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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: 261 - (26/09/02)

A buoyant economy
The Armenian republic is reporting rapid growth of GDP. It climbed 9.7% in the first seven months of the year, according to government sources. Industrial output rose by 12% in the same period. The trade deficit has shrunk by one quarter. Times are booming. 
But the recovery is from very low figures. The country was utterly devastated during the war with Azerbaijan over Nagorno-Karabakh, the Armenian enclave in its southern neighbour. It still faces a trade embargo imposed by Turkey as well as Azerbaijan, a massive obstacle to diversifying its economy. Quantitative estimates that the blockade costs US$180m or so per annum fail to take account of the qualitative impairment involved - no Turkish coffee or Turkish delight, no Azeri oil transported across its territory to the West (to the benefit of Georgia).

A hardline president
The president of Armenia, Robert Kocharyan, was once president of the enclave himself. He was then, and has to all appearances remained, a hardliner on the issue, which involves Armenia occupying 20% of Azeri territory and over a million Azeri refugees displaced. 
The president of Azerbaijan, Haidar Aliyev, hails from another enclave, that of Nakhichevan, between Armenia, Turkey and a narrow strip of Iran. The mentality of enclavists is different from that of mainlanders. Aliyev and Kocharyan are the ideal people to settle the matter, it might be thought. But so far there has been little progress. A successor regime to the ailing Aliyev may not be half so accommodating if Islamic zealots, who preceded him, return to power.
The very economic growth that Armenia can now boast is an impediment to an early solution, fostering the illusion that it is not necessary. A coming sale of energy-distributing networks is a main concern, with hopes of attracting foreign firms to the auction. But what could give it a better send-off than a peace deal? President Kocharyan needs to become a statesman not just a parochial politician. The time is running out for him to show he's capable of it.

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ENERGY

British company details plans to invest in Armenian power grid

Investment to the tune of US$150m-180m is needed to fully modernize the Armenian power grid, as represented by the Armenian Power Distribution Network closed-type joint-stock company. The results of a technical inspection conducted by the Armenian Institute of Energy prove this, the executive director of the Moscow office of the British Midland Resources Holding Ltd trade and industrial concern, Andrey Zavrazhnov, told a news conference, Arminfo News Agency has reported.
He said that Midland Resources Holding Ltd would submit its investment programme for the next year for the approval of the Armenian energy commission by the end of November 2002, after the company's shares have been handed over to the British company's ownership. Zavrazhnov refused to put a figure on the investment and noted that there were various estimates.

EBRD to buy shares of Armenian power grid

The issue of acquiring 19.9 per cent of the shares of the Armenian power grid has been discussed at the headquarters of the European Bank for Reconstruction and Development [EBRD]. Noyan Tapan News Agency learnt from the Yerevan office of the EBRD.
Before the previous tender, the EBRD expressed its readiness to acquire 20 per cent of the shares of the power grid. However, the EBRD may change its mind, considering that international financial organizations reacted coolly to the agreement which was signed on 24th August on the sale of 81per cent of the shares to the offshore company "Midland Resources."

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FINANCIAL NEWS

Karabakh maintains fast pace of economic development

In 2001 industrial production worth 5,516,700,000 drams [US$9.94m] was produced in the Nagornyy Karabakh Republic, which is 20.5 per cent more than in 2000, according to data from the NKR National Statistics Service, Azg has reported.
The high rates of growth in industrial production have also been maintained in the first seven months of 2002. In January-July 2002 industrial production grew by 23.2 per cent; in July it grew by 41.4 per cent.
Great success has especially been achieved in the private sector, which is evidence of the rapid development of market relations. In January-July 2002 alone the growth in industrial production in the private sector was 81.4 per cent, while the average number of personnel employed in the industrial and production sphere grew by 75 per cent.
The export indices are also evidence of significant growth in the industrial sphere. In comparison with the previous year, 2001 export volumes grew by 265 per cent and in January-July 2002 they grew by almost 350 per cent. 
The economic and tax reforms being implemented in the republic, as well as the noticeable progress in industry, have ensured growth in private incomes in turn. In January-July 2002 in comparison with the same period last year, private incomes grew by 14.2 per cent; profit tax grew by 26 per cent, income tax by 24 per cent and excise tax more than doubled. 
Characterizing the process of the economic development of the country Prime Minister Anushavan Daniyelyan said: "The economic reforms implemented in the past two and a half years are already yielding their positive results. As they say, the wheel of economic development has already started turning and is gathering speed. And we should do everything possible to maintain the rates of economic development."

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FOREIGN ECONOMIC RELATIONS

Armenian president, US envoy discuss economic ties

Armenian President Robert Kocharyan and US Ambassador to Armenia, John Ordway, have discussed issues of bilateral economic cooperation which were included on the agenda of the session of the Armenian-US working group, Mediamax News Agency has reported.
The next meeting of the Armenian-US working group will take place in Washington at the end of September, the Armenian presidential press service told Mediamax.

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FOREIGN LOANS

World Bank launches US$16m environmental project in Armenia

The Yerevan office of the World Bank and the Armenian Ecology Ministry have announced the beginning of the implementation of the Natural Resources Management and Poverty Reduction Project, Mediamax News Agency has reported.
Head of the Yerevan office, Roger Robinson, said he hoped that the programme, prepared by competent and well-informed experts, would be successful.
The programme is to cover the Gegarkunik and Tavush regions of Armenia, where the tasks stipulated in the project are most topical.
Armenian Ecology Minister, Vardan Ayvazyan, noted that the programme, worth US$16m, was aimed at increasing the effectiveness of the management of water resources, restoring forests, carrying out institutional reforms in ecology and managing the Dilizhan and Sevan national parks.

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