A Proposal for the Future
A Proposal for the Future
U.S. - Armenia joint development of advanced technologies.
Since the start of the October war in Artsakh, the fate of the Republic of Armenia has been on shaky grounds. This second conflict came as no surprise. Azerbaijan for over a decade had been threatening war and arming for one. Nor was the war’s outcome any surprise. The better equipped Azerbaijani army backed by Turkey, overwhelmed the obsolescent Armenian force.
A tiny, isolated, and resource-poor country with a tragic history stamped by GENOCIDE, Armenia should have taken a more realist approach to diplomacy. Yet to the contrary, Armenian statecraft revealed itself as a mix of delusional self-confidence and egoism.
Yerevan is a formal treaty ally with Moscow, hosts Russian military bases, and has Russian troops guarding its borders with Turkey and Iran. That security dependence, however, has carried with it parallel energy and economic dependence that has constrained Armenia’s development.
A bland economy has caused as much as one-third of Armenia’s population to leave the country in search of employment abroad, undermining the country’s long-term prospects.
The future of Armenia, like that of any other country, lies also in the hands of its neighbors.
Azerbaijan’s armed forces have won for Baku more options in foreign policy. It no longer survives in Russia’s shadow. Turkish special operations were critical to Azerbaijan’s victory, but, paradoxically, Azerbaijan, having accomplished most of its objectives in Artsakh, no longer needs Turkey as much as it did.
With no new friends, where can Armenia turn to?
For many years and for the past few months, I’ve written about the extensive information technology ecosystem within the Republic of Armenia. The talent is raw, the ideas plentiful. Major governmental changes, different local and international initiatives, and collaborations have been contributing to the continuous growth of the technology sector in the country.
However, Foreign Direct Investment (FDI) has frozen- with reports that FDI is down over 80% from 2019. From 2011 to 2019, FDI is down 60%. Russia certainly will not be interested in investing in a country with the current administration in power.
World Bank: Foreign direct investment, net inflows (BoP, current US$) - Armenia.
But the question still remains, how will Armenia be able to create value, invest in its future, and grow its nascent technology sector?
My proposal below is a mix of coordination between the Armenian-American interest groups and the top brass of the Armenian Military & National Security councils to establish the U.S.-Armenian Binational Research & Development Foundation (BARD)
The BARD Foundation would work to encourage cooperation between U.S. and Armenian companies in a wide range of technology sectors by providing funding and assistance in facilitating strategic partnerships for developing joint products or technologies.
The BARD Foundation would generate mutually beneficial cooperation between U.S. and Armenia companies, including start-ups and established organizations. BARD would provide both matchmaking support between U.S. and Armenia companies, as well as funding covering up to 50% of project development costs, up to $1M per project. BARD takes no equity in the companies. Private investors and sovereign wealth funds can take advantage of the business opportunities offered by the BARD Foundation. BARD requests repayment on the basis of actual revenues generated, demonstrating BARD’s commitment to risk sharing.
Projects can extend to Agriculture, Communications, Construction Technologies, Electronics, Electro-optics, Life Sciences, Software, Homeland Security, Renewable and Alternative Energy, and other technology sectors.
Some major projects can include focused collaboration on Quantum Sensing, Cybersecurity, Ecophysiological systems, Wide Bandgap Semiconductors, and Automating Chemical Synthesis– both in terms of front-end recipe optimization and the back-end hardware to carry out synthetic protocols.
THE IMPACT
Major Risk-Sharing
By providing a conditional grant, BARD cost-shares up to 50% of a Project’s development expenses. BARD is entitled to repayments up to a maximum of 150% of this Conditional Grant based on sales revenues derived from the Project. If a Project fails, BARD will claim no repayments. Therefore, BARD is sharing the risk with the Project partners.
No Equity; No Intellectual Property Rights
BARD acquires neither equity nor any rights to intellectual property in BARD-funded Projects.
Off-Balance Sheet Financing
BARD’s Conditional Grant is a form of off-balance-sheet financing. Grant payments are usually recorded as a reduction of R&D expenses, and grant repayments are recorded as royalty expenses. Because both transactions are P&L items and the repayment obligation is not recorded as a liability, they do not have any impact on the balance sheet. In addition, repayments are considered pre-tax expenses. This R&D leveraging instrument has proven popular with public and pre-public companies.
No Interference in Company – Company Relationship
BARD is not involved in formulating the nature of the relationship between the partnering companies. Likewise, the precise conditions and terms of this relationship are not subject to BARD approval.
Seal of Approval
Project proposals submitted to BARD are subject to a confidential review by qualified and experienced experts from the US National Institute of Standards and Technology (NIST) and from the Armenian Military Innovation Authority. Their professional recommendations, together with BARD’s familiarity with the participating companies, are further endorsements of the decision to undertake the joint venture.
How does the BARD Foundation Operate?
Any pair of companies, one Armenian and one U.S.-based, may apply jointly so long as they can demonstrate the combined capabilities and infrastructure to define, develop, manufacture, sell and support an innovative product based on industrial and military R&D. The key criterion is that each corporate entity shall have the ability to carry out its part of the joint development and commercialization. Their willingness to share in the financial risk of product development as well as in the financial gain of commercialization, are also key factors in BARD’s evaluation.
The BARD Foundation offers conditional grants for joint development projects on a risk-sharing basis. The Foundation funds up to 50% of each company’s R&D expenses associated with the joint project, up to $1M per project. Repayments are due if commercial revenues are generated as a direct result of the project.
Project Scales:
Full-Scale Projects:A Full-Scale Project is defined as one in which the total development cost to the two companies (up to the point of commercial readiness) is at least $400,000. BARD’s cost-share is up to 50% of the total cost of such projects.Decisions whether to approve or reject proposals for funding full-scale projects are made by BARD’s Board of Governors. The Board of Governors convenes semiannually to act on proposals for full-scale projects.Mini Projects: The budget of a BARD mini-project is limited to $400,000, which should be enough to complete the R&D phase. Therefore, the grant is a maximum of $200,000, or 50% of actual project costs, whichever is less.A Proposal for the Future
The BARD Foundation would be a catalyst of economic, technological, and financial growth for the Republic of Armenia and would give the U.S. the ability to not only recapture its status in OSCE Minsk Group but also allow them to partner with Russia on global counter-terrorism initiatives headquartered with a strategic operations command-based in Armenia.
The Ministry of Defense of the Republic of Armenia needs an immediate response and upgrade in strategy and technology to the prevalent threats of unconventional warfare or better known as “irregular warfare”. Both the Irregular Warfare Annex to the National Defense Strategy and the U.S. Defense Department’s current directive define irregular warfare as a “struggle to influence populations and affect legitimacy”.
Turkey’s usage of NATO SOF training, especially the use of UVA’s in commanding Azeri ground troops with the usage of jihadists, allowed Azerbaijan to execute fast-paced “political warfare”.
With the creation of the BARD foundation , Armenia would have the ability to partner with the best military contractors in the world to produce and be privy to cutting edge nascent technologies. These technologies would help the Armenian military have a competitive advantage: including in military information support operations, cyberspace operations, counter-threat networks, counter-threat finance, civil-military operations, and security cooperation.
The BARD Foundation would be a gateway and an information bridge with the United States State Department and the U.S. Military. This connection would allow Armenia to be exposed, trained, and be a part of the global shift to a new branch of military: Special Operation Forces (S.O.F).
Special operations are military operations requiring unique modes of employment, tactical techniques, equipment, and training. These operations are often conducted in hostile, denied, or politically sensitive environments and are characterized by one or more of the following elements: time-sensitive, clandestine, low visibility, conducted with and/or through indigenous forces, requiring regional expertise, and/or a high degree of risk.
If the Armenian Military had a fully functioning S.O.F branch working hand in hand with the Army, it would look something like this.
SOF are guided by the following principles of competition:
Orient campaigns on Armenian interests. Campaigns should center on Armenian interests and–in the context of global campaign plans–determine how actors threaten those interests or how to exploit opportunities to advance that interest relative to the actor.
Conduct integrated campaigning. SOF should enable joint force core warfighting functions and contribute through tasks beyond the capability of conventional counterparts.
SOF acts on a global scale and over time. The distribution and activities of SOF should reflect a comprehensive understanding of national priorities in time and space, not just in theater, but regionally as well as globally.
Exploit asymmetries and leverage indirect approaches. Campaigns should incorporate a strategic and operational understanding of asymmetries that exist between Armenia and adversaries' interests, strategies, cultures, postures, capabilities, and relationships.
Employ unorthodox methods. SOF are inherently limited in resources, which almost always bear a significant opportunity cost when employed. Within a compound approach, campaigns should strive to direct SOF in ways that fully realizes its potential effect in the strategic environment.
A Call to Action.
I urge Armenian-American interest groups to begin working on creating legislation with pro-Armenian U.S. lawmakers to enhance the strategic partnership between the United States and Armenia.
No government survives without a quid pro quo.
Through the BARD Foundation, Armenia might be able to give new opportunities, technologies, and abilities that the U.S. might never have had before.
United States-Armenia Strategic Partnership Act of 202..?
What would it entail?
to pursue every opportunity to deepen cooperation with the Republic of Armenia on a range of critical issues including defense, homeland security, energy, and cybersecurity;to provide the Republic of Armenia with security assistance, including for the procurement of a cybersecurity defense system; andto support the Republic of Armenia in its ongoing efforts to reach a negotiated political settlement with the Azeri people that results in the Armenian community of Nagorno-Karabakh living in peace and security.