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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: 274 - (27/10/03)

Hard Baku line continues
The success of Ilham Aliyev in obtaining the presidency of Azerbaijan in succession to his father on October 15th, which was a foregone conclusion, has not changed anything in the relations between the two states. Aliyev has re-affirmed that the occupied territories must all be returned. "My position on the Nagorno-Karabakh conflict remains the same: Its territorial integrity must be restored and the occupied territories returned. Only after this will it be possible to speak about a peace agreement. These are our fundamental principles and we are going to stick to them."
He was speaking before the vital Azeri presidential election of October 15th when a hard line was inevitable. But the statement of policy has been re-iterated subsequently. It is likely to remain the same in public of course.

The Louisiana solution.
One idea being mooted by of all people the former Bosnian Ambassador to the EU and NATO, is that the Armenians should simply buy the disputed territory from the Azeris, conceding ground where it is not essential to the security of the enclave, but retaining it when it is, above all the Lachin corridor. The Armenian diaspora has some very rich people in it keen to help attain an historic deal, so that the money could well be forthcoming.
The problem is that the Azeri state and its leading power elite are themselves rich from its oil revenues and do not need the money. What it does need is a perfect excuse for why the poor still remain poor in Azerbaijan, namely the abiding dispute over Nagorno-Karabakh. Little movement can be expected on the issue so long as the oil clique is in charge in Baku and so long as a hardliner is in Yerevan.

The Russian solution 
The Armenians are in a cleft stick. They do not like the Russians. But they dislike the alternatives more, Azerbaijan and Turkey.
The Armenians know that they have few options. They are an outpost of Christian culture in the troubled Caucasus. It is not that the Armenians are that keen on the Russians; but they feel that they can do business with them.
That is exactly what they cannot do with the Azeris and the Turks. Both have placed an embargo on trade with the Armenians, concerning of course the Nagorno-Karabakh affair.
The Russians however are pretty meagre business partners. Moscow pays only a symbolic rent and delivers inexpensive, obsolete military equipment to Armenia, for its bases there, while being as tight in negotiation as can be.
This is shown by the latest deal between the two countries, announced in early August, the sale of a thermal plant. It has one massive advantage. The transfer of the Razdan plant to Russia will allow for greater export of electricity to Azerbaijan and Turkey. Business has its own logic, stronger than that of geopolitics.

The Armenian welcome to military pact with Russia
Georgy Khosroyev, the Armenian ambassador in Moscow, has expressed his government's interest in military cooperation with Russia. The Armenians are keen to become a member of GUUAM (a regional body set up in 1997 with five members, Georgia, Ukraine, Uzbekistan, Azerbaijan and Moldova). It looks likely to ensue.
The parliament of Armenia has green-lighted an agreement with Russia on the joint use of facilities of military infrastructure.
The pact was presented by Armenian Defence Minister, Serzhik Sakisyan. According to him, the agreement is important and its quick approval was needed.
Under the agreement, the joint use of facilities in the military infrastructure on Russian and Armenian territory and their joint restructuring will be covered.
"These facilities include airports, bridges and roads," Sakisian was quoted as saying. "We did not make any specific list. The general principle is what is important to us," he added. Mger Shakheldian, chairman of the parliamentary defence commission, said the agreement should be approved to bolster security in the region.
The parliament recently ratified a bill on national security principles. It specifies Armenia's national interests and threats to national security.
Among the threats it names armed attacks, claims on territorial integrity and independence, blockades, the formation of military alliances directed against Armenia and international terrorism.

Kocharian sacks Yerevan mayor
In early July President Robert Kocharian dismissed the mayor of the capital Yerevan, namely Robert Nazarian, after a poor showing of his party in May's parliamentary elections. Kocharian has appointed Yervand Zacharian, who was previously the main tax-collector. The move consolidates Kocharian's grip on power, which was already formidable.
The pro-government Republican Party, headed by Premier Andranik Markarian, holds the leading position in parliament, with 40 out of 130 seats. It also controls over 400 local governments in towns and villages around the country. Kocharian is firmly in the saddle.

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BANKING

Russian, Armenian banks hail cooperation deal as "good example" for CIS

The Association of Russian Banks (ARB) and Union of Armenian Banks (UAB) signed an agreement on cooperation on 10th October, ITAR-TASS News Agency has reported.
"Armenia is the most important strategic partner of Russia," ARB chairman, Garegin Tosunyan, said. The signed document will help to make the interaction between the banking systems of the two countries more active.
UAB chairman, Samvel Chzmachyan, believes that cooperation will be mutually advantageous. The head of the Armenian Central Bank, Tigran Sarkisyan, says: "Russian-Armenian relations in the banking sphere "may be a good example for other member-countries of the Commonwealth of Independent States."

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ENERGY

Armenia hands over power plant to Russia to offset debts

An act has been signed on handing over 100 per cent of shares in the Razdan thermal power plant to the Russian Federation to cover foreign debt, the plant's CEO, Albert Bagdasaryan, has told Arminfo News Agency.
He said that the Razdan thermal power plant was valued at US$31m and that the Russian government was expected to decide soon on the handover of the plant to the Russian company RAO YeES [The Unified Energy System of Russia]. 
An appropriate agreement will then be signed between the Armenian government and the Russian company. Albert Bagdasaryan noted that the Razdan plant had been idle since 5th June 2003 as there was no need for power in the summer period. But it will resume work shortly due to an increase in demand for power, irrespective of who owns the plant.

Japanese funds to enhance Yerevan thermal power plant

The Armenia-based Yerevan Thermal Power Plant, recently said that it hopes to collect a US$140m loan from the Japan Bank for International Cooperation to develop a new power-producing unit at the facility, Interfax News Agency reported.
Ovanes Ovakimyan, director general of the plant, said the Japanese bank should determine the credit by next February or March.
The credit will likely be provided for 40 years at 0.9-1.8% per year. Repayments will start 10 years after the introduction of the new power-producing unit.
The Armenian side was obligated to present an environmental impact report and a macroeconomic development study for the new unit by the end of September.
"It is expected that the construction of the power-producing unit, with a capacity of 225 megawatts, will be completed in 2007," Ovakimyan was quoted as saying.
"The construction will take two years and about another year will be needed to draw up the necessary documentation and hold international tenders to buy equipment."
The new unit is needed because of the deterioration of the other units due to age at the facility and because of the need to improve the ecological situation in the country.
"The new power-producing unit would minimise harmful emissions and will also significantly reduce losses of electricity," he said.
At present, there are two power-producing units in operation at Yerevan Thermal Power Plant, which were built in the mid-60s. Overall design capacity of the plant stands at 550 megawatts, with 50 megawatts being used.

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FOREIGN LOANS & AID

European Bank set to help Armenia's private sector

The European Bank for Reconstruction and Development (EBRD) intends to implement a new business strategy in Armenia, EBRD Regional Director, George Krivicky, said on 7th October at a meeting with Armenian Prime Minister, Andranik Markaryan.
The Armenian government's press service told Arminfo News Agency that during the meeting, they also discussed new fields of cooperation. In particular, Krivicky noted that the EBRD was planning to expand cooperation in the banking, energy and telecommunications spheres, the private sector, in the spheres of small and medium-sized businesses and infrastructure and to provide consulting services to the Armenian business circles. He noted that the Armenian investment field had recently improved both in terms of the development of infrastructure and private sector and the implementation of state financial programmes.
For his part, Markaryan expressed the hope that the EBRD, while focusing on the private sector, would provide Armenia with serious assistance in the development of small and medium-sized businesses, banks, agriculture, the energy sector and a number of other sectors. He stressed that before submitting the new strategy to the EBRD board, there would be an opportunity to once again discuss in detail, cooperation and planned programmes.

IMF, World Bank pledge to support Armenian poverty reduction programme

The International Monetary Fund and the World Bank will continue to render assistance to Armenia in poverty reduction, James McHugh, director of the IMF office in Armenia, said in Yerevan on 9th October at the presentation of the national poverty reduction programme, Mediamax News Agency has reported.
He said that the Armenian leadership's policy was aimed at facilitating economic growth. But the current GDP level is not adequate to overcome poverty. McHugh rated highly the programme's objectiveness and noted that one of the programme's priorities was creating conditions for improving people's social welfare.
The IMF is implementing the programme "Mechanism of growth facility and poverty reduction" in Armenia, which is costing a total of about US$95m.

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