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Area (


Principal ethnic groups
Armenian 93.3%
Azeri 2.6%
Russian 2%



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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: 264 - (01/01/03)

The Armenian republic is cleaving as always to Moscow. Georgia is tilting heavily towards the US, and Azerbaijan has long gone over to a fervent pro-Western policy.

Permanently pro-Russian
But, while Armenia is in no way hostile to the West, where more than three million Armenians live in a diaspora larger than the home nation, it knows which side its bread is buttered on. Its energy and raw materials come from Russia, and Russian military help, both in equipment and personnel, are the basis of its security. 
In this regard Armenia resembles Israel, that other outpost of a nation in the Judeo-Christian tradition surrounded by those of an alien religion and culture, Islam. Israel is under blockade, and so is Armenia by Turkey and Azerbaijan. But Armenia has one co-religionist among its neighbours, fellow Orthodox Christian Georgia.

Russian premier in town
Premier Mikhail Kasyanov came to Yerevan in early November on a two-day visit, with as his top priority the settlement of the outstanding US$98m debt of Yerevan to Moscow. Kasyanov was keen to see an equities-for-debt swap, agreed last December, given concrete implementation, with five Armenian entities, including three research institutes being transferred into Russian hands. The Russians well remember the remarkable Mikoyan brothers, the one Soviet foreign trade minister for thirty years, the other the mastermind engineer behind successive MiG fighter aircraft designs, which gave the Soviet Union the edge over Nazi Germany in the Second World War. Picking Armenian brains seems like an excellent idea.
Armenia has also produced its share of brilliant businessmen, notably oil tycoon Nubar Sarkin Gulbenkian in the early twentieth century. The enterprises taken over by Moscow are to be put under the management of Ara Abrahamian, a Moscow-based Armenian tycoon.

The economy booms
Industrial production is booming by over 10% on an annual basis. The economy is no longer in desperate straits, as during the war with Azerbaijan.
But there is no doubt that the best news Armenia could receive is a peace settlement with its southern neighbour over Nagorno-Kharabakh and an end to the blockade by Azerbaijan and Turkey. Next year is presidential election time in both Armenia and Azerbaijan. President Robert Kocharian, a former president of the enclave, is a hardliner difficult to budge on the issue. But unless he does, it looks unlikely that Armenia can ever truly prosper.

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Armenian Airlines, KLM finalise deal

Armenian airlines chief manager, Arsen Avetisian, travelled to Amsterdam recently to sign an agreement with the Dutch flagship carrier KLM on the registration and provision of services to Armenian Airlines' transit passengers. The press office of the Armenian Airlines said a passenger, bound from Yerevan to any corner of the world via Amsterdam, may continue his or her way by registering only once in the Armenian capital. 
Another agreement between Armenian Airlines, KLM and North West companies on special tariffs for AA was extended. The parties also agreed that Armenian Airlines will pay its outstanding debts to Amsterdam's Schipol airport through its Amsterdam-based agent. Avetisian was also reported by Armenpress News Agency to have met with representatives of several Dutch travel agencies to make arrangements for the organisation of tourists from Benelux countries to Armenia next summer.

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Karabakh allocates funds to improve district 

The state budget of the Nagorno Karabakh Republic has earmarked 175m drams (about US$350,000 for the restoration of Askeran District, which suffered during the Karabakh-Azerbaijani war, Arminfo News Agency has reported. 
Of this, about 63m drams [US$113,000] have been allocated for the construction of accommodation, about 65m drams [US$116,000] for the construction of municipal facilities and about 40m drams [US$72,000] for the development of education, culture and sports, an Arminfo correspondent reported from Stepanakert.
The administration of Askaran District attaches special attention to providing martyrs' families with accommodation this year. Twelve buildings were constructed or restored to this end. Seven houses were built for refugees in various villages in the district.
The implementation of the programmes for supplying gas to the district and for the restoration of electricity and water supplies is continuing.
The Catholic Aid Service, which is implementing a number of humanitarian programmes in the district, made a substantial contribution to water supplies to the district villages.

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Foreign investors pump US$110m into Armenian economy in 2002

The volume of direct investment in the Armenian economy totalled US$71m in the first nine months of 2002 and increased by 26 per cent against the same period last year. The volume of general investment totalled US$110m in this period and also increased by 26 per cent, Armenian Minister of Trade and Economic Development Karen Chshmarityan has told journalists, Arminfo News Agency has reported.
He said that considerable growth was expected in Russian investment next year. The minister explained this by the fact that the handover of the shares of Armenian enterprises in order to clear off the US$101m debt to Russia would be assessed as direct investment.

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Kapan moves to Swiss hands

Armenia's government has sold the Kapan copper mining and concentrating plant to a Swiss company for US$1.25m. The buyer has pledged to settle debts to the state and wage arrears totalling US$9m, an official at the Russian Ministry of Economic Development and Trade told Interfax News Agency. 
The mine is 300 km southeast of Yerevan and works the central copper and Shaumian gold-polymetal deposits. Kapan has the capacity to produce 340,000 tonnes of copper concentrate annually. The complex processes about one million tonnes of ore from the central deposit and 300,000 tonnes from the Shaumian deposit every year.

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Low level of Armenian telecoms retards economic activities

The low level of telecommunications in Armenia is a considerable obstacle for the development of the country's economy, Roger J. Robinson, head of the Yerevan office of the World Bank [WB], has told Arminfo News Agency.
The main restrictive factors are very high communications tariffs in Armenia. The other factors are that a considerable amount of economic entities in Armenia come into contact with the telecommunications sphere. Therefore, Robinson believes, the issue of creating a healthy competitive atmosphere in this sphere is very important for Armenia.
He said that this sphere does not need the World Bank investment as it is a lucrative area. Nevertheless, Robinson added, the WB is ready to help the Armenian government to improve legislation and laws, including the role of the state in regulating the telecommunications sphere. "From a monopolistic point of view, we would like to see such a structure of the telecommunications market that could create a healthy competitive field," the head of the WB's office in Armenia said.

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