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ARMENIA


  
  



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
 

 

Update No: 288 - (01/01/05)

Turkey the key; the 1915-16 genocide the problem
The key foreign country for Armenia, after Russia, is Turkey. In a manner it is even more important than Russia. For Moscow just wants to preserve the status quo, in which Armenia remains subordinate to it. A rapprochement with Ankara could lead to it breaking out of its diplomatic isolation.
An omission from Armenia's draft 2005 budget has touched off speculation that a rapprochement with Turkey in fact may be in the offing. The missing line item concerns Yerevan's long-standing effort to win international recognition for what Armenian officials portray as the genocide of 1915-16. Some observers interpret the dropped genocide reference as an effort to extend an olive branch to Turkey. The conditions for a deal have in some respects never been better. The US Congress, which backed away from putting real pressure on Ankara to recognise the genocide for what it was under the second Clinton Administration, is no longer so wedded to the Turkish alliance, given the refusal of its counterpart, the Turkish parliament to allow US troops to cross Turkish territory in the Iraq War. There are more Armenians in the Diaspora in the US than in Armenia itself, which gives Yerevan leverage in American electoral politics.
Another factor influencing the normalization question is Turkey's bid to join the European Union. Representatives of the numerous Armenian Diaspora in France, the second largest in the world after that in the US, are reportedly putting pressure on the French government to withhold its approval for Turkish membership in the EU until Ankara addresses Yerevan's genocide claim, but without success. 
Yerevan contends that Ottoman Turkish forces systematically killed ethnic Armenians in 1915-16. According to some Armenian estimates up to 1.5 million of the 2.5 million Armenians then living in the Ottoman Empire died during this timeframe. Ankara has recognized that Armenians died en masse, but says Yerevan overstates the number of victims. In addition, Turkish officials steadfastly deny that the deaths were the result of a coordinated government policy, and, thus, the tragedy cannot be considered as a case of genocide as defined by the 1948 Genocide Convention. Contemporary Turkish officials note that the deaths occurred during World War I, adding that Armenians were caught in the middle of the bitter fight going on at that time in the Caucasus between Ottoman Turkish forces and Russian troops. The Armenians being Christians, supported Russia and were regarded by the Turkish High Command as a traitorous 'Fifth Column.'
Hitler famously said in 1938: "Who now remembers the Armenian genocide?" Still, he did and recognised it as genocide. He had genocidal plans of his own, of course, whose execution will be for ever remembered.
After details of the Armenian draft budget became public, Turkish and Azerbaijani media outlets in early November went into a frenzy of conjecture on the implications of the genocide-recognition omission. Armenian officials moved quickly to squash speculation that Yerevan was substantially changing its position. On November 9, the Arminfo news agency quoted Armenian Foreign Ministry spokesman Gamlet Gasparian as insisting Yerevan's stance on the genocide issue had not changed. "The issue of international recognition of the Armenian genocide does not concern only Armenia and the Armenians; this is a universal issue and cannot be lessened to the limits of any budget or similar financial documents," Gasparian said. Gasparian is well aware of course of the comparison with the Holocaust.
The Turkish Foreign Ministry responded the next day, adopting a wait-and-see stance. ""Except for the news reports, we have not received any official information about such a change in Armenia's [genocide-recognition] stance," the Anatolia news agency quoted Foreign Ministry spokesman Namik Tan as saying. 
Even if the interpretation of the news reportage accurately reflects Yerevan's intention, both Armenian and Turkish officials indicate that they will proceed with extreme caution in trying to end decades of mutual hostility. At the same time, regional analysts say both states have powerful economic and political incentives to explore ways to normalize bilateral relations. The normalization of Turkish-Armenian relations has the potential to create a new geopolitical order in the Caucasus. 

Karabakh issue still there
Turkish officials say the genocide issue is just one of several obstacles blocking the normalization of bilateral relations. Other issues, including the Nagorno-Karabakh conflict, also must be addressed before Ankara can fully repair its relationship with Yerevan, they add. Turkey has staunchly backed Azerbaijan during the stalemated search for a Karabakh peace settlement. Ankara, for example, is maintaining a trade embargo on Armenia until Armenian forces withdraw from occupied Azerbaijani territory situated outside Karabakh proper. 
While the obstacles to normalization appear formidable, regional economic circumstances are exerting strong pressure on all parties involved to compromise. For Turkey and Azerbaijan, a Karabakh peace settlement would boost the profit potential of the Baku-Tbilisi-Ceyhan pipeline, which is scheduled to start conveying natural resources from the Caspian Basin to Western markets in 2005. The normalization of ties between Turkey and Armenia also would reassure EU member states as they contemplate Ankara's entry into the organization. 
The pressure on Armenia to alter the status quo may even be stronger. Some analysts believe it is in Armenia's vital economic interest to secure the lifting of Turkey's embargo, thus opening up avenues for trade needed to fuel continued Armenian development. Other observers point out that normalization of ties with Turkey would aid Armenia's effort to improve relations with NATO and, in a broader sense, the West. 
Armenia's draft 2005 budget contained language urging the government to take action to improve ties with Georgia, Iran and Turkey, Arminfo reported. Thus, the omission of the genocide reference in the same document may well represent the start of a process by Armenia to search for common ground with Turkey. 
Many policy-makers and opinion-makers in Turkey remain sceptical over whether the genocide-recognition omission in the Armenian budget represents an initiative to engage Turkey on the issue. The general consensus appears to be that Turkish leaders should wait and see if Yerevan takes any follow-up action before buying into the notion that Armenia is truly open to altering its stance on the genocide issue. 
The geopolitical balance of the whole Caucasus at issue
If a rapprochement eventually comes about, the geopolitical landscape in the Caucasus could be significantly altered. Armenia has traditionally been Russia's strongest ally in the Caucasus. The normalization of Turkish-Armenian ties, which would presumably accompany a Karabakh peace settlement, could prompt Armenia to reorient Armenian political and economic policies towards the West, or, at the very least, weaken the special relationship now binding Yerevan to Moscow. 
The potential ramifications of the genocide-recognition omission do not seem to have been lost on Russia, which, in recent months, has expressed displeasure in various ways over Armenian diplomatic efforts to balance Yerevan's relations with Moscow with improved ties with the West. 
During a public appearance November 10, the Russian ambassador to Armenia, Anatoly Dryukov, appeared to discourage Armenia from getting too close to the West. Referring to the recent efforts by Armenian leaders to cultivate better ties to the West, Dryukov said: "If Armenia prioritises its national interests, then the vector of relations [i.e. Armenia's special relationship with Russia] will remain correct," the Mediamax news agency reported. 
Turkey the key; the 1915-16 genocide the problem
The key foreign country for Armenia, after Russia, is Turkey. In a manner it is even more important than Russia. For Moscow just wants to preserve the status quo, in which Armenia remains subordinate to it. A rapprochement with Ankara could lead to it breaking out of its diplomatic isolation.
An omission from Armenia's draft 2005 budget has touched off speculation that a rapprochement with Turkey in fact may be in the offing. The missing line item concerns Yerevan's long-standing effort to win international recognition for what Armenian officials portray as the genocide of 1915-16. Some observers interpret the dropped genocide reference as an effort to extend an olive branch to Turkey. The conditions for a deal have in some respects never been better. The US Congress, which backed away from putting real pressure on Ankara to recognise the genocide for what it was under the second Clinton Administration, is no longer so wedded to the Turkish alliance, given the refusal of its counterpart, the Turkish parliament to allow US troops to cross Turkish territory in the Iraq War. There are more Armenians in the Diaspora in the US than in Armenia itself, which gives Yerevan leverage in American electoral politics.
Another factor influencing the normalization question is Turkey's bid to join the European Union. Representatives of the numerous Armenian Diaspora in France, the second largest in the world after that in the US, are reportedly putting pressure on the French government to withhold its approval for Turkish membership in the EU until Ankara addresses Yerevan's genocide claim, but without success. 
Yerevan contends that Ottoman Turkish forces systematically killed ethnic Armenians in 1915-16. According to some Armenian estimates up to 1.5 million of the 2.5 million Armenians then living in the Ottoman Empire died during this timeframe. Ankara has recognized that Armenians died en masse, but says Yerevan overstates the number of victims. In addition, Turkish officials steadfastly deny that the deaths were the result of a coordinated government policy, and, thus, the tragedy cannot be considered as a case of genocide as defined by the 1948 Genocide Convention. Contemporary Turkish officials note that the deaths occurred during World War I, adding that Armenians were caught in the middle of the bitter fight going on at that time in the Caucasus between Ottoman Turkish forces and Russian troops. The Armenians being Christians, supported Russia and were regarded by the Turkish High Command as a traitorous 'Fifth Column.'
Hitler famously said in 1938: "Who now remembers the Armenian genocide?" Still, he did and recognised it as genocide. He had genocidal plans of his own, of course, whose execution will be for ever remembered.
After details of the Armenian draft budget became public, Turkish and Azerbaijani media outlets in early November went into a frenzy of conjecture on the implications of the genocide-recognition omission. Armenian officials moved quickly to squash speculation that Yerevan was substantially changing its position. On November 9, the Arminfo news agency quoted Armenian Foreign Ministry spokesman Gamlet Gasparian as insisting Yerevan's stance on the genocide issue had not changed. "The issue of international recognition of the Armenian genocide does not concern only Armenia and the Armenians; this is a universal issue and cannot be lessened to the limits of any budget or similar financial documents," Gasparian said. Gasparian is well aware of course of the comparison with the Holocaust.
The Turkish Foreign Ministry responded the next day, adopting a wait-and-see stance. ""Except for the news reports, we have not received any official information about such a change in Armenia's [genocide-recognition] stance," the Anatolia news agency quoted Foreign Ministry spokesman Namik Tan as saying. 
Even if the interpretation of the news reportage accurately reflects Yerevan's intention, both Armenian and Turkish officials indicate that they will proceed with extreme caution in trying to end decades of mutual hostility. At the same time, regional analysts say both states have powerful economic and political incentives to explore ways to normalize bilateral relations. The normalization of Turkish-Armenian relations has the potential to create a new geopolitical order in the Caucasus. 

Karabakh issue still there
Turkish officials say the genocide issue is just one of several obstacles blocking the normalization of bilateral relations. Other issues, including the Nagorno-Karabakh conflict, also must be addressed before Ankara can fully repair its relationship with Yerevan, they add. Turkey has staunchly backed Azerbaijan during the stalemated search for a Karabakh peace settlement. Ankara, for example, is maintaining a trade embargo on Armenia until Armenian forces withdraw from occupied Azerbaijani territory situated outside Karabakh proper. 
While the obstacles to normalization appear formidable, regional economic circumstances are exerting strong pressure on all parties involved to compromise. For Turkey and Azerbaijan, a Karabakh peace settlement would boost the profit potential of the Baku-Tbilisi-Ceyhan pipeline, which is scheduled to start conveying natural resources from the Caspian Basin to Western markets in 2005. The normalization of ties between Turkey and Armenia also would reassure EU member states as they contemplate Ankara's entry into the organization. 
The pressure on Armenia to alter the status quo may even be stronger. Some analysts believe it is in Armenia's vital economic interest to secure the lifting of Turkey's embargo, thus opening up avenues for trade needed to fuel continued Armenian development. Other observers point out that normalization of ties with Turkey would aid Armenia's effort to improve relations with NATO and, in a broader sense, the West. 
Armenia's draft 2005 budget contained language urging the government to take action to improve ties with Georgia, Iran and Turkey, Arminfo reported. Thus, the omission of the genocide reference in the same document may well represent the start of a process by Armenia to search for common ground with Turkey. 
Many policy-makers and opinion-makers in Turkey remain sceptical over whether the genocide-recognition omission in the Armenian budget represents an initiative to engage Turkey on the issue. The general consensus appears to be that Turkish leaders should wait and see if Yerevan takes any follow-up action before buying into the notion that Armenia is truly open to altering its stance on the genocide issue. 
The geopolitical balance of the whole Caucasus at issue
If a rapprochement eventually comes about, the geopolitical landscape in the Caucasus could be significantly altered. Armenia has traditionally been Russia's strongest ally in the Caucasus. The normalization of Turkish-Armenian ties, which would presumably accompany a Karabakh peace settlement, could prompt Armenia to reorient Armenian political and economic policies towards the West, or, at the very least, weaken the special relationship now binding Yerevan to Moscow. 
The potential ramifications of the genocide-recognition omission do not seem to have been lost on Russia, which, in recent months, has expressed displeasure in various ways over Armenian diplomatic efforts to balance Yerevan's relations with Moscow with improved ties with the West. 
During a public appearance November 10, the Russian ambassador to Armenia, Anatoly Dryukov, appeared to discourage Armenia from getting too close to the West. Referring to the recent efforts by Armenian leaders to cultivate better ties to the West, Dryukov said: "If Armenia prioritises its national interests, then the vector of relations [i.e. Armenia's special relationship with Russia] will remain correct," the Mediamax news agency reported. 

ENERGY

Midland Resources may sell Armenian power utility

Midland Resources Holding Ltd intends to sell Electric Networks of Armenia (ArmElNet), Armenia's national electricity distribution company, with Russia's Unified Energy System (UES) among the potential buyers, Yevgeny Glandunchuk, ArmElNet's director general, said, Interfax News Agency reported.
Midland Resources is concentrating more on its metals business, which would receive the proceeds from the ArmElNet sale, Glandunchuk said. "The problem is in the price which buyers might offer," he said. The owner has not received any lucrative offers yet, he said. It could take a year to sell the network, but by then it would have become more expensive with the need to invest in it and reduce electricity losses, Glandunchuk said.

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FOREIGN ECONOMIC COOPERATION

Armenian president, Iranian energy minister discuss cooperation

President Robert Kocharian received a delegation led by Iranian Energy Minister, Habibollah Bitaraf, Public Television of Armenia reported. 
The Iranian minister informed Kocharian that the construction of the Iranian sector of the Iran-Armenia gas pipeline will start in two and a half months. Iran intends to bring the capacity of the power exchange with Armenia to 1,000 MW by the construction of the third high-voltage power line, he added.
The Armenian president said that the launching of the construction of the Armenian sector of the Iran-Armenia gas pipeline and the construction of the Agarak-Shinuayr high-voltage power line were the beginning of major cooperation between Armenia and Iran and created an opportunity to discuss future projects. 
Robert Kocharian noted that the Armenian side was ready to do everything possible to continue the current tempo of cooperation. 
During the meeting, the sides also discussed the construction of the Megri-Kadzharan tunnel and the import of fuel from Iran to Armenia.

Armenian leader favours business cooperation with Georgia, Azerbaijan

Armenian President, Robert Kocharian, met representatives of the Association of Armenian-Georgian Business Cooperation in Yerevan recnetly, Mediamax news agency reported.
Kocharian said that the establishment of the association has created a favourable atmosphere for the development of bilateral cooperation and wished the activity of the structure to yield practical results. The president said that the Armenian side is doing everything possible to strengthen the association.
In turn, the Georgian side said that they are intending to create a similar format of cooperation with Azerbaijani entrepreneurs, attempting to create a basis for regional cooperation. Kocharian rated this initiative positively, recalling that Armenia has always supported the settlement of relations by means of cooperation.
During the meeting, the sides also discussed prospects for Armenian-Georgian cooperation in the sphere of transport, tourism, etc.

Russian, Armenian capitals sign cooperation programme

A programme of cooperation between the executive authorities of the Armenian and Russian capitals for 2005-07 was signed recently in Yerevan. Yerevan mayor, Yervand Zakharyan, and Moscow mayor, Yuriy Luzhkov signed the document, Arminfo News Agency reported.
"The programme embraces the widest range of cooperation between the capitals and concerns architecture and town-planning, trade, education and culture. The document is the result of painstaking work in recent years," Zakharyan said after the official signing ceremony. He said that this is the latest step to strengthen the friendship between the Armenian and Russian people. "The Moscow investment company is working successfully in Yerevan. We have agreed today on the creation of a Moscow House in Yerevan and an Armenian wholesale trade centre in the Russian capital," the Yerevan mayor said.
"Time limits don't allow me to list even a small part of what the programme signed today envisages. Moscow has established close business and cultural contacts with many capitals of the world and the signing of a new programme between Moscow and Yerevan is a continuation of the expansion of our states' cooperation," Moscow mayor Yuriy Luzhkov told journalists. The construction of the Armenian wholesale trade centre in Moscow, which will be done very quickly, is very significant. "The Moscow mayor's office will give all possible support to the Russian-Armenian (Slavonic) State University. Armenian students and schoolchildren will receive a large number of textbooks on the Russian language and other methodological and scientific literature. A student exchange will continue and greater opportunities will be created for further education for primary and secondary teachers in Moscow," Yuriy Luzhkov said.
The programme signed today will cost more than 100m dollars. The creation of the Armenian wholesale trade centre in Moscow will cost at least 60m dollars. The Moscow mayor thinks that cooperation between Moscow and Yerevan has good prospects and he is sure that trade between the two cities will have increased fivefold by the time of his next visit to the Armenian capital.

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FOREIGN LOANS

WB to provide 20m loan to Armenia to fight poverty

The World Bank (WB) has decided to provide a 20m loan to Armenia to back Yerevan's efforts to eradicate poverty, the World Bank press service said, Interfax News Agency reported.
It would be the first loan within the framework of a three-year programme of assistance to Armenia in this field. The project aims to accomplish four main tasks, the first one being the enhancement of macroeconomic discipline and improvement of administrative and corporate governance, including the struggle against corruption. The other aimsare ensuring the ownership rights and the creation of conditions for stiffer competition in the economy, forestalling and alleviating social and environmental risk factors.

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TRANSPORT

Russia proposes joint rail venture with Armenia

The state-run railway companies of Armenia and Russia agreed on November 3rd to set up a joint venture, underscoring Moscow's renewed efforts to restore rail communication with Armenia via Georgia after a 12-year hiatus, New Europe has reported. The agreement was signed in Yerevan by the visiting head of the Russian national railway, Gennady Fadeyev, and his Armenian counterparts. "Armenia today is under blockade," Fadeyev told reporters on his arrival in the Armenian capital. "It has practically no access to sea and railways. Things are transported mainly by road and air."
"In terms of financial and technical possibilities, the transport corridor Sochi-Sokhumi-Tbilisi-Yerevan may be resumed within a year," Civil Georgia quoted Fadeyev as saying. However, he stressed the prospect of increasing the volume of Armenian-Russian freight transportation through railway ferries. Fadeyev would not elaborate on the specifics of the project, saying only that the Russians hope to stimulate Tbilisi's interest in it. "I would have lied if I had said that we don't want Georgia to be an equal party to our agreements," he said. "Georgia provides for the shortest route of communication between Russia and Armenia."
His talks in Yerevan came two days after Russian Transport minister Igor Levitin's visit to Tbilisi during which he claimed to have made progress towards the restoration of the rail service that used to connect Armenia and Georgia to Russia and the rest of Europe. That is presumably key to the success of the Russian-Armenian venture. The rail link was disrupted in 1992 with the outbreak of an armed conflict in Abkhazia, a breakaway Georgian republic bordering Russia

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