No replies to this topic

[Azat]

GLOBAL CALIFORNIA
Local politics goes global -- California to open trade office in Armenia

Robert Collier

As befits the world's sixth-largest economy, California has an established presence in faraway lands, with trade offices and envoys searching for lucrative deals.

But its latest diplomatic foray -- a permanent mission in Armenia -- has raised eyebrows and prompted suggestions that something more than advancing the state's economic interests is at stake.

"It's the dumbest thing I've ever heard of," said Joseph Harrison, president of the California Council for International Trade, a business lobby based in San Francisco.

A little-noticed bill signed last month by Gov. Gray Davis authorizes the opening of a California state trade office in Yerevan, the capital of Armenia. It will add to the state's 12 other foreign offices, or mini-embassies.

The offices, run by the state's Technology, Trade and Commerce Agency, provide advice, contact information and business leads to California firms that want to export abroad. They also help foreign firms that want to invest in California.

Some of the state's foreign offices are located in major trade and investment hubs for California businesses, such as Hong Kong, Shanghai, Tokyo, Mexico City, Singapore, Seoul, Taipei, Frankfurt and London. Other U.S. states have similar offices.

But Armenia? Many business leaders go apoplectic when asked about the new choice.

"I don't think anyone who knows the global economy would even consider opening an office in a place where California does zilch trade and has zilch potential," said Harrison. "It's an indication that the Legislature is bowing to political pressure and they don't take trade seriously."

Indeed, trade opportunities in Armenia seem limited. The former Soviet republic, population 3.3 million, had an annual gross domestic product of $11. 2 billion in 2001 -- a tiny fraction of the Bay Area's annual activity of $325 billion.

Last year, California firms exported $15.6 million worth of goods and services to Armenia, putting that nation in 86th place among California's trading partners.

Yet other regions where California has far greater trade interests -- such as India, northern China and the Philippines -- have no California offices. And although the new mission is supposed to serve the entire former Soviet Union, it's hard to imagine a more illogical location.

Yerevan has limited international air connections, and the landlocked country has abysmal relations with the four nations that surround it. Troops from Armenia and neighboring Azerbaijan are locked in a tense standoff over the enclave of Nagorno-Artsax, and relations with Turkey are still poisoned by memories of the 1915-16 genocide, in which Turks killed about 1.5 million Armenians.

"I've got a better idea," Harrison said. "Why not open an office in Vaduz, Liechtenstein, and let me run it myself?"

In their defense, backers of the Armenia office point out that it won't cost the state any money. Lawmakers stripped state funding from the bill that authorized the office, and the Armenian American community -- which has made the bill its top legislative priority in recent years -- promised to raise the annual cost, estimated at as much as $200,000.

But even the bill's sponsor, Sen. Jack Scott, D-Pasadena, admits politics was the main motivation. "The Armenian Americans feel very deeply about their homeland. It's a very strong emotional commitment, which will express itself economically, just as trade with Israel is expressed by the Jewish community."

Indeed, some critics have pointed out that California trade offices in Tel Aviv, as well as in places like Johannesburg and Buenos Aires, have less to do with business and more to do with the influence of local ethnic groups.

There are more than 500,000 Armenian Americans in California, with the largest concentrations in Fresno and the Los Angeles-area cities of Glendale, Burbank and Pasadena. Politicians such as former Gov. George Deukmejian have kept their interests well-attended.

Ardashes Kassakhian, director of government relations at the Armenian National Committee of America in Glendale, said Armenia was one of the Soviet Union's most scientifically developed regions. Now, he said, its software engineers and other high-tech workers could be of help to Silicon Valley.

"Armenia has always been on the crossroads of trade routes, the Silk Road, where East meets West, and it's a perfect place for California to be based," he said.

However, despite the deal to pay for the office with private funds, Kassakhian said Armenians are expecting the state or federal governments to pony up the money -- an outcome that most observers view as highly unlikely.

"If the community is going to pay for the office itself, what's the point of having a California state office in the first place?" Kassakhian asked.

"If they don't pay for it, there won't be any Armenia office," replies Sen. Michael Machado, D-Stockton, a longtime critic of the state's foreign trade diplomacy.

This year, Machado sponsored legislation in which all offices would undergo strict performance evaluations and would be automatically closed after five years unless the Legislature reauthorized them. Machado said the bill was killed because of pressure from Davis' office, which argued it cut into the governor's prerogative.

E-mail Robert Collier at rcollier@sfchronicle.com.