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ARMENIA


  
  



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Key Economic Data 
 
  2003 2002 2001 Ranking(2003)
GDP
Millions of US $ 2,797 2,367 2,100 139
         
GNI per capita
 US $ 950 790 570 143
Ranking is given out of 208 nations - (data from the World Bank)

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REPUBLICAN REFERENCE

Area (sq.km)
29,800

Population
2,991,360

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

Capital
Yerevan

Currency
Dram

President
Robert Kocharian


 

 

Update No: 289 - (27/01/05)

Armenians, traditionally oriented toward Russia, are increasingly losing faith in the benefits of a special relationship with Moscow and are becoming more pro-Western in their outlook, according to recent opinion polls.
Polls show pro-Western sympathies emerging in the wake of Ukraine's Orange Revolution
Events in Ukraine, coming after those in Georgia a year earlier, are having wide repercussions in the former Soviet republics west of the Urals. Robert Kocharian, the president of Armenia, must be somewhat worried. The knell of the region's dictators has sounded.
Analysts in Yerevan say the pro-American shift in public perceptions over the past year is connected with a host of factors, not the least of them being the resounding success of Western-backed popular revolts in Georgia and Ukraine. Popular views have also been greatly affected by the discourse of large sections of the country's post-Soviet intellectual and political elites that regard the United States and the European Union as the ultimate guarantors of their country's independence and prosperity. 
The change is particularly visible among Armenia's opposition political activists, who are buoyed by the success of opposition movements in Georgia and Ukraine, while continuing to seethe over Russia's ongoing support for President Robert Kocharian's administration. Some of them are now openly calling for an end to Armenia's military alliance with Russia and its accession to NATO and the EU. 
"In the past, no political forces would openly call for Armenia's membership in NATO, safe in the knowledge that they would not only fail to get public support but also face harsh criticism. The situation is markedly different now," says Stepan Safarian, an analyst at the Armenian Center for National and International Studies (ACNIS), a private think-tank. "It is the opposition that enjoys the greatest popular support in Armenia. So naturally, its mood is being passed on to the general public," he adds. 
This assertion seems to have been born out by a nationwide opinion poll conducted by the ACNIS in December. Nearly two thirds of 2,000 respondents said they want their country to eventually join the EU and only 12 percent were against. A similar survey conducted by the Vox Populi polling organization in October found that 72 percent of Yerevan residents preferred the expanding union to the Russian-dominated Commonwealth of Independent States. 
Support for Armenia's entry into the EU was practically unanimous among 100 political and public policy experts separately questioned by ACNIS. They were also overwhelmingly in favour of NATO membership. 
The figures are remarkable for a small Christian nation that has for centuries viewed Russia as its main protector against hostile Muslim neighbours, notably Turkey and Azerbaijan. This sense of insecurity has been key to Armenia's heavy reliance on Moscow for defence and security since the Soviet collapse. The conflict with Azerbaijan over Nagorno-Karabakh only reinforced it. 
"I think that over the past two or three years our society has become much more realistic and is beginning to understand the external challenges facing our state," said Suren Sureniants, a senior member of Armenia's most radical opposition party, Hanrapetutiun (Republic). Hanrapetutiun is currently in talks with two other opposition groups over the formation of a new alliance that would not only strive to force Kocharian from power, but also offer Armenians a pro-Western alternative to policies pursued by incumbent authorities. Failure to come up with such "ideological alternative," in Sureniants's words, was the main reason for the opposition's inability to topple Kocharian with a campaign of street protests last spring. 
Unlike its counterparts in Georgia and Ukraine, the Armenian opposition found little support from Western governments, which appeared to be wary of the Armenian opposition's vague agenda and past Russian connections. The oppositionists appear to have studied the lessons of the "Orange Revolution" in Kyiv, and are now changing tack. One of the most popular of them, Artashes Geghamian, was calling for Armenia's accession the Russia-Belarus economic union as recently as two years ago. Geghamian now is an opponent of the idea. His National Unity Party voted for the dispatch of Armenian non-combat troops to Iraq during parliamentary debates in late December. 
The opposition leaders' "vehement desire to demonstrate their pro-Western stance" was denounced by a leading pro-Kocharian daily, Hayots Ashkhar. The paper voiced confidence that the pending Armenian troop deployment in Iraq should boost Kocharian's pro-American credentials in Washington. 
US President George W. Bush recently signed a proclamation authorizing the immediate implementation of "normal trade relations" with Armenia. The presidential action is the reflection of a steady improvement in US-Armenian ties in recent months. The proclamation, signed January 7, said that normal trade ties were made possible by the fact that Armenia had "made considerable progress in enacting market reforms" and had "demonstrated a strong desire to build a friendly and cooperative relationship with the United States." 
Other Kocharian loyalists are less sanguine. Vahan Hovannisian, a leader of the Armenian Revolutionary Federation, a traditionally pro-Russian party represented in government, warned of a potential "dangerous" export of Western-backed revolutions to Armenia. "I don't think that Armenian voters are today prepared to trust extreme anti-Russian forces," Hovannisian said at a recent news conference. "Having said that, it is evident that anti-Russian sentiment in Armenian society is growing and there are objective reasons for that." 
According to Safarian, the analyst, Russia's hasty endorsement of a rigged presidential ballot in Ukraine and its ensuing humiliation is one of those reasons. "There is a growing number of events testifying to Russia's weakness, and the Armenian public does not fail to notice them," he says. 
Safarian believes that Moscow's unequivocal acceptance of Kocharian's disputed re-election nearly two years ago, its hard bargain on Armenia's debts and the closure last fall of Russia's borders with Georgia also alienated many Armenians. Indeed, the two-month transport blockade, ostensibly aimed at preventing cross-border attacks by Chechen militants, hit landlocked Armenia hard by cutting off one of its main supply lines. The Russians faced an unprecedented barrage of criticism from Armenian politicians and media at the time. 
"The Russian factor is now one of the key challenges that threaten the sovereignty, security and democratization of our country," Sureniants charged. He claimed that a key element in the Kremlin's strategy of maintaining Russian foothold in the South Caucasus and elsewhere in the former Soviet Union is to prop up illegitimate regimes and thwart the resolution of ethnic disputes. The changing popular mood means that such views are not considered extreme and marginal in Armenia any more. 

The Turkish issue 
The Armenians cannot help wondering why Turkey won't show mercy and open its borders, ending the blockade that has been in place for more than a decade, as has one by Azerbaijan. Together they are holding back the Armenian economy mightily. Nor can they understand why Turkey won't accept and take responsibility for the 1915 genocide. 
Armenia believes it will join NATO to integrate with the US and to consolidate its security. The irony is that what America means for an Iraqi today is the same as what Turkey meant for an Armenian. Members of Tashnak Party, which demands the return of Armenia's historical territory and maintain the allegations of genocide as if it happened yesterday, are convinced that Turks make pilgrimages to Talat Pasha's grave, the Turk they hold responsible. Actually, Turks don't even know where his grave is, and put this misunderstanding down to the lack of knowledge about the other between Armenia and Turkey. They went on to say that if Turkey recognized the genocide, it would be a sign that political problems no longer needed to be solved through the use of force. 
The Chief Patriarch of the Armenian Diaspora, Karekin II, favours the development of relations between Armenia and Turkey. The Patriarch owns the locked case holding the golden letters of the Armenian alphabet, which hold religious significance and a special place in the Armenian identity. 2005 will be celebrated as the 1600th year of the Armenian alphabet and an exhibition regarding this is planned to be held at the Louvre in Paris. This is further evidence of the strength of the Armenian diaspora, with seven million living abroad, twice the number of those in Armenia. The diaspora is very important for Armenia as the country's economy stands on the financial flow of $600 million from abroad. The only industry in the country is a cognac factory. 

Turkish EU ambitions favour Armenia 
The European Union's decision to pursue membership talks with Turkey could have far-reaching political and economic ramifications for the Caucasus, and in particular for Armenia. The accession process can stimulate democratisation in the region. 
The EU decided December 17 to open what promises to be a lengthy accession process with Turkey. Some political observers in Turkey say the decision immediately increased pressure on Ankara to normalize relations with Armenia. In recent months, Ankara and Yerevan have probed a rapprochement, but they have yet to make substantive progress in overcoming long-standing mutual hostility. 
"If Turkey starts accession talks," adds Professor Gareth Winrow of Istanbul's Bilgi University, "it will have to normalize relations with all its neighbours as a condition of future EU membership. Number one, this means opening all its borders." 
Turkey's has kept its frontier with Armenia closed since 1993. The closure is connected with a Turkish embargo designed to encourage Armenia's withdrawal from Azerbaijani territory captured during the Nagorno-Karabkah conflict. Turkish political leaders in mid-2004 mulled re-opening the border, but the idea met fierce resistance, both in Turkey and in Azerbaijan, and officials backed off the idea. 
Turkish observers say the government will have a difficult time finessing the border issue, adding that despite the EU pressure, the status quo may not change in the near future. "If Turkey just opened the border because of EU pressure, there might easily be a backlash," warned Mustafa Sahin of the Ankara-based Eurasian think tank, AVSAM. "Azerbaijan is a very popular cause in Turkey. Also, Armenia still has territorial claims on Turkey that would have to be solved." 
Turkish territorial concerns stem from Armenia's refusal to recognize the Kars Treaty of 1921, which set the frontiers between the two states. Armenia claims there is no need for such recognition, as acceptance of the existing borders was implicit when both countries joined the Organization of Security and Cooperation in Europe (OSCE). Turkey, however, continues to seek a specific guarantee of Armenian recognition for the existing border. 
Armenian President Robert Kocharian in late 2004 appealed to the EU to place the opening of the frontier among the pre-conditions for Turkey's EU membership. "It is unacceptable for a country that is to have membership talks with the EU to keep its border closed with another country that is already in the neighbourhood policy of Europe," Kocharian said. 
The Armenian leader was referring to the EU Neighbourhood Policy (EUNP), which was formulated to provide a framework for states bordering on the EU, such as Moldova and Ukraine. "The EUNP is designed to give support and dialogue to those countries that have no prospect of joining for now," adds Winrow. "At first, Georgia, Armenia and Azerbaijan were excluded from the EUNP, but after the Rose Revolution in Georgia, the EU changed its mind and allowed them in." 
If Turkey and Armenia can eventually settle their differences, some observers believe pressure could increase on Baku and Yerevan to reach a Karabakh settlement. Others, however, are guarded about the possibilities. "Accession talks won't have any direct effect on the Armenian issue," suggested Ferai Tinc, a political analyst for the Hurriyet daily. "We've seen many times before these moves to sort out the border." 
Nevertheless, Tinc and others say Turkey's move towards EU membership cannot but have a positive impact on the Caucasus. "It will send a message to the region that will be good for the democratisation process," says Tinc. "Turkey's relations with the Caucasian states will be within a different framework - not as a big brother, but as a member of a community."
Sahin, the AVSAM think-tank expert, said that even though Armenia views Turkey with suspicion, a significant number of Armenians want to see Ankara's accession effort succeed. "Armenia is a little split on the issue," Sahin said. "But even there, many argue that Turkey's accession process will give Armenia greater leverage for change." 
Meanwhile, others see Turkey's European path as helping to widen EU influence with another regional big power, Russia. "Turkey can play a very important role here," says Winrow. "As can an organization such as the Black Sea Economic Cooperation (BSEC). Turkey can show its strategic importance to Europe and get better and closer regional relations through this."

Opaque future
Surveys about Armenia's future have found 50 percent see the future as 'unclear'. Armenian Research Center surveys have found that around the same amount have no hopes for economic improvement in the short term and are concerned about security issues. The desire to join NATO rises in line with tension with Azerbaijan. A very small number of people, meanwhile, think that going further to the West will detach the country from Russia and this will give "rather negative results". Russia plays the role of a hysterical father who loves but also beats his children. 
The Armenian National and International Research Centre finds that except for a small minority who prefer Russia due to geographical proximity, the majority of the people find the US more rational and acceptable than Russia, but each negative development stimulates people in panic to get closer to Russia. Turkey's attitudes and approaches are also included in these developments. 
Is it possible that Armenians could move on? In fact, there is some development in this direction. Garen Bekaryan, at the European Union (EU) Integration Centre, says: "In fact, Armenians might have to bury this genocide issue into history, but Turkey's massing of troops at the border during the Karabakh incident revived past fears." She is not wrong on this point. Russia sent Armenia 50,000 soldiers after Turgut Ozal's remark "What happens if a bomb falls on Armenia?" Some of these soldiers still remain in Armenia, ostensibly to protect it, but are damaging the country's attempts at democratisation in the meantime. 

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CONSTRUCTION

European bank invests in Armenian private construction company

The European Bank for Reconstruction and Development (EBRD) has allocated 850,000 euros to buy 28 per cent of shares of the Armenian closed joint-stock construction concern Shen Concern, the deputy director of the concern, Ara Asratyan, said, Arminfo reported. 
He said that it was the first time the EBRD had invested in a private production enterprise in Armenia. He pointed out that the bank's investment had been channelled into the production of concrete products and other construction materials, which are chiefly sold in the republic. Asratyan added that the European bank had been monitoring the operations of the company for the last two years and made a decision to establish long-term cooperation with the enterprise.
The contract has been concluded with the EBRD for five years and envisages more investment in the production of construction materials in Armenia. It is expected that after making fresh investment in April 2005, the European bank will own over 36 per cent of Shen Concern shares. The deputy director pointed out that Shen Concern's revenue amounted to 1.5bn drams (US$3m) in 2004.
The current investment portfolio of the European bank in Armenia totals 60m euros. Armenia became a member of the EBRD in 1992.

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ENERGY

Armenia and Iran begin building gas pipeline

After more than 10 years of negotiations and agreements, Armenia and Iran have begun work on a 141km gas pipeline linking the two countries, Russian newspaper Promishlenie Vedomosti reported. 
The preliminary cost of the project totals US$210-220m. Starting from 2007, Armenia would receive 36bn cubic metres of Iranian "blue fuel" over the following 20 years, and in return for this they will pay for it with their energy. According to experts, the Armenian-Iranian gas deal satisfies both countries.
Armenia will have an alternative source of energy in two years and this would boost its energy security. Having its own fuel and energy resources, Armenia receives gas only from Russia, but, according to analysts, the gas pipeline through Georgia is in a very bad technical condition and needs serious repair and modernisation. Iran has better political and economic relations with Armenia than with other Caucasus countries and hopes that the pipeline will be continued to Georgia. This would also give it the possibility of transporting gas via the pipeline to the Black Sea and Ukraine and from there to Europe, allowing it to become an important player in the European energy market.

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FOREIGN ECONOMIC COOPERATION

Russia, Armenia to ink deal

The Armenian government has given consent for the Armenian Urban Planning Ministry and the Russian Federal Agency for Construction, Housing and Utilities to sign an agreement on cooperation in reconstruction work in Armenia's Shirak region, RIA Novosti quoted the Armenian governmental PR service as saying recently. In 2005-2006 Russia will assign about 4m for Armenia to reconstruct the heating systems of a number of facilities of the country's second largest city, Gyumri (formerly Leninakan), the centre of the Shirak region, Minister of Urban Planning Aram Arutyunyan stated earlier. According to the official, Russia and Armenia have reached a preliminary agreement and the issue has been placed on the agenda of the Russian-Armenian interstate commission for economic cooperation. Among the facilities included in the programme the minister mentioned the Gyumri State Pedagogical Institute, a hospital, a physical culture school, four churches and blocks of flats. Gyumri is one of the cities most damaged by the devastating earthquake, which occurred in December 1988 in Armenia.

Armenia, Russia talk about better bilateral ties

Armenian President, Robert Kocharian and Russian State Duma speaker, Boris Gryzlov, discussed in Yerevan recently the prospects of developing Armenian-Russian relations, reports New Europe.
Kocharian expressed his satisfaction with the improvement of the structure of bilateral trade turnover last year, the Armenian president's press service said. Gryzlov stressed that the high level of Armenian-Russian relations will lead to further progress in future. The parties also considered the possibilities to develop transport communications between Armenia and Russia. At issue were railway communications and the Kavkaz ferry complex on the Russian bank of the Kerch Strait, which separates the Crimean peninsula and the Russian Krasnodar territory.

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