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ARMENIA


  
   

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In-depth Business Intelligence

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: 283 - (26/07/04)

The EU beckons
The Armenians are being courted by the EU in its New Neighbour Initiative (NNI), which aims to pave the way for countries, qualified by history and geography to join the club, to do so. They need to accommodate themselves to the acquis communitaire, with its 29 basic files of provisions. The NNI is the vehicle for this.
It could have an even more important role to play. The NNI encompasses Georgia and Azerbaijan, with whom the Armenians have a long-standing feud. This could likely only be resolved in a wider framework than that of the two republics locked together in conflict.
Dangling EU membership before Azerbaijan is an excellent way to win Baku's cooperation in negotiating an end to the problem, as it is to do the equivalent with Yerevan for Armenia.

Growth ahead for Armenia
Armenia has reasonable prospects ahead, despite the embargo on trade imposed upon it by Azerbaijan and Turkey.
The Armenian government is forecasting growth in gross domestic product (GDP) in 2005-2007 of 6% to 7% per annum and average yearly inflation in this period is planned at not more than 3%, Armenian Finance Minister, Pavel Safarian, said recently. He said that priority would be given to expenditure on education, healthcare and social welfare. Armenian GDP in 2003 increased 13.9%.
The Armenian Central Bank forecasts that inflation in the republic in 2004 will not exceed 3%. Last year consumer prices increased 8.6%. Armenia's GDP expanded 8.9% year-on-year in January-May, while industrial output expanded 3.3% to 195.223 billion dram. 

Armenia facing pressure on Nagorno-Karabakh issue
Robert Kocharian used to be President of Nagorno-Karabakh, he is consequently a hardliner on the vexed issue of the territorial dispute with Azerbaijan. Now President of Armenia, his administration appears to be facing increasing pressure to soften its stance on the Nagorno-Karabakh issue. Reports suggesting that Armenia is willing to explore the return of Azerbaijani territory seized during the Karabakh conflict are threatening to stir domestic political trouble for Kocharian. 
Both Armenian and Azerbaijani media have reported that the United States, in seeking to break the existing stalemate in Karabakh peace talks, is pressing Armenia to agree to the return of Azerbaijani regions captured during the 1991-94 conflict. According to the reports, Armenia is being asked to return anywhere between three and six of the seven areas seized from Azerbaijan. The only area that reportedly has not come up in discussions is Lachin, the corridor of land that connects Karabakh with Armenia proper. Kocharian has adamantly opposed giving back what Armenians describe as "liberated territories" as a precondition to a comprehensive peace settlement. 
A recent article published by the Turkish newspaper Zaman quoted Turkish Foreign Minister Abdullah Gul as saying that Yerevan was prepared to discuss the return of the territories. Gul mentioned a meeting of the foreign ministers of Armenia, Azerbaijan and Turkey, held on the sidelines of the June 28-29 NATO summit in Istanbul, saying that the Armenian participant, Vartan Oskanian, declared: "We [Armenia] can withdraw from all territories except Karabakh." Oskanian subsequently denied making any such statement during the meeting. 
Kocharian's ambiguous comments during a June 23 session of the Council of Europe's Parliamentary Assembly (PACE) helped fuel speculation about a possible deal. Kocharian stated at one point that the question of what Azerbaijani insists are "occupied lands" could have been settled long ago if Baku had implemented the so-called Key West principles, which reportedly mandated that Armenia vacate captured Azerbaijani territory. He also emphasized that any potential handover would have to be part of an overall Karabakh settlement. 
The speculation swirling around the Karabakh issue comes at an awkward political moment for Kocharian. Though opposition coalition protests that roiled Yerevan this spring have been suspended, Kocharian critics remain committed to a six-month boycott of the Armenian parliament. Despite the coalition's relative weaknesses, any effort to return Azerbaijani territory could potentially give the opposition an issue with which it could inflict considerable damage on Kocharian's administration. 
Kocharian is no doubt mindful of the circumstances that led to his rise to the presidency. In 1998, the willingness of then-president Levon Ter-Petrosian to embrace a gradual approach to a Nagorno-Karabakh settlement sparked a chain of events that led to his forced resignation. 

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AVIATION

New terminal for Yerevan airport

An Argentine company managing Armenia's main international airport began construction recently of a promised new terminal which is supposed to bring the facility into conformity with international standards, the Armenian Liberty reported.
Representatives of the Corporacion America operator were joined by Armenian government ministers to inaugurate the start of work on what they describe as the first stage of the reconstruction of the Zvarntnots airport. 
According to Juan-Pablo Guechigian, commercial director at Zvarntnots, it will cost at least US$42m. Justice Minister David Harutiunian, who is overseeing the project's implementation, said after the ceremony that the new three-storey building is slated for completion by 2007. He added that its ground floor will be available for passenger use "at the end of next year" parallel to the construction of the upper floors. 
Officials in Yerevan said earlier that the reconstruction will enable Zvarntnots to handle at least 1.2m passengers a year. Up to 800,000 people presently arrive at and depart from the airport each year.

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ENERGY

Japan invests heavily in Yerevan power plant

The Japanese government plans to invest 4.5m in the construction of a thermal power plant in Yerevan with a capacity of 1.5 megawatts based on a waste incineration plant, Armenian Natural Resource Minister, Vardan Aivazyan, said, Interfax News Agency reported recently.
Aivazyan said that the ministry has approved the construction of the plant and thermal power plant at the Nurabshen dump, which covers an area of over 60 hectares. Talks are currently underway between a potential subcontractor for the project, Japan's Shimizu, and the Yerevan mayor's office.
Aivazyan said that the project would involve the used of up to 800-900 cubic metres of rubbish per day to produce methane to be used in electricity production. The minister said that recently Armenia set an output tariff for electricity produced from burning biogas of 0.08 per 1 kWh and the investor is happy with this tariff. Arutyunyan, the national coordinator of the project, told Interfax that the Japanese state company New Energy and Industrial Technology Organisation plans to finance the project. She said that Shimizu has already completed the first stage of work on an audit and preparation of a feasibility study.

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FOREIGN LOANS & AID

WB offers Armenia 250m

The World Bank will extend Armenia up to 220m under an aid strategy for 2005-2008, and more than 30m under loan programmes, Vigen Sargsyan, the communications officer of the Yerevan office, said, Interfax News Agency reported on June 15th. 
Armenia can receive up to 220m if the country's economic reform indicators remain high. If reform is only satisfactory, Armenia would receive up to 170m and if the pace of reform is low, the country can expect around than 90m. World Bank specialists said that reform in 2003 was carried out according to high reform indicators, according to Sargsyan.

EU transfers 1.5m euros to Armenian budget

The European Commission has transferred the first tranche of 1.5m euros to the Armenian budget under the food security programme totalling 9.5m euros, Armenian Finance and Economy Minister, Vardan Khachatryan, said, Arminfo reported.
These funds have been given to agriculture, social security, the State Land Survey, Property and National Statistics Services for several years. 
The minister said that the remaining 8m euros will be transferred in two tranches by the end of 2004.
Speaking at a press conference, the head of the EU delegation in Armenia and Georgia, Torben Holtze, said that the programme was very important for enhancing the level of state management. He said that this was already the eighth food security programme, which had been realized in Armenia since 1997. As a whole, within the framework of the programme, including the transferred 1.5m euros, the EU has given Armenia 68.5m euros. Holtze added that for the time being, the sides are discussing the possibility of cooperation under this programme for 2005-07. Armenia can count on receiving 9.5m euros per year, he said.

Armenia gets US$23m from World Bank to improve water supplies

Armvodokanal [Armenian water canal] and the World Bank have signed a credit programme to the tune of US$23m for 40 years to restore Armenia's system of water supplies, the head of the Armenian State Committee for Water Resources, Andranik Andreasyan, said, Arminfo reported.
The programme aims to choose a new operator in the system of water supplies. The French company [Water Utility] Saur was chosen as a new operator in a tender. The State Committee for Water Resources is planning to submit the package of the credit programme during the autumn session of the Armenian National Assembly.
Moreover, two programmes of the German KfW bank amounting to 94m euros are being prepared for the Armenian water supplies company, Nor Akunk, that operates in Armavir Region. For the implementation of the first programme which envisages restoration work in Armavir Region, the German government will allocate a 14m-euro credit. The second programme, designed for restoration work in the country's Lori and Shirak Regions, will be carried out stage-by-stage. The overall funding of the programme is 80m euros, and 25m euros will be channelled into the implementation of the first stage.
Andreasyan said that due to the need for massive work in these areas, the government of Germany has decided to allocate one third of the 25 euros (about US$8m) as a grant.
The security problem in all operating reservoirs will be resolved with the World Bank's new credit programme amounting to US$7.5m, the head of the Armenian State Committee for Water Resources, Andranik Andreasyan, told reporters at a press conference.
The programme will be a continuation of the already implemented World Bank programme to maintain security in strategic reservoirs, he said. Andreasyan also said that a programme of developing irrigation systems is being prepared at the moment. He said that for the time being, 54 leading organizations are operating in the country's irrigation system, whereas only one big company Dzhirar is engaged in water supplies.
New tariffs have been established for services in the irrigation system at present, Andreasyan said. Thus, one cubic metre of irrigation water in Yerevan is 90 drams and 100 drams outside the capital. The difference in tariffs is explained by the fact that 45 pumping stations, which consume great amounts of energy, are operating in rural areas.

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