Why Armenia Is Rolling Out Diaspora Bonds For Development

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Babken DerGrigorian is Armenia's Deputy Minister of Diaspora

Babken DerGrigorian is Armenia’s Deputy Minister of Diaspora

From Devex 

NEW YORK—Armenia’s vast diaspora, estimated at 7-10 million people worldwide, is far larger than the resident population of this small, post-Soviet nation. The new Armenian government is now planning to leverage the support of its diaspora community for long-term, sustainable development work.

The government came to power earlier this year following a nonviolent protest movement, which saw opposition leader Nikol Pashinyan established as the country’s new interim prime minister. The change in leadership has been accompanied by a shift in how the government is approaching implementation of the Sustainable Development Goals.

Three months after a peaceful revolution, observers are asking whether a change of leadership will translate into more responsive and accountable governance in Armenia, supporting the next stage of its development.

Babken DerGrigorian, an economic adviser and deputy minister of diaspora for Armenia, joined the government in May. A native Californian of Armenian descent, he has an idea to fund development investment: Diaspora bonds. It’s a model that Israel and India have both used effectively, but it has been less successful in other places, such as Ethiopia.

The establishment of government-issued diaspora bonds — which Armenians outside the country could invest in, instead of funneling money into charities, as many of them currently do — is now underway. The government expects to release a formal strategy by the end of the year.

DerGrigorian spoke with Devex about how diaspora bonds function and why he believes this development strategy could work for Armenia. The conversation has been edited for length and clarity.
How did you develop the concept of a diaspora bond for Armenians?

We have a diaspora that is already very involved in charity, but the point is to leverage a small amount of charity intention for a much greater financial impact. These government bonds generally will be lower than the market rate of return, but still better than putting your money in a bank account. It is a win-win situation, in the sense that the government also gets access to cheaper credit on the international market, usually local currency.

The proposition you make to the diaspora is that instead of giving away money to charity as a donation, [you can] use your charity intention to take on the risk associated with local currency bonds.

“The diaspora’s financial contributions to Armenia should not only be based on some emotional attachment. It should rationally make sense for both parties to be sustainable in the long run.”

In general, governments use this money for development-related projects. In our case, it will all be used for SDG-related work, to move Armenia closer to SDG implementation, but of course just general national development projects also.

What made you consider diaspora bonds as an option that could work for Armenia in particular?

This is something I have been researching for a while, especially because I am diasporan. The Armenian diaspora relationship has always had a financial component to it, but essentially it has always been a charity-based relationship. I started thinking about how that money could be spent in a much better way for development projects. It slowly snowballed from there. We had our [political] revolution and I ended up in this position. It is the perfect opportunity to make something like this happen, especially since the revolution was very positively received in the diaspora.

You can categorize the diaspora into two broad categories: The traditional diaspora and the new diaspora. The traditional diaspora are descendants [of those who fled] the genocide and the new diaspora are people who have migrated from Armenia since independence [in 1991]. In terms of economic impact there is a broad range, but the traditional diaspora are better positioned for this. They have been in their host countries for generations and have done well for themselves. But you have some well-to-do business people in the new diaspora who will be some of our targets for this.

Are people from the Armenian diaspora primarily supporting Armenia through donations or remittances?

It is both. The new diaspora generally has been more remittance based, and the traditional has been more [focused] toward charity and benevolent work. For example, the All Armenia Fund has held an [annual] telethon since 1994, and has raised about $300 million [so far]. While this might not seem like a lot, we know the charitable intention is already there … Our goal with the diaspora bonds is to leverage this for much greater financial power.

So the idea is to transform charity donations into something that is more sustainable?

Yes, and it is about moving from the emotional field to a more rational relationship. The diaspora’s financial contributions to Armenia should not only be based on some emotional attachment. It should rationally make sense for both parties to be sustainable in the long run.

How much money is the government hoping these bonds can generate?

This will ultimately depend on the strategy we settle on, but my view is that the first — and perhaps second — issuance is going to be a proof of concept with a short maturity, which will be used to demonstrate the viability of the instrument and ensure trust among the diaspora.

As such, I’d like to see these funds used to finance ring-fenced development projects with direct revenue generating capacity, such as solar panel farms … Eventually, I’d like to see an annual issuance of diaspora bonds with longer term maturity, for more general budgetary support, but again aimed at development projects — perhaps those without a direct revenue stream but with high multiplier effects for broader economic growth.

What are the biggest gaps in Armenia’s development work that need more support?

This is going to help us move forward on our SDG implementation. That is one of the necessities of any project we do.

The money is going to end up [benefiting] infrastructure, education, and energy, initially. But it is important to set up the parameters of what types of projects we want to do and what ministries can offer.


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  1. HAGOP said:



  2. Levon said:

    No such faith will ever exist so long as Western Armenians are completely shut off from political/voting/representation processes, which Mkhitar from “New Armenia” deems unattainable, something which the previous minister didn’t even dare to say.

    As the saying goes, “Taxation without representation is tyranny.”

    The days of giving to Armenia by 3rd and 4th generation Western Armenians are over.

    The ministry is advertising ideas without even fleshing out the strategies and details. They did the same back in mid-May regarding the flawed bicameral concept. How unserious.

    And Westerners typically speak of “Sustainable Development Goals”.

    Boiling down many Western Armenians’ genuine commitment and concern for an independent Armenia to them having “some emotional attachment” is disrespectful at the very least.

    • Armen said:

      I thought Western Armenian was a language. Stop creating unnecessary divisions, you either care about Armenia or you don’t and if you don’t then why are you on this website? There’s more to being Armenian than the goings on of the Glendale city council and American Senators talking about the Genocide. Some of us want Armenia to succeed and flourish, I send money every month to various organizations, as long as I feel it helps the nation get a little further in the right direction. I don’t live there so I have not right to tell them how to run their country, I give because as an Armenian, I feel it is the right thing to do. It’s about an idea bigger than oneself.

  3. Harry Derderian said:

    It would have seemed more practical and credible if the basis of “new” ROA & Diaspora relationship— featuring defined and detailed participation / influence in Homeland practices — had been in place first before looking to diaspora as a bank. Is this what the “new” diaspora relationship is offering ?
    Hagop’s term “trust” suits as the newly formed administration must show a track record of change,with accompanying credibility of progressive and transparent practices and reform.

  4. Minas said:

    Personally, I trust the new government. They have done everything possible to prove that they are serious in their fight against corruption. And for those who expect to have voting/representation right while living in their warm California houses, I would only advise to be realistic. No government has done that, not even the Israeli one which is built initially by repatriation. Their are many repats right now in Pashinians government. Take the head of the civil aviation, a young lady repatriated recently from Denmark. If you are waiting for an invitation from Pashinian to move to Armenia and become the foreign minister there, you are wasting your time.
    Back to the topic, I think this is a great idea but only if a few important things are taken care of. Firstly, it has to be US based and registered. Few Armenian Americans will take the risk of purchasing Armenia based bonds. It might create legal and tax issues. Secondly, it has to be transparent and information provided. Respected diaspora experts of the field should be directly involved. I still remember the failed Hamahaykakan bank which cost Armenias taxpayers millions of dollars. They announced it and a few years later it became clear that the project was a a failure, zero information was provided. And finally, the money raised should be used for specific revenue generating projects, not filling government budget holes. Power plants are great ideas. Especially renewable energy ones.

  5. Levon said:

    Get your facts straight before talking.

    There are countless governments who issue citizenship to their kin regardless of birthplace and residence within a short period of time and allow them to vote in national elections through embassies and consulates worldwide – a right taken away from Armenian citizens by Kocharyan. Some countries even allocate parliamentary seats for elected representatives of Diaspora districts.

    Nobody is asking for unfair privileges or government positions, just for fair rights; the new head of the civil aviation was born in Armenia and is simply returning home for a privileged position!

    With 75% of the worldwide Armenian population residing abroad, not by choice, but as victims of Genocide, this is the minimum of what one could ask for to build a strong, prosperous state.

    Otherwise, Armenia will remain a homeland primarily for Eastern Armenians and the majority of Western Armenians will be kept at arms length until they’re all gone – finishing off the Genocide.

    • Bambeloni said:

      Honestly, I don’t even understand what do you want?!
      Armenia has made it extremely easy for diaspora Armenians to acquire citizenship. Anyone who can prove he is quarter ethnic Armenian is eligible to become a citizen of the Republic of Armenia. The process is so simplified that even Dan Bilzerian who is not born in Armenia, does not speak Armenian, has never lived in Armenia, got his passport during his very first visit to the country! Once citizen, you are eligible to vote. The possibility to vote outside Armenia is a matter of technicality for the new government. They are determined to make this upcoming elections as immaculate as possible and since it is much more difficult to oversee the process outside Armenia, they decided to leave it for future elections. In any case, Pashinian is extremely popular in diaspora, especially among hayastantsis who are mostly citizen and eligible to vote, so allowing them to vote would have only benefited him!
      Your statement that the head of civil aviation is not diasporan since she was born in Armenia is not only false, it is offensive. Who are you to say who is diasporan and who is not?! She went back to Armenia long before the revolution. I personally read her blogs about repatriation before the revolution!
      You were born in diaspora not by choice but you live in diaspora very much by choice. So stop justifying your reluctance to move to Armenia. You are free to live wherever you want and you have no obligation to move to Armenia but there is absolutely nothing preventing you from repatriation, if you want.
      And if you want I can give you examples of “western” Armenians who right now work in Pashinians administration. Their main difference with you and me is that they didn’t wait for invitations to repatriate!
      And no there is no country in the world where a majority which resides outside the country determines who should rule over a minority who resides in the country. That is not only stupid, it goes against the very essence of democracy!