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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)

Books on Armenia

REPUBLICAN REFERENCE

Area (sq.km)
29,800

Population
3,326,448

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: 277 - (01/02/04)

The fall-out from the Rose Revolution
The events in Georgia, its Rose Revolution, are of overwhelming significance for Armenia. Sandwiched between Turkey and Azerbaijan, with whom its relations are frosty in the extreme, each maintaining a trade embargo with it, Armenia's only link to the outer world (other than a 12 mile border with Iran) is via fellow Christian Georgia. Russia, Armenia's ally in its confrontation with its Muslim neighbours, lies beyond. But a more powerful threat is at work, that of the US and its inexorable drive towards Westernisation. 
For 200 years the Russian empire's defence and offence against the Turks and Turkic peoples to its south was conducted from Armenia. This is still so. High in the snow-capped mountains of Northern Armenia, just a few miles from the Turkish border, Russian troops have been on patrol, as for two centuries past. "We are here to protect this land from Turkish aggression," a 26-year-old lieutenant from Moscow, was quoted in language that might have been uttered in 1804 or 1904, as well as 2004. The Russians remain hugely proud of their conquest of the Southern Caucasus, which commenced in the 18th century as Tsarist forces pushed south into the Black and Caspian Seas, ousting the Turks.
Russian rule came about piecemeal, as imperial troops helped the locals to fend off attacks from the Ottomans and the Persians, but only to batten on them themselves. They rapidly established the sinews of empire, Russian engineers building the Georgian Military Highway to Armenia, still partially used to transport troops and war material, although the road is in a bad way. After 1917 the Red Army crushed nationalist uprisings in the region and Stalin, then commissar of nationalities, divided the area into his native Georgia, Armenia and Azerbaijan. The republics were heavily garrisoned, firstly to quell endemic unrest and then later to defend the region from an attack by NATO through Turkey.
From the moment of their independence in 1991 the Caucasus republics began to orient themselves in new directions away from Russia, towards Turkey for the Azeris, towards the West for the Armenians and the Georgians. But the Nagorno-Kharabak conflict soon brought Armenia back into the Russian fold, indispensable to its victory by 1992 over the Azeris in securing its enclave in Azerbaijan and taking a swathe of Azeri territory linking it again to the motherland, the Lachin Corridor.
The president and warlord of the enclave at the time was a certain Robert Kocharian, now president of Armenia. A hard-liner on the issue he remains, a loyal Russian ally.
The Azeris soon found that their best recourse lay in forging close ties with the West, as did the Georgians, although as long as Shevardnadze was in charge a tilt towards accommodation with Russia was also in evidence, as with regular energy deals done with Russian partners. With 9:11 everything changed and the Azeris saw their new role as being the conduit for energy supplies to the West, alternative to OPEC - and Russia. Shevardnadze could see the advantages of this new perspective for Georgia as well, the logical route for the Caspian oil and gas to flow westwards. The Americans were already coming to the republic militarily to combat the new terrorist threat. The Rose Revolution has now firmly anchored Georgia to the Western Path.
Where the Russians have been steadily pushed out, the Americans have come in their place - and look to be staying for good. The US military is training the Georgian army, while there are rumours of air bases being planned in Azerbaijan. In December the ever tactful US Defence Secretary Donald Rumsfeld demanded that Russia speed up its withdrawal of its remaining forces in Georgia, eliciting a fierce protest from Moscow.
Armenia, or rather its dictatorial and corrupt regime, is now out in the cold. It has been ruled out as a route for Caspian resources to flow to the West and is evermore dependent on Moscow. The Russian base at Bolshaya Krepost in Armenia will stay. Says Col Ashot Karapelyan, who serves at the base: "The Americans are pursuing an aggressive and expansionist policy. The Russians first came here in 1775 and our presence today is more important than ever. Without us the Muslims would overrun this area and in no time would be on the southern borders of Russia."
This vision has no appeal to the Azeris or Georgians, whose younger generations are learning English rather than Russian these days and see their future with the West. But the Armenians, albeit reluctantly, view the Russians as the lesser of two evils. With the Russians they sleep easier at night. As one Government employee puts it: "We are Christians in a sea of Muslims and Russia protects us. We'd prefer the Americans too, but they are so far away and Russia is just next door."
If things begin to go well for the Georgians now under their new Western umbrella, even the Armenians might think it is time too ditch the Russians and Kocharian too. The regime in Yerevan is facing its toughest test yet.

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ENERGY

Armenia power plant set to build new unit with Japanese loan

The start of construction of a new power-producing unit with a steam generator at Yerevan's thermal power plant is planned for 2004, Interfax News Agency has reported.
The director-general of the power plant, Ovakim Ovanesyan, has told journalists that the construction is due to be completed in 2008. 
The total cost of the project is US$165m of which US$140m will be received as credit from the Japan Bank for International Cooperation and US$25m will be provided by the Armenian side in the form of communications and other infrastructure.
It is planned that the credit will be granted for 40 years, with repayments starting 10 years after the launch of the plant. Ovanesyan said that the Armenian parliament decided on 17th December to exclude the Yerevan thermal power plant from the state privatisation programme. He said that this is due to the JBIC credit programme, which aims at crediting the Armenian government and not the private sector.
He said that the launch of the new unit will halve spending on fuel, and consequently also halve the cost of electricity. Natural gas consumption currently amounts to 372 grams of gas per kilowatt-hour of electricity. This will be reduced to 193-220 grams per kilowatt-hour. It is planned that the cost of electricity will fall from 14.8 drams per kilowatt-hour to six-eight drams. The current tariff, including VAT, amounts to 18.8 drams per kilowatt-hour. The thermal power plant has a total capacity of 550 megawatts, although at the moment only one unit of the plant's seven is in operation. The new unit will have a capacity of 225 megawatts.

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FOREIGN LOANS

Germany gives Armenia 5m Euros for business development

The governments of Armenia and Germany have signed an agreement on allocating an additional 5m Euros for continuing the programme of the German-Armenian Fund (GAF) on financial assistance to small and medium-sized businesses, Arminfo News Agency has reported. The document was signed by the Armenian Finance and Economy Minister Vardan Khachatryan and the German ambassador to Armenia, Hans-Wulf Bartels. They informed journalists at a press conference that the expected fourth tranche consisted of a credit of 4.5m Euros and a grant of 0.5m Euros.
Within the framework of this document, the Armenian Finance and Economy Ministry also signed an agreement under which the Armenian government guarantees the 5m Euro in drams in the GAF programme with the aim of creating favourable conditions for attracting privileged loans for continuing this project. This guarantee has been presented to the Central Bank of Armenia at the expense of the reserve funds of the Armenian government.

World Bank allocates US$20m to Armenia

The World Bank board of directors has decided to allocate to Armenia the second tranche of the SAC-5 structural reforms credit to the tune of US$20m, the spokesman for the Yerevan office of the World Bank, Vigen Sarkisyan, told Arminfo News Agency.
He said that the money would be transferred shortly. In addition, the Dutch government will grant Armenia 4.6m euros, which is also linked to the second tranche of the World Bank loan, Sarkisyan added. Armenian Finance and Economy Minister Vardan Khachatryan had said earlier that the Armenian government would stop accepting the World Bank's budget forming loans next year and that SAC-5 was the last one. The government intends to accept loans within the framework of individual development programmes that are not connected with the budget, the minister said.

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MINERALS & METALS

Minister says diamond processing on the rise in Armenia

A programme on developing diamond production in 2004-2006, approved by the Armenian government, was presented by the Trade and Economic Development Minister Karen Chshmarity on 19th December, Azg has reported. The new programme was elaborated and approved after the thorough examination of all the developments and changes that have taken place in the sector since 1997, including changes in prices and in the correlation between demand and supply in the world market.
Describing the development of the sector in the country in the last five years, Mr Chshmarityan also touched on the indices for the next few years. Against the export of diamonds worth US$24m in 1997, the sector yielded up to US$200m in 2002, i.e. increased by nine times. The number of employees in the sector for the same period rose from 1,300 to 7,000, allowing Armenia to take ninth place in processing and exporting diamonds in the world.
The number of enterprises in this sector also rose from five in 1997 to 50 in 2002. The diamond-cutting sector plans to increase output up to US$500m (US$400m in diamond processing and US$100m in the jewellery sector) and increase the number of its workers by 10,000 with an average salary of US$200.
According to Chshmarityan, there is higher demand for diamond products in the world market, which means that Armenia can expand this sphere.

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NUCLEAR ENERGY

IAEA studying possibility of building new unit at Armenian nuclear power plant

The International Atomic Energy Agency is studying the possibility of building a new power-producing unit at the Armenian Nuclear Power Station as one option for energy development in the republic until 2020, Deputy Armenian Energy Minister Areg Galstyan told journalists, Interfax News Agency has reported.
He said that IAEA specialists, together with Armenian energy companies, have carried out the corresponding research, which will be published in the near future.
The capacity of the Armenian Nuclear Power Station, which has two power-producing units, amounts to 815 MW. 
Galstyan said that in 2003 the Armenian Nuclear Power Station plans to produce about 2bn kWh of electricity, which accounts for 35 per cent of total electricity production in the republic.
Markosyan said that in the past eight years, since the second power-producing unit was re-launched in 1995, the plant has produced 16bn kWh of electricity. In this period US$47m were provided to ensure safety at the plant, including US$35m from the USA and US$12m from the European Union.

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