ANCA Voices Reservations Over US Advocacy For Armenia’s Controversial Pension Reform

Thousands protest Armenia's new pension reform law in Yerevan in January

Calls for U.S. to Remain Neutral on Armenia’s Pension Debate; Support Exploration of Alternative Models of Reform

WASHINGTON—The Armenian National Committee of America is engaged in ongoing discussions with the State Department and the U.S. Agency for International Development regarding Armenian American concerns about the negative impact of high-profile U.S. advocacy for increasingly controversial pension reforms in Armenia.

“As Armenian Americans, core stakeholders in both the U.S.-Armenia relationship and the enduring friendship of the American and Armenian peoples, we are seriously concerned that our government’s vocal support for this controversial pension reform is needlessly straining America’s strong standing in Armenia,” said Aram Hamparian, ANCA Executive Director. “We look forward to continuing our engagement and remain hopeful that common-sense, middle-ground solutions will emerge – in terms of both the substance of policy and the democratic process of their implementation – that will work for all the people of Armenia and serve to further strengthen American-Armenian ties.”

The ANCA, in meeting with U.S. officials last week, shared a detailed analysis, prepared by economist Dr. Ara Khanjian of Ventura College, regarding the shortcomings of the reform program being publicly endorsed by the U.S. Embassy and USAID. Dr. Khanjian, who took part in the meeting, provided a point-by-point review of the serious shortcomings of the extreme model being backed by the United States. While all stakeholders agree that the old pension system needs reform, there is broad-based opposition in Armenia and among Armenians worldwide to a 100% privatization of pensions. U.S. support for this extreme model, embraced by only five other countries, comes despite President Obama’s ardent opposition to even relatively modest efforts, under President George W. Bush, to privatize a small percentage of Social Security. A majority of the Senate and House also opposed any privatization of Social Security in the U.S.

The level of U.S. advocacy for this pension reform model is widely viewed, in Armenia and the U.S., as potentially harming America’s standing in Armenia. The U.S. position on this measure is also seen as running counter to a number of values prioritized by USAID in its FY 2013-2017 Country Development Cooperation Strategy for Armenia, including transparency, consensus-based policy-making, and responsive and accountable governance. Read the USAID strategy document.

While there is broad consensus that the old pension system was deeply flawed and needed replacement, only very narrow support exists for the extreme model adopted by Armenia’s ruling party.

As a remedy, the ANCA is proposing that the U.S. government should refrain from further public endorsements of this controversial reform and, instead, publicly support an open exploration – among political leaders and the general public – of alternate reform models – including U.S. Social Security, hybrid systems, and the total privatization model.

Background: The pension system adopted by Armenia’s ruling party and endorsed by the U.S. government is an extreme model, in which 100% of pension or social security taxes are allocated to individual private pension accounts. Internationally, there just five other countries with such an extreme pension model: Chile, El Salvador, Mexico, Kazakhstan and Nigeria, and the global trend, since the 2008 economic crisis, has been for governments to move decisively away from privatization. The analysis prepared by Dr. Khanjian covered a broad array of problems inherent in extreme pension reforms – many shared by the IMF and the World Bank – including financial market and labor market risk, adverse impact upon women, budgetary considerations, increased fees, and lack of sufficient regulatory oversight. Within Armenia, he noted, no significant political leader outside the ruling party supported this reform, while the previous president and every opposition party represented in Parliament opposes its implementation.

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5 Comments

  1. Charlie said:

    Why it is the business of the US to make decisions for Armenia? This is an internal business and only the people of Armenia choose what’s best for their welfare.

  2. Armen & Victoria Markarian said:

    The whole idea of totally privatizing pensions in Armenia is too scary to contemplate. With Armenia’s record of corruption and mistrust among the public, not just because of government behavior, but the oligarchs who control so much of the private sector. Would this mean that people’s future retirement funds would be in the hands of possibly easily influenced persons who might embezzle funds, hide benefits, etc.? This is definitely a policy that needs reconsideration.

  3. Sarkis said:

    In all honesty, the ANCA has no business in Armenia’s internal affairs. Aram Hamparian generally does good work for the Armenian-American community and I do not doubt his patriotism, which is in stark contrast to the Armenia-hating freaks at the so-called “Policy Forum Armenia” such as Ara Turkoglu Manoogian (he is the piece of human garbage that demands Armenian-Americans abandon Armenia and refuse donating to the annual Armenia Fund telethon – the one event that actually manages to unite all Armenians of all ideologies around the world in support of Armenia). But ANCA members are not economic experts and certainly not experts on the internal conditions of Armenia’s economic and pension systems. Pressure and demands regarding internal reforms within Armenia are the prerogatives of Armenia’s citizenry, not foreign-based organizations.

    Instead, I would suggest the ANCA focus on protesting against continued American military support of turkey, seeing how America announced a few days ago that it was going to be UPGRADING its NUCLEAR WEAPONS based in turkey.

    And while I’m on the ANCA, I have to note that members like Seto Boyadjian are really doing the Armenian-American community as well as the Republic of Armenia a huge disservice by advocating regime change in Yerevan at the behest of Washington and its NATO allies. His personal preaching in favor of Raffi Hovannisian’s failed attempt at a coup de’tat in Yerevan was truly unprofessional and cast a dark shadow over Armenia-Diapora relations and made the entire Armenian-American community look suspect in the eyes of Yerevan and Armenia’s citizenry.

  4. Avetis said:

    Let’s wait a few more centuries before we can try this “independence” thing again. In the meanwhile, I have something to say to the most honorable president of the Russian Federation, Vladimir Putin: Please Mr. President, please come to Armenia and make sure to bring your troops with you (with or without insignias) and help us put an end our misery.

    PS: Better to live like Ossetians under Russian rule – than live like a bunch of self-destructive peasants and gypsies unable to govern themselves. Yes, history does repeat itself and more things change the more they stay the same.

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