People in Karabakh sometimes call President Bako Sahakyan, “the builder”. After his election in 2007 the importance of construction has been emphasized- both in terms of quantity and quality. There is even a joke in Karabakh that given the kind of heart for the construction field he has, President Sahakyan should have become Minister of Urban Development.

In a few months after assuming the office the president replaced the Minister of Urban Development, appointing a young architect Anahit Vardanyan. Shortly after her appointment the new minister founded a separate body overseeing construction quality. Low quality is spoken about both officially and non-officially: beginning with road construction, where defects are visible to the naked eye, and ending with housing, where construction shortcomings reveal themselves right after being moved into. For example, roads built on the money donated during the All-Armenian telethons are in bad shape. The North-South highway built only 3-4 years ago has been repaired for a few times already, and because nobody can determine who is supposed to pay for the re-repair the construction has been stopped.

Official sources do not publicize the amount of mistakes revealed so far, or how many people have incurred liability.

In the first 6 months of 2008 construction to the amount of 8,322,200 drams ($277,406) was implemented, which is 2.6 percent less than during the same period of 2007. Statistic data say the volume of construction carried out on state budget money has been cut for 20.5 percent, humanitarian aids funding construction have been cut for 33 percent, construction by private means of the population is down for 11.6 percent; instead, the volume of construction by means of foreign investors, mostly Russian, has grown 5 times.

Experts explain the construction volume reduction by the fact that a big share of construction has stopped either because of quality or because of a lack of required documentation.

In his not so numerous speeches President Sahakyan speaks about the field carrying a high risk of corruption.

In a private conversation the owner of a small construction company said that almost half of the money received from the state is spent on things other than construction itself. Besides official taxes that can be exceptionally high, considerable money has to be “given away” to this or that official. “At the cost of what am I supposed to give bribes? At the cost of building material. The less money is left, the cheaper material we have to buy. And the cheaper the material, the poorer its quality is. Asphalt turns out two centimeters lower than the required norm, wall covering- thinner, and it takes more money to have that kind of construction to be accepted for operation,” says the company owner, who spoke to ArmeniaNow on condition of anonymity.


It is this kind of phenomena that the authorities are trying to fight against. But so far that fight cannot be called a success, as the guilty are not punished.

Construction of residential houses has been strongly emphasized this year. Young families are particularly in need of houses. Many young couples do not get married because they don’t have an apartment. This year, however, the number of marriages in the first 6 months of 2008 has grown 5.7 times as compared to the same period in 2007. The nuptial surge is due to a government program that provides financial incentives for newly weds.
Accordingly, the number of families in need of residences has grown.

For those who can afford to take a real estate loan, the state has introduced the system of mortgage credits. Commercial banks offer such loans with the yearly interest of 12-16 percent. The state program subsidizes half of the 12 -percent annual interest rate, the other 6 remaining for the citizen to pay on his/her own.

The Director of Artsakh Investment Fund Karen Yesayan says apartments are built by means of mortgage credits. “Within the framework of the program 2 nine-storied blocks of flats are currently being built in Hadrut and Askeran, as well as a 64-apartment building on Duman street in Shushi, which was damaged in a fire during the war, is being reconstructed,” says Yesayan.

A total of 143 mortgage requests have been satisfied so far, 52 of which were for purchases, 5 for construction and 86 for repair; 3 requests have been refused. The total amount of mortgage guaranteed by the fund is 884,180,000 drams ($2.9 million). Artsakhbank has credited mortgage requests equal to 364,502,000 drams ($1.2 million), Armbuisnessbank credited 74,100,000 drams ($247,000).

“I had never thought to apply for a mortgage. When I read in newspapers how much your monthly profit must be in order to get one, I changed my mind about going to the bank. Monthly salary [income] has to be of about $800. If I had such income I could save money for an apartment myself,” says Lilya Osipyan, 28, a mother of two children.

She also says that her husband is an officer and serves in the army. She hopes her husband will be provided with an apartment.

Housing is being built for officers within the framework of a social army project. This year 12 apartments for servicemen have been put to operation, 126 more are expected by the end of the year. Defense Minister Movses Hakobyan says 840 officers and warrant officers are paid a compensation for apartment rent by the army.
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