In particular, Azerbaijan was unsettled by the prospect of Ankara opening up Turkey's border with Armenia without progress having been made in the Nagorno-Karabkah peace talks; hence Ankara subsequently gave Baku a water-tight guarantee that it would not do so until progress had been made, in particular by withdrawing Armenian troops from the occupied territories. Even though this has not happened, Turkey is still trying to keep various channels of communication open at different levels and last week Turkish Foreign Minister Ahmet Davutoğlu met with a group of Armenian NGOs to discuss confidence-building measures. This also followed calls by US Secretary of State Hilary Clinton to get the process of reconciliation back on track.
Davutoğlu should be applauded for this initiative and his commitment to rapprochement. Although, official talks may remain at a standstill, it is a positive thing that civil society continues to meet and that there are growing numbers of cultural activities between the two, as well as the fact that higher numbers of Armenians than ever before will spend their summer vacations in Turkey this year. This demonstrates that while the territorial border is still be closed, the mental border is open.
It seems that Turkey is planning to pursue some confidence-building measures that could be economically favorable to itself and Yerevan. Most reported is the possible opening of direct Turkish Airlines flights between Yerevan and the opening of a Turkish Airlines office in Yerevan. However, given it has taken Turkey sometime to “reset” relations with Azerbaijan, it is unlikely that Ankara will do anything that might upset Baku. The issue of such planned economic measures may crop up during discussions today in Baku between Turkish Prime Minister Recep Tayyip Erdoğan and Azerbaijani President Ilham Aliyev because Turkey has promised Baku, Azerbaijan would always be kept in the loop.
Unfortunately, following the recent failed Kazan summit, it does not seem progress in the Karabakh peace talks is imminent unless Russia, following its recent shuttle diplomacy -- visiting both Baku and Yerevan -- is able to miraculously pull a rabbit out of its hat. The current delicate political-economic and social situation in Armenia is sadly not conducive to change. Furthermore, with elections on the horizon in 2012, President Serzh Sarksyan has virtually no room for maneuver and will therefore continue to stick to maximalist goals, maintaining the status quo rather than risk tumbling from power. This approach, unfortunately, seems to have the backing of the majority of society. It appears that Armenians would rather live in poverty or leave the country than show more flexibility in the talks.