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Wealth and Money

The image of the Armenian as a consummate business person goes back a long way. With seemingly endless confrontations from foreign rulers, and no real chance for political gains within their own country, the Armenians in the Middle Ages established a new class of leaders, both at home and abroad. These were the merchants and traders. They quickly gained a reputation as good businessmen, spreading literacy and culture wherever they went, from Europe to parts of Asia. Remarking on the Armenian influence in India, the French historian Fernand Braudel wrote, "Where would Madras be without the Armenians?"

The Armenian reputation for business also flourished along with the Diaspora. Today, many prominent businesspeople throughout the world can claim Armenian roots. And this special skill in business affairs remains a source of pride.

A Talent for Business - An Armenian man, named Artash, walked into a bank in New York City and asked lor the loan officer. He told the officer that he was going to Yerevan on business for two weeks, and needed to borrow $5,000.

The officer told him that the bank would need some form of security for the loan. Artash handed over the keys to a new Ferrari parked on the street in front of the bank. He produced the title, everything checked out, the car was accepted as security, and Artash departed with his loan. The American bank's president and its officers all had a good laugh at the Armenian who offered a $250,000 car as collateral for a S5,000 loan, and an employee moved the Ferrari safely into the bank's underground garage.

Two weeks later, Artash returned and repaid the loan and the interest, which came to $15.41. The loan officer said, "Sir, we are very happy to have had your business, and this transaction has worked out very nicely, but we are a little confused. While you were away, we checked you out and found that you are a multimillionaire. What puzzles us is, why would you bother to borrow $5,000?"

Artash replied, "Where else in New York City can I park my car for two weeks for only $15.41 and expect it to be there when I return?" Ah, the Armenian brain ... This is why Hayastan is shining!

Within the homeland itself, however, opportunities for economic prosperity have been somewhat restricted. Genocide followed by the Soviet system stifled the Armenian flair for enterprise. Until the global recession of 2009, Armenia was striving to get back on its feet, and was doing so at a relatively fast pace. The average per capita gross domestic product in Armenia nearly tripled from 2000 to 2005, but it still remained at less than half the per capita GDP of its neighbors Georgia and Azerbaijan.

Armenians have a positive attitude toward the accumulation of wealth, and love tales of successful Armenian businesspeople. However, they are aware that the fabled business class has yet to experience resurgence in the homeland. For real success, modern Armenia must overcome significant economic vulnerabilities. First, economic growth is heavily reliant on increasing exports, which is obviously hampered by the closed borders. Also, exportable products and services are somewhat limited (for example, diamond polishing). Government, too, must loosen its grip on tariffs and taxation. To restore the economic pride of the past, Armenia needs greater investment, expansion of capital markets, and even further government and banking reforms.

A second vulnerability is the continued dependence on remittances from Armenians abroad. According to the International Monetary Fund (IMF) and the Central Bank of Armenia, remittances actually exceeded the country's annual budget. This widespread dependence also makes the country highly vulnerable to fluctuations in the global economy, as evidenced by how the country was hit by the global recession of 2009.

Also, there are vast differences in wealth across the country. Although Armenia's economy has improved, Yerevan, with one-third of the country's population, produces more than half of its gross domestic product. According to the United Nations Development Program Statistics, about half of Armenia's rural population of 1.5 million lives in poverty. The government, Diaspora groups, and nongovernment aid organizations have introduced several programs to relieve the dire situation in the rural ureas; however, for many, the circumstances are still very serious.

And then there are the oligarchs. Just as in Russia, an enormously wealthy class of oligarchs has made its way to the top of society. Since independence, the rise of this new elite has hampered Armenian economic reform. These influential businessmen not only control key industries, but also sit in parliament. Many Armenians hope that reforms will one day loosen the oligarchs' grip on both business and government, but there is still much that can be done.

Oligarchs are not shy about showing their wealth. They build outrageously lavish mansions; they give their sons and daughters Mercedes cars when they turn sixteen; they frequent the upscale retail shops being built along Yerevan's North Avenue. Their muscle-bound "protectors" are well-known. These are not a revival of the Armenian tradesmen of old; it is widely agreed that their influence on issues such as distribution of wealth, anticorruption, criminal justice reform, and privatization are harming progressive economic reforms in Armenia.

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