Wednesday, May 18 2016 07:35

 Mr. Ambassador, what do you think of the current level of the trade and economic relations of Armenia and Poland, considering that despite the upward tendency of the two countries’ trade turnover for 2015, Poland is no longer in the list of the countries wherefrom Armenia receives net direct foreign investments?

 

The commodity turnover between Armenia and Poland for 2009 totaled $34.7million, in 2012, this indicator increased to $43million. In 2015, it reached $82-$83million increasing by 2/3 as compared to 2014 (80% of total turnover is the export from Poland). At present, Poland is the leader among Armenia’s trade partners in Eastern Europe. It ranks the third in the list of the EU countries after Germany and the Netherlands. Armenia is also the leading trade partner for Poland in CIS in terms of the trade turnover growth. I think the foreign trade turnover growth may prompt inflow of direct investments in the country.

 

In short, the trade and economic ties can be described with a single word - reliability. We have a reliable economic cooperation now. The sides seek to increase both the commodity turnover and investments. At present, there are negotiations for launching investments in the most important sectors of economy, including IT-sector and the defense industry. The issue of Armenian investments in Poland is on agenda. Armenian companies producing thermostats weigh opening of an enterprise in Poland. I hope we will see a growth of not only the commodity turnover but also investments next year.

 

Do the countries implement any mutual investment projects? Are there any contacts between the business communities of the two countries? Which of Armenia’s economic sectors are more interesting to the Polish businessmen?

 

The Polish-Armenian Intergovernmental Committee for Economic Cooperation will meet on May 17. A not big conference will be held with the participation of the companies present on the local market or the ones that are going to enter it. We hope the business forum will become a certain impetus for enhancing the bilateral cooperation. 

 

I would like to mention Lubawa SA, a leading Polish company that has intensified its activity this year (Lubawa-Armenia Armenian Polish military industrial JV opened in October of 2014 on the basis of the Armenian machine-tool factory). Previously the Company failed to operate at full capacity. For two years the company had operated without profit and there are preconditions now to ensure profits in the current year. I’d like to say that many other potential investors closely follow the company’s activity. In this sense, the future investments depend on the success or failure of Lubawa – the first big investment. Therefore, I hope Lubawa will become exemplary.

 

Asseco Group, a Polish IT company, has recently announced that it is going to create a joint venture on the local market in Armenia, if the Government of Armenia provides it with the necessary conditions. Asseco Group is the 4^th largest software developing company in Europe.

 

Mr. Ambassador, at what stage is the military cooperation of the two countries?

 

Yet in 2011, during the visit of the Armenian defense ministry delegation to Poland, the prospects of the bilateral military cooperation were discussed. Poland and Armenia made an arrangement to sign an agreement of cooperation in the military and military-and-technical field and in the field of military education. The defense departments of the two countries signed a specific cooperation agreement. The previous one was corrected certainly. The updated document is on the tables of the ministers now.

 

What are the major problems that hinder development of economic cooperation of the two countries?

 

There are some difficulties connected with the market volumes. The Armenian market is very small for big companies. Consequently, it is not so attractive. For instance, very small volume of  “Karas” wine - the only wine brand present on the Polish market  - is produced.  A similar situation is with agricultural products. It is very hard to find a vendor able to supply the necessary volumes of agricultural products without intervals.  The logistic problems hang like the sword of Damocles over the cooperation in the given field.  This increases the transport costs manifold. Although there is a ferry service via Georgia to Romania, this item of expenditures appears to be too high for exporters.  

 

One of the major tasks of the Armenian business is development of “the Armenian brand,” I think.  Frankly speaking, I do not know any company that has enough capacity to hold a large-scale advertising campaign in Poland. These are expenses for several million euros.  However, such a promotion will help selling various Armenian products. 

 

I’d like to say that Polish businesspersons and investors consider the Armenian market from the perspective of entering third markets in two-three directions. Armenia traditionally has more than just good relations with Iran. In addition, Armenian businessmen have a positive experience of operation in the sophisticated market of Iran.  The second direction is the Middle East where the country has quite working contacts. The third direction is connected with Armenia’s alignment with the Eurasian Economic Union (EEU) and a chance to enter the EEU market. However, there are some problems connected with the certification of agricultural products and with phytosanitary certification of food products. Armenia is not a large market and additional expenditures make exporters refuse from projects and investments.  For instance, I know that one of the biggest companies in the meat industry would like to enter the Armenian market. However, calculating the certification costs, they found out that they will be reluctant to work two years to cover these expenses.

 

Considering the current economic realities, I’d like to say that without the prospect of entering the Middle East and Iranian markets, the big actors will not come to the local market, while the mid-sized and small ones will demand better conditions for operation.  One should not forget that SME look at the markets outside their country through stereotypes. Therefore, advertising and promotion of the country as a brand is a necessity.   

 

As a EU member-state, do you think that Armenia uses the possibilities and preferences (under GSP+ arrangements) at full?

 

I have an impression that the European principles of document management proved complicated and inefficient for the Armenian small and mid-sized businesses. I think certain prompt mechanisms should be developed to make the principles of European business more accessible to them.  For instance, when Poland launched the procedures of joining the European Union and started harmonizing its legislation, the government provided financial resources for creation of centers to help businessmen prepare the necessary documents to receive European funds. It is necessary to invite specialists with an experience of work at the European organizations so that they help managing businesses. It is very hard for a SME to apply to European specialists or organizations over technical issues, as it is an endless red tape amid lack of the necessary specialists. I think 3-4 such centers will be enough for the local businesses.

 

What particular measures would you recommend for Armenia to make the “Armenian product” more attractive for Polish investors?

 

Basing on the Polish experience, I can say that establishment of the necessary infrastructures is a priority for raising investments. It is important that investors have good infrastructure. Second, it is necessary to develop certain privileges for investors. About 2/3 of the EUR70-80billion investments in Poland are concentrated in the zones where special conditions were created for investors. Third, it is necessary to ensure an absolutely safe market for the financial sector. The banking system of Armenia is not closely connected with the Western one. Therefore, in case of sanctions against the Russian banks, certain restrictions may affect the Armenian banks too. And finally, it is necessary adopt laws that will ensure transparent economic activity of the country and create conditions for free competition, the laws that ban monopolies.

 

It is necessary to understand that it is the last chance to attract not only Polish but also Western investors. This chance is the opening of the Iranian market, since the West sees it as a huge market with huge financial resources.  Since Armenia is close to the Iranian business, have working contacts - this window of opportunities will be left open for 2 years no longer. Therefore, all the sides interested will find a direct access to the Iranian market.  Let us not forget that time is the most expensive asset in both politics and economy. 

 

Poland is one of the countries that advocates for enhancing the ties between Armenia and Europe. What do you expect from the new phase of the negotiations between Armenia and the EU? What are Armenia’s prospects for European integration? I’d like to recall that the Polish Foreign Ministry has recently urged the EU to think over the future of its Eastern Partnership project and correct it to offer a new, specific program to each EaP member-country. What do they particularly mean?

 

Although it is early to say anything about it, I think the correction of the Eastern Partnership project will be reflected in a differentiated approach to the countries that have not signed the EU Association Agreement. It is necessary to observe the “more for more” standard.  Before September 2013, Armenia was closer to the European standards than any other EaP country. After Armenia refused the Association Agreement and declared that it is no longer interested in the DCFTA, the situation has changed dramatically. Georgia, Moldova and Ukraine have left Armenia behind. Now, the country has got an opportunity to work towards rapprochement with the EU again. It appears that the Eurasian Economic Union has proved to be not so profitable investment – a year of membership has brought no benefits to Armenia.  Perhaps, it  is an indicator that it is necessary to speed up the process of rapprochement with the EU. Europe shows “a fully open approach” to this. The “more for more” principle has already brought its fruits to the neighbor Georgia too. Poland still has a positive stereotype of Armenia. I am speaking about the Armenian Diaspora in our country and about Armenia as the first Christian country. Before late 90s, Poland’s relations with Armenia were developing much well than with Georgia. Then Russia’s foreign policy vector changed. Georgia proved to be more EU-oriented than Armenia is.

 

The sides believe that the negotiations for the new stage of rapprochement with the EU will be successfully completed by the end of the current year.  I hope the cooperation will become deeper and will little differ from the AA. Armenia was once on EU’s doorstep, but unfortunately, at the last moment it put on the brakes. At the same time, everything must be done wisely not to complicate the political situation around Armenia in the light of the latest developments as well as to achieve such conditions of cooperation that will create a guaranteed safe business for European partners in the long-term outlook.

 

P.S.  After the given interview with Ambassador Nowakowski, we have got a feeling that this amazing person is a sincere and good friend of Armenia. His style of communication with media and frankness of his answers could not but arouse admiration.  A person who uses his personal ties to help promoting the Polish-Armenian cooperation is an exemplary diplomat and a devoted man of his country and the country of his appointment.