Monday, July 11, 2011

And the Money Kept Rolling In from Every Side…

One of the most discouraging things that you learn about in Armenia is corruption. Sure, it exists in every society throughout the world and the US is clearly not exempt, but the extent of it here continues to surprise me.

I suppose it is a holdover from the Soviet system and, since Armenia has only been independent for 20 years, old habits are hard to break. When you toss in how bad the economy here is (Forbes recently ranked it as the second worst in the world) and the fact that the salaries people earn here when they do have jobs are typically very low, the opportunity to make extra money is irresistible to some. I have long thought that socialism doesn’t work as an economic model since it ignores human nature so this may be an example to prove that.

The most discouraging aspect of corruption here, though, is how deeply ingrained it is in people’s lives – how it affects them day-to-day yet they shrug it off as something that can’t be changed. A poll conducted in 2004 neatly sums up the views of the population (see here).

Here are a few examples that I have heard about.

Education and Work

It is a given in many schools that you can buy your grades. In fact, it is more noteworthy to hear about a school where you CAN’T pay the teachers. A normal pattern I have heard about includes the following:

  • The teachers follow the curriculum set by the education ministry and if the students can’t follow what is going on, they need tutoring (so far, nothing abnormal). But the tutoring is done by the teachers themselves for a fee, making one question why they don’t go a little further in the classroom to ensure the students are learning.
  • When it comes time for exams, the students typically bring gifts in for the teachers and the examiners and curry favor by fetching coffee, etc.
  • If you still aren’t doing well, a payment is in order to ensure the grade you want. The education ministry has recently taken steps to eliminate this problem, but teachers have responded by hiring “agents” to collect bribes on their behalf to have deniability.

As I wrote a while back about how women seem to have internalized the notion that they are not as smart as men, several students pointed out that the men in their classes don’t study but still get better grades – ipso facto they are smarter. But it seems more likely that some of them are paying their way through.

But it does not only affect those who don’t want to study or can’t keep up. Someone I know was recently pursuing a doctoral degree and was told by a member of the review panel in advance of defending his thesis that he would not pass unless he paid him 300,000 dram (about $800 dollars at current exchange rates). When he refused, he failed. The reviewer then indicated that if the candidate were to change his mind, the price would now be 600,000 dram. Oh – and the faculty member in question had already been fired for being corrupt but seems to have been allowed to finish up the projects he had in process. The matter is under appeal but who knows where it will go.

Much of this may be unnecessary since, to the extent teachers and school directors are evaluated, the pass/fail rate comes into account so it is bad to not have all your students pass. Therefore grade inflation can be expected, but why not get some money out of it just in case? And this makes me wonder about how No Child Left Behind may play out over the years….

It is also routine to pay a bribe to get into the university you want and the process to get good grades carries you through to graduation. Recent changes, however, may take a bite out of the bribes needed to get into a university, at least temporarily.

Until this year, all males needed to enlist in the army in the May or November of the year they turn 18 but could get a deferral until graduation if in a university. Over the past year, though, there was a change to the education system whereby students need to complete 12 years of education instead of 10 before entering a university, so typically 18 year olds will now be in high school instead of university. This year, the university deferral was also eliminated, removing the incentive for many guys to even attend in the first place. As a result of these factors, the number of people taking university entrance exams plummeted 90 percent, virtually assuring everyone would get in somewhere. Oops. The draft age was subsequently raised to 19 to partially offset these factors.

To start your career, if you have connections in the faculty, you can get a teaching job at a school or university regardless of your qualifications compared to other applicants. This ensures that the education students are getting is sub-par but they may still need to pay to get grades sufficient to graduate.

And those graduating from medical schools can pay a bribe to get a job at a hospital, but more on the medical corruption below.

The Military

As I mention above, military service is compulsory, but not all service is created equal. Unless you get a medical deferral (again, I’ll get to the medical corruption soon) you serve but where you go is not definite.

From 1988 to 1994, Armenia and Azerbaijan were at war over an area known as Karabagh or Artsakh, which was mostly populated by ethnic Armenians but made part of Azerbaijan during the Soviet era. A cease fire has been in place since 1994, but there are still shootings reported along the border and there is always rhetoric about whether the war will resume.

As you can imagine, no one wants to do their military service there, but would prefer to be stationed in the bases in Yerevan, Vanadzor or other places in Armenia proper. But in order to get posted in one of those places, you need to pay up to $5,000 to someone in the decision-making process. Considering that many professions here pay about $200 per month and the GDP of Armenia is about $3,000 per capita, that is an enormous sum. You can determine a family’s wealth pretty easily by discussing military service (every family I have met here has at least one son since males are favored and couples may continue to have children until a son is produced). If the son is/was in Karabagh (as my Solak host family’s was) they obviously can’t afford the bribe.

The Medical Establishment

Armenia provides a Basic Benefits Package to all citizens, meaning that basic healthcare is free. Regardless, doctors or nurses are often “rewarded” for doing their jobs. You may be able to go to a hospital for free, but if you want the nurse to respond to your mother if she is in distress, pay some money to be sure. Likewise, you may need to pay the busy doctor to make sure your condition is treated in the limited time he has. A study published last year states that half of Armenians do not seek medical care due to “lack of money”. Many may not be aware of the Basic Benefits Package and no one feels the need to clue them in when a payment can be had or they may be too well aware of the “informal payments” required and just deal with it.

One of the ways to avoid military service is to have a medical condition that prevents it. Certification of such can be purchased from many doctors for the right price (I don’t know if there is a sliding scale whereby you pay more to get certified about a more extreme condition, but it wouldn’t surprise me).

Another example concerns a student I know who was applying to attend a university in another country – coveted because European universities are seen as better than Armenian ones and the opportunity to live abroad is very attractive. The application packet required a doctor’s note that the applicant is currently in good health and nothing further medically.

The student went to her family doctor and was told that, despite what the form said, she would really need a full medical history, and that hers could not be found. If she was willing to pay a fee of 10,000 dram, however, it could probably be located or reconstructed. We were able to put her in touch with a reliable doctor who conducted a routine physical for a much smaller fee and she got the documentation she needed.

And all of this is compounded by the fact that the doctor you see may not be qualified in the first place. He may have bought his way through primary school and high school, into and through medical school and into the hospital you are visiting (“I am not a doctor, but I play one at the hospital”).


Capitalism is relatively new to Armenia, but getting around the rules is not. Much of the country’s wealth is concentrated in a group of “oligarchs” – those that own the businesses that “serve” all of the country’s citizens.

When the country became independent 20 years ago, a process of privatization began and state-owned companies were auctioned off. Since then, income disparity has grown such that a huge amount of the nation’s wealth (I don’t recall the figure but seem to remember a number north of 60 percent) is concentrated in a small number of families (again I am stretching to remember but I recall it being about 50). Many of these business people either support a specific political party or are politicians themselves. [Update: This recent article indicates the numbers are 52 percent of total wealth of the country generated in the hands of 44 families and that 76 members of Parliament are business owners, cited as a violation of the Armenian constitution.]

As a result, government business is given to either the people voting on who gets the business or people supporting them. Not surprisingly, the businesses owned by these families pay very little in taxes, leaving the tax burden to be borne by small businesses.

While all businesses are required to provide receipts for each purpose (from a system that is used to report revenue figures to the tax authorities) many do not and keep two sets of books - with the second including all their revenues and the bribery expenses they incur. I learned from a fellow volunteer who works with a small-business development organization that the customs department normally has to be bribed to move imported goods into the country, the tax department can be paid off to look the other way, and people have to pay to expedite anything that the government has a hand in.


I heard recently that virtually everyone in the country expects the police to be corrupt despite recent government efforts to reduce corruption. I have had no interactions with the police during my time in Armenia (other than meeting the Gyumri police chief) but have heard stories from others.

One story was relayed by an American (and former PCV) who lives in Texas with his Armenian wife and is currently visiting her family in Armenia. His brother-in-law is doing all of the driving because he was once pulled over and told that it is illegal for Americans to drive here (it is not). And while all police cars are equipped with dashboard cameras (presumably to film anything that might be corruption) I often see people pulled over who get out of their cars and speak to the police behind the police car (coincidentally out of the camera’s range).

And On and On…

This does not include the local politicians who own mansions that must be far more expensive than their salaries would allow, the white elephant businesses or real estate that they or their families own, the perceived issues with national elections that caused Armenia to lose much of its Millennium Challenge Corporation funding (repaved roads are overrated anyway) or the stories I read every day. Today there was one about well-connected companies bypassing regulation, one about a small businesses being shut down because the owner complains to the media about abusive tax practices and an opinion piece about dealing with the DMV. Not a day goes by without seeing an article in the press about corruption of some sort.

So what can we do? We can lead by example. The US would never put up with a program that would encourage bribery to teachers or grade inflation, allow undue influence of businesses on the government or elect politicians with conflicts of interest. Oh – wait a minute…..