Risks of investor outflow and damage to economy – experts on nationalization of Electric Networks of Armenia

YEREVAN, July 4. /ARKA/. On July 3, the Armenian National Assembly passed in the second and final reading legislative amendments to the laws On the Public Services Regulatory Authority and On Energy, allowing the nationalization of Electric Networks of Armenia (ENA).

Armenian Prime Minister Nikol Pashinyan announced the plan to to nationalize the power distributing company after ENA owner, president of Tashir Group Samvel Karapetyan was arrested in Armenia on July 19 on charges of publicly calling for the seizure of power.

These events caused a wave of criticism in Armenian society and, in particular, in expert circles. ARKA news agency cites the opinions of experts, politicians and business representatives on this issue.

Tigran Jrbashyan: A Step Towards Nationalization Is Extremely Risky

Tigran Jrbashyan, Director of Management Consulting at Ameria, stated that the use of nationalization as a way to solve problems is used in developed market economies.

'But this is an extreme measure, which is resorted to only when all other ways of implementing state policy have been exhausted.'

According to him, with an appropriate legislative framework, as is envisaged in Armenia, the government can effectively oversee infrastructure management by regulating prices, setting standards and ensuring quality and transparency.

“Under such conditions, a step towards nationalization is an extremely risky decision that can undermine investment confidence and lead to costly international disputes,” Jrbashyan noted.

He is convinced that the decision on nationalization should be made with extreme caution, since it is fraught with long-term strategic consequences, including large financial costs and a worsening investment climate.

In his opinion, hasty steps without careful consideration can lead to catastrophic consequences.

Vardan Aramyan: Damage to Economy and Investor Outflow

Former Finance Minister Vardan Aramyan believes that the deal to nationalize ENA will break the “backbone” of the country’s economy and scare away domestic and foreign investors.

According to his estimates, with such decisions the government stimulates not the inflow, but the outflow of foreign investment.

“The thing is that stability and precise rules of the game are very important for a foreign investor. There is no clear explanation for all this, the only explanation is populist statements that everything should be national. If so, then close the economy, the market, return the Soviet economy, and let's see how you develop. All this will lead to very bad consequences,” the former Finance Minister told the ARKA news agency.

Hrant Mikaelyan: Nationalization will be compromised

Economist Hrant Mikaelyan also talks about the threat of investor outflow. “Right now we have accumulated from 3.5 to 4 billion dollars of Russian investments, and there are also investments from Cyprus, which are also most likely Russian in origin. This will start to “outflow” from Armenia. The thing is that each business will then start to “try on” the situation for itself. And if it considers that it, too, may end up in the authorities’ field of vision and there is at least some minimal risk that its assets will also be taken away, then it will think about evacuation (from Armenia),” Mikaelyan told the ARKA news agency.

He does not rule out that from a legal point of view, the nationalization process will most likely be compromised, and from a political point of view, “it is compromised from the start.”

Tatul Manaseryan: Basic Illiteracy

“The nationalization process is not some kind of “store” that can be taken and nationalized,” said Professor Tatul Manaseryan in an interview with the ARKA news agency.

He noted that this is, first of all, infrastructure, without which it is impossible to imagine the functioning of the economy of Armenia and any country in general.

“And from this point of view, we must take into account that, firstly, we do not have such a law “On Nationalization.” Any developed country in the world, a civilized state has such a law. Because if there is a law “On Privatization,” then there must also be a balancing law “On Nationalization,” Manaseryan noted.

According to the expert, without such a law, talking about nationalization is simply elementary illiteracy (https://arka.am/news/business/protsess-natsionalizatsii-eto-ne-kakoy-to-magazin-kotoryy-mozhno-vzyat....

David Ghazinyan: negative reactions of international partners

Acting CEO of Electric Networks of Armenia CJSC David Ghazinyan called the bill on nationalization of ENA 'illiterate'. He expressed bewilderment that the authorities did not establish any contacts with the ENA leadership and did not start a discussion before initiating the nationalization process.

Ghazinyan added that although domestic procedures are closed to ENA, it is nevertheless possible to involve international organizations together with partners.

"We are receiving very negative reactions from our international partners. They are very surprised, shocked," Ghazinyan said.

Aram Vardevanyan: Damage to Armenia's International Reputation

Lawyer Aram Vardevanyan, representing the interests of ENA owner Samvel Karapetyan, stated that the legislative changes initiated by the Armenian authorities are unconstitutional and aimed at interfering with property rights.

"This process also completely violates the foreign investment protection regime, and also damages Armenia's international reputation," Vardevanyan noted.

According to him, under these conditions, the arrest and prosecution of a person is a violation of the law.

Tigran Abrahamyan: Economic and Investment Blows

Secretary of the opposition faction "I Have Honor" of the National Assembly Tigran Abrahamyan also stated that encroachments on private property will in the future cause great damage to Armenia's image and its investment environment.

"In general, in international practice, property infringements are considered to be among the most serious, and in this regard, the problem is not in the domestic political plane at the level of Samvel Karapetyan and the authorities, in the future it will cause great damage to the image of Armenia and, most of all, its investment environment," he said.

And this, according to him, is the most dangerous thing that can be imagined in Armenia in terms of economic and investment blows.

Artsvik Minasyan: an electoral tool for manipulation

The Armenian authorities consider ENA CJSC as a tool for manipulation ahead of the 2026 parliamentary elections, says Artsvik Minasyan, secretary of the opposition faction "Armenia".

According to him, the authorities are fighting against everything that may represent public state interest and do not even understand the essence of the word "nationalization".

Minasyan called the actions of the authorities 'a seizure' that has nothing to do with nationalization.

"What you are doing is a seizure, destruction, and you are trying to denigrate everything, but you will not succeed," Minasyan said.-0-

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