In Recent Years, There Have Been No High-Profile Property Cases in Armenia
Artak Kirakosyan, Director of Civil Society Institute
- What is the situation with the violations of property rights in Armenia like today and is there a difference compared with the past?
The situation in Armenia can be divided into three periods. This is the immediate post-Soviet period, when the first wave of property privatization, which was considered to be people’s privatization, began in the republic. This privatization was carried out according to various, not entirely understandable schemes with the declared goal of accumulating initial capital. According to theory, the new capitalists were supposed to follow up by developing the country's economy on this basis. However, in practice, the state and the people received only a penny from the sale of their property. Later on, the new owners successfully resold the property they had laid hands on for pittance at prices that were dozens, hundreds, and even thousands of times higher. However, it was still significantly lower than the real cost of this property. Thus, in a certain sense, the first wave of privatization became the first national wave of problems with property. Subsequently, the second wave of privatization of state property continued, launching the process of filtering out “unworthy” owners, who received the property in due time for nothing, this time in favor of their “worthy” ones. All this was done by the authorities on the basis of gang "concepts" and "laws". This period lasted until the “velvet” revolution (Editor: April 2018), and it came to the point when there was no one to take property from, it was in the hands of their gangs – the “worthy” ones only. Moreover, among the "worthy" ones there were both members of the ruling Republican Party, and representatives of the opposition, who were also part of the system. In the same period, property was taken away from the ordinary mortals, in order to realize the “priority public interest”. For example, they took property from the residents of the streets where North Avenue was erected in the center of Yerevan in the early 2000s.
The situation has become quite interesting in the course of the past year. There is an active and rather heated debate in the society and political circles about the need to introduce “transitional justice”. Will this “transitional justice” affect the right to property acquired illegally by those in power who used their privilege? Besides this, there are enough problems in connection with the obligations undertaken by the state under the previous authorities. Today it is not clear what can be done with these commitments. The most striking example is the situation around the Amulsar project by the British company Lidian Armenia. This mining company has acquired a license, has taken the first steps towards gold mining. However, today a part of the Armenian society has asked the question on who owns the country's mineral resources, and who decides how the mineral resources will be used. And the municipal councils in various regional communities require the mandatory consideration of the local population’s opinion in the matter of subsoil use.
At the same time, I do not remember any case of the violation of the citizens’ property rights at the level of private houses, apartments and small shops over the past year. Simply no large-scale construction is taking place in Armenia, respectively, and the rights of citizens in favor of “priority public interest” are not violated.
- Who deals with the protection of property rights of citizens more? Are these human rights organizations or lawyers, hired by the citizens?
I think lawyers hired by the citizens, deal with these matters more. Because, starting with Northern Avenue, the court cases by the plaintiffs who felt dissatisfied with the takeaway of their property in favor of “priority public interest” as well as the decisions of local courts, were most often filed with the European Court of Human Rights (ECHR). Lawyers, in turn, very quickly realized the viability and profitability of such cases, which, respectively, directly affected the number of lawsuits in the ECHR. Lawsuits in connection with the violation of property rights are investigated for years, but, as a rule, the ECHR satisfies these claims.
- Are there any high profile stories on the violations of property rights in Armenia, and was it possible to defend these rights through legal proceedings in the country?
The loudest stories of property rights violations are connected with the construction of the same Northern Avenue. And there were quite a few cases of the protection of citizens' rights to property and receipt of compensation through legal proceedings in this context. The fairness of the trials was a different question.
The fact is that some plaintiffs received quite large compensations upon court decisions, and some did not receive anything. At the same time, the claims of the plaintiffs were practically no different. It is clear that all this raises questions about the Armenian justice. In this sense, it is noteworthy that after being dissatisfied with the Armenian justice, the plaintiffs appealed to the ECHR, yet, they again received less compensation than that received by their fellow sufferers upon the decision of the Armenian courts. Thus, the whole process was rather murky, and it is possible that the judges made decisions for bribes. At the same time, in any case, all these compensations were paid by the state, that is, by taxpayers, and not by the developer companies.
- How does the situation with property rights in the country affect the development of entrepreneurship, foreign investment, and attitudes in the society, in general?
I would like to highlight two points here. Opposite points, by the way. On the one hand, there was hope in the country for the development of entrepreneurship under fair, uniform rules of the game for all. The non-division of entrepreneurs into "of their own" and "alien" will open the way for new investments in Armenia. And foreign and local entrepreneurs will be interested in capital investments in Armenia even by attracting credit funds. However, all this is seen only as a long term development.
In the short term, rather serious fears can be identified in connection with the situation with the right to property in Armenia. These fears are primarily caused by the prospect of a forced return of some material means and property to the state by people who received them through illicit enrichment. In the short term, this will put potential investors in a rather difficult situation. Investments in a country where there is a lack of stability in relations between the state and economic entities are fraught with serious risks. The lack of stability in its turn is also fraught with fears about the degree of predictability by the country's authorities. In the future, such authorities are quite capable of coming to the conclusion that it is necessary to establish, for example, socialism or communism in Armenia and, accordingly, go for the nationalization of all private property. Accordingly, in such an uncertain situation, it is rather difficult to talk about long-term investments. And here again we can give an example of Amulsar. It is clear that the investment climate in Armenia today is quite full of risk, and primarily for political reasons.
As for societal moods, on the one hand, people hope for the development and application of normal, fair, rules for business and entrepreneurship that will be equal for all. And also they hope for the prosecution of or at least return assets by illegally enriched persons. On the other hand, it is not yet clear to the society how all this should be implemented. So far, there is not even a roadmap for the introduction of a “transitional justice” system. It is not clear whether the return of assets, illegally acquired over the past decades, will take place. At the same time, in the future, I do not even rule out the possibility of a complete redistribution of property in Armenia, since the ruling elite needs funds for the development of the country. However, so far the high degree of public confidence in the government and the prime minister does not imply such a scenario. Thus, it can be stated that as a whole, the society is quite positive about the current situation around the property right in Armenia. Our main problem is uncertainty, which does not allow us to speak boldly about long-term investments in the economy of our country.
This material was prepared in the framework of ”Public Dialogues for Communication between Armenian and Azerbaijani Specialists” project, supported by the Black Sea Trust for Regional Cooperation (a project by the G. Marshall Fund). Opinions expressed in the material do not necessarily represent those of the Black Sea Trust or its partners.
