December 3, 2001

One distinct feature of the Armenian reality is the human capital of the nation. Unlike its neighbors, Armenia does not have oil, or gas, or other natural resources in significant amounts. What we have is people. Education is a priority for most if not all Armenian families. In fact, since the days of Mesrop Mashtots and the Holy Translators, education and literary tradition has been an important part in preservation of the national identity.

While the national income and poverty statistics for Armenia are not encouraging, the presence of a strong educational and scientific capacity is an indication that the long-term development of Armenia can be assured. Yet, the maintenance and modernization of this capacity is essential if we want to preserve the high levels of literacy, higher education, and scientific potential that Armenia enjoyed at the outset of independence in 1991 and continues to enjoy even now.

Educational system is comprised of more than 1400 secondary schools, eleven state universities, and more than 30 private colleges and universities. The literacy rates for Armenia are almost 100%, and the number of people with higher education is among the highest in the world. The secondary education is compulsory and free of charge through grade ten. The main problems, however, is the general economic conditions in the country. The general budget allocations have declined since 1988. According to a study by the World Bank, in 1980's Soviet Armenia was allocating an equivalent of $500 per student in a secondary school, while in the 1997 the same number was $30. Also, a World Bank study estimated in 2001 that the gross primary enrollment was only 87% which means that 13% of the school-age children were unable to attend classes. This may not reflect the fact that many families have emigrated from Armenia, so it is not an entirely accurate number, but it shows a dangerous trend. Teachers' salaries are low (20-30 dollars a month), and access to textbooks is a major problem too.

Similar problems continue to exist in the science sector. During the Soviet times, the organizational structure was highly centralized and based on the Academy of Sciences. Some research institutions reported directly to federal agencies in Moscow, and some to local Armenian ministries. The last decade and the economic problems of Armenia have had a major impact on the science, basic and applied research, and technological development. Armenia has more than 140 scientific institutes, centers, and other units, including major institutions like the Yerevan Physics Institute, Byurakan Observatory, Microbiological Depository Center. The National Academy of Sciences coordinates fundamental and applied research in different fields. As a state scientific organization, the NAS unifies scientific and research institutes and subsidiary services. The Academy has a total staff of about 4600 employees, including a scientific staff of about 2400 (116 Academicians, 340 Doctors of Science, 1150 Candidates of Science).

The story of the Armenian science in the last decade was a story of survival and adaptation to the new conditions. In 1998, the scientific R&D expenditure in Armenia was 0.3% of GDP, and the educational expenses were less than 2% of the GDP. Although the state funding is very low, the Armenian scientists are doing excellent work in many areas, due to substantial scientific potential, recognized schools, research-oriented scientific traditions, and good equipment. The number of scientific publications was 0.8 per scientists per year in 1998, and the ratio of scientific personnel to general population was 0.17%. The scientific institutions of course experienced a major problem as many scientists have emigrated. Yet, sometimes is can be beneficial as well because the former staff members have helped to establish good contacts between their former and current institutions.

I want to speak about a problem of brain drain and emigration from Armenia.
There are many estimates as to how many people left Armenia. Armenia held a census in October, and we will know the preliminary results in March 2002. But even without the census, it is clear to everyone that this problem exists and is acute.

Soviet Armenia's economy, which was approximately twice the size of current GDP, was anchored in the Soviet Union's command economy. By 1989 Armenia had developed heavy industry, including radio electronics, defense, and chemical industries. This was a blessing in disguise, because it allowed a high level of urban employment but made Armenia completely dependent on the Soviet Union. Cities were built that depended on one huge plant to provide employment, like Hrazdan, Charentsavan, Kapan. Pollution and social problems also arose.

Well, the Soviet Union no longer exists. Those enterprises that employed thousands of people are now idle, and the people who worked there found themselves out of job. The problem of unemployment is especially tough for those with fewer skills. Poverty is high: a U.N. study estimated that more 50% of population is vulnerable while 23% live in dire poverty. So, many people chose to leave Armenia rather than face the grim prospect of living off welfare. Armenia's budget, which is much smaller than it was a decade ago, is also strained with important expenditures on national defense and security, rebuilding the earthquake zone, and social welfare.

There was also inner migration, as people returned to rural areas. Armenia's agriculture is 100% in private hands, the only CIS country to have done so. Those who have emigrated send remittances back home, supplying much needed income. In economic terms, we have experienced an export of Armenia's most productive resource, its labor supply.
There are several factors that will curb and reverse the migration of population. First, we need to foster development of small and medium size enterprises to allow many people to establish a small but reliable source of income. Privatization and foreign investment will allow restructuring of the existing industrial enterprises, and there are some examples that this is happening.

The emigration of people from Armenia is the tragic result of underutilized economic potential. Nor is it an isolated phenomenon: we know from history that Ireland has suffered a similar brain-drain which is now being reversed. I have confidence that eventually, as Armenia's economic progress picks up, it will be possible to stop and reverse the migration in Armenia.

Obviously, the Armenian government is concerned about the future of the science and education. There is a government activities program, adopted in August 2000, that also addresses the situation in this field. The government plans to press ahead with the reforms of the secondary school, including streamlining the number of schools, increase in their academic autonomy, and introduction of per-student subsidies to each school (instead of current, fixed financing from the budget which is not flexible). Eventually, the government plans to introduce a six-day week for school students, and an eleven-grade secondary education. An average secondary school now has ten grades, 1 through 10. In American terms, the students go through elementary, middle, and high school while attending the same secondary school.

The Government plans to develop a national program for development of the education system. This program would provide for a significant increase in teacher's salaries, training, establishment of teachers' training and continuing education centers.

As there are many private colleges operating in addition to the already established state colleges and universities, the government plans to develop a strong licensing and accreditation mechanism, based on solid standards and to increase the colleges' autonomy. A proposal is under discussion to establish a Pan-Armenian University, with faculty comprised of specialists from Armenia and the Diaspora. Such a higher education institution has the potential to become a leading center of the Armenian studies.

The government will work with donor countries and use other resources to provide an Internet classroom in each of Armenia's secondary schools and state universities, to allow the students and faculty to fully utilize the modern research and high technology tools available through the INTERNET.

Science:
The government views the science sector, including the research institutes and laboratories, as an essential factor in the long-term economic and social development of the country. The primary objectives of the reforms in this sector should be the optimization of the structure and management of the scientific institutions, and securing a steady flow of financing for them. In addition to state budget financing, the government envisages incentives for encouraging private sector and third-party financing of R&D projects.

A major help to the struggling scientific institutions is the existence of international foundations helping the scientists in Armenia. The U.S. Government has established the Civilian Research and Development Foundation, which provides grant funding to the NIS scientists. There is International Scientific-Technical Center, a cooperative venture with the EU and Government of Japan, that fosters contacts between western scientific institutions and their counterparts in Armenia. The U.S. Government runs a number of other programs that benefit the Armenian scientists and educational institutions, for example, the Muskie Scholarship program that allows 70 Armenian graduate students to study in the U.S. every year. The members of AESA, and individual Armenian American scientists, as well as the scientists who have emigrated from Armenia have also been of great help to their Armenian colleagues. These programs have helped sustain the scientific institutions, orient them toward private sector's needs, and establish a culture of good cooperation and collaborative efforts with their counterparts in the U.S. and European countries.

I don't want to create an impression that everything is bleak in the Armenian science. There are indeed many success stories. I have this guide book here, Armenia's hi-tech directory, that lists products by 38 Armenian scientific institutes and their branches. This is a testimony to their enterprising spirit and adaptation to new times.

I often travel to the Armenian communities in the U.S. I want to promote an interest in the Armenian economy, and I usually brief the community and civic leaders of many opportunities and success stories among those who have invested or traded with Armenia. In turn, I have had the opportunity to find out more about the issues of concern to our community, their great potential and their dedication to the homeland.

What is clear to me is that, despite the many problems and different perceptions that exist between the Republic and the Diaspora, our people have two major aspirations: first, making Armenia a strong, prosperous, and democratic country, and, second, preserve the Armenian identity and culture outside the Homeland, in the Diaspora. This dual objective will help strengthen both the Diaspora and the Republic, and will contribute to eventual forging of a single cultural identity. Without serious involvement by the Diaspora businessmen it will be difficult to achieve real economic progress in Armenia, and the Government is taking steps to make it easier for Armenians anywhere in the world to invest in Armenia and profit from those investments.

Aside from commerce and investment, we also expect the Armenian Diaspora to be an active participant in Armenia's social, scientific, educational, and cultural life. And I believe that the AESA is uniquely positioned to assist the revival of the Armenian science. If you are thinking of a way to engage your Armenian counterparts in the field of science, or education, or any other field, the Embassy will be more than happy to hear from you. Together, we can build a prosperous and stable future for our Homeland.
I would like to hear your proposals, comments and ideas, and I am looking forward to your questions as well. I would also appreciate if you tell me of your activities so far in this area.