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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: 260 - (29/08/02)

The Armenians are doing reasonably well, given that the economy was devastated by war with Azerbaijan in the early 1990s. A blockage by Azerbaijan and Turkey on trade with Armenian has been in place since then. This has cost hundred of millions of dollars in lost trade per year.

Norgorno-Karabakh
The main issue still separating the two sides concerns the 20% of Azeri territory held by the Armenians, surrounding its enclave there, Nagorno-Karabakh. Over one million Azeris are refugees from the lost territory. It is inconceivable that Baku will agree to peace until this massive problem is addressed.
Robert Kocharian, the president of Armenia, was former president of the enclave. This has made him a hard-liner, or so it appears. The Armenians are not budging from their refusal to hand back territory.
Haidar Aliyev, the president of Azerbaijan, is an interlocutor keen for many reasons to see a peace deal, not least to strengthen the succession chances of his son, Ilham.

Economy boost
The economy is booming, at least on official figures. Industrial production is growing by 10% per year and GDP by a comparable amount, to be exact by 9.6% in 2001 and perhaps 6.5% in 2002.
Despite the existence of a large diaspora, three million strong in the USA alone, there is a paucity of foreign direct investment. Undoubtedly, the trade embargo is a deterrent here. So is the mantle of official corruption, which sees state tenders being listed only days or a fortnight or so before the date of auction. Clearly insider information and insider contacts mean everything.
Official aid is still flowing; for instance the Germans have just committed 25 million Euros to Armenia. But this sort of sum soon gets swallowed up without apparent trace.
Kocharian does not seem aware of the problems. An air of complacency is being induced by the figures for growth. Quality matters as well as quantity. Here much still needs to be done if Armenia is to exploit its great potential, strategically situated in the Caucasus as it is.

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AVIATION

Armenian businessmen set up new airline

The International Airlines of Armenia company is being established in Armenia, and from this September it plans to start carrying out regular international flights, an Arminfo News Agency correspondent has learnt from Armenia's Main Civil Aviation Department.
According to the source's information, the new air company has already obtained a certificate to carry out international flights, in particular to Europe. The plan for the first stage is to launch a Yerevan-Frankfurt-am-Main flight. A-320 and A-310 Airbuses are to be bought for these purposes in the near future. The founders of the newly-established company are Armenian entrepreneurs whose names are not being disclosed.
According to some sources, one of the large shareholders in the new company is the president of the Multi Group concern, Gagik Tsarukyan.

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FOREIGN ECONOMIC RELATIONS

Armenian president, World Bank representative discuss cooperation

One could observe positive trends in Armenia and the high level of economic growth is indicative of this, the new representative of the World Bank's Yerevan office, Roger Robinson, said today at a meeting with Armenian President Robert Kocharyan. 
Arminfo News Agency learnt from the Armenian presidential press service that Robinson had expressed his readiness to help the development of the Armenian economy by implementing joint programmes. 
Kocharyan congratulated Robinson on his appointment and expressed his confidence that the cooperation between the World Bank and Armenia would be fruitful.
It should be noted that the World Bank is implementing in Armenia 28 programmes amounting to US$697.1m.

Karabakh leader calls on Armenians in Russia to help develop economy

More than 1,000 new jobs have been created over the last few years thanks to investments by Diaspora Armenians in the economy of the Nagornyy Karabakh Republic, NKR President Arkadiy Gukasyan, said on 5th August during a meeting with a group of Russians of Armenian extraction, with Karabakh roots, who now occupy responsible positions in the Russian Federation. These guests were accompanied by the president of the company Mika-Limited, Mikhail Bagdasarov. 
The NKR president's press service told Arminfo News Agency that Arkadiy Gukasyan called on these guests to cooperate in making more effective use of the potential of Russia's Armenian community in developing the economy of Nagornyy Karabakh.
At the request of the group, Arkadiy Gukasyan told them about various humanitarian projects and business programmes being carried out in Nagornyy Karabakh by representatives of the Armenian Diaspora. The president stressed that a favourable investment climate has been created in the republic to stimulate capital investment in the NKR economy.

Armenian company wins order to build Iranian reservoir

The Yerevanstroy open-type joint-stock company has received an order from Iran to build a reservoir in Tabriz, the director-general of the company, Vazgen Pogosyan, has told an Arminfo correspondent, Arminfo News Agency has reported.
He said the contract is worth US$1.5m and work on it will start soon.

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FINANCIAL NEWS

Armenian official predicts 10 per cent growth in trade turnover with Russia

The trade turnover between Armenia and Russia stood at US$106m for the first half of 2002. Of this, US$79m fell to the import of Russian goods to Armenia and US$27m to the export of Armenian goods to Russia, Deputy Trade and Economic Development Minister, Ara Petrosyan, told journalists, Arminfo News Agency has reported.
According to the deputy minister, the trade turnover between the two countries is expected to increase on average by 10 per cent this year, which is a stable growth over the last few years. Ara Petrosyan said that as a rule the trade turnover increases in the second half of the year.
The trade turnover between Armenia and Russia amounted to US$230m, including US$170m in imports and US$60m in exports in 2001.
Armenian goods mainly went to the Russian markets, Ara Petrosyan said. Moreover, the deputy minister said that the agreement signed between Armenia and Russia on not levying value added tax on various Russian goods exported to Armenia, also had a positive impact on the growth of the trade turnover.

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