From the very start of the armed conflict provoked by Armenia on the border with Azerbaijan in the summer of 2020, experts pointed to the clear economic prerequisites for the yet another exacerbation of Yerevan's aggression. By their unsuccessful and unwise attempts to 'offend' Azerbaijan from the western regions, which have nothing to do with the main conflict zone, the authorities of the neighboring country tried to distract their population from unrealistic anti-records in all economic sectors during the pandemic, which, undoubtedly, led to the complete failure of social programs.
Karma is a bitch...
However, the enemies made a gross mistake - by challenging Azerbaijan to a large-scale response, the Armenians will not only be defeated in the military aspect, which is already happening. The confrontation they provoked will exhaust their last economic resources, taking them down to the very bottom of the financial pit. And no "handouts" of eternal donors and sponsors will be able to help them out.
From the beginning of the hostilities, the Armenian leadership has been directing all its efforts to stop them. Calling the heads of various states, the prime minister of this country begged them to influence Azerbaijan to end the fighting. So what's up? Where did the enemy's aggressive fervor go? Where are the statements about their readiness to wage war, which Yerevan used to voice in its media every day?
"As the analysis shows, Armenia is economically incapable of even conducting short-term hostilities. According to approximate data, the cost of Armenia's recently destroyed military equipment has surpassed $1 billion. Millions of dollars are required every day to conduct fighting. And Armenia has no such economic power," said Tahir Mirkishili, chairman of the Milli Majlis Committee on Economic Policy, Industry and Entrepreneurship.
According to official statistics, Azerbaijan's economy is three times larger than that of Armenia. The gap in military spending of the two countries is almost fourfold - $ 2.3 billion and $658 million, respectively.
Mirkishili noted that Azerbaijan's strategic reserves amount to $52 billion, while Armenia's indicator stands at $2.6 billion. The International Monetary Fund expects Armenia's strategic reserves to drop below the level of 2019 by 2025.
At the same time, the pandemic further aggravated the current economic crisis in the neighboring country. In the meantime, the international financial institutions say Azerbaijan will come out of quarantine with more than a 2% growth in the GDP.
Deep in debt
Again, according to official data, every fourth citizen of Armenia lives below the poverty line. Armenia's net migration rate (a gap between immigrants and emigrants) is minus 5.6 for every 1,000 people. The country's current account deficit at 8.2% of GDP is a rather strong indicator of the crisis.
Moreover, Yerevan is already head over heels in a swamp of debt. It had to borrow the maximum amount from the International Monetary Fund (IMF) to close the budget deficit and meet its foreign payment obligations.
The influential organization "Public Debt Management Network" published an article saying Armenia faced a threat to financial security. In particular, the economic development of this country is increasingly dependent on funds raised from abroad. The statistics of the Armenian Ministry of Finance for the first half of this year show that the country's total public debt reached $7.7 billion, with the share of the external borrowings amounting to $6 billion. Moreover, 80% of the country's entire national debt is in foreign currency, and a persistent negative trend in this direction indicates how fragile its financial security is.
Thus, at present, Armenia's external liabilities exceed all financial security standards and account for around 42% of its gross domestic product. In recent years, the ratio of total public debt to the GDP has been growing steadily. Compared to 2015, this indicator increased from 48 to 54%, and the external public debt rose from 40 to 42%.
Instead of working to overcome the crisis, Armenia provokes new military clashes with Azerbaijan. Does Yerevan hope for their eternal donors?
What is clear today is that Armenia's economy is sliding down at an even greater speed.
"In just a couple of days of fighting, the Armenian dram depreciated, which clearly shows the economic tension," Mirkishvili said.
On the other hand, the mining industry's products in the form of crude account for $1 billion of Armenia's export revenues per year. It is one of the primary sources of income for the country's budget.
And now: where are the enterprises of this industry located? In the Azerbaijani lands occupied by Armenia or close to the front line. Accordingly, today Armenia has to stop mining, thereby losing income.
So, the country has neither the military nor the economic strength to conduct hostilities with Azerbaijan. Every day of military confrontation only brings it closer to complete bankruptcy.