YEREVAN (RFE/RL)–The Central Bank of Armenia (CBA) has banned the activities of the money transfer company Western Union following the latter’s decision to stop handling cash remittances to Nagorno-Karabakh taken under pressure from Azerbaijan.
The decision came just days after the Azerbaijani authorities ordered local commercial banks not to do business with Western Union and MoneyGram because they operate in Karabakh. Azerbaijan’s National Bank said on August 1 that any financial operations in “occupied Azerbaijani territories” are illegal.
In a statement on Monday, the CBA’s governing board condemned Western Union’s refusal to wire cash transfers to Karabakh through Armenian banks without a prior warning. It said the move “can harm the usual activity of the banks” and “influence the economic, financial and real sectors of the country’s economy.”
“We figured that it’s quite risky to have such a player in our market,” Grigor Ghonjeyan, a member of the CBA board, told RFE/RL on Tuesday. He described Western Union’s stance as “inconsistent” and “unprincipled.”
Ghonjeyan claimed at the same time that the CBA ban is “not political.” “It is simply aimed at risk management,” he said.
The Colorado-based company did not immediately react to the development,.
Multimillion-dollar remittances sent home by hundreds of thousands of Armenia’s working abroad have been essential for Armenia’s economic recovery that gained momentum in the early 2000s. The total amount of remittances processed by Armenian and foreign banks jumped by 57.5 percent to $668.6 million in the first half of this year. A comparable amount of cash is believed to have entered Armenia through non-bank transfer systems like Western Union.
Ghonjeyan downplayed the economic fallout from the ban on Western Union, saying that there are 16 other transfer companies operating in the country. “Their potential and capabilities will allow them to fully fill the gap soon,” he said.
But one Armenian commercial banker, who asked not to be identify, was less sanguine, saying that Western Union has been indispensable for Armenian migrant workers living in remote countries with no banking ties to Armenia. Still, he said they will eventually find alternative ways of sending cash to their relatives at home.
Ghonjeyan indicated that the CBA may yet reconsider its decision if Western Union resumes money transfers to Karabakh. “We are not going to initiate active negotiations with Western Union,” he said. “But if Western Union changes its behavior in a way acceptable to us and offers our banks new contracts ruling out unilateral and sectarian decisions in the future, the Central Bank could revisit the issue and make a decision.”