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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: 298 - (27/10/05)

The new zeitgeist
Democracy is in the air in the Caucasus and the dictatorial regime in Yerevan is bowing to it even by continually denying it. Elections in neighbouring Azerbaijan are due on November 6th; and these are less of a formality than usual. There are 2,000 candidates for seats in parliament, some now allowed from abroad. That the ruling party will win is not in doubt, but some individual surprises are expected.
Georgia has just held five by-elections, confirming the continued, if more critical, support for the ruling order there after its Rose Revolution two years ago. Georgia remains a sort of beacon for the other countries in the region, as every election campaign, whether presidential or parliamentary, held in neighbouring states since 2003, have had a whiff of approaching revolution. This also goes for election campaigns in entities not recognized by the international community. Abkhazia lived through a "velvet revolution" of its own almost a year ago, and there was the approach of revolution in the air in Nagorny Karabakh in June.
Armenia and Azerbaijan are no exceptions in this respect and both have to face the test of how ripe they are for revolution. Armenia will soon be holding a referendum on proposed amendments to its constitution and Azerbaijan, as we have seen, will hold parliamentary elections on Nov 6th. In both cases the votes are expected to be more open than was the case with the presidential election in Azerbaijan and the presidential and parliamentary elections in Armenia in 2003. 
This may be an indicator that the CIS has entered a new, post-revolutionary phase. The main sign of this new situation is the presence of election observers from the United States, Europe and international organizations, whose work is to ensure that voting measures up to democratic standards. Emissaries from Washington and Brussels are already busy announcing the conditions for the upcoming elections in the southern Caucasus, and a certain division of labour can be seen here. The European organizations are paying closer attention to democracy in Azerbaijan, while those from the United States are keeping a watchful eye on Armenia - not surprising, given that Armenia's traditional geopolitical position of close relations with Russia and a firm anti-Turkish line is not entirely to the taste of US diplomats.
US Ambassador to Armenia John Evans, for his part, said recently that the adoption of the proposed amendments to the Armenian constitution in a national referendum would open up broad new opportunities for the republic. In Evans' words, "failure of the referendum would slow down the democratic processes in Armenia," and falsification of its results would set off mass popular protests.

Challenges ahead for Armenia's constitutional vote
After a brief and uncharacteristic period of cooperation, the Armenian government and opposition are back on a collision course over constitutional reform. The opposition's refusal to accept President Robert Kocharian's proposed changes to Armenia's constitution has also put it at loggerheads with the international community, which has backed the amendments, as Evans' comments above show. 
At a September 1 extraordinary session, Armenia's National Assembly adopted the government's proposed constitutional amendments in the second reading. Despite pressure from members of the ruling coalition and representatives of Western countries, the main opposition parties declared that they would not support the draft in a referendum scheduled for November. 
The four-day parliamentary session resulted in a series of amendments designed to downplay presidential powers and gain the approval of the Venice Commission, the Council of Europe advisory body for constitutional law, which had rejected an earlier draft in May as unsatisfactory. Opposition members, who interrupted their one-and-a-half-year boycott of parliament to attend the special session, refused to take part in the final vote on the proposed amendments. 
Besides the Council of Europe, the draft was publicly endorsed by the Organization for Security and Cooperation in Europe's Yerevan mission and the US and British ambassadors. 
In an interview published in the August 26-27 edition of the Hayots Ashkhar daily, British Ambassador Thorda Abbot-Watt rejected calls for a "colour revolution" during the November vote, and stressed that the European Union, whose rotating presidency the United Kingdom currently holds, "prefer evolutionary ways of development rather than revolutionary ones." The vote on the revised constitution is part of that process, the ambassador implied." Let's not forget that what we deal with is not a regular election or a referendum of confidence in connection of the previous elections. We deal with the constitution, a document predetermining the principal directions of the country's development." 
Nonetheless, the government faces considerable obstacles in securing a "yes" vote for its amended constitution this November. Putting voter lists in order is one sizeable challenge. Overcoming public apathy is another. Disinterest in the topic of constitutional reforms notably increased after parliamentarians were broadcast live on public television hurling insults at each other during the legislature's special session. Public awareness of the proposed changes is also relatively minimal since the proposed constitution has not yet been published. An earlier version was posted on the National Assembly's website, but less than 10 percent of Armenians have Internet access. 
In addition, President Robert Kocharian must demonstrate to the international community that the vote is free and fair. In an August 26th statement, Ambassador John Evans termed the revised constitution "a notable step forward," urging the government to take "the necessary steps . . . to increase public awareness about this important process so that a well-informed public can express its will in the referendum scheduled for November." Secretary of State Condoleeza Rice has recently raised the importance of a transparent vote with President Kocharian, the US State Department has announced. 
If adopted, the revised constitution would enter into force two years from the referendum. 
The government appears to believe that the success of the referendum is not guaranteed, however. Defense Minister Sergei Sargsian, widely seen as a potential presidential candidate, was quoted by the Russian news agency Regnum as emphasizing that a "no" vote in November would not mean a vote of no confidence in the Kocharian administration. 
"I will not consider that the people have expressed their distrust in the authorities," Sargsian said on September 1. "As you remember, there were referenda in European countries that were not adopted either. However, this was not interpreted as distrust in the authorities." 
Western countries' endorsement of the draft constitution reinforced the ruling coalition's own campaign for both ordinary Armenians' and the opposition's support for the amendments. "Do you suppose that we have bribed these foreign governments?" Galust Sahakian, leader of the pro-government Republican Party faction, asked opposition members during the parliamentary debates. In reply, Shavarsh Kocharian claimed that US Ambassador John Evans had compared the process of democratisation in Armenia with that in Iraq. "Why should we take Iraq rather than the European democracies as a standard?" he asked. 
At the Venice Commission's urging, the amendments adopted by parliament were intended to pass greater powers from the president to parliament and the prime minister. Among other provisions, for instance, they call on the National Assembly to appoint the human rights ombudsman and members of the National Radio and TV commission. The president has also been removed from the Council of Justice, a body that plays a key role in appointing judges. 
While opposition parties had earlier pushed for such changes, in the end, they declared them insufficient. Shavarsh Kocharian, a member of the opposition bloc Ardarutiun (Justice), said his faction was not satisfied with the fact that under the amended version, the president would still have the power to appoint chairmen of courts. The opposition also took issue with the failure to provide for direct elections of the mayor of Yerevan. According to the draft, a special law to be adopted later will determine the type of elections for this position. 
Political rhetoric heavily coloured the opposition's response. Ardarutiun leader Stepan Demirchian stated that his bloc would say no to the referendum and "the illegal authorities," since "no steps are taken to create an atmosphere of confidence." The National Unity faction adopted a similar position, saying that they would support the amendments only if the November constitutional referendum was followed by early parliamentary, and then, early presidential elections. Deputies from both factions left parliament the day before the vote on the constitutional amendments. 

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ENERGY

Interenergo to control Armenian electricity distribution grid 

Russia's state-run power monopoly, Unified Energy Systems (UES), has gained the right to formally purchase Armenia's electricity grid, giving Russia total control over the Armenian energy sector, New Europe reported recently. 
For the past few years, Armenia's leading Western donors were against Russian attempts to take over the Electricity Networks of Armenia (ENA) but now appear to have come to terms with the change of ownership. The Armenian government finally decided to transfer the entire stock of the republic's electricity distribution grid to Interenergo - a component of the UES, Armenian Energy Minister, Armen Movsesian, said. He added that the UES of Russia would assume all the commitments of the current owner of the republic's electricity distribution grid, the British-based Midland Resources. The British company recently suggested the stock transfer. 
Movsesian denied claims that the UES of Russia would allegedly become the monopoly on the Armenian energy market. He said the Russian company produces only 10 per cent of the republic's electricity. On June 23, Interenergo acquired the right to 99-year control over the Armenian electricity network at a cost of 73 million Euro. Initially, UES claimed to have purchased the Armenian utility, but later clarified that it paid the lump sum only for the right to run ENA and use its profits. UES alone controls several big power plants that account for 80 per cent of Armenia's electricity output. Movsesian publicly spoke out against the Russian giant's ownership of ENA last March, arguing that it would run counter to a key goal of the energy sector reform: separation of units generating, transmitting, and distributing electricity. Meanwhile, the World Bank believes that it is not important as to who is the owner of the power distribution network as they have great confidence in the regulator in Armenia.

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TRADE DEFICIT

Trade deficit up 30%, inflation 0.9% 

Armenia saw a foreign trade deficit of 481.7 million Euro in January-August 2005, up 29.8 per cent on the same period of 2004, the National Statistics Service said, Interfax News Agency reported.
Foreign trade turnover grew 31.8 per cent in the eight months to 1.69 billion Euro with exports up 35.3 per cent to 603.8 million Euro and imports up 29.4 per cent to 1.08 billion Euro. Armenia's foreign trade deficit was 636 million Euro in 2004, against 591 million Euro in 2003. Foreign trade turnover grew 5.1 per cent in 2004 to 2.07 billion Euro. Armenia's inflation stood at 0.9 per cent in Armenia in September. Prices for food products, including alcohol and cigarettes, went up 1 per cent, non-food product prices rose 1.7 per cent, and service tariffs increased 0.5 per cent. The country saw deflation with a 3.6 per cent drop in consumer prices in January-September. This figure for August stood at 1.4 per cent. The Armenian National Bank forecasts inflation at approximately 3 per cent this year. Consumer prices went up 2 per cent in 2004.

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