This information comes from the assessment conducted in country for the Armenia report, which was published in December 2001.
The commercial, legal, and institutional environment in Armenia can currently be characterized as a system of parallel worlds in which reforms and progress move in different directions at different speeds. Basic laws range from quite good to nonexistent, supported by institutions that vary from excellent to deplorable. Widely divergent experiences of investors in navigating the system belie an unstable rule of law. In short, all evidence points to a dysfunctional system with unpredictable pockets of success and failure.
Although much progress has been made in the past five years in upgrading the legal framework, at least in terms of legislation passed, the system of legal reform and the implementation of those reforms are incomplete. There is no formal mechanism for including the private sector in the legislative process, so that most essential stakeholders are less participants than victims of it. Change is based on individual access to the system through relationships, not systemic interaction between those who pass laws and those who are affected by legislation.
Much of the basic legal framework is in place for commercial development and economic growth, but one essential element is missing altogether. There is no proper legal framework for secured lending, the foundation for the growth of credit and financial liquidity. At the microenterprise level, a number of assets are effectively used to secure and enforce debts, but this is based more on relationships between the lender and the intimate community making the loans than on legal framework.
Demand for change, along with local human resource supply for defining the needed changes, is quite high. However, the demand is unfocused, with few organizations able to speak effectively for the interests of their members. Moreover, the lack of a mechanism for public debate and private sector interaction means that organized interest groups can be either irrelevant to the process or unduly able to manipulate the process without proper consideration for countervailing interests.
