Yerevan Municipality, A Return to the USSR. Ruslan Baghdasaryan

Former head of the Davitashen administrative district in Yerevan, Ruslan Baghdasaryan, wrote on his Facebook page: “Recently, I have periodically addressed various issues related to Yerevan on different occasions. Waste management, sanitation, elevators, and so on. This time, I would like to draw everyone's attention to the governance of the capital city in a broader context and understand its logic. Or to understand whether there is logic at all.

Firstly, let me remind you: according to the Constitution, the foundation of the economic system of the Republic of Armenia is a social market economy, which is based on private property, freedom of economic activity, and free economic competition, aimed at overall economic welfare and social justice through state policy. The demand for social justice is not a return to socialism, but a path to economic development where state participation in the economy should not be large and should gradually decrease.

Although Prime Minister Nikol Pashinyan mentioned that the current government is not guided by 'isms', he has repeatedly stated while talking about the economic revolution that the role of the state is to create conditions so that everyone can engage in any business they desire. The state should not build factories or hotels but create an environment in which entrepreneurs would want to build factories and hotels in Armenia and be confident that their rights are protected by law. This is a completely understandable approach.

In addition, there is a thesis that no one disputes: the state is a poor and inefficient manager, and in all possible sectors of the economy, the management should be handed over to the private sector, of course establishing the rules of the game and exercising control. Almost all successful countries in the world have gone this route—handing over the management of railways, even prison management, or the execution function of judicial acts to the private sector. The current government not only does not dispute this thesis but confirms it judging by its statements and certain actions.

For example, the Ministry of Health recently wanted to privatize one of the city’s medical centers, justifying that it needed investment and modernization, which could best be achieved by the private sector. Similarly, the Ministry of Finance proposes outsourcing the internal audit of state departments to private auditing firms, claiming that quality would be higher that way. Or the fact that private companies have started supplying the soldiers' food in the army. If I’m not mistaken, last year the law on public-private partnership was adopted, which establishes the rules of the game in this area.

The state decides its priorities, determines what it wants to do, clarifies what it is ready to provide on its part, what conditions to create, while entrusting the implementation of the program to the private sector, which, under strict supervision, does its work for profit.

But what is the Yerevan Municipality doing? Quite the opposite. Immediately after their appointment, the new authorities of the capital entered into conflict with the private entrepreneur, Sanitek. As a result, instead of clarifying the rules of operation so that this company could carry out city cleaning more effectively, the functions of waste collection and sanitation were again transferred from the private sector to the state. I am more than convinced that we will reap the bitter fruits of this later. Today, the vehicles gifted (or purchased) seem to have solved the waste issue, but it costs the state more (you can compare the amount of money directed to waste management before and now) and, besides that, the future is very uncertain; vehicles have a “habit” of breaking down, wearing out, and ultimately becoming unusable. How will their maintenance be carried out, what means tomorrow will refresh the fleet and the other equipment? From the residents of the capital or from new donors?

As for sanitation, the most noticeable issue recently has been the sidewalks that haven’t been cleared of snow. Of course, the mayor announced that there is no appropriate equipment, but this is merely an excuse. The real reason I mentioned above— the state is a poor manager.

Recent examples in the field of greening and transport can be regarded as the latest. The greening carried out through a competition has been made a function of a community institution. (I assure you they will fail here as well.) A renowned British organization had conducted a serious analysis and developed a new project for Yerevan’s transport network at the behest of the previous city authorities. It was expected that this system would be entrusted to a private company based on the principles of concessionary management. The city wouldn’t spend money on acquiring buses or paying drivers. That would be done by the private sector, naturally in exchange for certain profits. However, that profit also entailed responsibility, and the company would have to plan its business in such a way so that it could provide a high-quality and continuous service alongside profit.

And what is now planned? It has been decided to purchase about 700 buses for 250 million dollars. Moreover, that money will also be a loan. The city authorities will manage this fleet themselves and the public transport system. Compare: in one case, the state was getting a new transport network with new fleet without spending money, which was to be managed by a professional company. In the other, the state is buying buses for 250 million dollars, during which it spends money on their maintenance and personnel, and manages it with highly questionable professionalism and efficiency.

You might say that this is more correct and cheaper (since the state does not require profit for its management), but this is an overly simplistic approach, as the damage caused by non-professional management can be extraordinarily high.

I must emphasize— the public versus private debate can be eternal. The problem lies elsewhere— the Yerevan Municipality seems to be operating outside the general logic of the country. While the government talks about large infrastructural projects to be carried out with the private sector, the Yerevan Municipality is returning to the USSR—everything is state-owned. If this continues, I won’t be surprised if one day it is announced that everything in the capital should be managed by the municipal authorities—from restrooms to entertainment centers.

What is sad is that the municipality is making these steps not based on ideological grounds (let’s say the mayor supports increasing the role of the state) but in a domestic, spontaneous manner. It seems easy at the moment, but what will happen later will become clear. Is waste management failing? Let’s buy a few dozen trucks (or receive them as a gift), solve the problem now, and we will think later what will happen when they break down. Do we have a problem with public transport? Let’s purchase several hundred buses for 250 million dollars; the residents will see it, be happy, and commute with the new buses. But who will pay for those 250 million, along with interest? Who will pay the drivers' wages, who will pay the operators, and who will monitor it, and how will we get out of this in a few years? They don’t care; perhaps they think that this will be the responsibility of the next city authorities.

These questions, the logic of the municipality’s activities (or its absence) is much more important than individual trucks or elevators. However, unfortunately, there is no discussion about these issues on any platform. Neither politicians talk about it, nor journalists nor experts. No one. We all focus on superficial details, neglecting deep-rooted problems. And the consequences will, to say the least, be sad.