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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: 268 - (25/04/03)

The election result casts cloud on Armenian politics
There is considerable bad feeling in Armenia about the recent presidential elections, which had two rounds. In the first one there was widespread suspicion of cheating in favour of the incumbent Robert Kocharian, a tough nut for anyone to crack, ex-leader of Nagorno-Karabakh and a hard-liner on the issue of the enclave in Azerbaijan, 20% of whose territory is now in Armenian hands. Methods of rule in the enclave have long been rough and ready; and Kocharian has brought them to his rule in Yerevan.
Maybe to allay the strong doubts about the outcome, Kocharian won not quite enough, just 49% of the vote, in the first round. But in the run-off, he was clear victor, on 67.5% to his opponent's 32.5%.
A suit that was filed by Armenia's opposition leader was dropped by the Constitutional Court recently. The suit was filed to cancel the outcome of the presidential election. Court chairman, Gagik Arutiunian, told a news conference: "The violations that took place during the first round of the election did not affect the result." 
Artashes Gegamian came in third place in the first round of elections and asserts that there was unfair play. Stepan Demirchian, another opposition leader, filed another suit. There were also other claims from Demirchian, who is head of the People's Party, that various offences could have influenced the outcomes.

Economic statistics also in doubt
In the period before the election all sorts of up-beat statistics on the economy were released. GDP was growing in double figures last year, The National Statistics Service stated. But few believe this. In fact the population feel that living standards are falling.

Kocharian promised an industrial regeneration and more jobs at election time. The president visited Germany in January and won over German investors to the idea of raising production at the Yerevan Pure Iron Factory with investments of US$18-20m. The factory already sells 95% of its output to the European market.
Industrial revival is also the order of the day for the cognac sector and for the wines and spirits industry generally. The Yerevan Cognac Plant is raising investments to US$10m in 2003, President and Director General, Reire Larretche, said. The French firm, Pernod Ricard, acquired the plant in 1998, since then it has invested US$40m in it. The company is planning to raise sales in Germany, China and the US to consolidate in Russia and adjacent countries.
But there are two countries conspicuous by their absence in these plans, Turkey and Azerbaijan, which are both embargoing Armenian trade. Until normal commercial relations are resumed with them, Armenia's economy will be operating under a severe handicap. That probably means for as long as Kocharian rules in Yerevan.

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BANKING

Armenia banking sector sees higher foreign assets

Consolidated charter capital decreased from 15.3 per cent in the year to 32.7bn drams from 37.7bn drams for Armenian banks. The allotment of foreign assets in Armenian banks shot up from 49.3 per cent to 52.9 per cent of consolidated charter capital in 2002, Interfax News Agency reported. Meanwhile, there are five banks currently in different stages of bankruptcy. 
As of January 1st, 2003, there were previously 25 different banks functioning in Armenia and five wholly foreign owned commercial banks registered in Armenia. There was growth in capital for banks in Armenia, of 110 per cent to 42.1bn drams. The loan portfolio sustained a loss of four per cent to 101.1bn drams.

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FOREIGN COOPERATION

Armenal inks 3-year contract with Siemens on equipment supplies


An equipment supply contract signed by Armenal, a Russian-owned aluminium foil mill in Yeveran, and German electric giant, Siemens, could be worth more than €4m, Interfax News Agency reported. The Russian Aluminium company, RusAl, which owns Armenal, said this 3-year contract provided for Siemens equipment to be installed at most Armenal divisions and would speed up a drive to create a waste-free process at the mill.
Armenal and Siemens have signed a cooperation agreement for the supply of energy, engineering and electronic equipment to reconstruct foil production and train Armenian specialists. The agreement may be extended. Payment for the deliveries and services to be provided by Siemens will be made under an Armenal investment programme to be financed by Russian Aluminium worth US$34m for the next 10 years.
The parties have also drafted the text of an agreement on the joint production - without the formation of a joint venture - to produce energy-saving equipment using Siemens high-voltage apparatus for Armenal, other RusAl plants and energy installations in Armenia. The deal put Siemens know-how at Armenal's disposal. RusAl acquired 26% of the shares in Armenal, which was set up in May 2000, for US$500,000 in January to become the foil mill's sole owner. Based on adjusted figures, RusAl invested US$41.3m in equipment and working capital at Armenal in 2000-2002. 
Last year, Armenal produced about 5,372 tonnes of foil, almost twice as much as in a year earlier. Design capacity is 42,000 tonnes.

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TOURISM

Tourism keeps booming in Armenia, foreigners up 33%


According to statistical data released by the Armenian government, the number of foreign nationals visiting the country rose by nearly a third to 162,000 last year, reports New Europe. 
These figures show that Armenia continues to become more attractive to tourists and business travellers. The Armenian Liberty said the officials viewed such growth as particularly encouraging since it took place after 2001, the year when the country celebrated the 1,700th anniversary of adopting Christianity as a state religion. The yearlong festivities attracted thousands of foreign visitors, many of them of Armenian origin. Diaspora Armenians from the United States and Western Europe continue to account for the bulk of tourists.
The government data is based on information received from immigration authorities and private business sources. Local hotels, for example, have calculated that most visitors come from the United States and France, which have a large Armenian community. About 32% of them were from Russia and other ex-Soviet states.
According to the Commercial Director of the country's largest Marriott Armenia Hotel, Arman Manukian, RFE/RL reported, the official figures should be taken with a grain of salt. "The growth began from a very low base a few years ago and has not yet reached a point where we can say that Armenia's potential is being used to a large extent."
Data provided to the government by local travel agencies shows that more foreigners visited that for leisure. Only 35.5% of them can be considered tourists, according to the travel agents' estimations. Government sources say the growing number of privately-owned hotels made the increase, which is a welcome boost to the struggling Armenian economy, possible. That has also lowered accommodation prices seen as disproportionately high for Armenia. Manukian cautioned, however, that most visitors still find local hotels too expensive and continue to stay in much cheaper private apartments.

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