Principal ethnic groups
a free service
An Orthodox Christian country, Armenia was incorporated into Russia in 1828 and the USSR in 1920. Armenian leaders remain preoccupied by the long conflict
with Azerbaijan over Nagorno-Karabakh, a primarily Armenian-populated exclave, assigned to Soviet Azerbaijan in the 1920s by Moscow. Armenia and Azerbaijan
began fighting over the exclave in 1988; the struggle escalated after both countries attained independence from the Soviet Union in 1991. By May 1994, when a
cease-fire took hold, Armenian forces held not only Nagorno-Karabakh but also a significant portion of Azerbaijan proper. The economies of both sides have
been hurt by their inability to make substantial progress toward a peaceful resolution.
Update No: 255
The Armenians are tilting heavily towards the US in the post-9:11 crisis, who are easily their largest aid donor. They are eager to be drawn into the
anti-terrorist coalition even though they are far from any likely attack. They are in a not dissimilar situation from Israel, a non -Moslem nation surrounded
by Moslem ones hostile to them, except for Georgia. But whereas Israel has been sustained by the distant US, Armenia has been propped up by Russia. Now the
Armenians are hoping to obtain some US support as well, enabling them to lessen their dependence on Russia.
The US, indeed, views Armenia as a potentially useful ally. No less a figure than Donald Rumsfeld, US Defence Secretary, took time off to visit Yeveran in
December to meet President Robert Kocharyan, and Defence Minister Serj Sargsyan, to discuss bilateral military cooperation. The US is very interested in a
military presence in the Caucasus as well as Central Asia, having a base in effect in Georgia next door.
This cannot have gone down too well in Moscow. But the Russians are having to come to terms with the fact that the US is vastly their superior in military
affairs, indeed is vastly superior to anybody else these days. Being in the Russian sphere of influence previously helped Armenia to victory in the war with
Azerbaijan in the early 1990s with covert assistance aplenty. The war has left the fatal legacy of a blockade by Azerbaijan and Turkey until the Armenians
retreat from the 20% of Azeri territory they hold.
This has crippled economic performance; for its trade with its neighbours to the South and West has long been important to Armenia. It is importing three
times as much as it is exporting, the sign of a grave malfunctioning of the economy. That it can happen at all is due to the generosity of international
agencies, the World Bank, the IMF, etc and the extensive Armenian diaspora, who are being supportive with aid and foreign investments
What is urgently needed is a negotiated end to the conflict over Nagorno- Kharabakh, the Armenian enclave in Azerbaijan. Sooner or later there will be a
compromise, and the sooner for Armenia the better. Even the diaspora, a very extensive one, consisting of many more abroad than in Armenia, are fed up with
the intransigence of the hardliners. Until they relent, Armenia is unlikely to recover much in the way of attracting foreign investment or recover from its
The economy is doing well on official figures GDP up by 9.6% last year. But this is from a devastatingly low base. People were denuding the landscape of trees
for fuel during the war. That is no longer happening and a semblance of normality is being restored. Yet the country has a long way to go before it becomes
prosperous. That will take decades, not years. First the dispute with Azerbaijan needs to be resolved.
Armenian, Turkmen presidents discuss gas exports
The presidents of Armenia and Turkmenistan, Robert Kocharyan and Saparmyrat Nyyazow, have discussed issues concerning Turkmen gas supplies to Armenia,
Mediamax News Agency has reported.
The leaders of the two countries met within the framework of the informal CIS summit in Kazakhstan. Following an agreement reached during a telephone
conversation in January, Kocharyan and Nyyazow summarised concrete instructions to be issued to the working groups for the elaboration of the future
agreement on the export of Turkmen gas to Armenia via Iranian territory.
Robert Kocharyan confirmed his invitation to the Turkmen president to pay an official visit to Yerevan, which was accepted with pleasure.
Construction of the Iran-Armenia gas pipeline is expected to start after the signing of an Armenian-Turkmen agreement on gas supplies.
FOREIGN LOANS & AID
IMF, World Bank disappointed with progress of economic reforms in Armenia
A study by the international financial organisations has shown that economic reforms in Armenia have fallen short of expectations, therefore, it is necessary
to reconsider the programmes of assistance to the Armenian government. This was stated on 28th February by the Armenian minister of finance, Vardan
Khachatryan, Arminfo News Agency has reported.
According to him, Armenia's main creditors, the IMF and the WB [World Bank], have arrived at this conclusion after studying the situation in seven CIS
countries, including Armenia. The said organizations tried to find out whether there were mistakes in the programmes of assistance to the governments of these
countries and whether real difficulties connected with the economic reforms were not taken into account, the minister said. The biggest mistake was that the
level of poverty in these countries has not reduced in comparison with the early 90s.
World Bank regional director, Armenian president discuss business environment
At the meeting on 5th March, Armenian President Robert Kocharyan and the regional director of the World Bank, Judy O'Connor, who was visiting Armenia,
discussed the problem of improving the business environment in Armenia, Arminfo News Agency has reported. The head of the Yerevan branch of the World Bank,
Owaise Saadat, attended the meeting as well.
Having set out the stance of the World Bank on the economic situation in Armenia and on the course of the projects implemented in the Republic of Armenia with
the assistance of the World Bank, Judy O'Connor expressed her satisfaction with the mutual cooperation that had developed, the presidential press service told
Robert Kocharyan noted that the task for the country's leadership was to minimise the number of checks done by various agencies in the republic's
organisations, enterprises and institutions. In the opinion of the head of state, such measures will limit the sphere of unsubstantiated bureaucratic
intrusion in the business sector.
The Armenian president highly valued the assistance of the World Bank in the restructuring in Armenia and the realization of economic projects. Speaking of
the process of restructuring the state administration system in Armenia, he expressed his certainty that the structural reforms currently being prepared would
help to increase the efficiency of the country's administration system.
Armenian paper sceptical British management can restart rubber plant
On 9th February this year an agreement was signed on passing Nairit-1 to the British Ransat company for executive management. Pro-government propaganda
sources were saying that the Nairit problem had been finally settled and the plant would soon function, Aykakan Zhamanak has reported.
But today it is impossible to say how great the grounds are for optimism. At that time observers of the process noticed several conditions. In particular, the
programme presented by a representative of the Ransat company, Anil Kumar, on how they will export Nairit's production. He said that one possible direction
for the export of Nairit's production is by lorry via Iran which will increase the prime cost of production. There is also one more problem - the problem of
debt, which is about US$5m.
The problem of exporting Nairit's production has not been discussed yet, as Armenia is still under blockade. Instead, the problem of Nairit's debts is already
being discussed. The interested parties gathered in the Energy Ministry: Energy Minister Armen Movsisyan, director of ArmRosGazprom [Ayrusgazard, Armenian
Russian gas industry] Karen Karapetyan, Deputy Industry Minister Ashot Shakhnazaryan and others. The problem is that when the agreement was signed a
representative of the Ransat company, Anil Kumar, said Nairit would resume operations when all the debt negotiations were finished and a list of terms for
debt repayment had been drawn up. No specific terms were arranged. Since nobody from Ransat participated in the meeting, it may be supposed that it is the
industry minister's business to persuade those whom Nairit is indebted to. But they are not likely to be persuaded.
For example, Nairit owes ArmRosGazprom more than US$800,000. Nobody knows what the terms of this debt repayment will be. Even ArmRosGazprom's director does
not know. Mr Karapetyan said that he would agree with shareholders on the terms. Fifty-five per cent of shares in ArmRosGazprom belong to the [Russian]
Gazprom and ITERA companies. That means it is not so easy to set terms for the repayment of debts for gas.
The biggest debt is to the Energy Ministry. The latter is also seen as too "kind" to the new managers of Nairit. It should not be forgotten that the energy
sector is not in a good state and they will not miss an opportunity to get their money - about US$3m. So the prospects for Nairit resuming operations are
INVESTMENT BACKGROUND REPORTS
Our analysts and editorial staff have many years experience in analysing and reporting events in these nations. This knowledge is available
in the form of geopolitical and/or economic country reports on any individual or grouping of countries. Such reports may be bespoke to the specification of
clients or by access to one of our existing specialised reports.
For further information email:
Considering an investment or a trip to any newnation? First order our Investment Pack which will give you by e-mail the last three monthly
newnation reports and the complete worldaudit democracy check for the low price of US$12. The print-out would be a good companion to take with you. Having
read it, you might even decide not to go!
To order please click here:
Investment background report