Yet, there is a fourth, and a major challenge that Armenia is facing during its three decades of its independence which is the incapacity of its political class to address any of those long-standing challenges to the viability of Armenian statehood. This incapacity is the result of weak leadership unable to conceptualize the objective problems, simulate developments in short and medium term, and articulate pragmatic solutions.

Economic challenges

Armenia currently has a small economy, inefficient and unproductive. According to the World Bank, in 2022 Armenia’s GDP was 19.5 billion USD, and GDP per capita was a bit over 7,000 USD. Unemployment officially is at 12%, and among the youth it is over 30%.

Armenia’s labour productivity in GDP per hour was evaluated at 19.55 USD by the International Labor Organization. Georgia stands at 17.33 USD and Azerbaijan at 16.15 USD., much below the Russian Federation (30.36 USD), Turkey (40.26 USD), not to mention advanced countries such as Canada (56.22 USD), Israel (58.72 USD), or Switzerland (67.11 USD). Armenia is in top 15 countries dependent on remittances (14% of GDP in 1995-2019), youth unemployment is over 30% and poverty over 26%.

Those structural problems are the result of the economic collapse that Armenia went through in the early 1990’s, in the immediate years after the collapse of the Soviet Union. Since, Armenia has failed to modernize its economy. As a result, the pre-existing Soviet industrial infrastructure was dismantled, scientific institutes emptied of their content, education declined, leading to long-term structural changes with low productivity, systemic unemployment, and poverty.

The changes in the period of transition from Soviet economic model to wild capitalism had negative impacts on Armenia’s demography with massive out-migration and long-term low birth rate led to dramatic decline in Armenia’s population. From 3.3 million in 1989 when the last Soviet census was carried out, the population now stands at 2.9 million if one believes official givens. UN forecasts put Armenia’s population at 2.6 million by 2050.

Strategic dilemma

Armenia’s political class, over three decades and after four different administrations in power, failed to tackle any of those strategic challenges the state faced. The central cause of this failure is that the four successive administrations made the Karabakh conflict part of the internal power struggle, to use it as a source of legitimacy or as scapegoat for their failures. Next to structural problems, Armenia – and Armenians more broadly to include Karabakh and the Diaspora – have a leadership deficit.

In addition, the double events of 2018 Velvet Revolution, and 2020 Second Karabakh War revealed massive structural weaknesses of state institutions, including the political institutions and the armed forces. The 2018 revolution revealed that Armenian political institutions are primitive and unable to organize succession – the “democratization” promise of the Velvet Revolution. The revolution also posed the necessity of modernization and efficiency within the state – fight against corruption – which in turn led to unprecedented polarization within Armenia’s elites and public opinion.

The state or the nation?

In the post-2020 period two major ideas are taking shape. One is questioning Armenia’s capacity to survive as an independent sovereign state, and therefore, the necessity to rely on foreign (Russian? American?) support. This thesis was defeated by the fact that Russia seems not in a hurry to solve the security problems of Armenia, while US engagement in the South Caucasus remains limited to mediation.

A second idea is taking shape since, which calls for Armenia taking care of its own state interests, for Armenia “to think and act as a state”. This debate has numerous merits, including the necessity to develop Armenia’s state institutions, and define its state interests – belatedly now after three decades. Yet, it leaves numerous unanswered questions: a state as an apparatus is needed for what? The current debate takes the side of the “state” against the “nation”: it excludes Karabakh Armenians, as well as the Diaspora, this later being equated to ARF-Tashnaktsutyun, which it is not. The problem is that even with Karabakh abandoned to Russia for the sake of state interests, the Baku authorities continue their aggression not only against Karabakh but also against Armenia (“Western Azerbaijan”) itself, and Turkey continues its blockade against Armenia despite several agreements and diplomatic efforts.

A third way?

Why should Armenia be a sovereign state? When the mass mobilization started in Armenia in early 1988, the Karabakh Movement that led the nation to independence, argued that Armenia needed sovereignty because the (Soviet) state failed to defend the physical security of Armenians. This was the result of Sumgait pogroms (February 26-28, 1988). The Armenian state was a necessity, it was argued, to defend the people. Not the other way around.

Armenia on paper is a parliamentary democracy, but in practice follows the same mechanisms as previous governments and is like Brezhnev era politburo: the head of the executive with his (never her) 4-5 close collaborators decide all fundamental issues. Armenian state administration is functioning based on loyalty, where only the top echelons of the state are over-working, with limited results. The rest of the state administration is uninformed, disoriented, bitter, inefficient, incompetent, etc. State institutions were long used as the social base of the ruler (again, a Soviet legacy). No wonder ministries are so under-developed, as they never went through the necessary reform since the collapse of the Soviet Union.

The 2018 revolution was a wake-up call about the necessity of a profound political reforms (democratization) and institutional modernization (anti-corruption struggle). The 2020 defeat could have been an awakening call to Armenian leadership to identify the causes of its profound failures leading to defeat.

Does Armenia have the necessary resources to face the current aggressive Azerbaijan-Turkey alliance? Difficult to answer this question. But the only answer to the current attacks against Armenia and Karabakh is to build an efficient, relevant Armenia, both in its state institutions and in its economic performance. If that direction is taken, Armenia will discover numerous unutilized resources. First, it is the vast human resources inside Armenia that the current political and state institutions are unable to mobilize. And second, it is the vast human resources available in the Diaspora, ready to help Armenia. For that, Armenian political leaders should reform the state, open-up decision-making processes, and guide the Diaspora in the project towards a modern and efficient Armenia.

Vicken Cheterian is a journalist and professor who teaches international relations at Webster University Geneva and University of Geneva. He is an author of numerous books and academic articles.

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