Tuesday, November 19th, 2013

Volunteers plant trees in Dzidzernagapert, Armenia, as part of the
SunChild environmental project (Photo: FPWC)


Landlocked, blockaded and permanently under threat of attack from
hostile neighbors, the Republic of Armenia faces a multitude of
national security issues. These issues are further perpetuated by a
myriad of social concerns relating to health, education and poverty;
arising from a government wrought with corruption, a business
environment dominated by oligarchs and a serious emigration problem.

But all is not doom and gloom. For the most part, Armenia's social
problems have been tackled by individual and group-run Non-Governmental
Organizations (NGOs) which have done their collective utmost to serve
the needs of the country and the people. Coupled with this have been
the generous donations of Armenians in Armenia and across the globe
who have assisted in funding NGOs in Armenia. Despite this generosity
however, NGOs face an uphill battle to fund the projects that will help
Armenia make the transition from a developing to a developed nation.

In the absence of good government and with NGOs constantly limited by
budget constraints, a more sustainable solution to some of Armenia's
social challenges is necessary. One solution is Corporate Social
Responsibility (CSR).

CSR is regarded by experts as an evolution in political and social

After a protracted global battle ensued through much of the 20th
century between the virtues of socialism and economic liberalism,
by the 1990s economic liberalism and the rule of market forces had
ultimately prevailed. Public enterprises were privatized, taxes were
reduced, barriers to trade were removed and governments were no longer
responsible for economic growth. Rather, the economic prosperity
of a nation was dependent on markets and the entrepreneurship of
its citizens.

But after privatizing state assets and relinquishing responsibility
of economic performance, governments also saw a reduction in their
ability to cater to and fund the social needs of their citizens. This
is where CSR comes in. While governments are not absolved of social
responsibility, corporations as the key beneficiaries of economic
liberalism, now bear some responsibility for social improvement.

Broadly, CSR refers to the behavior of organizations as they relate to
human rights, the environment, labor conditions, communities, consumer
rights and social policy. CSR is increasingly becoming a focus area for
governments and businesses across the globe. Sponsored by the United
Nations Institute for Training and Research (UNITAR), the Global Summit
on Social Responsibility was held in Quito, Ecuador. The event provided
an international platform to debate various social responsibility
issues, contributing to the enhancement of competitiveness and the
promotion of socially responsible corporations, cities and states.

Many corporations in Armenia have been criticized for their lack of
ethics, monopolization of markets and disregard for consumer rights.

Businesses avoid tax payments, provide employees with only minimum
wages and create barriers to market entry for competitors through
unethical means. The 2009 OECD Anti-Corruption Network Report
identified these practices as a "major obstacle to business development
in Armenia". Similarly, in 2012 the International Crisis Group reported
that the influence of oligarchs in Armenia "increases a propensity
for corruption, undermining economic growth and the development of
effective economic institutions".

Despite the commonality of unethical business practices, a handful of
corporations in Armenia are demonstrating genuine socially responsible
behaviors. Tufenkian Artisan Carpets which operates in Armenia, refuses
to hire any employee under the age of 18, utilizes environmentally
friendly production processes and pays competitive wages. The
company and its diasporan owner, James Tufenkian, make significant
contributions to protecting the communities in which they operate.

Operating in accordance with a set of social principles, Vivacell is
another corporation making a difference to social issues in Armenia.

With a commitment to ethics and human values, Vivacell supports the
National Center for Oncology, the SunChild International Environmental
Festival and operates a neonatal medical program to support young
mothers and families in regional Armenia. The Lebanese-born Armenian
CEO of Vivacell, Ralph Yirikian has driven the company to be a
profitable and socially responsible corporation.

While many businesses in Armenia have operated unethically and
with impunity, some enterprising diasporans have demonstrated that
businesses can make a social difference and still turn a profit
in Armenia.

CSR presents a unique opportunity for diasporans who have an interest
in operating businesses in Armenia. By employing socially responsible
behaviors in their Armenian business operations, business leaders can
contribute to the improvement of the country's social situation just
as Tufenkian and Yirikian have successfully done.

The public and diasporans visiting Armenia also have the power to
influence and shape business practices by supporting those enterprises
which operate and behave in an ethical manner. Support for socially
responsible corporations will lead other enterprises to operate
ethically in order to remain competitive and ultimately improve the
business culture in Armenia.

Varant Meguerditchian recently presented on the topic of "the public's
ability to shape the ethical behavior of governments and organizations"
at the Global Summit on Social Responsibility sponsored by the United
Nations Institute for Training and Research in Quito, Ecuador.

Meguerditchian is the former executive director and president of the
Armenian National Committee (ANC) of Australia. He currently works as
a government relations professional in Sydney. He holds undergraduate
and graduate degrees in politics and business administration and
is currently completing his second master's degree in international