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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 No: 254
The Armenians are being 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 except for Georgia, nation surrounded by Moslem ones hostile to them. There are of course big differences all the same.
The US, nevertheless, views Armenia as a potentially useful ally and no less a figure than Donald Rumsfeld, US Defence Secretary, took time off to visit
Yeveran in December to meet President, Robert Kochanyan, and Defence Minister, Serj Sargsyan, to discuss bilateral military cooperation. The US is now
interested in a military presence in the Caucasus as well as Central Asia.
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. Armenia has previously been definitely in the Russian sphere of influence, helped to victory
in the war with Azerbaijan in the early 1990s by covert Russian assistance. 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 disfunctioning 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 desperately needed is a negotiated end to the conflict over Nagorno- Kharabakh. 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 post-Soviet malaise.
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 Airlines resumes Yerevan-Paris flight
The Armenian Airlines has resumed direct flights to Europe, which were interrupted on 21st January due to an engine problem with an A-310 aircraft, the head
of the main department for civil aviation (MDCA) under the Armenian government, Oganes Yeritsyan, said at a news conference in Yerevan, Mediamax News Agency
He added that flights to Paris were resumed on 31st January by a Tu-154 aircraft, which is on lease from Russia. Yeritsyan stated that the payment for leasing
the aircraft had not yet been agreed completely with the Russian side.
Yeritsyan said that the fault in the engine of the A-310, which is on long lease by the Armenian Airlines, would not influence the decision to lease another
aircraft in March this year.
World Bank calls for more favourable entrepreneurial milieu in Armenia
Positive moves have been established in the restoration of Armenia's economy over the past 10 years. Economic growth in the republic can be tracked in
industry, construction, the service and energy spheres, said the World Bank resident representative in Armenia, Owaise Saadat, presenting the World Bank
report "Transition to a market economy: analysis and lessons of the first decade in the countries of Eastern Europe and the former Soviet Union." According
to him, research undertaken by the World Bank in Armenia shows that the country faces two problems, that of unequal distribution of economic growth and that
of uncertainty about its the country's stability, Arminfo News Agency has reported.
Saadat noted the creation of new jobs among the principal factors affecting economic growth. He said that the share of new enterprises in the general
employment of Armenia comprised 26-28 per cent, while according to the estimates of World Bank experts, economic growth starts only after new enterprises
change from passive "receptacles" of consumable resources into active competitors that quickly increase their share in general employment and attract the
most highly qualified employees. Data available shows that new enterprises need to reach a threshold of 40 per cent in terms of their share in general
employment to become the "engines" of growth, Saadat said.
Saadat asserted that one of the obstacles to economic growth in Armenia is an under-developed entrepreneurial and investment milieu. He noted that in 2001
the government of Armenia carried out a number of reforms that increased opportunities for the private sector. However, today there is a need for additional
reforms aimed at increasing exports and the improvement of management and marketing in the country's private sector.
In order to stabilise economic growth, Armenia needs to set up an enterprise restructuring agency, which would also stimulate investments and exports, while
governmental assistance should target specific areas, the World Bank representative believes. The World Bank is ready to assist in this.
Saadat noted that the restoration of transition economies is affected by two factors, one of which is the market order and the other is stimulation. Market
order prompts old enterprises to free their assets and labour, which then are transmitted to restructured and new enterprises, while stimulation forms a
policy aimed at the creation of a favourable and competitive environment for investment and the consumption of labour and assets.
Armenia hands over chemical giant to British company for management
The Armenian government adopted a decision on 31st January to hand over the Nairit 1 closed-type joint-stock company, the only producer of chloroprene rubber
in the CIS, to Britain's Ransat Group which intends to invest US$20m in the plant over the next three to four years, Armenian Trade and Industry Minister
Karen Chshmarityan told journalists, Arminfo News Agency has reported.
He said that the money would be channelled into resuming and improving the plant's operations, which had been idle for over three months, and purchasing new
equipment, engineering development and marketing. The agreement on handing over 98 per cent of shares of Nairit-1 for management is expected to be signed
within 10-15 days. The investor is to put the plant into operation 60 days after signing the agreement. It is planned to hand over the chemical giant for
management for one year. Then, the government will discuss the possibility of selling it to the British company, the minister noted.
Armenian telecom giant to sell shares in domestic market
ArmenTel intends to sell part of its shares in the domestic market. Talking to the Noyan Tapan News Agency correspondent about this, Asmik Chutilyan, head of
the ArmenTel public relations department, pointed out that it had not been decided yet how many shares would be put up for sale. The final decision on this
issue will be made after it is agreed with the company's shareholders.
Ninety per cent of ArmenTel shares belong to the Greek company OTE and 10 per cent to the Armenian government. Armenian Minister of Transport and
Communications, Andranik Manukyan, said that ArmenTel was intending to sell 20 per cent of its shares.
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