Principal ethnic groups
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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 January 2002
The Armenian republic is reporting good figures for economic growth. GDP rose by 9.6% in January-October 2001, over the same period of last year. But
this is from a low base and is distinctly lop-sided in character, as is shown by figures for foreign trade. Exports amounted to US$267m, while imports
To be importing almost three times as much as one is exporting is a sign of a grave dysfunction. That it is possible at all is because Armenia's extensive
diaspora (there are more Armenians outside than inside the country) are generous with donations and foreign investment, while the IMF, World Bank, etc, are
being supportive. But the main cause of the problem is a trade embargo exercised by two of its neighbours, Turkey and Azerbaijan.
They imposed it for a good reason, Armenia's continuing occupation of 20% of Azeri territory, after winning a war with Azerbaijan over Nargorno-Kharabakh,
the Armenian enclave on Azeri territory. The sensible course for the Armenians would be to withdraw from all but the Lachin Corridor linking the enclave
to Armenia proper.
Now is the moment to negotiate because the ailing 77-year-old Azeri President, Haidar Aliyev, is keen on a deal to ensure the succession for his son,
Ilham. President Bush has been urging President Robert Kocharian of Armenia and Aliyev to settle their differences. He has a good point here; for them
both it would be a win-win situation, but Kocharian, himself the former warlord of Nagorno Kharabakh has to be wary of Armenian fanatics in a country
where political murder is regrettably commonplace.
Unibank develops investment projects
Unibank is developing a number of investment projects in Armenia with an overall amount of US$10m, Chairman of Unibank's board and deputy Chairman of the
Moscow Uniastrum Bank's board, Gagik Zakaryan, stated in his interview to Arka News Agency.
The investment projects are pertaining to the industrial enterprises, hotels, rest homes and real estate under privatisation in Armenia.
The chair of the board stated that the creation of Unibank pursues two aims, namely to implement a support system of Russian investments into the Armenian
economy and to implement new banking technologies to the Armenian market. These are internet-broker services via Utrase system and the service by the
Private Banking method. Zakaryan added that in the first year of its activity Unibank plans to open affiliates in nine large cities of Armenia. "The tasks
of the bank are to open an affiliate network in all the large cities of Armenia and a number of affiliates in Yerevan," Zakaryan.
Armenian water system in need of US$1.5bn
Chairman of the Water Economy Committee subject to the government of the Armenian Republic, Gagik Martirosyan, told the press recently that the water supply
system of Armenia needs investments amounting to approximately US$1.5bn, New Europe has reported.
The chairman underlined that 30 per cent of the funds should be appropriated for the rehabilitation of the system in Yerevan city. Citing ARKA report,
Martirosyan disclosed that the government of Armenia had already worked out a programme for rehabilitation and developments projects for the water economy of
According to official estimates, some US$200m in investments are stipulated by the programme for the following five years.
It should be noted that the improvement of the water supply to Yerevan city is included in the US$35m programme on Armenia's communities' development,
funded by the World Bank (WB).
The WB share in the programme's funding amounts to US$30m and co-financing of the Armenian government US$5.5m out of which a considerable amount will be
for the modernisation of the water supply system and draining in Yerevan.
Armenia allocates US$16m credit to Karabakh
Armenia will allocate to Nagorno Karabakh an interstate credit worth 9bn drams (US$16m) for shaping the 2002 budget. This credit constitutes 40 per cent
of GDP in the Nagorno Karabakh Republic [NKR]. The allocation of credit was discussed at the meeting of the Armenian and Nagorno Karabakh inter-parliamentary
commission, Arminfo News Agency has reported.
The chairman of the NKR National Assembly's commission for finance, budget and economy, Mayor Danielyan, said that the need to obtain this interstate
credit has been underlined by a difficult social and economic situation in Karabakh and the inability of the NKR to resolve its economic problems. The
allocated credit will not be spent on development. It will be spent on current expenses for salaries, pensions and allowances, he said.
Danielyan said that the income part of Karabakh's budget for 2002 stood at 12.4bn drams [US$22m]. Of this, 9bn drams [US$16m] is the interstate credit;
2.6bn drams [US$4.6m] - domestic income; 260m drams [US$462,000] - income from privatisation; and 530m drams [US$943,000] are expected to be gained from
interests of the state credits.
The expenditure part of the budget stands at 12.6bn drams [US$22.4m]. The budget envisages 1.4bn drams [US$2m], which is 8.3 per cent of the total income,
for state and public services. The budget deficit will be 243m drams [US$432,000].
Foreign investment totalled US$88.4m over 9 months of 2001
Foreign investment in the Armenian economy totalled US$88.4m over the first nine months of 2001. Compared with the same period in 2000, foreign investment
has decreased by 37.1 per cent, and direct investment by 36.5 per cent, the Armenian National Statistics Service has told Arminfo News Agency.
Frank Muller initiates production operations
The Swiss Frank Muller company is to launch the production of elite Swiss watches in Armenia in 2002, the company's representative to Yerevan, Georgy
Muradian, was quoted as saying by Arminfo New Agency recently.
According to Muradia, with this end in view eight Japanese processing units were supplied to Armenia, and installation works are currently under way.
Only gold cases will be produced in Armenia. Muradian refrained from officially announcing the investment and production volumes.
Frank Muller is one of the dynamically developing companies specialising in producing elite watches which are manually assembled in small quantities.
Interestingly, some sketches of the watches that will be produced in Armenia depict Mount Ararat and Armenia's map.
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