Azernews.Az

By Abdul Kerimkhanov

Soon it will be a year as an Armenian mineral exploration and development company Lydian Armenia CJSC has been forced to suspend its activities. The new government of Armenia still cannot put an end to this story. It is difficult to predict how much time it will take to see results of the investigation.

Earlier, some Armenian environmental activists claimed that the dust from the Amulsar gold mine could be dangerous for Jermuk city further reaching Sevan Lake through groundwater. In response, the company stated that the distance from Amulsar to Jermuk is about 10 km. The activists, dissatisfied with this statement blocked the roads to halt the operations in the field.

The extension of the investigation process is fraught with concrete losses for Yerevan. The indiscretion of the government can be very costly for Armenia, in particular, its budget, economy, and reputation.

Earlier, Armen Stepanyan, Deputy Head for the Sustainable Development at Lydian Armenia, said the construction work, carried out at the Amulsar field, was suspended after the closure of the road leading to the mine. He added that the company suffered heavy losses and about 1,300 people lost their jobs. Stepanyan did not rule out that the company may demand compensation from the government.

Now it is June, and the process is not even close to completion. Of course, the loss growing from month to month increases the amount of possible compensation as well. As many as 1,300 people suffer without work and livelihoods. Every day of idle time of the company is the most serious problem for these persons.

In case the Armenian government have to compensate the loss of the company, it is obvious that the amount will be very impressive. Similarly, the Armenian budget will lose serious funds. The longer the business is idle, the more money the Armenian government will have to pay. The process duration is directly proportional to the financial risks for the state treasury.

The delay of the situation denouement around Lydian Armenia promises also other kinds of losses to the country. The former U.S. Ambassador to Armenia Richard Mills said in October 2018, the company has not been working for four months and that an American investor has invested about $500 million in the project. In this context, Mills noted that if the problem is not solved quickly, this will cast a shadow on Armenia’s business attractiveness. He added that American investors are closely monitoring the development of the situation around the enterprise.

It is difficult to say whether the Armenian government heard Mills’ statement. But obviously, he was not listened to. The problem, contrary to the advice of the former ambassador, did not find a quick solution. Accordingly, Armenia has even more lost its poor business attractiveness, in particular, in the eyes of American potential investors.

In addition to serious financial risks to the budget and negative social effect, the story of Lydian Armenia has greatly undermined the country's investment reputation. The longer the process lasts, the more spots appear on the business climate of Yerevan. In addition, there is more doubt about the government’s capacity in principle.

Thus, the reluctance of the Armenian government to find solutions to various problems that require special efficiency is fraught with very serious problems for the country and its population. As long as the post-revolutionary officials learn how to solve problems, their number grows and Armenia suffers further losses.