Oligarch vs. Oligarch

I haven’t spent much time discusses the oligarchs of Armenia. The basic idea is that when the Soviet Union broke apart, everything was up for grabs because of privatization. Whoever could claim the sugar factory (through dealing or violence) automatically becomes the monopoly force that everyone must pay homage to if they want sugar. Without capital for new businesses and without rule of law to stop oligarchs from crushing opposition, those oligarchs have become very very rich. This is similar to what has happened in Russia, leading some to believe that Putin is the richest man in the world.

That’s what makes this recent news about one of the Armenian oligarchs being fined 50 million dram ($125,000) for unfair business practices so interesting. There are two ways to look at this: the state bureaucracy is finally gaining enough power to take on the oligarchs or that some other oligarchs are using the state to battle against their competitor. While the former is what would happen in an ideal world, reality reflects the latter. Fortunately, this isn’t a bad thing.

Some of the oligarchs have realized that their reign based on closed markets and borders can’t last forever. Instead, they see that open and fair competition is the future and some of them are preparing themselves for just that. Suddenly, oligarchs continuing the old pattern of control are on the defensive and taking hits because of it. Nothing better for Armenia for oligarchs to (non-violently) duke it out between each other while improving the state capabilities and promoting fair competition.

What some of these families are doing is cleaning up their money. They have massive wealth and they are establishing mechanisms to sustain their wealth in a modern economy. They’ve won the capitalist game of life. Now they just need to polish their image. Undoubtedly, the next step is a turn to philanthropy to change the anger against them to praise just like many other oligarchs have done.

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6 Comments

13 June 2012 · 1:11 pm

6 responses to “Oligarch vs. Oligarch

  1. Gabe Armas-Cardona

    Just to add a note on how much money we’re talking about, the President of the Union of Domestic Producers Vazgen Safaryan views that Armenia has lost out to $200 million USD over the last decade to Oligarch’s skimming. This is roughly likely a 0.2% tax on the GDP of Armenia over the last ten years. I have no idea how Safaryan arrived at that number. http://www.a1plus.am/en/economy/2012/06/21/vazgen-safaryan

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