Pension Wars

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Armenia has been experiencing a rise in political activity in the last few years. The most recent of which has been the wide scale public outcry over the government’s new pension reform plan, embodied by the ‘dem em’ (we oppose) movement. Over the past several months, thousands of Armenians, mostly young professionals, some of whom are from the IT sector, have been staging routine mass protests against the USAID-backed reforms which went into effect on the 1st of January 2014 as part of legislation enacted in 2010. Under this new pension reform law, all employed persons born after 1973 would be required to pay an extra five to ten percent of their salaries to a government-approved selection of private fund management firms. The government argues that this is a necessary measure due to the need to reduce government expenditures as the country struggles with the impending budgetary burden of population aging amongst other constraints. With the impending economic slowdown over the next two years, the government has understood the necessity of being careful with budgetary funds and the previous entirely public pension system would be too costly.  The opposition to this reform may seem perplexing to outside observers, as pension privatisation has been hailed as a successful policy for dealing with similar budgetary problems that governments have in the developed world. The blog, “the Armenian Economist” notes that countries with similar pension packages include Australia, Chile, Denmark, Estonia, Finland, Hungary, Iceland, Israel, Mexico, Netherlands, Norway, Poland, Slovakia, Sweden, and Switzerland.

Despite enjoying the backing for the reform of a number of economists, and the overt support of the US ambassador John Heffern, opponents, discontent over the mandatory element of the reform, have been suspicious of the package. They argue that the unconstitutional measure would be seen as an extra form of taxation on a labour force which is already underpaid, and over taxed, and would ultimately lead to an increase in emigration particularly within the IT sector, which is dominated by highly paid (by armenian standards), highly skilled young professionals who would be tempted to pursue careers elsewhere.

Since the reforms have been hailed as both necessary and competent, why have they generated so much controversy? There are a few things that are worth noting:

It’s about being overtaxed:

Currently, roughly 26% of an Armenian worker’s salary goes to paying various taxes, including their public pension funds. In a country where the average income is less than 250 EUR a month, this means that workers are left with just over 180 EUR to cover monthly expenses. Removing another 5 to 10% of their salaries would leave them with just 170 EUR per month. This in a city where the recommended minimum monthly expenses for one person is roughly 400 EUR.

Its about freedom of choice:

One of the biggest issues of contention here is that the new pension plans are mandatory, and citizens are unable to choose how it is managed. The government has responded to concerns by pointing out that they cannot expect the population to manage their own pensions as they would be left with nothing after retirement, and tried to comfort opponents by mentioning that the  private pension funds will be managed by French “Amundi” and German “Talanx” companies. The Constitutional Court, however, has sided with the protesters on the matter.  It should be noted, however, that even in pension systems which are said to not be mandatory, the actual amount of choice is quite trivial anyway.

It’s about mistrust for the State:

Many Armenians can still recall how much of the life savings which they had collected over many years vanished overnight with the collapse of the USSR, and again a few years later, when the government illegally dipped into the nation’s pension funds to finance new projects. Furthermore, armenians have grown increasingly cynical of incessant government promesses with seemingly more sinister intentions, such as the recent speeding cameras, bus fare increases, city centre parking system, etc. The government, in response has done very little to show genuine will to help foster better dialogue with civil society over such issues, conducting closed-door meetings, and so on.

It’s a vote of non-confidence in the Government:

One aspect of this movement which could puzzle outside observers is the lack of actual criticism of the reform itself. A recent study conducted by masters students at the American University of Armenia’s School of Humanities revealed that many of those frustrated were ready to accept the reform’s implementation if it had been proposed by any government other than the present one. In this sense, the current protests are part of a wider wave of protest against the Republican government by an increasingly vocal, and competent opposition movement.

As Initial discontent has since grown into a fully fledged movement, it has noticably attracted and united all four non-governmental parties: the opposition the Heritage party, Armenian National Congress, ARF- Dashnaksutyun and the non-ruling Prosperous Armenia Party towards the cause. Initially unorganised and chaotic discontent eventually transformed into a clear list of demands. The protesters claimed that they would not back down until the reform package was submitted to the constitutional court for evaluation, repeal said laws, and for the prime minister, Tigran Sargsyan to resign.

Amid the backdrop of almost daily protests (which include a rap song)  the Constitutional Court declared, on April 2nd, that certain elements of the reform package were indeed anti-constitutional, and ordered the parliament to reconsider it. Despite this, mandatory inputs into the new pension plans, which had automatically started on January 1st continued, prompting a continuation of public protests.

Since then, the Prime Minister Tigran Sargsyan has resigned, replaced by notorious oligarch Hovik Abrahamyan (known colloquially as ‘mook’), who has declared his intention to work with the professionals to reform the package. At the time of writing, the National Assembly has approved a new bill on pension reform, after the Court gave them until the end of september to bring it into conformity with the constitution. The new prime minister, Hovik Abrahamyan, has publicly stated that the changes to the reform will make it optional to subscribers. In the meantime, employers are still asked to continue taking 5% of worker’s salaries. Meanwhile, the protests are growing in size and frequency…

Understanding the Armenian world view when dealing with the Artsakh Conflict

Despite the world having witnessed our recent history, we are still asked by International mediators to be reasonable in our demands (our demands to preserve what is left of our nation)

 it would be really nice if, for once, the international community, the Turks and the Azeris would care to understand the Armenian case: We are a nation of people who’s contribution to the world is quite disproportionate to our size, and yet have constantly been marginalised by larger interests, seen as disposable problems, to the point where our plight has even been refered to as “the armenian QUESTION“, as if we were a problem that the world was trying to effortlessly wash its hands of. For most of our recent history, we have been criticised as a nuisance by larger powers in the grand scheme of World Affairs, because we complained about our lands being taken from us, our people murdered, our sovereignty being violated, or culture compromised time and time again. Yet, we have constantly been asked to compromise on these things which we have held dear by the same powers who asked us to sacrifice for the greater good, to appease our aggressive neighbours, or for future compensation.

Today we live in a Republic that is one tenth the size of the state we were legally promised in 1919, which itself was only two thirds the size of the land we have historically lived in; which didn’t bother Stalin who decided to disect us even further.

Different Armenias

 We do not have the luxury of having a Sprachbund stretching from Blugaria to China like our neighbours do, our closest kin have long since been assimilated into other cultures, there is no where else for us to go. We have nothing left to give, and yet we are still being told by the International community that we are being unreasonable, that we must compromise…This is not an irrational call for romantic nationalism, or irredentism, this is a very real, pragmatic issue for us. IT is an issue that intails the very survival of our nation as a relevant, independent state in the modern world. We collectively share the pain of the Azeris who suffered in the early nineties, but it was a necessary pain, Just as the pain of the Indian-born Britons who left for a land of their ancestors that they had never seen, when India received it’s independence.

It should be noted, however, that despite the fact that the Armenian nation has already lost so much, for the sake of peace, the Armenian negotiators at the Kazan conference offered a compromise that was so humiliating for the Armenian side that some of the points have still not been publicly revieled. This very reasonable proposal was turned down by Aliyev. In other words, no matter what we offer, they will still ask for more.

Should Azeri refugees be alloud to return to their homes? Absolutely. Should we allow Azeris free passage through Armenia/Artsakh, as part of a pledge to allow all of mankind the right ot freedom of movement, and dignity they deserve as fellow human beings? Definately. Should we dream of the day where we could one day trade freely with Azerbaijan and look towards eventual regional economic integration? We are more than willing…Yet, to give up even an inch of land for which we have fought and bled for? NEVER.

Mshak: expressing Armenian Libertarian thought since 1872

In 1872, the prominent Armenian political philosopher and economist, Grigor Artsruni, became the primary founder of the first liberal newspaper for Armenians around the world in Mshak (AImagermenian:Մշակ meaning “The Toiler”). Along with the help of co-founders Aleksandr and Levon Kalantar,Arakel Babekhanian, Hambardzum Arakelian, and Hakob Melik Hakobyan (penname “Raffi”), the newspaper soon grew to become one of the largest and most prominent voices of Armenian people in the Russian and Ottoman empires. It advocated firmly for the respect of individual freedom and for free market-oriented economic reforms in the Russian empire. In addition, it first published the works of many famous authors and intellectuals, most notably the nationalist liberal author Raffi’s famous novella,Khente (Armenian: խենթը meaning “The Fool”). In keeping with such themes, Mshak also called for the creation of a unified Armenian nation-state until it was shut down in 1921 by the Bolshevist occupation of Georgia.

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This modern publication aims to preserve the original spirit of Mshak in a contemporary context. Our goal is to contribute to the maturation of the political and economic discourse in Armenia by analyzing government policies in the country and the Transcaucasus region, and making recommendations from a classical-liberal and paleo-conservative perspective.

Mshak is a non-governmental organisation, and is not affiliated with any political party, whether it be in the Armenian National Assembly or in the Opposition.

This publication advocates the ten fundamental principles:

  • Armenians all across the world form a single nation;
  • Armenians residing within the Republic of Armenia “should be assured an undoubted security of life and an absolutely unmolested opportunity of autonomous development,” as per  President Woodrow Wilson’s Fourteen Points;
  • Society within the Republic should be structured around the respect of the unalienable natural rights of man, bound through social contract and freedom to pursue “life, liberty, and property”;
  • Respect for Rule of Law within the Republic;
  • Universal equality through the justice system of the Republic
  • Increased governmental transparency and accountability within the Republic;
  • A small, transparent, streamlined, and highly efficient government bureaucracy within the Republic;
  • A thorough and complete transition to a free market economy within the Republic;
  • An imposition of a minimal flat tax on business within the Republic;
  • The immediate creation of tax-free zones in the bordering provinces of the Republic;
  • Armenia, as an integral member of the European Continuum, should pursue a more aggressive European integration policy.