The devastating effects of the restoration of capitalism in Armenia

The Armeniana people were once proud of what they achieved after the 1917 Bolshevik revolution, in spite of the later Stalinist deformations. But since the demise of the former Soviet Union capitalism has been introduced and the effect has been a total collapse of what was once a developing and cultured country.

The Caucasus, since the break up of the Soviet Union, has been dogged by regional economic crisis, ethnic cleansing, robbery of state institutions and poverty. In a region of 51 different ethnic groups, how can we explain the fact that it has changed from a place of economic and technological advancement, and ethnic co-operation, to what we have today? As revolutionary Marxists we understand that the countries that make up the Caucasus have been the victims of all the effects of the restoration of capitalism, and below is the evidence.

Before the Armenian Bolshevik revolution, Armenia was the most backward country in the Caucasus. With its ruling class and intelligentsia residing in Tbilisi (Georgia), the Armenian people mostly made a living in rural villages, and its capital Yerevan, was no bigger or advanced than a small town. In spite of the bureaucratic deformations, Soviet state planning had allowed its people to equal, if not surpass, those around the globe in health care, education, science (especially in the field of space) and in sporting achievements.

Once dubbed the ‘Soviet Silicon Valley’ because of its high-tech industries, the country is now one of the most impoverished in the region. It is estimated that Armenia has lost 20% of its population in recent years. From a population of 3.5 million in 1989, it is thought that somewhere between 800,000 and 1.2 million people have left the country to try their luck abroad. People sell their apartments in order to buy air tickets to Moscow! The consequences of the restoration of capitalism for the economy have been widespread. It is estimated that 50% of Armenians live below the poverty line, with an average of US$570 yearly income. Corruption and political assassinations add to the sense of a society under threat.

What has happened to Armenia? Why have all these achievements been erased? And where did the finance, which allowed the achievements during the Soviet years, go?


1991 “Revolution”


Before we start with the aftermath of the counter-revolution, we should see how these events came about. Although worthy of volumes of books in itself, the counter-revolution was essentially the hijacking of the people feeling isolated in Armenia. The Armenian people did not choose capitalism over communism, but rather wanted a system of government which would truly meet the needs and demands of the Armenian people. The Stalinist state did not provide this. Stalinism was clogging up and tearing down the very system people had had faith in.

Firstly, the government was unable to respond correctly to the war in the Armenian enclave of Kharabakh, where pogroms were being instigated by both sides. There was clear evidence of officials of the system (bureaucrats) turning a blind eye to the massacres. The Armenian people saw that at the time their brothers and sisters were being butchered in Kharabakh, the system of bureaucrats was not providing them with any help.

On top of this, in December 1988, Leninakan in northern Armenia was devastated by an earthquake that killed 25,000 people, leaving more than 400,000 homeless. Government relief efforts were slow and badly organized. However, the death toll was only so high due to the poor planning, and the shoddy materials used (stories of builders stealing the iron rods to be used to strengthen buildings were common). The arrival of essential supplies such as fuel was delayed by an economic blockade Azerbaijan had imposed on Armenia in 1989 because of the war in Nagorno-Karabakh. The war also hindered efforts to reconstruct Armenia’s earthquake-damaged infrastructure.

All this had an effect on the Armenian people. Things had to be changed. This was a result of the feeling of neglect from Moscow and from the bureaucrats inside Armenia, who weren’t paying attention to the demands of freedom and democracy, at a time when the Western imperialists were pumping out propaganda via radio broadcasts about how the people could prosper if they changed the system.

Armenia voted for independence in September, and Levon Ter-Petrossian was elected first president of the Republic of Armenia in October 1991. This was all done through the constitution, and through voting ‑ buildings weren’t burnt, nor were bureaucrats killed. But let us see what has happened to these bureaucrats, and whether the demands of the people have been met?


The 2003 elections and the current state of government


Compared to the rest of the Caucasus, the Armenian bourgeois has been relatively unique, in that it has managed so far to keep down protests, unlike in Baku (Azerbaijan), and Tbilisi (Georgia).

In the recent 2003 elections, however, the new traditions of election rigging were once more upheld by the Armenian ruling class. The current elite, did realise that this time they couldn’t be too blatant with the rigging, and so they pushed the elections to a 2nd ballot, to make the rigging seem less obvious and clear cut to the Armenian people.

In spite of these manoeuvres and attempts to cover up what they were doing, the elections were neither “free” nor “democratic” as the western imperialists had boasted on Radio Liberty 12 years previously. These are the following findings according to the OSCE final report into the presidential elections: “People associated with opposition campaigns were dismissed from their jobs, while others were threatened.” “A number of shop owners were threatened against displaying opposition campaign posters.” “Family members and reputable NGO’s reported threats of violence by conscripts”

However, the elections weren’t just marred by violence, the process itself turned out to be a typical bourgeois sham. “Cases of passport fraud were confirmed by observers on election day”

This means that the people who were not voting, had died, or had left the country, had their passports taken off them, and used to cast ballots by the incumbent’s officials. “In Lori region, a policeman was witnessed carrying a box of at least 50 passports out of the polling station.” “There were 22 polling stations where ballot stuffing was confirmed during the first round.” “‘Carousel’ voting was observed” and cases of “vote-buying were observed” as well as voters simply voting more than once. These comical notes are simply the tip of the iceberg in a country where corruption is rampant.

The opposition also had further obstacles placed before them, just in case the violence and election rigging wasn’t enough. “There were a number of instances in which public facilities were denied to the opposition.” “Observers verified allegations that public sector employees, factory workers, teachers, students and others were instructed to attend the incumbent’s rallies.” “Observers were credibly notified of instances of campaigns abandoning plans to open offices following intimidation.”

Arguably the worst aspect of the new bourgeois regime is how it deliberately lied to the people with its promises of freedom of speech, in all aspects of media, and the right to demonstrate.

In 2003 the US-based NGO Freedom House downgraded its assessment of the media climate in Armenia from "partly free" to "not free", citing the use of security and libel laws to silence criticism and the closure of a private TV station in 2002. A1+ and Noyan Tapan were not given tenders in 2002 with these elections in mind; A1+ was particularly opposed to Kocharyan in its reporting stance, not particularly as a result of media bias, rather due to being relatively objective. According to the OSCE “news coverage, analytical and other programs were biased.” Below is a table showing this bias.

Name of Station

Kocharyan Coverage

Nature of reports concerning Kocharyan

2nd and 3rd

Opposition Coverage

Public TV (H1)


“93% positive”

19% and 11%



“Exclusively” positive

5% and 3%

TV Armenia


“overwhelmingly positive”

2% and 2%

TV Alm


“overwhelmingly positive”


TV Shant


“mainly positive”

15% and 14%

HH (state newspaper)


“99% positive”

5% and 2% (“mainly negative”)

The cost of advertisement, which was $120/minute, “was very high by local standards” in an effort to bleed the opposition dry.

All these dirty tactics used by the ruling class did have an effect upon the people. However there was no real opposition that was any different to Kocharyan. If anything it was actually worse, (Stepan Demirchyan was reported to have looted and sold $500m worth of factory machinery along with others during the bleak 1991-1993 period). Because there was no true workers’ leadership, the demonstrations were organised in support of the national chauvinist Demirchyan. According to the OSCE, “some opposition leaders addressed the crowds with intemperate and even inflammatory statements including calls for unconstitutional action such as the takeover of the presidential palace.” So it could be argued that a revolutionary mood was present, and the ruling class knew this. “International observers witnessed police stopping public transport in order to prevent people joining demonstrators”, however, the actions of the officers of this new bourgeoisie state did not cease at merely stopping buses: “On February 22, police began detaining opposition supporters at their homes in the very early morning, for alleged ‘hooliganism’ and/or participation in unsanctioned public meetings. At least 200 individuals were detained including many opposition proxies and campaign staff”

As for representation in the new elections, an indicator into the state of the government is how well it incorporates the 65% of the population who have university diplomas ‑ women. The situation for women representation became worse than awful when the number of women ministers fell from 12 in 1995 (poor in itself), 4 in 1999 and none at present.




Under the Soviet central planning system, Armenia had developed a modern industrial sector, supplying machine tools, textiles, and other manufactured goods to sister republics in exchange for raw materials and energy. However, since the Soviet collapse, these factories have simply frozen, where crates which were meant to be opened before the day of the collapse, still remain intact outside the factory gates. This freezing has led to growing unemployment which, currently using conservative figures, stands at 20%, of which none get welfare, and usually have to survive using funds sent to them from those who have already left Armenia, either from Moscow or Los Angeles.

Since the collapse of Stalinism, Armenians have been told that they are now “free” in their pursuit of happiness, and as “individuals” can truly prosper, let us compare this bourgeois myth with the facts. According to UNICEF the GDP per capita average annual growth rate from 1990 to 2001 was -1.3%. This continual drive towards poverty is awaiting the aftershocks of the world economic crisis to fully reach the Armenian borders. 8% of the population earn less than $1 a day (UNICEF)

The real face of capitalism is clearly revealed in the following figures: the lowest 10% of waged people consume 2.3% of national consumption, and the highest 10% spend 35.2%. Again, this is using conservative figures.

Even the growth figures, which the Armenian Foreign Ministry boasts of, of 9% are nothing to what they should be if they want to be on track to recovery. As it is essentially starting from scratch, the figures should be closer to 20-30%. One can only go on to believe that even these figures will decrease as the economic climate turns even greyer. It must also be noted that many new businesses starting in Armenia are from “Diaspora” Armenians of whom there is only a finite amount. It should also be said that these new Diaspora investors have become accustomed to bribing officials in order to pay less tax revenue to the government. Some phenomena are universal!

However, this is merely the beginning. For not only is the amount of money in the pockets of the Armenian people constantly being devalued, but also the prices of goods have shot up, (mirroring all other CIS states) with 172% inflation from 1990 to 2001 (UNICEF). Women are choosing to terminate pregnancy in unprecedented numbers. One aid worker identified a woman who had had almost 40 abortions!

A worrying sign for Armenia is that it is becoming trapped in foreign debt. “Armenia remains short of significant volumes of foreign direct investment and is dependent upon assistance from international financial institutions”. In December 2002, Armenia secured a US$20million loan from the World Bank. As a result Armenia has agreed to privatize its power utilities, so much for the calls for independence in 1991! Now the orders don’t come from the Yerevan or Moscow burocrats, but rather from the international capitalists of Washington, London, Strasbourg and Tokyo.




Welfare, as in all other CIS states, has virtually ceased, simply because of the fact that the government cannot afford to allow people to live. The unemployed have no dole to survive on, and are forced to leave the country, or to live off funds sent from abroad. The most common solution is to go to Moscow for a year or two, and return with some money for the family. However, there are those who believe in the “American Dream”, but when they arrive they realise they have to work 14 hours a day for a one/two bedroom apartment for their entire family. There are growing concerns over alcoholism and the growth of drug abuse among some layers of workers. The workers have no one to turn to in their hour of need, and there is no viable party to turn to.

Pensioners receive 2000 AMD (£3 GBP) a month, rising to 3000 AMD if they are war veterans; this is in a country with a winter of -20 degrees Celsius. These pensioners, who have worked all their lives, are forced to give up the independence they had, and live with a son or daughter. Those who can work what little they can, usually old women sweeping the streets, waiting for a wage that is undelivered for months if not years. Bourgeois Armenia is being built on the backs of the workers and the suffering pensioners. Yes, they may say, but the situation with the youth is different.


“Chronic malnutrition among children under-five rose from 12 per cent in 1998 to 14 per cent in 2000. There are wide social and economic disparities across the regions and populations of Armenia.” (UNICEF)

“Acute family impoverishment is widespread in Armenia. More than 55 per cent of the population lives in poverty and about 8.5 per cent in extreme poverty. Families with children under-five comprise almost 60 per cent of the poor. (UNICEF)”


According to UNICEF figures the death rate has increased from 5 in 1970 to 7 in 2001, and the birth rate has decreased from 24 to 9 in the same period.

And what about education? “Underpaid, demoralized, and outmoded teachers are using decades-old books to teach children in rotting buildings with no school supplies from the government. Parents are expected to pay for admissions to university. The government's concept of education reform is to divest itself of responsibility for pre-school education and children's institutions by handing formal responsibility over to penniless district councils.” Bribery of teachers is common practice, leading to the rich being able to pay their way through life, and the poor to suffer. No doubt we will be told in a few years that the leaders of this generation should be there because “they have the know-how”.

Even in these battered schools, there are huge problems of absenteeism and students dropping out in order to work for money to support their families. These facts remind us of stories of the late 19th century Armenia, where students had to work to survive, most vividly shown by the children’s author Hovhannes Tumanyan in the book “Gikor”


Religion and Minorities


Religion has always played a part in the state of Armenia, being the first state to have Christianity as its state religion; this has resulted in centuries of conflict with surrounding Muslim nations. However, religion if we look at history, has always been an excuse for the ruling classes to declare hostilities in order to further their own class’ gains. The most recent example being the conflict over Nagorno Kharabakh where religion was used as an excuse by Armenians as a motive to fight, and on the other hand Jihad was declared by certain islamists, bringing in fundamentalists to fight in Azerbaijan, including veterans from the Afghanistan war.

Today however, we see how religion has truly become “the opiate of the masses”, where people are merely surviving in hope of having a better “afterlife”. And this is not exclusively done by the Armenian Christian Church, but also by many religious sects such as the Jehovah’s Witnesses and so on. The Government continues to reject the application by the Jehovah’s Witnesses for legal recognition as a registered religion, and members of the group reported individual acts of discrimination. Other denominations occasionally report acts of discrimination, usually by mid-level or lower level government officials. There is also the problem of the draft, and as a result 23 members of the Jehovah's Witnesses are in prison and 7 in pre-trial detention charged with draft evasion or, if forcibly drafted, with desertion due to refusal to serve.

As for other minorities, the largest is the Yezdi group, of whom there are 40-50,000. The Yezdi live a nomadic lifestyle and live isolated from society on the eastern regions of Armenia. The first Yezdi School was opened in 1920, and during the Soviet period they established a programme on National Radio. However, during the rise of nationalism, no resources have been provided for these ethnic groups such as the Yezdi, Greeks, Assyrians or Germans, and have had to sustain their culture on their own without government aid.


Imperialist Chessboard


Within the country the imperialists took no time in changing education policy and emphasising the importance of business within society. “Young Entrepreneurship Promotion Campaigns” have been established, encouraging young Armenians to learn about the way capitalism works, no doubt instilling greed into the first generation of the new Armenia.

Imperialist adventurism doesn’t stop here: “The World Bank plans to implement five new programs in Armenia totalling about $75 million in the next three to four years, Roger Robinson, the head of the Bank's office in Yerevan told the press” (2) On top of this, the US has started building its $150 million embassy in Yerevan, which one assumes will be the hub of US operations in Armenia; either that, or it is an attempt to accommodate the daily mile long queue for visa applications to the USA!

NATO has made huge steps in the region, trying to decrease the importance of Turkey to avoid a situation like the one during the Iraq war where US troops were not allowed to fly from Turkish bases. The Armenian foreign ministry points out, "A political dialogue with NATO and the republic's participation in the Euro Atlantic partnership are getting more coordinated and targeted." According to the Russian Newspaper Itar-Tass, “Armenia will make its contribution to the peacekeeping operations of the Alliance by way of setting up its own forces compatible with the NATO partnership program, Yerevan officials say with confidence.” its seems the Yerevan officials say this out of obedience rather than confidence.

However, things are much more complicated than they first seem. None of the Caucasian ruling classes have gotten on together, especially the Armenian. The other week, the Azeri ruling class didn’t allow the Armenian military to take part in NATO’s military exercises in what NATO has dubbed “Partnership for Peace Program”, and this has sent feelings of fury running through the Armenian military. Ironically though, the Armenian military occupy 20% of Azeri land, and so have been undertaking military exercises for the best part of 10 years anyway.

The situation becomes more complex when we take into account the final factor: Russia. Armenia has long been a vital part in Russia’s own imperialist plans in the Caucasus. Russia has become increasingly alarmed by the stranglehold the USA has on the Caucasus. The Russian military control the borders around Armenia (which is most visible at passport control in the airports), and make the Armenian generals subordinate to Russian generals even within the Armenian army. Armenia is a vital link between Iran and Russia, and this north-south line has only been interrupted by Georgia’s shenanigans over the last few years. No doubt with the US puppets Saakashvili and Burdzhanadze in effective control in Georgia, the importance of keeping Armenia a Russian semi-colony will increase. The final struggle in the Caucasus seems to have landed on the Armenian square, with both imperialist aggressors hungry to maintain their stake in the Caucasus and further their interests.


The Left and the ex-Stalinists


The Communist Party of Armenia (Hayastani Komunistakan Kusaksutyun, HKK) was founded in 1920, and its current chairman is Sergey Badalyan; elected in August, 1994, and has 53,000 members. The Communist Party still maintains organizations and offices nationwide: with organizations in all 10 marzes (districts) of Armenia and Yerevan and has 35 offices. Having peaked at 11% in the 1998 Presidential elections, this time round in 2003 it was around 4%. Although the party with one of the largest memberships, the make up has a substantially elderly layer within it, dogged with old nostalgic values of Stalinism. It has adjusted its policies and platform to fit in with today’s capitalist Armenia, and has reformed its ideas to suit the system rather than to challenge it.

In doing so however it has lost ground to the right-wing ARF party, which is largely a party from outside Armenia, originating from the Western Armenians who formed the early Diaspora in Western America, and throughout the Middle East. Having complete control in the Diaspora, the ARF has been able to use its finances to penetrate into Armenian politics.

Unlike in Georgia, Armenia has no Labour party, and the remaining weak unions are dominated by the right wing, which at most will talk to the bosses, if the bosses wish to. Since “independence” Armenian workers have lost all their rights, and are now at the mercy of the neo-liberal Kocharyan President.

Unlike much of Europe, the situation for the Left in Armenia is unique. They have neither competition with other Left groupings, nor do they face workers who have faith in government, and yet still they are unable to meet the demands of the workers, or indeed explain to the workers what is currently going on in Armenia.

Discontent in Armenia is rife, and in any other situation this would have led to revolt by now. The problem is – and this is a recent Armenian phenomenon (partly due to the history of the conflicts over the last 15 years) ‑ that they have lost hope in the established institutions. What is needed is for a fresh new layer of workers to come forward and enter the mass organisations. It is necessary to explain why this situation has come about, to unite against capitalism, and to show that there is hope, there is a solution. The confusion among the workers was shown in the support for Demirchyan who everyone knew wouldn’t do anything for the workers.

The people look back romantically at the Soviet days saying “we had this… we could do this and this and now we have nothing… now we are paralysed”. The point is that the achievements of the old glory days can be achieved, but not by re-establishing Stalinism which committed hideous crimes against the Armenian population including its best poets and scientists, but through a genuine Socialist revolution.

Only through a socialist transformation could the Kharabakh war be brought to a final end, by entering into a voluntary federation in which the resources of the Caucasus would be pooled for the benefit of all. Only this time round, with more advanced workers, and more advanced technology the end result would be much more successful for all those concerned. It would not be based on the backwardness of the Soviet Union as it was in the early 1920s, but on a much greater development that has taken place over the decades.

Only through a socialist transformation could we stop the rich exploiting the workers of Armenia and the Caucasus, where the workers would control the means of production in a democratic manner.

Until then, the Caucasus will be treated like a pool for the imperialists to play in and to plunder the resources, to exploit its workers, and use the countries that make it up as pawns in their military games. It may seem difficult, it may seem distant, but the only solution to the problems of the Caucasus is a socialist one. A socialist Caucasus would be an example for all, for workers around the world to unite. There is still a big demand for change. As Tina, a secretary in the capital, Yerevan, told the BBC, ”People are sick of the Kocharyan regime, and now we have the chance to change it."

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