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ARMENIA


  
  



In-depth Business Intelligence

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)

Books on Armenia

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: 294 - (28/06/05)

Armenia is in a very sensitive region, almost as unstable as the Middle East. It is, as it were, the 'Israel' of the affair, sticking out like a sore thumb, and deeply resented by several of its neighbours, notably Azerbaijan and Turkey, who operate a trade blockade against it. Its one backer is Russia, still keen 'to divide and rule' in the Caucasus. 

Baku alarmed at Russian arms transfer to Armenia
The announcement made by Russian chief of staff General Yuru Baluyevsky that some of the weaponry from Russian military bases in Georgia will be transferred to Armenia has alarmed Baku, Azeri Deputy Foreign Minister, Araz Azimov, said recently. Baluyevsky said that Russian military bases will be withdrawn from Georgia to Russia, while some of the military hardware and other equipment will be sent to Armenia.
Azimov said that in the past, Russia diverted some of its weaponry withdrawn from Georgia to Armenia. "This greatly worries us sand we would not want Russia to take this step again," the Azeri said. The main cause of concern for Azimov is due to the extremely sensitive situation in the region and the atmosphere of regional security and stability.

Russian arms from Georgia stay under Russian control
Russian charge d'affaires in Azerbaijan, Pyotr Burdykin, on June 2nd, on behalf of the Russian Foreign Minister, officially responded to the Azeri government's note expressing its concern about the redeployment of some weapons from the Russian military bases in Georgia to Armenia. 
The note read that the matter can only imply the transfer of weapons from one Russian military base to another, rather than their transfer to Armenia, Burdykin said commenting on reports alleging that Russian weapons could be passed to the Armenian armed forces' disposal. He added, "One of the ways to withdraw weapons from Georgia is to transfer them to the Russian military base located in Armenia, but this does not mean that we can pass these weapons to Armenia." 
The weapons will in any case remain under Russian jurisdiction. Burdykin stated that the decision to redeploy part of the weapons from the Russian base in Georgia was made due to very strong pressure, not only from Georgia but also from other countries, (principally the USA).

New highway to Iran alarms environmentalists 
It is vital for Armenia to maintain ties with Iran, the only one of its immediate neighbours, apart from Georgia, with whom it is on reasonable terms. But their common border is narrow, as is the one highway across it, which is often impassable for months at a time in winter, hampering vital commercial contacts.
Another one is to be built of greater width. But it unfortunately has to go through pristine forest country dear to environmentalists, the Shikahog Forest. The 90km road has already received a 16mn euro EU loan. It looks certain to go ahead.

IMF approves new 3-year credit for Armenia
The International Monetary Fund (IMF), as well as the EU, is lessening the isolation of Armenia. It has approved a new three - year lending programme for Armenia that aims to bolster its strong macroeconomic performance and is conditional on improved tax collection in Yerevan, as announced on May 27th.
In a statement circulated by the office, the IMF said Armenia would receive about US$34.2m in low-interest loans through 2008. The decision will enable Armenia to draw an amount equivalent to US$4.9m from the IMF immediately. The first instalment of the fund's new Poverty Reduction and Growth Facility (PRGF), worth about five million Euro, was distributed on May 25th, the statement read.
After the executive board's discussion, IMF's Deputy Managing Director Agustin Carstens was quoted as saying that "Armenia's economic performance continued to be strong in 2004 and early 2005.
Encouragingly, poverty and inequality indicators have improved notably in recent years, owing mainly to higher salaries, private transfers from abroad, and state social assistance." It has been reported that the authorities' new three-year PRGF-supported programme aims at consolidating macroeconomic stability, generating additional domestic resources to finance poverty-reducing and growth-enhancing expenditures, and boosting private sector activities.
Tax and customs administration reforms, the heart of the programme, will focus on raising domestic resources in a transparent and nondiscretionary manner that would help to create a business climate conducive to economic activity and strengthening the tax base, which will be needed as external aid flows diminish over the medium term.
"The central bank of Armenia (CBA) will continue to focus on maintaining price stability, amid strong capital and remittance inflows. The CBA will maintain the flexible exchange rate regime, while enhancing the instruments for sterilising capital inflows. Fiscal consolidation over the medium term will facilitate containing the monetary effect of capital inflows," Carstens said.
The programme envisages financial sector reforms, strengthening banking supervision and improving corporate governance, particularly of banks to expand financial intermediation. Authorities will step up the pace of reforms in the non-bank financial sector, including by implementing an appropriate supervisory and regulatory framework in the insurance sector. The authorities are determined to address remaining problems in the energy and water sectors, with the support of the World Bank, Carstens stated. The Fund approved the fresh loans less than six months after completing a similar lending scheme for Armenia worth 105m Euro. The PRGF funds have been used by the Armenian central bank to maintain a stable exchange rate of the national currency, the dram, and alleviate the country's negative balance of payments.

Hosting Black Sea debate
It is naturally very much in Armenia's interest to maintain good relations with Black Sea littoral states, hoping for an eventual reconciliation with the largest of them, Turkey. The seventh sitting of the board of governors of the Black Sea Trade and Development bank (BSTDB) and the Black Sea Business Forum started in Yerevan on June 5th. The BSTDB promotes the economic development of the member states by financing the programmes of state and private enterprises, Interfax News Agency reported.
High-ranking officials of the Black Sea regions and a number of international and financial organisations like the European Union, European Bank for Reconstruction and Development, International Monetary Fund, World Bank and International Financial Corporation were invited to attend. The delegation of the Russian Federation, led by the Russian branch of the BSTDB, head of the department for investment policy of the Russian Ministry of Economic Development, Svetlana Ganeyeva, was also present. 
The participants of the sitting, held under the aegis of the Armenian president and government, considered the annual report on the bank's activities in 2004 and the key issues of the BSTDB development.

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ENERGY

Iran and Armenia to build two power stations

Iran and Armenia concluded an agreement to build 2 power stations at the common border of the 2 countries, Interfax News Agency reported.
This decision was adopted on May 14th at the 7th meeting of the joint technical commission that was attended by the deputy head of Iran's Water and Energy Resources Company for development projects, Nasser Nemati, and Armenian Deputy Minister of Energy Karen Sarkisian, according to Interfax. "Given the 40km Iran-Armenia common border across the Aras river, the 2 sides decided to use the relevant hydroelectric potential," Nemati said at the meeting. A report released by the public relations department of Iran's Water and Energy Resources Company quoted Nemati as saying that based on the agreement, the first power station with a production capacity of 130m watt will be established in Armenia by building an 18.3km tunnel. "The second one with a capacity of 140MWs will be constructed in Iran. A 17.5km tunnel is required to be set up for the second power station," the report added. It said the preliminary studies on the first phase of the second project are currently underway. The report concluded that so far 5 documents have already been mutually signed and necessary talks on expediting the settlement of the current problems have been held.

Georgia wants to join Iran-Armenia gas pipeline - premier

Georgia has reiterated its interest in being involved in the construction of the Iran-Armenia gas pipeline, Mediamax News Agency reported. 
Georgian Prime Minister, Zurab Noghaideli, said this at the meeting with his Armenian counterpart, Andranik Markaryan, in Tbilisi on 1 June, the press service of the Armenian government has told. 
Markaryan said in reply that the first phase of the project is being implemented now, but "Armenia has not ruled out the possibility of discussing this issue with Georgia in the future." 
To recap, Georgian Prime Minister, Zurab Noghaideli, arrived in Armenia on an unscheduled visit on 11-12 March 2005. He said following the visit that the Iran-Armenia gas pipeline had been one of the main subjects of talks. 
"We are certain that we want the gas pipeline from Iran to Armenia to be used to export gas to Georgia. It will be a profitable project for Armenia. If Georgia is a transit country for Armenia today, then Armenia will become a transit state for Georgia," Noghaideli said during his visit in March. 
"The Georgian side raised the issue that Armenia become a transit country for gas supplies from Iran to Ukraine through Armenia and Georgia. We have heard this request and will discuss it in the future," Markaryan said in reply.

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FOREIGN ECONOMIC RELATIONS

Yerevan and Tehran develop agro ties

Armenian deputy Minister of Agriculture, Samvel Avetisian, recently signed a memorandum on economic cooperation with Mazandaran province in Nur city of Iran. This memorandum will expand economic relations between Armenia and Iran and Mazandaran, Interfax News Agency reported.
Mazandaran province is situated in the north of Iran along the Caspian shore. While addressing the meeting with representatives of diverse departments, entrepreneurs and businessmen of Iran and Armenia, Avetisian underlined that the high economic and agricultural potential of Mazandaran would be able to meet the needs of Yerevan quite successfully. "In the course of our four-day visit preconditions were formed for Armenian and Iranian entrepreneurs making investments in both countries," Avetisian said.

Armenian official, CIS representative discuss cooperation

Armenian Deputy Foreign Minister, Gegam Garibdzhanyan and secretary-general of the Interparliamentary Assembly of the CIS countries, Mikhail Krotov, discussed issues regarding Armenia's participation in the 9th international economic forum, held in St Petersburg on 14-19 June. 
During the meeting, Mikhail Krotov informed the Armenian deputy foreign minister of the work of the Interparliamentary Assembly of the CIS, its programmes and measures to develop interparliamentary relations in the CIS countries, the Armenian Foreign Ministry press service has told Arminfo. 
Garibdzhanyan noted that an active participation of Armenia in the CIS will continue and the country will do its best to take part in the forthcoming forum. He also stressed the need to expand cooperation between the CIS countries in the humanitarian sphere. 
The foreign deputy minister said that the declaration on cooperation in the humanitarian sphere, which was signed at the informal summit of CIS presidents in Moscow on 8 May, opened up prospects for boosting partnership in this sphere as part of Armenian-Russian bilateral cooperation as well as within the framework of the CIS. 

Armenian, Russian presidential aides discuss economic projects

The head of the Armenian presidential administration, Artashes Tumanyan, and his Russian counterpart Dmitriy Medvedev discussed a wide range of issues pertaining to the expansion of Armenian-Russian cooperation, Arminfo News Agency reported.
The meeting discussed the need to find ways for effectively putting into operation the Armenian enterprises handed over to Russia within the framework of the property-for-debt agreement. The sides touched on problems related to the launch of the Kavkaz ferry link. Tumanyan and Medvedev also discussed a number of regional projects, including the Iran-Armenia gas pipeline.
In 2003, Armenia handed over to Russia the shares of five enterprises totalling US$93.7m to repay its debt. The enterprises included the Razdan thermoelectric power plant estimated at US$31m, the Mars [radio electronic plant] company estimated at US$56m, the Yerevan Scientific Research Institute of Automated Control Systems and the Yerevan Scientific Research Institute of Mathematical Equipment estimated at over US$5m, and the Yerevan Scientific Research Institute and Production Enterprise of Material Studies estimated at US$350,000.
Trade between Armenia and Russia amounted to US$266.2m in 2004, which is 10.6 per cent less than in the previous year.

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