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armenia

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ARMENIA


  
   

 
Key Economic Data 
 
  2002 2001 2000 Ranking(2002)
GDP
Millions of US $ 2,367 2,100 1,900 135
         
GNI per capita
 US $ 790 570 530 143
Ranking is given out of 208 nations - (data from the World Bank)

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
 

  

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: 275 - (01/12/03)

Troubles in the Caucusus
The Armenian leadership, and particularly President Robert Kocharian, must be alarmed at the downfall of Eduard Shevardnadze. The exposure of a fraudulent election and the forced resignation of the president set awkward precedents for Armenia. Armenia is a Christian country like its neighbour Georgia. Indeed, it underwent official conversion at state level before any other country, and even the Roman Empire, in 300 AD.
It sees itself, therefore, as part of the West, which was artificially swallowed up by Russia. That heritage involves an appreciation and respect for liberal and democratic values. But that is hardly what the regime in Yerevan exemplifies.
Kocharian is a thuggish dictator, who merely pretends to lead a democracy. He learnt his political trade as the warlord president of Nagorno-Kharabak, the Armenian enclave in Azerbaijan, when it was the stake in a war with the Azeris, which the Armenians won.
The highly dubious election of President Ilham Aliyev of Azerbaijan on October 15th was not a pretty sight either, but at least the West went along with the fraud. They have good reason to do so - oil. No such consideration obtains for complaisance to Armenia.

Turning to Russia
The natural ally for the repressive regime in Yerevan is Moscow. The Armenians are allowing the Russians to augment their military presence in the republic. 
The Armenian side has agreed to joint use of military facilities with Russia, including airfields, bridges and roads. Armenia is in 'a special relationship' with Russia, much as the UK is with the US. If it won the war it was due to this fact above all others, much as UK victory in the Falklands was due to close US help. The Armenian forces are closely intertwined with Russia's.
This 'special relationship' extends beyond military matters. Armenians have long played a prominent role in Russian affairs. The oil baron, Gulbenkian, and the brothers, Mikoyan, stand out here, one a top Soviet politician for decades, the other a brilliant engineer and inventor of MiG planes.
Russia has become a second homeland for many Armenians, Russian President Vladimir Putin said at the founding congress of the World Armenian Organisation in Moscow on October 6th. "We highly appreciate the contribution of the Armenian community to all spheres of Russian life," the Kremlin leader said. Russians and Armenians "feel equally comfortable and welcome both in Russia and Armenia," he said. Russia shares the Armenian people's strive to advance "a sovereign, independent and democratic Armenia," Putin explained. 
The contribution of the Armenian community to the development of its ancestral homeland and to the Russian-Armenian business relationship will only grow and expand, the Russian president said. He noted how Russia is eager to develop equal ties and cooperation agreements with Armenia. Putin expressed confidence that the World Armenian Organisation will contribute to the development of "the principled stance of society and attitudes of citizens of different countries to such threats as terrorism and national and religious extremism."

Economy booming
One comfort for the regime is a booming economy. It has the highest figures for growth of both industrial production and GDP in the CIS.
Industrial output rose by 20.5% in the first nine months of 2003 on an annual basis, while GDP rose by 15.2 % in the same period. The growth is coming after a drastic contraction in the 1990s. But it is coming and highly welcome for that.

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ENERGY

EU to pay to replace equipment at Tatev Hydroelectric Plant 

The European Union plans to provide Armenia with a grant of 2.7 million Euros to replace tension regulators at Tatev Hydroelectric Plant, part of the Vorotan Cascade Hydroelectric Plant, Vorotan General Director, Sasun Khachatryan, told journalists, Interfax News Agency has reported. 
The plant's management said that the regulators that are currently operating have been in service for over 30 years and, according to US and European experts, are worn out and obsolete. Replacing this equipment will increase the reliability of supplies from the Vorotan plant. 
Vorotan Cascade Hydroelectric Plant was launched in 1970 and consists of three plants with a total capacity of 404.2 megawatts and average annual electricity production of 1.16 billion kWh. With the launch of the Vorotan tunnel, through which about 150 million cubic meters of water will be transported to Lake Sevan, production of electricity at the plant will fall by 50 million kWh. 

Armenia pays gas debt to Turkmenistan 

Armenia has paid its debt to Turkmenistan for gas supplied in 1994-1996 amounting to US$34m, ahead of schedule, a source in the press service of the Armenian Finance and Economics Ministry told Interfax News Agency. 
In line with an intergovernmental agreement, Armenia's debt for Turkmenistani gas should have been paid off in July 2004. The press service said that by the end of 2002 this debt had been reduced to US$11m. 
The press service noted that gas debt was paid off with goods produced in Armenia. The operator for the debt payments on the Armenian side was the state company Energoinvestprom. 

UES and Armenia sign key energy cooperation protocol

Russian electricity giant, Unified Energy Systems (UES), will support the power sector in Armenia thanks to a recent protocol on cooperation signed between UES Chairman, Anatoly Chubais, and Armenian Prime Minister, Andranik Margaryan, Interfax News Agency reported.
The document deals with joint efforts by the two sides to guarantee the reliable operation and management of a number of energy installations in Armenia during the coming winter season.
The Russian company oversees the Armenian Nuclear Power Plant and controls the Sevan-Razdan Cascade. It is also planned to hand over Razdan Thermal Power Plant to UES management in the near future.
In the coming months, the two parties will develop a joint strategy for cooperation in the power sector in Armenia and neighbouring states. UES and Armenia plan to resolve a number of tasks, including restoring the parallel work of the energy systems in both countries and the setting up of a single dispatch department, Interfax said.
Speaking to reporters, Chubais said his company will draw up a proposal to retain electricity tariff growth in Armenia. According to him, the cost of 1kWh of electricity in Armenia totals 4.5 cents. Commenting on the Armenian Nuclear Power Plant, Chubais said, "no revolutionary decisions should be made regarding with the fact that the energy holding company is managing the plant."
Chubais also noted that UES has "no plans to acquire Vorotan Hydroelectric Plant," the fourth key power plant in Armenia. "We have already taken on responsibility for 80% of generating in Armenia," he said. He was unable to put a figure on planned UES investment on developing the Armenian energy system. "We are only coming to terms with management, we still need to evaluate the financial situation," the company leader said.
Information prepared for Chubais' visit to Armenia states that at the moment ZAO International Energy Corp, established by the Russian electricity giant to manage Sevan-Razdan Cascade, is holding negotiations to draw in a credit of 15m Euro to modernise Yerevan Hydroelectric Plant, which is part of the Sevan-Razdan Cascade.
The documents also note that the International Energy Corp has taken on the responsibility to service and repay a credit of 18m Euro, invested in the reconstruction of another of the Cascade's plants - Kanaker Hydroelectric Plant.
"Armenia will soon restart electricity exports to Georgia, part of whose energy installations are also owned by UES," Chubais said.
Telasi, the Tbilisi-based electricity distribution firm, has rented the Georgian part of the Alaverdi power line linking Armenia with Georgia. UES may rent the Armenian part of this line. 

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FINANCIAL NEWS

IMF director praises Armenia's "constructive approach" to Russian debt

Horst Koehler, the International Monetary Fund (IMF) managing director, has described the transfer of the assets of a number of Armenian enterprises to Russia in repayment of foreign debt as a constructive approach, he told a press conference in Yerevan on 10th November, Arminfo News Agency has reported.
He believes that "this bargain is effective and will be beneficial to Armenia's economy." At the same time, the amount of Armenia's foreign debt, which will total US$1,049m, is not of concern to the IMF as the debt, Koehler believes, is fully manageable. He added that the country's internal debt is so small that it is not worth discussing since it amounts all in all to 4 per cent of GDP.
Russia is prepared to ensure the profitability of the enterprises which have been handed over by Armenia as part of its state debt to Russia, Russian Security Council Secretary, Vladimir Rushaylo, said in Yerevan on 4th November after a meeting with Armenian Prime Minister, Andranik Markaryan, ITAR-TASS News Agency has reported.
"The main aim of Armenia handing over part of its enterprises is not only to pay off Armenia's debt to Russia but also to ensure that these enterprises are profitable and there is demand for their production," Rushaylo said. In particular, Russia received three research institutes which worked for the defence industry, the Mars instrument-building plant, and the Razdan heat and power plant. Besides, Armenia's nuclear power station has been handed over to the United Energy System of Russia on trust.
Rushaylo said that in the last three years the trade turnover between the two countries has grown considerably. Thus, in the first half of this year it reached US$117m, up by 80.7 per cent compared with the first six month of last year. According to the two sides' forecast, the bilateral economic exchange will continue to grow quite fast. "This is connected with the general stabilization of the two countries' economies, major joint enterprises in Armenia coming into operation and the implementation of long-term programmes and agreements," Rushaylo said.
At the same time, he said, there are still a lot of problems which are hampering the development of trade and economic cooperation between the two countries. For instance, it is necessary to unify the legislation and legal basis in this area.

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FOREIGN LOANS & AID

India pledges grant to Armenia

Armenian President Robert Kocharyan and Indian Prime Minister, Atal Behari Vajpayee, have discussed prospects for military and technical cooperation, Mediamax News Agency has reported.
The two leaders also discussed the possibility of cooperation between the Armenian and Indian law-enforcement agencies. Kocharyan thanked the Indian prime minister for the support provided by India on the issue of Armenia's joining the international North-South transport corridor. The Armenian president and the Indian prime minister pointed to a high level of political dialogue.
Kocharyan noted the importance of bringing relations between Armenia and India in the trade and economic sphere up to the level with relations in the political sphere. The sides said that cooperation in the spheres of information technology, jewellery production, science and technology, agriculture, health care and pharmacology were promising.
The Indian prime minister said that he was ready to give a US$5m grant to Armenia for projects in the agricultural field, particularly, in the processing industry.

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