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armenia

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  ARMENIA

REPUBLICAN REFERENCE

Area (sq.km)
29,800

Population
3,336,100

Principal ethnic groups
Armenian 93.3%
Azeri 2.6%
Russian 2%

Capital
Yerevan

Currency
Dram

President
Robert Kocharian

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Background:
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: 259 - (25/07/02)

The Armenian economy is doing rather well of late. But this has been from a war-devastated level of activity, in which in the early 1990s people were denuding the country of its trees for want of fuel and scavenging for food.

Nogorno Kharabak
Those desperate days are over for the Armenians, but not the legacy of the war in the shape of ruptured ties with its neighbours as a result of which Azerbaijan and Turkey maintain a trade blockade. This costs hundreds of millions in lost trade per year.
Yet a peace deal over Nagorno-Kharabak to end the blockade seems as elusive as ever. President Robert Kocharian was at the relevant time warlord of the Armenian enclave, is not making the required concessions, that six out of seven Azeri provinces occupied by the Armenians be returned, allowing a million and a half refugees to go home. The recent history of the Armenian government is one of violence and as ever, official corruption.

The economy rebounds
Given the adverse external situation it is surprising how well the economy is doing. GDP growth was 6% in 2000, and a robust 9.6% in 2001. It is billed to be 6.5% in 2002. A little on the ambitious side, but a lot better than in the 1990s. 
The Armenians may be beginning to show some of the enterprising get-up-and-go for which they were famous before 1914, the boom conditions making it easier to introduce banking reforms. That was the view expressed by Chairman Tigran Sargsyan at the annual meeting of Armeconombank for the 2001 results.
Another bank, Areximbank, has announced its intention to introduce new banking technologies this year. The outlook for business and farmers to obtain loans should improve.

Solid US support
One major plus for Armenia is the strong support of the US. The three million strong Armenian diaspora is vital here. They have an active lobby group, as concerned to advance its interests as pro-Israel lobbyists which is regarded in Washington as second in effectiveness, only to the pre-eminent Israelis.
The US government has allocated US$1.336bn to Armenia since 1992, according to the US Department of State. The US has also provided other aid to the amount of US$218m. The US is likely to remain staunch in this regard. World Trade Organisation membership with its support is on the cards. Things are incrementally looking up for Armenia. 

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AGRICULTURE

Armenian official says new investment in agriculture needed

International organisations and donor countries have spent 46bn drams (over US$80m) to develop Armenian agriculture during the years of independence, Armenian Deputy Agriculture Minister, Samvel Avetisyan said at a seminar on economic reforms in Armenia, Arminfo News Agency has reported.
This sum was too little to develop Armenian agriculture and in the course of the coming years, aid from international companies will be sought again, Avetisyan said. At the same time, some credit programmes for agriculture were not used efficiently, Avetisyan added. Agriculture employs one-third of Armenia's workforce while Armenia's dependence on the import of agricultural goods amounts to 40 per cent.

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ENERGY

Armenian, Iranian energy ministers discuss cooperation in Yerevan

Armenian Energy Minister, Armen Movsisyan, and Iranian Energy Minister, Habibollah Bitaraf, started talks in Yerevan on 9th July, Mediamax News Agency reported.
Mediamax learnt from the Armenian Energy Ministry press service that the ministers had expressed satisfaction with joint work launched after the signing of the Armenian-Iranian memorandum "On cooperation in the energy sphere" in December 2001 in Tehran. Armen Movsisyan and Habibollah Bitaraf said that there were opportunities for more active usage of the energy potentials of Armenia and Iran for the implementation of joint projects.
The sides discussed the progress of work on the feasibility study for the joint usage of the hydroelectric potential of the Araz river and the construction of the Syunik-Centre high-voltage power line.

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FOREIGN ECONOMIC RELATIONS

Armenia's WTO accession possible this year

The Armenian trade and economic development ministry said it had sent the World Trade Organisation (WTO) member countries the last, 400-page document, "Timetable for Consolidation of Goods and Service Tariffs," required before Armenia's formal accession to the WTO. The document is to be discussed by WTO member countries in the next four to six weeks, which would be followed by the final phase of negotiations on Armenia's accession. Armenian farmers are expected to get state subsidies during the transitional period of Armenia's accession to WTO, which is expected to last several years.

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FOREIGN INVESTMENT

Karabakh gets US$20m foreign investment

Foreign investments to the tune of US$20m have been made over the last three years in Artsakh [Nagorny Karabakh], the Nagorny Karabakh Republic [NKR] minister of economic and structural reforms, Boris Arushanyan, said on 18th July. He noted that all the right conditions had been created in the republic for investors for transition from unilateral assistance to mutually beneficial cooperation, Noyan Tapan News Agency has reported.
According to him, over the said period, tax policy had been improved radically, which eased the tax burden concerning profit tax, income tax, land tax and obligatory welfare payments. A number of privileges has been introduced to increase the competitiveness of domestic goods in the internal market.
It was also noted that in the forthcoming years the priority areas of the development of the NKR economy would be agriculture, light and food industries, exploitation of natural resources, jewellery, information technology and tourism.

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FOREIGN LOANS

European Union releases final tranche to Armenia

The European Union has released the second, final tranche of its annual US$9.4m budgetary subsidies to Armenia which were mainly allocated to pay for the government's social and agricultural programmes, the EU office in Yerevan recently announced, the Armenian Liberty reported.
The grant worth 4.5m Euros is part of the European Commission's Food Security Programme for the fiscal year of 2001. The first five million Euro instalment was disbursed in January.
The funds, included in this year's Armenian budget, are due to be used by the ministries of agriculture and social security and other government agencies for assistance to farmers, family benefits, maintenance of orphanages and other related activities.
The European Commission's branch office in Yerevan issued a statement in which it announced that the disbursement of the grant "lays ground" for the signing of the food security programme for the next financial year. The allocations are likely to be kept at the 2001 level.
The latest tranche brings the total amount of EU assistance to Armenia to 51m Euros within the food security framework, with the first such programme having been launched in 1996.

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