Armenia's Economic Pulse

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Diamond Sector News

ARMENIAN SHOGHAKN DIAMOND COMPANY REDUCES ITS MONTHLY OUTPUT FROM 25THND CARATS TO 3 OR 4 THOUSAND

ARKA
Nov 8, 2007

YEREVAN, November 8. /ARKA/. Armenian Shoghakn diamond-cutting
enterprise has reduced its monthly output from 25thnd carats to 3 or
4 thousand, Sergey Gasparyan, the general director of the company,
said in an interview with ARKA News Agency.

He also said that the stuff had been cut as well - only 300 employees
remained instead of former 1800.

Gasparyan said that these measures were taken because of grown cost
price of final product and volatile situation in currency exchange
market.

He said that the company's output is completely exported, because
Armenia has no raw materials resources and consumer market.

That's why the dollar's precipitously fluctuating exchange rate drives
final product's cost price up and makes it not competitive at markets.

Gasparyan said that the output reduction was also due to considerable
reduction of the world diamond consumption market.

"Earlier, the U.S.A. was the biggest diamond consumer - about 70%,
while now the country consumes only 30% of the world diamond output. It
depends on further developments at the marker whether the enterprise
will be able to work to its full capacity", he said.

Gasparyan said that as a rule, sales reach their peak at the period
between September and December. It means that future plans will be
outlined only after summarizing results later this year.

"The enterprise has necessary industrial capacity, however a part of
them are temporarily frozen until situation stabilization", he said.

He said raw materials were stably supplied to Shoghakn, and for seven
years of its record the enterprise had never staid idle because the
lack of raw materials.

Gasparyan said that the enterprise produces 50thnd carats every month
from one hundred square meters of raw materials.

Shoghakn is the leading diamond-cutting enterprise in Armenia. Its
quota in Armenian diamond industry makes 35%.

One of the key diamond suppliers is Israel. Once Shoghakn's monthly
output was 35,000 carats.

The enterprise belongs to entrepreneur Lev Levaev (LLD Diamonds)
from 2000.

http://www.gab-bn.com/IMG/pdf/Ar23-_Armenian_Shoghakn_Diamond_Company_Reduces_Its_Monthly_Output_From_25thnd_Carats_To_3_Or_4_Thousand.pdf

ARMENIAN POLISHED DIAMOND OUTPUT FALLS 49.2% IN JAN-SEPT 2007

Tacy
Oct 15 2007
Israel

Armenia's polished diamond output of fell 49.2 percent to approximately
US$99 million (AMD 32.97 billion) in January-September of this year,
according to Gagik Mkrtchian, the head of the Trade Ministry's precious
stones and xxxelry department.

Mkrtchian told Russian news source Interfax that sales for these
first nine months of 2007 also fell 51.1 percent to approximately
US$95.68 million (AMD 31.84 billion) and exports similarly decreased
50.4 percent to approximately US$94.51 million (AMD 31.45 billion).

Mkrtchian predicts the "slump" in the diamond cutting center will
recover by the end of this year and that the sector is expected to
grow in 2008. He added that the slowdown in production and exports
has translated into local job cuts.

Russian diamond producer Alrosa and the Armenian government signed
a cooperation agreement in August between the cutting and xxxelry
sectors. Mkrtchian said that a joint company between Armenian cutting
companies and Alrosa is expected to start work in 2008, which will
enhance Armenia's cutting center.

Mkrtchian also told Interfax that he hopes, for the sake of local
employment, that Shogakn, the country's largest cutting company, which
is owned by Lev Leviev, would not close, despite reports claiming
the contrary.

http://www.diamondintelligence.com/magazine/magazine.asp?id=5576&search_text=

ALROSA COMPANY TO EXPORT $28-$30 ROUGH DIAMONDS TO ARMENIA NEXT YEAR

ARKA News Agency
Dec 21 2007
Armenia

YEREVAN, December 21. /ARKA/. The Russian ALROSA diamond exploration
and cutting company plans to export $28-$30mln rough diamonds to
Armenia.

ALROSA Vice-President Sergey Ulin reported that the company plans
to hold another meeting to discuss the results of the first six
months of its cooperation with Armenia and determine the parameters
of cooperation with possible corrections toward larger supplies not
only for the end of next year, but also for 2009, he said.

RA Minister of Trade and Economic Development Nerses Yeritsyan
expressed hope that the ALROSA Company will put its plans into practice
within the next few years.

"We have much to do to specify the policy and prospects for development
to amplify the opportunities for business expansion in Armenia by
such a large company as ALROSA, and not only in diamond processing,"
the Minister said.

The Chairman of the International Association of Armenian xxxellers,
owner of the DCA diamond-cutting enterprise, member of the RA
Parliament Gagik Abramyan said that experts of the ALROSA Company
are expected to pay a regular visit to Armenia next July to conduct
inspections at the country's diamond-cutting enterprises.

"The issue of increasing the number of Armenian diamond-cutting
companies meeting the ALROSA-set terms will be considered," he said.

Abramyan pointed out that cooperation in two directions will be
carried out next year.

"At a meeting with President Robert Kocharyan we talked about the
purchase of rough diamonds as well as about the supply of diamonds
for further processing and re-export," he said.

This October, ALROSA experts conducted inspections and made assessments
of 23 Armenian diamond-cutting companies. Thereafter, they selected
four Armenian enterprises that will process rough diamonds worth
$1mln supplied by ALROSA - Daymotek Company, Arevakn, SCA and Ukos.

On August 6, 2007, in Yerevan, the RA Government and the ALROSA Company
signed an agreement on cooperation in xxxellery and diamond-cutting
industries. The agreement envisages the supply of rough diamonds to
Armenia for processing and re-export. Under the agreement, Armenian
diamond-cutting enterprises are to process rough diamonds 0.30 to
1.5 carats, which process is economically unsound in Russia.

Russia is one of the largest suppliers of rough diamonds - 1/3% of
the world diamond output. Armenia, in turn, has many professional
diamond-cutters capable of processing up to 1mln carats yearly.

The ALROSA Company is of the world's largest diamond-extracting
company, its share in the world output being 25%. In 2006, the ALROSA
Group sold products worth $2.86bln, with the sale of cut diamonds
totalling $141.1mln The ALROSA stockholders are Rosimuschestvo
(Russian Property) (37%), Ministry of State property Management of
Yakutia (32%), individuals and legal entities (23%). Eight Yakut
uluses hold 8% of the ALROSA shares.

http://www.minted.am/en/2/item/547/

RUSSIAN GIANT 'IMPLEMENTING' DIAMOND DEAL WITH ARMENIA
By Hovannes Shoghikian

Radio Liberty, Czech Rep.
Dec 21 2007

Russia's state-owned diamond monopoly said on Friday that it has
started implementing a recent agreement with the Armenian agreement
which should shore up Armenia's declining diamond-processing industry.

Under the agreement signed in Yerevan in August, the ALROSA giant
undertook to resume supplies of Russian rough diamonds to Armenian
companies. Those supplies fell sharply in 2004 and ceased altogether
in 2006, contributing to an ongoing downturn in a sector that was
once a key driving force of Armenia's economic growth.

The ALROSA chairman, Sergey Vybornov, said 22 Armenian diamond-cutting
firms applied to his company following the August deal but only
four of them were chosen to receive Russian precious stones. They
have already been supplied with $1 million worth of uncut diamonds,
he told reporters in Yerevan.

According to Vybornov's deputy, Sergey Ulin, ALROSA, which mines
diamonds in eastern Siberia, plans to carry out at least $28 million
worth of such deliveries in the course of next year and could raise
their volume in 2009. He said the Russian giant, which accounts for
one fifth of global rough diamond sales, sees "optimistic grounds
for developing cooperation" with Armenia.

Underscoring the importance of that cooperation, both President Robert
Kocharian and Prime Minister Serzh Sarkisian received the visiting
ALROSA executives on Friday.

Minister for Trade and Economic Development Nerses Yeritsian said
after the talks the Armenian government will do its best to facilitate
ALROSA operations in the country. Yeritsian said the government is
also holding "active discussions" with the Russian company on the
possibility of expanding their presence into other sectors of the
Armenian economy. He gave no details.

Vybornov said in that ALROSA is negotiating with the authorities in
Yerevan over the possible of an unnamed Armenian mining enterprise.

It was not clear if he referred to the Indian-owned Ararat Gold
Recovery Company, which develops the bulk of the country's gold
reserves.

According to government statistics, Armenian plants manufactured 25
billion drams ($82 million) worth of gem diamonds in the first half
of this year, down by 48 percent from the same period last year.

Armenia's total diamond output dropped by over 17 percent to 93
billion drams in 2006, continuing the production slump that began in
2004. Refined diamonds have since ceased to be the country's single
largest export and now account for just 1 percent of its gross
industrial production.

Government officials and analysts blame the sector's decline on
a combination of internal and external factors, including falling
global demand for precious stones and the dramatic appreciation of
the Armenian dram.

http://www.armtown.com/news/en/rfe/20071221/200712212/

RUSSIA'S KRISTALL TO CUT SOME DIAMONDS IN ARMENIA

Interfax News Agency, Russia
Russia & CIS
February 28, 2008

Kristall of Smolensk, Russia's biggest diamond cutter, has reached
an agreement to process some of its rough diamonds in Armenia, the
state company said.

Kristall plans to outsource in Armenia cutting of stones that would
be less profitable to process in Russia.

Kristall will sign a memorandum with Armenia's Diamond Company in
early March on joint processing of rough diamonds.

"The participants in the project plan to work out a joint program
to develop cutting of diamonds in Armenia, which besides process of
raw material will include joint efforts to develop the technological
potential of Armenia's cutting industry and increase the efficiency
of processing rough diamonds," Kristall said.

Kristall increased its turnover by 13% in 2007, to $404 million.

http://www.interfax.com

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Re: Armenia's Economic Pulse

The Dram Appreciation and The Armenian Economy

IT IS IMPOSSIBLE TO AVOID APPRECIATION OF NATIONAL CURRENCY UNDER
CONDITIONS OF RAPID ECONOMIC DEVELOPMENT, WORLD BANK REPRESENTATIVE
SAYS

YEREVAN, DECEMBER 14, NOYAN TAPAN. Under conditions of rapid economic
development, it is impossible to avoid appreciation of the national
currency, and as a small country Armenia has difficulty with managing
the appreciation of the dram, Shigeo Katsu, WB Regional Vice President
for Europe and Central Asia, expressed this opinion on December 14.
According to him, there are several measures (including increasing the
competition and making the economy more transparent) for dealing with
the difficult situation as a result of the dram's appreciation.

S. Katsu pointed out the necessity of taking extra measures aimed at
extending the business environment and the investment field. In his
words, the rules of the game and the main players of the economic field
should be definite, while investors should be fully informed about it.
He said that there are still a number of problems in Armenia, and
foreign investments have consideraly contributed to their solution.
However, these investments were mainly made in some sectors of the
economy.

Nevertheless, S. Katsu positively assessed the two-digit growth of the
country's economy. According to him, economic developments are
proceeding rapidly in Armenia and this growth is expected to continue
in the next years. He expressed an opinion that Armenia should be able
to increase its investment attractiveness not only in economy but also
in the sphere of educaion.

http://www.armeniandiaspora.com/archive/120529.html

ARMENIAN CURRENCY APPRECIATION HURTS EXPORTERS DRASTICALLY
by Armine Avetyan

168 Zham, Armenia
Nov 27 2007

"Only importers are good businessmen in Armenia"

The US dollar became cheaper for 35-40 drams last week; then the
dollar gained 20-25 drams but it did not grow enough to reach the
previous level. Currently, 1 US dollar is traded at 296-300 drams at
Yerevan's currency exchange offices.

According to a media report, a record 20m dollars was traded in the
Armenian Stock Exchange last Friday [23 November]. The average rate
was 312.9 drams and the closing rate was 312.5 drams. Meanwhile, the
rate was 275-300 drams at currency exchange offices on the same day.

Experts attribute such a difference in one day to financial schemes.

Many think that the depreciation of the US dollar is a result of
schemes in general. Compared with 2003, the US dollar has already lost
50 per cent. Some analysts say that this is a unique "tax" imposed
by the Armenian authorities on remittances Armenians get from abroad.

[Passage omitted: this "tax" is higher than the 20-per-cent VAT
applied in Armenia]

Armenians who rely on remittances sent by their relatives living abroad
suffer the most. While they could get 58,000 drams for 100 dollars in
2003, they get only 30,000 today. Exporters suffer too because they
sell their products for dollars but make their expenses in drams at
home. Manufacturers constantly complain that their production costs
keep rising making their products uncompetitive in world markets.

"If the trend continues, we may stop our production," Hovhannes
Iskajyan, chief accountant of Yerevan champagne factory, says. The
factory exports champagne and wines to Russia. [Passage omitted:
appreciation made the factory to cut production for 30-40 per cent]

Karen Stepanyan, deputy director of the Armenmotor company that
produces meat grinders, says the company has planned to export 1,000
grinders to Russia in 2008 to be sold within three months. [Passage
omitted: the company fears it will lose the Russian market due to the
dram appreciation; another exporter says they lost the US market in
2005 because of the dram appreciation]

In response to these complaints, the Armenian authorities -
and especially Central Bank chairman Tigran Sargsyan - say the
manufacturers should boost their productivity instead of complaining.

"That's stupid," Hovhannes Musayelyan, director of the Synopsis
company that produces and exports information technologies, says.

[Passage omitted: appreciation has already made Armenia a risk zone
for the Synopsis company]

"The interests of manufacturers are ignored in Armenia, and it
turns out that only importers are good businessmen in Armenia,"
Musayelyan says.

Due to the US dollar depreciation, another field that has been deemed
as priority has lost more than 60 per cent: the diamond-cutting
industry. The Shoghakn factory, a giant in this field, is on the
verge of going out of business. The company suspended production
in the summer for a long time; it resumed a small-size production
in September.

However, the company may stop working by the end of the year or in
the beginning of 2008. "The US dollar was 340 drams in the summer,
and I presented the owners with a new plan and persuaded them not to
shut down the factory," Shoghakn director Sergey Gasparyan says.

"Now, only 300 workers are employed in the factory. I was planning
to hire more people but what happened those days changed our plans."

[Passage omitted: Gasparyan says he is unsure of the factory's future.]

P.S. Former Central Bank of Armenia chairman Bagrat Asatryan offered
his comments yesterday [27 November] to the website A1+. "If thinking
boyishly, one can be even proud of the dram appreciation, but if you
start thinking in more details, this is a tragedy for the country in
terms of economy," Asatryan said. "The appreciation of the dram should
be considered in the context of the economic conditions, there can
be no baseless appreciation. If the appreciation is translated into
cheaper, let's say, potatoes, bread and other products, it would be
great. But what we have in the result of this policy is that potatoes
are cheaper in the USA than they are in Armenia."

http://www.gab-bn.com/IMG/pdf/Ar14-_Armenian_Currency_Appreciation_Hurts_Exporters_Drastically.pdf

Lragir, Armenia
Dec 5 2007


EXCHANGE RATE OF DOLLAR WORRIES GOVERNMENT

The revaluation of the dram, more exactly the depreciation of the
dollar causes worry, said Prime Minister Serge Sargsyan in a briefing
on December 5. Lragir.am inquired from the head of government whether
it worries the government that the continuing revaluation of the dram
and especially the fluctuations reported a few days ago may jolt the
financial market, which for its part may threaten national security.

`Our economy is small and open, and therefore vulnerable.
Figuratively, the storm in the ocean is more dangerous for small
ships and boats. For big ships, the storm is not so dangerous. The
storm on the international market is highly dangerous for us. Here is
one circumstance. The second circumstance is that a peculiarity adds
to all these problems. Our citizens get immense sums from their
relatives who live in the United States or Russia. They get
remittances in dollars. On the one hand, the state of these people is
becoming worse because prices do not go down, and now, for instance,
the dram value of one hundred dollars is less, and it is the second
additional circumstance determining the revaluation of the dram
because a greater dollar sum comes. It is clear that the government
worries about it, it is clear that we are making serious moves,
especially that the depreciation of the dollar does not foster
export. We need to boost our GDP,' Serge Sargsyan says.


However, he says the moves they take cannot produce results in one,
two or three months. `These moves will have a long-terms effect. What
worries most is the fluctuation by 20 drams. We are attending to this
problem, and this does not depend on the process underway on the
international market, we need to find out the main reason. Was it an
attempt to jolt our economy? Was it a speculation to make money or
was it another process? For instance, interference of other
countries, and so on,' Serge Sargsyan says.

http://www.gab-ibn.com/IMG/pdf/Ar9-_Exchange_rate_of_dollar_worries_government.pdf

http://www.armeniandiaspora.com/archive/119222.html

MONEY TRANSFERS TO ARMENIA THROUGH COUNTRY'S BANKS GROW 1.2 FOLD TO ABOUT 1 BILLION 127.9 MILLION DOLLARS IN 2007 ON 2006

Noyan Tapan
Feb 21, 2008

YEREVAN, FEBRUARY 21, NOYAN TAPAN. Remittances of natural
persons without opening a bank account are made in Armenia by the
Armenian commercial banks and the organizations with a licence
for implementation of remittances (granted by the Central Bank of
Armenia (CBA). With the aim of implementing rapidly money transfers of
customers, the Armenian commercial banks have joined 18 international
systems (Western Union, Money Gram, Anelik, Unistream, Contact and
others).

According to the CBA press service, remittances to Armenia through
the banks - participants in these systems amounted to 385 bln 819 mln
drams about 1 bln 127.9 mln USD in 2007 (their numer made 1,527,585),
exceeding 9.8fold the amount of remittances abroad. The net inflow of
money through commercial banks made 346 bln 451 mln drams, growing by
69 bln 495 mln drams as compared with 2006. The amount of remittances
to Armenia grew 1.2fold (by 70 bln 351 mln drams) on 2006. The average
amount of a remittance to Armenia made 253 thousand drams in 2007,
not changing as compared with 2006.

The organizations, which are members of the international money
transfer systems and implement money transfers in the territory of
Armenia, made payments of 3 bln 504 mln drams to their customsers in
Armenia and implemeted transfers of 718 mln drams abroad in 2007. The
average amount of a payment to customers (in remittances to Armenia
made by payment and settlement organizations through a money transfer
system) made 101 thousand drams in 2007, remaining at the level of
the previous year. Money transfer implementing organizations made
money transfers through Armenian commercial banks as well.

Transfers to Armenia through the Swift system amounted to 1 trillion
823 bln drams (declining by 34 bln drams on the previous year), while
their number made 287,786. The average amount of a transfer made 6.3
mln drams, declining by 0.5 mln drams as compared with 2006. Payments
to natural persons (in transfers through the Swift system) grew by
13.7 bln drams to about 203 bln drams, while the average amount of
a payment increased by 62 thousand drams to 2.16 mln drams. At the
same time, the amount of natural persons' transfers abroad through
the Swift system grew by 22 bln drams to 303 bln drams.

On the whole, the amount of transfers to natural persons through
commercial banks and money transfer implementing organization grew
by 17% as compared with 2006 and made 599 bln drams, while the amount
of transfers abroad grew by 7% to 343 bln drams.

http://www.nt.am/news.php?p=0&c=0&t=0&r=0&year=2008&month=02&day=21&shownews=109967&LangID=1#109967

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Re: Armenia's Economic Pulse

Russo-Armenian Economic Relations (Part I)

RUSSIA BUSINESS DEVELOPING POSITIONS IN ARMENIA ECONOMY

ITAR-TASS News Agency, Russia
September 24, 2007 Monday

Russian businesses are strengthening their positions and influence
in the Armenian economy.

Now the whole market of the republic's fixed and mobile communication
is controlled by Russian businesses. Vympelcom (trade mark Bee Line)
is the owner of the Armenian telephone company ArmenTel (the whole
fixed and a part of mobile communication). On September 14, Mobile
TeleSystems (MTS) announced the purchase of 80 percent of stocks of
the leading operator of the Armenian cellular communication Vivacell.

The Russian business positions in the Armenian power engineering
industry are very strong. In 2005, the Interenergo company that is a
daughter of the UES (Unified Energy Systems) of Russia electric power
utility, bought the right to manage Electrical Networks of Armenia
for a period of 99 years.

On September 2, the leader of the industry and one of the largest
taxpayers of Armenia - the ArmRosgazprom JV for gas transportation
marked its 10th anniversary. Russia's natural gas monopoly Gazprom
holds 57.79 percent of stocks of this monopoly seller of gas on the
Armenian domestic market, 34.7 percent of the JV stake belongs to
the Armenian government (the Energy Ministry) and 7.71 percent to
the ITERA Group. ArmRosgazrpom is taking part in the laying of a gas
pipeline from Iran to Armenia and is going to export electric power
to neighbouring counties.

The fuel and energy sector remains the most promising sphere of
bilateral cooperation. Armenia gets 80 percent of needed energy
resources from Russia. The Armenian NPP is the main cooperation
facility. The nuclear power plant was shut down after a devastating
earthquake in Armenia in 1989 and in 1996 is was de-mothballed with the
participation of Russian specialists. The power unit of the Armenian
NPP that uses Russian nuclear fuel generates up to 40 percent of
electricity consumed in the republic. From April 2003 the NPP was
transferred to the financial-industrial management of the INTER RAO UES
closed joint stock company. The Sevan-Razdan hydropower plant cascade
was transferred to the property of RAO UES as part of settlement of
the Armenian debt to Russia for the supplied nuclear fuel.

In December 2003, INTER RAO UES started to manage Armenia's largest
Razdan thermal power plant that accounts for about 30 percent of
all power generating capacities of the republic. In January 2004,
the plant was finally handed over to Russia as part of the debt
settlement. The Razdan Energy Company was created that took over the
property rights of this facility.

On Friday, it was announced here that Russia's major investment company
Troika Dialogue is buying Armimpexbank. Russia's Vneshtorgbank had
earlier become the owner of Armsberbank and renamed it into VTB Armenia
bank. The Russian insurance company Ingosstrakh owns 75 percent of
stocks of Armenia's major insurance company Efes (INGO-Armenia).

Military-technical cooperation is an important aspect of
Russian-Armenian relations. Within its framework Armenia purchases
equipment and weapons at internal Russian prices. Armenian military
undergo training at Russian military academies free of charge or on
privileged terms.

In the meantime, Armenian Prime Minister Serzh Sarkisyan is beginning
an official visit to Moscow to discuss a broad spectrum of issues of
Russian-Armenian cooperation in the political and economic spheres.

He will meet Russian Prime Minister Viktor Zubkov, hold talks on
various aspects of bilateral relations and give a press conference
at Itar-Tass.

It is the first visit to Russia paid by the current Armenian cabinet
head who was appointed for the post in April. Sarkisyan retained
the post of the head of the Armenian part of the intergovernmental
commission on economic cooperation between Russia and Armenia.

The two countries' cooperation is developing on the bilateral
and multilateral basis. Armenia, the same as Russia, is for the
strengthening of the Commonwealth of Independent States (CIS) and a
member of the Collective Security Treaty Organisation (CSTO).

Russia and Armenia have become reliable economic partners that found
reflection in their treaty "on long-term economic cooperation for
the period up to 2000,"signed in September 2001 by Russian President
Vladimir Putin and Armenian President Robert Kocharyan.

Russia today is the main trade partner of Armenia. Russia's Exports
to the country are mainly nuclear fuel and equipment supplies for
the Armenian nuclear power plant, energy resources, machinery and
equipment. Food products, raw materials, unprocessed aluminium, as
well as liquors and semi-precious stones and metals prevail in the
structure of Russian imports from Armenia. About 70 Russian regions
are maintaining bilateral economic relations with Armenia.

The volume of trade turnover between Russia and Armenia has doubled
and may exceed 0.5 billion US dollars by the end of the year, Russian
Acting Transport Minister Igor Levitin who heads the Russian part of
the intergovernmental cooperation commission said in Armenia last
week. He stated that Russian investments in the Armenian economy
have also increased. In the first half of the year they amounted to
74 million dollars.

The lack of direct transport service between the two countries is
the main obstacle to the development of Russian-Armenian economic
cooperation. The Abkhazian section of the railway between Russia and
Armenia is closed, therefore the main part of cargoes from Russia
to Armenia is transported via the Black Sea through the Georgian
Poti port and then by railway. Measures are currently being taken to
increase the load on the Kavkaz-Poti ferry service.

http://www.gab-ibn.com/IMG/pdf/Ru2-_Russia_Business_Developing_Positions_In_Armenia_Economy.pdf

SOARING TRADE BOOSTS RUSSIAN-ARMENIAN ECONOMIC TIES
By Emil Danielyan

Eurasia Daily Monitor, DC
Oct 30 2007

Armenia's trade with Russia has increased dramatically this year,
paralleling the growing Russian economic presence in the country,
which has sparked concerns about Armenia's economic independence
and even national security. The almost 62% year-on-year rise in
Russian-Armenian trade registered in the first eight months of 2007
comes despite Russia's continuing transport blockade of Georgia,
Armenia's main commercial conduit to the outside world.

According to the most recent data posted by Armenia's National
Statistical Service (NSS) on its website, http://www.armstat.am, the volume
of bilateral trade totaled $404 million in January-August 2007, up
from $250 million registered during the same period last year. Much
of the gain resulted from an almost 100% surge in Armenian exports
to Russia, most of them alcoholic beverages and prepared foodstuffs.

Even so, Armenian imports of Russian commodities and goods (notably
natural gas) continued to account for most of the bilateral commercial
exchange, rising by 50% to about $280 million.

Consequently, Russia saw its share in Armenia's external trade
grow from 13.1% to 15.2%, solidifying its status as the South
Caucasus state's single largest trading partner. The NSS reported
similarly strong gains in Armenia's trade with Georgia, Ukraine,
and Kazakhstan. As a result, the share of non-Baltic former Soviet
republics in its trade reached 32.6%, up from 28.4% recorded in
January-August 2006. The European Union, by comparison, accounted
for 38.2% of the January-August 2007 turnover.

Officials in Moscow and Yerevan have welcomed the growing commercial
ties between their countries, which they say will reach a new high of
$700 million in the full year 2007. Speaking after talks in Moscow on
September 25, the Russian and Armenian prime ministers said they would
try to ensure that Russian-Armenian trade hits $1 billion next year
(Armenian Public Television, September 25). Armenian Prime Minister
Serge Sarkisian instructed his ministers to closely work with their
Russian counterparts to meet this target (Statement by the Armenian
government, September 27). Nikolai Ryzhkov, a Russian lawmaker
co-chairing a Russian-Armenian inter-parliamentary commission, came
up with a more conservative estimate during a mid-October visit to
Yerevan, predicting bilateral trade will likely pass $1 billion mark
only in 2009 (Interfax, October 19).

Russia-Armenian trade is growing strongly despite Russia's decision
in June 2006 to close its main border crossing with Georgia. Moscow
cited the need to conduct repairs on Russian border guard and customs
facilities. The move, whatever its real motives, hit hard Armenian
companies that heavily relied on the Upper Lars crossing in shipping
goods to Russia and other parts of the former Soviet Union. Armenian
government officials and lawmakers have since been lobbying their
Russian counterparts to reopen Upper Lars. According the Armenian
ambassador in Moscow, Armen Smbatian, the Russians have promised to
do that some time in 2008 (RFE/RL Armenia Report, September 28).

Armenian exporters, meanwhile, appear to have quickly adapted to the
new situation through an even greater reliance on a rail-ferry link
between the Georgian Black Sea port of Poti and Ukraine's Ilyichevsk.

A similar ferry service, designed to primarily cater to Armenia,
was launched in April 2007 between Poti and the Russian port of
Port-Kavkaz. However, the service has yet to become regular and
frequent enough to process substantial amounts of freight. Sarkisian
reportedly raised the issue with his Russian counterpart, Viktor
Zubkov, during their Moscow meeting.

Zubkov told journalists after the talks that Russian companies would
invest $1.5 billion in Armenia "in the near future." He gave no
details, saying only that much of those investments will be channeled
into the construction of an oil refinery in southeastern Armenia
that will process crude from neighboring Iran. The ambitious project
featured prominently during Iranian President Mahmoud Ahmadinejad's
October 22 visit to Armenia. Speaking at a joint news conference
with Ahmadinejad, Armenian President Robert Kocharian said Yerevan
and Tehran agreed to press ahead with the project's implementation.

Another top Russian official, Transport Minister Igor Levitin, said
in Yerevan on September 14 that Russian investments in the Armenian
economy will reach a record-high level of $500 million in 2007 (Azg,
September 15). He did not specify whether the figure includes $430
million that the Russian telecommunications operator MTS paid to
purchase Armenia's largest mobile phone network, VivaCell, from a
Lebanese-owned firm. The deal, officially announced in Yerevan on
September 14, came almost a year after the $500 million acquisition
of Armenia's national telephone company and its wireless network by
another Russian telecom operator, Vimpelcom.

The Armenian government is believed to have played a key role in both
takeovers that left another sector of Armenia's economy under Russian
ownership. It has also been instrumental in Russian control of the
Armenian energy sector. That control has become near total since the
signing of a controversial April 2006 agreement that enabled Armenia
to avoid a doubling of the price of Russian gas until January 2009
in return for handing over more energy assets to Russia. It was
officially confirmed on September 12 that those assets include the
entire Armenian section of an under-construction gas pipeline from
Iran (Haykakan Zhamanak, September 13). It will now be owned by the
Armenian national gas company in which Russia's Gazprom conglomerate
has a controlling stake.

The tightening of Russia's economic grip on Armenia is widely
attributed to Kocharian's and his preferred successor Sarkisian's
obvious desire to ensure the Kremlin's continued support for their
regime. The two men, who single-handedly make all key decisions
affecting the nation, are poised to cede more industries to Russian
companies ahead of next spring's Armenian presidential election.

Those include Armenia's rail network and largest gold mining company.

http://www.jamestown.org/edm/email-to-friend.php?article_id=2372546

ARMENIAN-RUSSIAN TRADE TURNOVER POSSIBLE TO INCREASE

ARKA News Agency, Armenia
Oct 4 2007

YEREVAN, October 4. /ARKA/. Armenian-Russian trade turnover can be
increased through cooperation in atomic energy, RF Ambassador to
Armenia Nikolay Pavlov stated in his interview to the Golos Armenii
newspaper, commenting on RA Premier Serge Sargsyan's official visit
to Moscow.

The Ambassador explained that the matter concerns join exploration
of uranium deposits in Armenia.

On this context, Pavlov pointed out great importance of improving
the schedule of the Caucasus-Poti ferry service. "Of we resolve the
problem of excisable products at the customs station of the port of
Caucasus before the end of the year, the trade turnover will certainly
increase," Pavlov said.

Speaking of the investment volume, the RF Ambassador stated that
Russian investments in Armenia's economy are not so large - about
$800mln.

"At their recent negotiations in Moscow, the Prime Ministers discussed
the issues of construction of an oil refinery in Armenia, development
of processing enterprises in the country with the involvement of
Russian business. Russian investors are ready to invest capital
in Armenia," Pavlov said. He added that such companies as Gasprom,
VTB, RAO EES Rossii, Vympelcom and RUSAL are and will go on working
with Armenia.

As regards the construction of an oil refinery in Armenia, a
feasibility report is being worked out. "We must specify the capacity
of the refinery and the consumers. This is a most interest project,"
he said.

Pavlov pointed out that the Armenian-Russian Intergovernmental
Commission for Economic Cooperation held a meeting in Yerevan
recently. A number of documents were signed at the meeting, namely,
a contract with the Armenian "Armavia" airline for a purchase of
Sukhoi Super Jet 100 airplanes worth over $50mln in 2008, a corrected
schedule of measures for the implementation of a program of long-term
Armenian-Russian economic cooperation until 2010.

In January-July 2007, Armenian-Russian trade turnover increased by 57%
and totaled $330.1mln. Armenia's exports to Russia totaled $111.8mln
(17.7% of Armenia's total exports) - a 2.05-fold increase compared
to January-July 2006.

http://www.armeniandiaspora.com/archive/111814.html

[Siamanto]

Re: Armenia's Economic Pulse

Russo-Armenian Economic Relations (Part II)

ArmeniaNow 2 Nov 2007


DEBATING BIG BROTHER'S PRESENCE: CONCERNS LINGER OF ARMENIA AS `OUTPOST'

Gayane Abrahamyan

Russia continues to expand its presence in Armenia's economy, buying
up infrastructures of national importance. The increased
`Russification' of Armenia gives way to concerns that Speaker of
Russia's State Duma Boris Grizlov in 2004, calling Armenia an
`outpost' is coming true.

Strategic partner Russia owns 80 percents of energy sources and
systems of independent Armenia, which has forced Armenia into the
state of an `energy colonization', economists say.

With the latest deal Russia took possession of the communication
sphere. On September 14th the Russian MTS got 80 percent of
International Cell Holding Company, the owner of K-Telecom for 310
million euros. 90 percent of Armenia's leading communications operator
ArmenTel were bought by Russian Vimpelcom Company in November 2006 for
382 million euros.

Armenia still owns some infrastructure including the railroad, but the
Russian Railroads Company will be the most likely winner in the tender
announced on October 15th as it competes with an unknown company from
India.

Last year, Andranik Manukyan, Minister of Transport and Communications
of the Republic of Armenia stated that the only way to save the
Armenian railroad is to hand it over for concession management to
Russia, something the RA government is likely to do.

The beginning of the Russian policy of getting economic leverages is
symbolically chosen to be the year of 2002, when the `Property for
Debt' deal was set into circulation; according to the deal Armenia
gave Russia 4 enterprises and the most powerful Hrazdan
Thermo-Electric Station as a pay for its debt to Russia of $97 million.

`Russia intruded into its strategic partner's home like a bailiff and
demanded our strategic entities for just $97 million. This took place
in case when Russia had forgiven much larger debts to others: say, $40
billion to Turkey, Syria and had even reconstructed Georgia's debt in
$150 million with the right of privilege to repay in 6 years,'
economist Eduard Aghajanov says.

In 2001 Putin called the criticism of the deal `hysteria over selling
the Fatherland' saying those times have passed and the economy has to
go in a different direction.

The `hysteria' of opposition and economists became even fiercer, when
none of the enterprises was re-launched within the 5 years since then,
gave no production and did not bring any use to the economy of the
country.

Andranik Mihranyan, Russia-based political scientist of Armenian
descent believes the deals have been made by mutual agreement and
Russia has never imposed conditions unacceptable for Armenia.

`Russia simply has very little interest in those plants. It has even
appeared that Russia does not need them, because there are numerous
similar factories in Russia itself that do not operate.'

A similar opinion was expressed in Yerevan recently by the co-chairman
of the Armenian-Russian inter-parliamentary commission Nikolai
Rizhkov, saying the plants received particularly by the `Property for
Debt' deal were not profitable for them. `Some of our expectations
connected with those enterprises did not prove right.'

Economic analyst Aghajanov asks who forced the Russians to purchase
the enterprises. And answers that the decision on the purchase has not
been economic, but rather political aiming to get as much leverage in
the Armenian economy as possible.

The most powerful leverage is the energy system. Russia bought more
than 80 percent of the country's energy sources and system, including
the 5th energy bloc of the Hrazdan Thermal-Electric Station, the Sevan
Cascade, distribution network, and took the Metsamor Nuclear Power
Plant for licensed management because of a set state monopoly in this
sphere. With the exception of thermal-electric and several minor
hydro-electric stations, the rest are owned by Russian companies.

Besides, no cash money has been given for the majority of these structures.

The first energy infrastructure that became Gazprom's was the 45
percent of ArmRosGazProm. Russians paid in gas instead of the $148
million over several years.

According to official data the Russian RAO UES paid $25 million for
the Sevan-Hrazdan cascade; however, some sources mention the RAO UES
took the cascade in exchange for the Armenian debt for nuclear fuel.

The Hrazadan Thermal-Electric Station went into Russian possession as
a result of the `Property for Debt' deal. An exception is the Electric
Network of Armenia as RAO UES has to pay $70 million in exchange -
though not to Armenia but to the owner of the network - the British
Midland Resources.

The most controversial deal further empowering the economic leverages
of Russia and deepening the disproportion of the Yerevan-Moscow
relations was signed in 2006, when the 5th bloc of the Hrazdan
Thermo-Electric Station, the last significant energy system, was ceded
to Russia (the other four blocs already belonged to the Russian
company).

Under Russian pressure the initial length of Iran-Armenia pipeline was
also drastically minimized, thus preventing its competitiveness to the
Russian energy companies.

This new deal was called `Property for Gas', which, Aram Sargsyan,
chairman of the oppositional Republic Party says should in fact be
called `Everything for the Post.'

The necessity in `Property for Gas' deal appeared after Russia decided
to increase the price for the gas for 2.5 times ahead of parlamentary
elections in Armenia; and coincided with time when Armenia was making
attempts to diversify its energy sphere.

After protracted negotiations, the government of RA gave preference to
Iranian Mar and Sanir companies in both tenders for the construction
of the Iran-Armenia gas pipeline and the modernization of the Hrazdan
Thermal-Electric Station the same year.

`Russia realized quite well that this cooperation with Iran is a
serious alternative and blackmailed Armenia by increasing the price
for gas,' former Prime Minister, and presidential candidate Vazgen
Manukyan says insisting the latest deal is a new leverage in the hands
of Russia to be used for political purposes.

`In the presidential election in 2008 Russia may say: `If my proxy
does not come to power I will make the price for the gas $250, if he
does - it will remain at $110',' Manukyan told Armenianow.

The 5th bloc of Hrazdan station was given to Russia for $60 million in
cash, while the remaining nearly $189 million will be paid to the
ArmRosGazProm as subsidy.

For three years the citizens of Armenia will be getting relatively
cheap gas; however, another highly important energy entity of the
republic will go into Russia's possession. According to the agreement
the prices may go up beginning 2009.

Radical opposition political analyst Suren Surenyants is confident the
authorities agreed to the economically unprofitable gas deal to
prolong their stay in power and to fulfill all the `directives' of the
Kremlin.

Vahan Hovhannisyan, deputy speaker of the National Assembly, member of
the Armenian Revolutionary Federation insists Armenia-Russia relations
are a strategic partnership in nature and include mutual obligations
of the sides: `We may frequently dislike those obligations, but they
are unavoidable.'

`After the Soviet years it's natural that the relations with Russia
are viewed as colonial. However, the situation has changed and I don't
see a threat that Russia may use its economic leverages for political
purposes,' a co-chairman of the Armenia-Russia Inter-Parliamentary
Commission Vahan Hovhannisyan said.

http://www.armenianow.com

RUSSIAN-ARMENIAN ECONOMIC FORUM TO BE HELD IN YEREVAN ON JANUARY 20-21


YEREVAN, JANUARY 14, NOYAN TAPAN. A Russian-Armenian economic forum
will be held in Yerevan on January 20-21. The Union of Armenians of
Russia (UAR) and the RA ministry of trade and economic development are
the event's organizers. NT correspondent was informed by the UAR that
it is envisaged that at the January 21 plenary sitting of the forum,
the Armenian prime minister Serge Sargsian will address forum
participants with an opening speech, while the chairman of the UAR Ara
Abrahamian will make a speech of welcome.

During the plenary sitting, the RA minister of trade and economic
development Nerses Yeritsian will give the report "The Development
Prospects and Priority Investment Directions of Armenia's Economy". The
director of the Armenian Development Agency (ADA) Tigran Davtian will
make the report "The Current Investment Environment in Armenia".

On the same day A. Abrahamian and N. Yeritsian will hold a joint press
conference. Individual meetings of businessmen - forum participants
will take place. 60-70 businessmen are expected to arrive from Russia
to participate in the forum.

http://www.armeniandiaspora.com/archive/122782.html

RUSSIA HAS INVESTED $1 BILLION IN ARMENIA

ARMENPRESS
Jan 21, 2008

YEREVAN, JANUARY 21, ARMENPRESS: Addressing an Armenian-Russian
business forum in Yerevan today Armenian prime minister Serzh
Sarkisian said the event was an important avenue for businessmen of
both countries to seek new ways for boosting their ties.

He said Russian investments in Armenia's real sector of economy since
its independence have amounted to nearly $1 billion or one third of
all foreign investments and about 900 ventures with joint capital
have been opened.

The Armenian prime minister singled out, particularly, IT, machine
building, tourism and some other sectors as areas in which both
countries have huge resources to make progress.

The forum was attended by Igor Levitin, Russian transport minister
who co-chairs together with Serzh Sarkisian the bilateral government
commission for cooperation.

Igor Levitin for his part described Russia's relations with Armenia
as dynamic. He said trade between Armenia and Russia grows over 50
percent annually. For example, it grew 60 percent in 2006 and is
expected to grow 63 percent for 2007.

The Russian minister also spoke about Russian investments in Armenia's
major sectors-energy, transport, mining and banking . He said removing
transport obstacles will give a very strong push to bilateral trade.

Armenia has had no overland connections with Russia since 2006 July
after Russia closed a border check point on its border with Georgia
for a repair that was to end in several months. The trade is being
carried out through ferry boats which join Georgian ports with Ukraine
and Russia.

The Russian minister urged Armenian companies manufacturing building
materials not to miss their chance and take part in construction of
sporting facilities for southern Russian city of Sochi that will host
2014 Winter Olympic games.

Levitin reminded that Russia is ready to invest in prospecting of
uranium in Armenia. An agreement to that end was signed in Yerevan
last year.

http://agbu.org/newsbulletin/2008-01-0119.pdf

http://armenpress.am/eng/news/news.htm

MOSCOW REGION, ARMENIA SIGN COOPERATION AGREEMENT

ITAR-TASS
Jan 30 2008
Russia

YEREVAN, January 30 (Itar-Tass) -- The governments of Armenia and
the Moscow region signed a cooperation agreement on Wednesday.

The signing of the document was in the centre of Moscow region Governor
Boris Gromov's one-day visit to Yerevan.

When receiving the Moscow region governor, Armenian President Robert
Kocharyan said he was satisfied with the signed agreement.

He is confident that the document will give an additional impetus to
the development of Russian-Armenian cooperation.

The Moscow region has a big potential and its authorities are ready
to tap it in order to enhance Russian-Armenian relations, Gromov said.

During his meeting with Armenian Prime Minister Serzh Sarkisyan,
the governor discussed further development of bilateral interaction.

The interlocutors pointed to the key role of contacts between the
Russian and Armenian regions in that cooperation.

The Moscow region and Armenia have traditionally good relations,
Gromov said.

The signed agreement envisages the setting up of working groups
in various spheres and specific programs of cooperation, including
agriculture, housing construction, and culture, the governor said.

Our main task is to create favourable conditions for the development
of business, economic, cultural and social contacts, Gromov said.

In 2007, trade turnover between Armenia and the Moscow region had
neared 40 million U.S. dollars, the governor reminded, adding,
"There is no point in saying that this index is high."

http://www.unescap.org/tid/tisnet/news308.pdf

[Siamanto]

Re: Armenia's Economic Pulse

Russo-Armenian Economic Relations (Part III)
The Position of the Current Leadership: Economic Relations, Cooperation or Integration?

ARMENIA SEEKS STRONGER TIES WITH RUSSIA
Sergei Blagov

EurasiaNet
March 27 2008
NY

Serzh Sarkisan, whose controversial election as president of Armenia
precipitated political violence in Yerevan, is hoping closer ties with
Russia can hasten a return of stability in the South Caucasus country.

Sarkisian -- the current prime minister who is scheduled to be
inaugurated as President Robert Kocharian's successor on April 9 --
flew to Moscow on March 24 for meetings with Russia's presidential
tandem, outgoing chief executive/incoming prime minister Vladimir
Putin and president-elect Dmitry Medvedev. [For background see the
Eurasia Insight archive].

Already Russia's closest ally in the region, Sarkisian said he was
committed to "deepening and expanding" Armenian-Russian ties. He also
expressed gratitude for Moscow's support of the Armenian government's
handling of the political crisis in Yerevan. [For background see
the Eurasia Insight archive]. "We always felt your assistance in the
election process," Sarkisian said during a meeting with Putin. "To
be honest, we never expected such clear-cut" support.

Putin and Medvedev seemed happy to take the Armenian leader up on
his offer of closer relations. "This is your first visit after the
elections, and, of course, we see special symbolism in this fact,"
Medvedev said.

Putin, meanwhile, clearly indicated that Armenia's current domestic
difficulties would not hamper the Kremlin's ability to do business
with Sarkisian. "I know that political processes in Armenia are
complicated," Putin acknowledged. The Russian leader then expressed
confidence that "no matter how the internal political process in
Armenia unfolds, what has been built in the past years in relations
between the Russian Federation and Armenia will be maintained and
will develop in the future."

Sarkisian indicated that his incoming administration would seek to
quickly restore a sense of stability in the country, pledging to
create "an atmosphere of tolerance." The centerpiece of his emerging
stabilization program is an initiative to boost social welfare and
economic opportunity. [For background see the Eurasia Insight archive].

The two countries have been doing a lot of business in recent years.

Trade between Russia and Armenia reached $800 million in 2007,
marking a 60 percent increase over the previous year, according to
the Russian official statistics. Moscow voiced expectations that
bilateral commerce would top $1 billion in the near future.

Trade between Russia and Armenia has been hampered by transportation
bottlenecks. For over a year, Sarkisian has been lobbying Russian
officials to expedite the opening of ferry service connecting Russian
Black Sea ports and the Georgian city of Poti, a move that would ease
Armenia's transport woes. Moscow's recent decision to ease transport
restriction with Georgia could revive hopes that ferry service could
begin soon. [For background see the Eurasia Insight archive].

One notable bilateral trade development occurred February 6,
when Atomredmetzoloto, a uranium mining subsidiary of Russia's
nuclear monopoly Rosatom, created a joint venture in Armenia to
develop uranium reserves estimated at 30,000-60,000 tons. The deal
was clinched during a visit to Armenia of the Prime Minister Viktor
Zubkov, who was accompanied by Sergei Kiriyenko, head of Rosatom.

In Yerevan, Kiriyenko pledged to participate in a tender to build a
new nuclear power plant in Armenia. The initial estimated cost of the
project is $1 billion. Zubkov and his Armenian counterpart Sarkisian
also inked an agreement covering Armenia's participation in the
International Enrichment Center in Angarsk, in Russia's Irkutsk region.

One potential trouble spot in relations centers on energy supplies.

Armenian officials have hoped to ensure, through their expressions of
loyalty to Moscow, that the Kremlin-controlled energy conglomerate
Gazprom would give Armenia a preferential price for gas. Armenia
currently pays $110 per thousand cubic meters (tcm) and this contract
price remains effective till January 1, 2009. That price is far
lower than what some other former Soviet states pay Gazprom. Yet,
even if Gazprom was inclined to maintain Armenia's favorable rate,
events now seem to mandate that Yerevan will face a substantial price
increase in 2009. Gazprom's recent pledge to pay "European market"
prices to Central Asian producers means that the gas that it obtains
from the region with cost the Russian company upwards of $300/tcm. It
will have no choice, then, but to pass costs on to its customers. [For
background see the Eurasia Insight archive].

http://www.eurasianet.org/departments/insight/articles/eav032708a.shtml

CHAIRMAN OF CBA: INTEGRATION PROCESSES WITH RUSSIA WILL GROW AT A QUICKENED PACE

arminfo
2008-03-25 17:03:00

ArmInfo. Integration processes with Russia will grow at a quickened
pace, Chairman of the Central Bank of Armenia (CBA) Tigran Sargsyan
said in his interview with "Rossiyskaya gazeta" (Russian newspaper).

According to him, time and confidence are the important elements
of modern economy. If there is mutual understanding, the economic
contacts are established quickly. Mentality, traditions, the huge
cultural layer, which have always unified Armenia and Russia are
becoming a strong stimulus for new business opportunities. It is
much more complicated with Europe and America: establishment of new
economic relations needs time, and time is money. The integration
processes with Russia will leave behind the integration processes
with other countries.

Commenting upon the possible suspension of the Millennium Challenge
Program in Armenia, Sargsyan said that this program would greatly
help the country, though the country mostly relies on its own
economic potential. "Armenia will go forward along the path of market
reforms. Those indices, which already exist and those which will by
all means be, will allow our American colleagues to reconsider the
decision and renew the project. Due to the strong basis of relations
with Russia, we'll manage to overcome a number of problems, including
the temporary suspension of the financial support under the Millennium
Challenge Program. The relations with Russia, which have become more
intensive over the past three years, prove that the financial and
economic problems in Armenia are overcome", he said.

The CBA chairman said that actually being isolated from the foreign
world by transport blockade and having no serious natural resources,
Armenia demonstrates sustainable rates of economic growth. In 2007,
the growth rate made up 13,7%, with inflation rate being 6,6%. This
is the lowest inflation index among the CIS countries. The real
incomes of the population annually increase by 19-20%, the poverty
level decreased twice over the past three years. To a large extent,
this is the result of the economic policy conducted the Armenian
government headed by Armenian President Robert Kocharyan and Armenian
Prime Minister, newly-elected President Serzh Sargsyan.

Russia traditionally maintained good relations with Armenia. After the
disintegration of the Soviet Union, the cooperation dropped abruptly:
the former plan schemes went out of date, and the new ones were not
created yet.

Cooperation on market bases became possible over the past five years
when the economy of both states consolidated to the extent possible.

In 2007 the Russian-Armenian trade turnover grew by 65% to $700mln
against just $300mln in 2005. Last year Russia had the biggest 16.1%
share in Armenia's foreign trade. Besides, Russia is home to a very
big Armenian community and almost 80% of all private money transfers
from Armenia are sent to Russia.

Presently, Russia and Armenia are implementing a whole number of joint
projects. In 2008 they are planning to complete the construction of
the second section of Iran-Armenia gas pipeline, a project financed
by AromRosgazprom (joint venture of Gazprom, Itera and Energy Ministry
of Armenia).

The company has started to modernize the Sevan-Hrazdan Water Power
Plant and is building Kajaran-Ararat gas pipelines. In 2008-2010
AtomRosgazprom is planning to invest almost $30mln in the Armenian
economy, particularly, in the restoration of Yerevan and Azrni water
power pants, modernization of Argel, Sevan and Kanaker WPPS. Presently,
Armenia buys Russian gas at a preferential price - $110/1,000 c m,
while for its neighbors the price is no less than $230/1,000 c m.

In the nuclear sphere, Rosatom and Ecology Ministry of Armneia have
signed an protocol for establishing a JV for prospecting, mining
and processing of uranium in Armenia. The JV is planning to spent
several hundreds of millions of US dollars on this project. In early
Feb 2008 the foreign ministries of Russia and Armenia exchanged notes
on Armenia's joining the International uranium Enrichment Center,
set up by Russia and Kazakhstan in May 2007.

Rosatom is going to take part in the tender for the construction of
new nuclear power plant in Armenia. The Russian business is active
in Armenia's banking sector. In late 2007 Gazprombank bought 80.09%
stake in Armenian-Russian Export-Import Bank (Armeximbank).

Such big players as Troika-Dialogue, Unibank, Gazprombank, VTB have
come to Armenia. Russian companies control a big part of Armenia's
telecoms and manufacturing sectors. MTS OJSC owns 80% of the mobile
telecom operator K-Telecom (VivaCell), while VimpelCom owns the
fixed and mobile telecom operator ArmenTel. Rusal owns Armenal foil
rolling plant.

Rostekhnologies State Corporation has specific investment plans
in Armenia's engineering and machine-building sectors. Since 2002
RosDefenseExport has supplied Armenia with military products worth
$25mln. Russian Railways manages Armenian Railways Company and has
promised by 2010 to restore the railway communication with Turkey and
by 2009 with Azerbaijan. The Russian company is planning to invest
$570mln in Armenian railways. If the transport blockade of Armenia
is lifted and the Abkhazian section is opened, this figure may grow
to $2.132bln. The development of the transport infrastructure will
help us to more effectively use our economic capacities.

Armenia's legislation is rather liberal, so, the Russian business
has no problems on the Armenian market. International experts say
that the Armenian economy is much more open and attractive than the
economies of the other CIS countries.

The Armenian authorities are working hard to turn Armenia into the
financial center of the region. Armenia is a place where different
banking cultures can work in harmony and dialogue.

http://www.arminfo.info/

CENTRAL BANK HEAD: ARMENIA AND RUSSIA TO SPEED UP COOPERATION DEVELOPMENT

ARKA
March 25, 2008

YEREVAN, March 25. /ARKA/. Armenia and Russia to speed up their
cooperation development, Tigran Sargsyan, chairman of the Central
Bank of Armenia, said Monday in an interview with Rossiyskaya Gazeta.

He pointed out time and trust as important factors of economic
development.

He thinks these factors lay favorable ground for establishing
economic ties.

"Mentality, traditions and cultural relations have always united
Russia and Armenia and created favorable environment for establishing
business ties", Sargsyan said.

He said that this doesn't apply to Europe and America - time is needed
for establishing new economic relations, and time is money.

"Integration processes with Russia will outdo integration with other
countries", the Central Bank head said.

He said that once Armenia's economic relationship with Russia lagged
behind political, but in recent tree years, the countries built up
political relations.

"Armenian and Russian governments view new industries, changeover
to science intensive economy and high technologies as top-priority
focuses.

This will spur our economies integration", Sargsyan said.

Armenian-Russian trade turnover grew 65.5% to $704.1 million. Armenia's
exports to Russia totaled $201.8 million (17.4% of Armenia's exports)
in 2007 after growing 66.5%, compared with the previous year.

Imports from Russia reached $502.3 million in 2007 after growing 65.1%,
compared with 2006.

As a whole, Russia has imported commodities worth $570.5 million
(17.4% of total imports).

Statistical reports say, in 2007 Russian imports reached the record
high making 15.9% of Armenia's foreign trade turnover.

http://www.arka.am/eng/economy/2008/03/25/8693.html

[Siamanto]

Re: Armenia's Economic Pulse

The Artsakh Report (Part I)


Trade

AMOUNT OF NKR FOREIGN TRADE TURNOVER INCREASED BY 75%

DeFacto Agency
April 10 2008
Armenia

YEREVAN, 10.04.08. DE FACTO. In 2007 the amount of the Nagorno-Karabakh
Republic foreign trade turnover made $ 277 million 392, 9 thousand,
which exceeds the level of 2006 by 75 %.

According to the information DE FACTO received at the NKR National
Statistic Service today, export had made $ 72 million 549, 6 thousand
(growth is 60 %), import - $ 204 million 843, 3 thousand (growth is
81 %).

Deficit of trade balance increased by 95 % as compared with 2006 and
made $ 132 million 293, 8 thousand.

In 2007 the amount of the NKR foreign trade turnover with the CIS
countries made $ 260 million 894, 8 thousand, or 94, 1 % of total
turnover. To note, $ 257 million 735 thousand (92, 9 % of the sum)
fall to the share of the RA.

In the total amount of export 47, 3 % make raw materials, 28, 8 % -
gems and semi-precious stones, precious metals and articles made of
them, and 10, 2 % - foodstuffs.

In import's structure 23, 8 % make raw materials, 17, 6 % - foodstuffs,
10, 8 % - production of vegetable origin, and 9, 6 % - cars, equipment
and mechanisms.

http://www.defacto.am/index.php?OP=71333225

Energy

One more project on electricity export

12-04-2008 12:23:34 - KarabakhOpen

Currently a program of development of energy sector is being drafted,
which involves exploitation of energy resources of the major rivers of
Karabakh, construction of small water power plants, thanks to which
Karabakh may start exporting energy, said Prime Minister Ara
Harutiunyan in a consultation yesterday.

The prime minister underlined that during the drafting of the program
an issue of review of tariffs occurred but the prime minister says it
is necessary to avoid change of tariffs.

Ara Harutiunyan underlined that currently Karabakh supplies 45 percent
of its demand, and imports power from Armenia. With regard to the
national energy company, Artsakh Energy, Ara Harutiunyan said the
company not only did not foster but also hindered the development of
the energy sector, sustaining major losses. The head of state urged to
reduce power loss. He said this year the sector generated 12 percent
more profit but it is not a limit.

Losses of power in Stepanakert and Hadrut were reduced, unlike
Kashatagh, Martakert and Shahumyan where the people in charge received
a warning.

The head of the electricity board of Kashatagh says electricity bills
60 kWh of which is subsidized by the government are not paid. The prime
minister proposed reviewing the mechanism of subsidizing. Loss of power
in the region is 52 percent compared with 72 percent in the same period
of last year. However, it is not enough. In Martakert the loss of power
is 23.6 percent, in Shahumyan 38.6 percent.

The prime minister said the heads of the regional offices of Artsakh
Energy will be fired if the situation does not change.

Several years ago the ex-prime minister Anushavan Danielyan worked out
a program of construction of small water power plants. The program
seemed realistic but it was not brought into being. The ex-prime
minister explained that there were no investors. If the current program
also relies heavily on investors, it may end up in the same way as the
previous program.

http://www.karabakh-open.com/src/index.php?lang=en&id=3&nid=8777

Tourism

BIG TOURIST CENTER TO OPEN IN STEPANAKERT

DeFacto Agency
March 26 2008
Armenia

YEREVAN, 26.03.08. DE FACTO. A big tourist center will open in former
polyclinic's building in Stepanakert, a shareholder of Tourist Center
CJSC Sergey Shahverdian told in an interview with Karabakh-Open.com.

The restoration works have already started.

According to S. Shahverdian, the building's architectural appearance
will be completely maintained. A tourist agency and an information
center for tourists will be placed here. There will also be exhibition
halls and other services necessary in tourist industry.

The restoration works mainly financed by Russia's Armenians will be
concluded in a year and a half. The territory of the park adjoining the
building, where an open-air exhibition is to be held, will be equipped
with modern amenities as well. "The Artsakh artists will have an
opportunity to exhibit and sell their works", Sergey Shahverdian said.

In his words, the idea to establish such a centre sprang up as early
as in 2004. "It was very important for us that the center should
be placed in an ancient building of the city restored in line with
historical-architectural and tourist requirements", S. Shahverdian
said. He also added they have made a right choice. "During the works
on pulling down additional walls and partitions we have found unique
arch apertures". "According to experts' estimations, the building
was constructed in eighteen fifties, after tsar's troops had been
dislocated in Karabakh", S. Shahverdian added.

http://www.defacto.am/index.php?OP=71332585

Agriculture

[The title is misleading, as the article suggests that during the first months of the current year, it was one third of last year's twelve months; it compares "apples and oranges???" Siamanto.]
CROPS ARE ONE THIRD OF LAST YEARS

KarabakhOpen
08-04-2008 20:44:36

The minister of agriculture Armo Tsatryan says the pace of sowing of
crops is normal. As of March 31, 1131.3 ha of crops have been sown
which is one third of last year's index.

The government provided seeds of potato, corn, soy, peas to farmers in
the form of interest-free loans. According to the minister, already
more than 300 tons of potato seeds, 215 tons of peas, 8 tons of corn
and 5 tons of soy have been distributed. Loan is due by October 1,
after the harvest.

Also Armo Tsatryan said in an interview with Karabakh-Open.com that
last year 1185 ha of potatoes was sown. This year 999.6 ha have been
sown by April, compared with 614.2 ha of the same period of the past
year. 213.8 ha of vegetables have been sown against 7.9 ha last year.

According to the minister of agriculture, 12 thousand ha of privatized
and rented land, as well as 1500 ha of the government reserve are
fallow. Half of 300 million drams foreseen for this program has
been disbursed to farmers, the rest will be disbursed in June after
cultivation. According to the minister, another 120 million drams
will be needed.

http://www.karabakh-open.com/src/index.php?lang=en&id=2&nid=8713

POTATO SEEDS AND FERTILIZERS AT MODERATE PRICE

KarabakhOpen
19-03-2008 11:56:55

Spring sowing has started, and the government provides assistance to
farmers. 1500 tons of nitrite fertilizers have been imported to NKR,
which is sold to farmers at a lower price thanks to the government
subsidy. 1 kg of fertilizer costs 104 drams of which the owners of land
pay 80 drams, those who rent land pay 100 drams, said the NKR minister
of agriculture Vladimir Zakiyan in an interview with the Azat Artsakh.

According to him, 274 tons of seeds of potatoes of early ripe sorts
have been imported. The price of the seeds is 230 drams. Seeds were
provided to all the regions. It is foreseen to buy another 30 tons
for the regions of Martuni and Kashatagh. It is also foreseen to
import seeds of corn, pea, bean and buckwheat.

http://www.karabakh-open.com/src/index.php?lang=en&id=2&nid=8405

[Siamanto]

Re: Armenia's Economic Pulse

The Artsakh Report (Part II)


Salary/Income

AVERAGE SALARY EXCEEDS THE COST OF LIVING 2.5 TIMES

KarabakhOpen
28-03-2008 11:17:07

According to the NKR National Statistics Service, the labor resource
of NKR was 81.6 thousand in 2007 and was up by 1.6 percent compared
with 2006. The economically active population totaled 59.1 percent,
which was up by 1.5 percent compared with 2006. As of January 1, 2008
the number of people employed in economy was 56.1 thousand compared
with 54.6 thousand in 2006, including 15.1 thousand self-hired people
and 41 thousand wage earners. 23.5 thousand people of working age did
not work or look for jobs, compared with 23.1 thousand people in 2006.

In 2007, according to the NSS, the average monthly wage of people
employed in the economy was 68,610 drams, and was up by 21 percent
compared with 2006. In addition, the monthly wage of people employed
in offices and organizations funded by the government was 77,235 drams
and was up by 20.2 percent compared with 2006. The monthly wage of
people employed in commercial and non-commercial organizations was
62,641 drams and was up by 21.8 percent.

In the fourth quarter of 2007, the ratio of the minimum salary to
the average salary was 26 percent, and to the cost of living was
64.3 percent.

The ratio of the average monthly wage to the cost of living was
247.3 percent.

http://www.karabakh-open.com/src/index.php?lang=en&nid=8553&id=2

Price Index/Cost of Living

CONSUMER PRICE INDEX 109.2% IN NKR IN JAN-MAR 2008

ARKA
April 10, 2008

STEPANAKERT, April 10. /ARKA/. The consumer price index was 109.2% in
the Nagorno-Karabakh Republic (NKR) in January-March 2008 as compared
with the corresponding period last year. The index of prices for food
products (alcoholic beverages and tobacco inclusive) was 114.9%, that
of prices for nonfoods 101.3% and that of prices for services 102.8%.

The NKR Statistical Service reports that the consumer price index
was 103.2% in the NKR in January-March 2008 as compared with last
December. The index of prices for food products (alcoholic beverages
and tobacco inclusive) was 104.6%, that of prices for nonfoods 101.7%
and that of prices for services 101.2%.

Price monitoring conducted by the NKR Statistical Service showed a
rise in the prices for a number of essential goods in the NKR. A 36.1%
rise in the price for bread was recorded in March 2008 as compared
with last March, a 27.9% rise as compared with last September and an
8.5% rise as compared with last December.

The respective rise in the price for flour was 73.9%, 44.4%
and 16.4%. The price for noodles rose by 14.2%, 13.8% and 3.1%
respectively. The price for rice rose by 3.6%, 7.4% and 2.9%, for
beef by 7.1%, 7.1% and 5.9%, for animal fat 29.4%, 23.7% and 6.8%,
for vegetable oil by 59.6% and 50.9% as compared with last March and
September respectively. A 3.5% fall in the price for vegetable oil
was recorded as compared with last December.

http://www.arka.am/eng/economy/2008/04/10/8929.html

In March 2008 price of bread grew by 36.1 percent compared with March
2007


12-04-2008 12:24:27 - KarabakhOpen


According to the results of monitoring of prices by the NKR National
Statistics Service, in March the prices of some foodstuffs went up.
Compared with the prices in March, September and December 2007, in
March 2008 the price of bread went up by 36.1 percent compared with
March, 27.9 percent compared with September and 8.5 percent compared
with December. The price for flour went up by 73.9 percent, 44.4
percent, 16.4 percent; noodles 14.2 percent, 13.8 percent, 3.1 percent;
rice 3.6 percent, 7.4 percent, 2.9 percent; beef 7.1 percent, 7.1
percent, 5.9 percent; animal fat 29.4 percent, 23.7 percent, 6.8
percent; vegetable oil went up by 59.6 percent compared with March,
50.9 percent compared with September, and went down by 3.5 percent
compared with December.

Compared with the CPI in December 2007, the CPI in March 2008 is 103.2
percent, foodstuffs (including alcohol and tobacco) 104.6 percent,
other goods 101.7 percent, services 101.2 percent. Among foodstuffs
increase was reported in potatoes 121.9 percent, bread 107.3 percent,
dairy products 104.7 percent, meat 104.6 percent, fruit 103.3 percent,
the NKR National Statistics Service reports.

Compared with the CPI in December 2007, in March 2008 the CPI was 102.5
percent in Stepanakert, 102.9 percent in Askeran, 103.9% percent in
Hadrut, 104.0 percent in Martakert, 104.3 percent in Martuni, 105.9
percent in Shushi and 103.7 percent in Berdzor.

Compared with the CPI in January to March 2007, in January to March
2008 the CPI was 109.2 percent, foodstuffs 114.9 percent, other goods
101.3 percent, services 102.8 percent, and compared with March 2007, in
March 2008 the CPI is 110.9 percent.

http://www.karabakh-open.com/src/index.php?lang=en&nid=4793&id=2

Workforce/Population Data

SOME INDEXES OF WORK'S MARKET IN 2007 IN NKR

Azat Artsakh Daily
Published on March 26, 2008
NKR Republic

As NKR National Statistical Service informs, working recourses, which
includes economically active and economically non active population,
in 2007 in NKR has compiled 82.6 thousand people, an increase in
comparison with the previous year - 1.6 per cent. Economically active
population, by whom a suggestion of manpower for creation of goods
and services in accountable scopes is satisfied in 2007 in NKR, it
compiles 59.1 thousand people, an increase in comparison with the
previous year - 1.5 per cent.

By 01.01.2008 condition, a number of occupyers in household has
compiled 56.1 thousand people, instead of the previous year's 54.6
thousand people, moreover, a number of hired workers - 41.0 thousand,
self-occupyers - 15.1 thousand people. In 2007 in NKR a number of
unemployment has compiled 5.1 per cent, instead of the previous year's
6.1 per cent. In the republic economically non active population,
who hasn't work in accountable period and hasn't looked for a job,
has compiled 23.5 thousand people, instead of the previous year's
23.1 thousand. In branch connection, an average monthly nominal wage
has been rather high especially in crediting and governing systems,
which have compiled 211.5 and 163.1 per cent. By results of the
4th quarter of 2007 a correlation of minimun wage in regard towards
average nominal wage has compiled 26.0 per cent, in regard towards
minimal consumer budget - 64.3 per cent and correlation of average
nominal consumer budget - 247.3 per cent.

http://www.armtown.com/news/en/aza/20080326/2557/

THE RATIO OF WORKING ADULTS TO CHILDREN AND PENSIONERS IS 1000 TO 550

KarabakhOpen
03-04-2008 16:36:55

As of January 1, 2008, the population of NKR is 138,834, of which
71,652 or 51.6% are urban dwellers. Compared with January 1, 2007
the population has grown by 1087 or 0.8%, the National Statistics
Service informs.

48.1% of the population are men, 51.9% are women. 36.7% live in
Stepanakert, 16.7% in Martuni region, 13.7% in Martakert, 12.5%
in Askeran, 6.2% in Kashatagh, 3.3% in Shushi и 2% in Shahumyan.

As of the beginning of 2008, 24.5% were children under 15, 64.5%
were working age people and 11% are people of retirement age. In
other words, the ratio of working people to children and pensioners
is 1000 to 550.

In 2007 2145 children were born which is up by 2% compared with
2006. 1227 people died, which is down by 0.6% compared with 2006. The
number of deaths among children under 1 year was 19, under 5 years 25.

In 2007 519 marriages were registered compared with 827 in 2006,
the rate of divorce did not change and totaled 123.

The number of people who arrived in Karabakh (excluding internal
migration) was 831, left 1026.

http://www.karabakh-open.com/src/index.php?lang=en&id=2&nid=8645

[Siamanto]

Re: Armenia's Economic Pulse

Production of Uranium In Armenia

The Project

Russia & CIS General Newswire
December 24, 2007 Monday 12:00 PM MSK


Armenia could begin producing uranium in 2 - 5 years

YEREVAN Dec 24

Armenia could begin producing uranium in the next two to five years,
Armenian Energy Minister Armen Movsisian told journalists.

According to the best-case scenario, the exploration of uranium
reserves together with Russian experts will be completed within a
year and uranium can be produced within two years, while in the
worst-case scenario the production could begin in five years, the
minister said.

It is not economically rational to enrich uranium on the Armenian
territory, because the country lacks industrial uranium reserves, the
minister said.

It was reported earlier that Armenia decided to join the Russian-
Kazakh agreement on the establishment of an international uranium
enrichment center in Angarsk in the Irkutsk region, the Armenian
government said late last month.

According to preliminary reports, Armenia has no less than 30,000
tonnes of uranium. An additional survey may increase the size of
these reserves by 1.5-2 times.

Movsisian also said that an international consortium may build a
nuclear power plant in Armenia. The attitude of the international
community to the construction of a nuclear power plant in Armenia has
changed for the better over the past five years. "Today the
international community extends a helping arm to Armenia to build its
new NPP," the minister said.

Russia could deliver safe nuclear reactors, Europe could supply
electrical and technical equipment, while the United States could
deliver automatics. The minister said that a technical and
feasibility study for a new NPP is expected to be prepared by
September 2008.

Project works will begin and a general contractor will be chosen
then.

Armenia and Russia have been discussing a possibility to extend the
term of financial management of the Armenian NPP by INTER RAO UES,
which expires in September 2008. Financial management brought a
positive result: problems related to the delivery of fuel assemblies
to refuel the plant and to hold planned maintenance works were
solved, the prime minister said.

It is planned that the Armenian NPP will be decommissioned in 2043.

The decommissioning will cost 238.75 million euro. The plant will be
decommissioned gradually in order to reduce the financial burden. The
second energy unit of the NPP is expected to be stopped in 2016. The
closure of the station is considered in conjunction with a project to
build a new NPP by 2016.

The Armenian NPP generates almost half of the electricity in Armenia.
INTER RAO UES trust management was introduced for five years at the
NPP in 2003.

http://www.gab-bn.com/IMG/pdf/Ar19-_Armenia_could_begin_producing_uranium_in_2_-_5_years.pdf

ARMENIA TO SET UP URANIUM PROSPECTING JOINT VENTURE WITH RUSSIA

RIA Novosti
March 6 2008
Russia

YEREVAN, March 6 (RIA Novosti) - The Armenian government authorized
on Thursday the establishment of a joint venture with Russia for
the additional prospecting of uranium deposits in the South Caucasus
republic.

Russia's state nuclear corporation Rosatom and the Armenian
environmental ministry agreed in February to set up a joint venture on
a parity basis for the additional prospecting of Armenian uranium,
which will be enriched in a specialized international center in
Angarsk, East Siberia.

The centre is to operate under the supervision of the International
Atomic Energy Agency (IAEA).

"This decision was made pursuant to a memorandum signed between
Rosatom and the Armenian environmental ministry on February 6, 2008
on developing cooperation in uranium prospecting, production and
processing," the Armenian government's press office said.

Armenian uranium reserves are estimated at 30,000-60,000 metric tons.

http://en.rian.ru/world/20080306/100851195.html

The Exploration of Uranium

ATOMREDMETZOLOTO TO PROSPECT FOR URANIUM IN ARMENIA FROM SEPTEMBER

Noyan Tapan
April 22, 2008

YEREVAN, APRIL 22, NOYAN TAPAN. The RA minister of environmental
protection Aram Harutyunian and the director general of
Atomredmetzoloto OJSC (Russia) Vadim Zhizhov on April 22 signed an
agreement on creating a closed joint-stock company (CJSC) on uranium
prospecting. Under the agreement, the company will be registered within
3 months, then it will receive a licence for uranium prospecting in
Armenia. It is planned to start geological prospecting in September
in Syunik marz.

According to A. Harutyunian, Armenia and Russia signed an agreement on
cooperation in the peaceful use of atomic energy as early as 2000. In
February 2008, the RA ministry of environmental protection and Rosatom
agency (Russia) signed a memorandum on development of cooperation in
geological exploration of uranium mines, mining and processing. This
memorandum confirmed the sides' intention to found a joint venture.

A. Harutyunian said that the whole process of geological prospecting
will be transparent and in line with requirements of the Armenian
legislation. In his words, the Russian side envisages to make
investments of about 3 million dollars this year.

The authorized capital of the joint venture makes 92 mln 241 thousand
drams (over 297.5 thousand USD). A temporary account will be opened
in Areximbank CJSC (Gazprombank Armenia) in order to set up this
company. Atomredmetzoloto will pay (in money) 50% of the company's
authorized capital. The Armenian side - the ministry of environmental
protection will pay its share of capital in property, as well as in
the form of geological and other information.

Atomredmetzoloto company manages all the uranium manufacturing assets
of Russia and implements some projects in Kazakhstan. The company
is in second place in the world by its uranium reserves. 100% of
Atomredmetzolot's shares is owned by Atomenergoprom OJSC that makes
part of the Russian atomic energy agency Rosatom.

http://www.nt.am/news.php?p=1&c=0&t=0&r=0&year=2008&month=04&day=22&shownews=112548&LangID=1#112548

The Enrichment of Uranium

Energy Publisher, TX
Feb 10 2008


Russia: Armenia inks deal for uranium enrichment

The agreement to join the enrichment center was signed by the prime
ministers of the two countries.

by World Nuclear News


Armenia has signed an agreement with Russia to join the international
uranium enrichment center to be set up in Siberia. The two countries
have also agreed to set up a joint venture for uranium exploration.

The agreement to join the enrichment center was signed by the prime
ministers of the two countries, Victor Zubkov and Serzh Sarkisyan,
during a visit by Zubkov to the Armenian capital Yerevan. Armenia now
joins Kazakhstan and Russia in the venture to set up a shared
enrichment centre at Russia's existing Angarsk plant. Ukraine has
also expressed interest in signing up.

The international center is seen as a first step towards an
internationalized nuclear fuel cycle and possible nuclear fuel
'bank', which would contribute to non-proliferation aims by ensuring
security of supply of nuclear fuel without countries needing to
establish their own fuel production facilities.

The two countries also signed a memorandum to set up a 50:50
Russian-Armenian joint venture to explore for uranium and other
minerals in Armenia, with prospecting activities due to begin in
September 2008.

Speaking after the prime ministerial talks, Sergei Kiryenko, head of
Russian state nuclear energy corporation Rosatom also told reporters
that Russia would be the likely winners of a tender for the
construction of a new 1000 MWe nuclear power plant on the site of
Armenia's existing Metsamor plant. Kiriyenko said the government of
Armenia would announce a tender for the construction of new nuclear
power plant, adding modestly: "We are going to take part in it and we
have quite good chances to win."

The Metsamor power station originally hosted two nuclear units. Both
were closed down after a severe earthquake in 1988 triggered concerns
about their seismic vulnerability. One unit is now undergoing
decommissioning but the other restarted operations in 1995 and is
earmarked for closure around 2016. Armenia relies on Metsamor for
over 40% of its electricity and in November 2007 the USA also
signalled its support for nuclear new build in the country, pledging
a reported $2 million towards planning studies.

http://www.energypublisher.com/article.asp?id=14331

The Situation In Russia

RUSSIA'S URANIUM RESOURCES IN PERSPECTIVE

RIA Novosti
April 23 2008
Russia

MOSCOW. (Sergei Golubchikov for RIA Novosti) - On April 22 in Yerevan,
Russia and Armenia signed a treaty to set up a joint venture for the
exploration and mining of uranium and other minerals in Armenia.

The company is being established on parity lines and will be registered
within the next three months.

It was signed by Vadim Zhivov, general director of the Atomredmetzoloto
(ARMZ) uranium holding and Armenia's Environmental Protection Minister
Aram Arutyunyan.

ARMZ manages all of Russia's uranium assets and runs some projects
in Kazakhstan.

Today, AMRZ ranks second in the world for uranium reserves. This is
the result of the nuclear industry's restructuring, and in particular
the pooling of its core plants under one umbrella.

With the focus on nuclear power, Russia is now planning its uranium
future carefully to warrant the successful development of its nuclear
industry.

The collapse of the Soviet Union has left Russia high and dry, with
many well-researched fields outside its boundaries, mainly in Central
Asia (Tajikistan, Kazakhstan, Kyrgyzstan and Uzbekistan).

For now, Russia has only one uranium-containing deposit, in the Chita
Region, with its Streltsovsky mining and chemical plant. Its total
reserves are estimated at 150,000 metric tons of ore. Other fields
in Eastern Siberia have a further 70,000 metric tons of explored raw
materials. Altogether, the proven reserves amount to 615,000 metric
tons. This figure also includes 344,000 metric tons from Elkon,
the largest recently explored Russian field located in the north
of Yakutia-Sakha.

Russia's uranium-bearing provinces present a challenge for
developers. The largest of them - the Aldanskoye deposit - can be
developed only by sinking. The ore occurs at a depth of 300 meters,
and mining is unprofitable.

During authoritarian times that problem did not exist: northern uranium
was obtained by the free labor of prisoners, including political
ones. In Chukotka, for example, they supplied the material for the
first atomic bombs. As prison camps closed down, uranium mining in
the northern latitudes stopped.

Now a search is on for an economically feasible way of opening up the
mothballed mines. Uranium prices are increasing throughout the world;
over the past three years they have doubled, and not surprisingly. One
cubic centimeter of uranium is equivalent to 60,000 liters of gasoline,
110 to 160 metric tons of coal, or 60,000 cubic meters of natural gas.

Being highly concentrated, this fuel can be easily and cheaply
transported any distance. Its price factored in as part of generated
power is comparatively small. So even a massive rise in uranium fuel
prices has little effect on nuclear power costs. Since 1997 they have
gone up by just 7%.

With current uranium production at 3,400 metric tons a year, its
reserves will last for half a century. How will Russia's nuclear
industry fare once the explored reserves run out? There are two
options. The first is to look for an alternative way of supplying
fuel for the nuclear industry. One is to use so-called "fast reactors"
(fast-breeder reactors).

Their advantages are moderate power intensity and low fuel
consumption. Fast reactors can use uranium from poor fields, with a
low degree of enrichment.

Another way is to recycle spent fuel, namely to obtain plutonium fuel
separated from the uranium extracted from nuclear reactors.

Russia has cornered a sizeable part of the world's future uranium
market, and its share could grow as new fields are tapped in Eastern
Siberia.

It can also receive supplies from other countries - ones that have
no nuclear industry of their own or lack enriching technologies.

Russia already owns 49% of the Russian-Kazakh Zarechnoye company,
which is developing a field of 19,000 metric tons of uranium.

In 2007, Australia became one of Russia's uranium partners. It boasts
the world's largest uranium deposits. The leaders of the two countries,
Vladimir Putin and John Howard, signed an agreement in Sydney, under
which Russia will receive $1 million worth of raw Australian uranium
per year for its nuclear needs. The document will come into effect
once the two parliaments ratify it.

Mongolia is also going to play an important role. Theoretically,
its natural uranium resources put the country at the cutting edge of
the world market, and just need to be explored.

Russia's potential uranium reserves (natural and weapons-grade) will
enable it to claim 45% of the world's uranium enrichment services
market by 2030 and 20% to 25% of the nuclear plant construction market.

Given closed nuclear cycle technologies (fast-breeder reactors), these
resources will be able to meet global power needs for 1,000 years.

Sergei Golubchikov is an associate professor at Russian State Social
University.

The opinions expressed in this article are the author's and do not
necessarily represent those of RIA Novosti.

http://en.rian.ru/analysis/20080423/105711234.html

Related Post

[Siamanto]

Re: Armenia's Economic Pulse

Armenia's Telecom Sector
Part I: Armentel's Monopoly

"WITHOUT TIES" MEETING OF INFORMATION TECHNOLOGY SECTOR HEADS TAKES PLACE IN TSAKHKADZOR

Noyan Tapan
May 4, 2008

YEREVAN, MAY 4, NOYAN TAPAN. A meeting "without ties" of the heads
of the IT sector was held in Tsakhkadzor on May 1-3. The meeting was
entitled "The Ways of Information and Communication Development". It
was attneded by 80 heads of nearly 50 companies, and 20 representatives
of the RA ministry of economy, the State Customs Committee, the State
Tax Service, the Public Services Regulatory Commission, the RA State
Commission on Protection of Economic Competition, international donor
organizations and about as many representatives of the mass media.

During the meeting, round tales were conducted on the following
subjects: The Tax ans Customs Legislation and Administration of the
Republic of Armenia, The Education of Information and Communication
Technologies (ICT), and the Communication and Security.

The main problem raised during discussions on the last subject was
related to the factors affecting the quality and price formation
of data transmission services via the Internet. It was stated
that although the sector of Internet services has been liberalized,
ArmenTel CJSC does not actually provide other providers with channels
for provision of last mile Internet services to ultimate users. The
company also avoids connecting its channels to the networks of other
companies and provides itself Internet access and data transmission
services through fixed-line phone connection.

This creates for ArmenTel conditions for monopoly and the opportunity
to provide the indicated services at cheapest prices, which makes it
impossible for other companies to compete with ArmenTel in the sector
of last mile services and to attract investments to this sector. On
the last day of the meeting, discussion on this subject was held with
the participation of the RA minister of economy Nerses Yeritsian. He
proposed that representatives of the companies of the telecommunication
sector clarify the situation through research and propose possible
ways out in order to find legislative solutions to the problems. The
version of constructing a new fiber-optic cable for international data
transmission and a fixed-line network was not ruled out at the meeting.

During the round table on the subject "ICT Education", it was pointed
out that the use of information and communication technologies in the
comprehensive education system is being regulated gradually by such
steps as connecting schools to the Internet, the budgetary financing
of schools' Internet traffic and the creation of school electronic
content. As for the issue of training of ICT specialists, there are
still problems with presentation of orders for preparation of experts
of the higher educational system, qualification of lecturers, and
the absence of levers on the private sector's impact on the quality
of education and the educational programs.

According to N. Yeritsian, it is envisaged to solve the problem
related to tax and customs administration through introduction of
automated systems of new orders and registration.

The meeting was organized by the Union of IT Enterprises, the
USAID-financed Competitive Armenian Private Sector (CAPS) Project,
and the RA ministry of economy with the support of U Com company.

http://www.nt.am/news.php?p=1&c=0&t=0&r=0&year=2008&month=05&day=04&shownews=112991&LangID=1#112991

Reduction of prices for Internet-communication should be clearly motivated and not differentiated

Arminfo
2008-05-05 15:47:00


Since October 1, 2007, ArmenTel Company has been officially deprived of
the monopoly for Internet-communication networks in Armenia. However,
it did not affect the alignment in the branch, as the Company preserved
the telephone network ownership, therefore, an opportunity of rendering
DSL-communication. Naturally, it made the Internet-providers operating
in the country dependent, as ArmenTel, which preserved the monopoly in
fact, did not loose the freedom of optional management of prices for
traffic being realized by providers. On April 18, ArmenTel, appearing
now under the Beeline trademark, announced of the reduction of prices
for Internet-traffic ` from 400,000 drams to 30 per 1 megabit. However
it does not concern the providers, which will be supplied Internet at
the previous price. At ArmInfo's request, Director General of one of
the Armenian leading providers, `Arminco' Company, Grigory Sagyan
commented on the situation.


- Mr. Sagyan, how do you treat reduction of prices for
Internet-communication?
- A cut in prices for Internet is a positive phenomenon. I think that a
budget Internet promotes the population integration into the world
information network and, thus, contributes to increasing of the general
educational and cultural level. However, any fall in prices should be
clearly motivated and not differentiated. The present price fall per
Megabit/sec from 1.2 mln drams to 30 thsd drams bypassed the providers,
that may make it possible to draw some conclusions regarding the plans
of the Internet-communication market management in the country.
Noteworthy, ArmenTel does not render services at 30,000 drams to
another operators but forces them to buy the service at 1.2 mln drams.
The matter here concerns not falling in prices but the tariff policy,
as a result of fulfillment of which the competitive operators
(providers) of ArmenTel are fully withdrawn from the market.



- How did the situation originate under which one company was permitted
to control the price mechanisms in the telecommunications market of the
whole country?
- The point is that ArmenTel has got a confidence that if it is not a
monopolist, it is enabled to conduct an autonomous price policy.
However, a term `dominating position in the market' is used today
instead of the term «monopoly», as ArmenTel owns a network of
communication, which is led to every apartment ` it is about 250,000
telephone lines in Yerevan. This dominating position envisages
regulation of the cost of services being rendered by network. The
regulation today is carried out by two organizations, al least ` Public
Services Regulatory Commission and Economic Competition Protection
Commission.



- Thus, the monopoly, either legal or factual, does not contribute to
development of the telecommunications branch, does it?
- This is testified by the examples of the past. ArmenTel preserved the
monopoly for cellular communication till 2005, and the users had to pay
$200 for telephone cards in the black market to get communication, the
quality of which entirely depended on the operator's will. Elimination
of the monopoly and appearance of a competitive company increased both
the quantity and the quality of mobile communication. Let everyone
decide how much the parallels with the present situation may be drawn
here. Perhaps, it will succeed to withdraw all the competitors from the
market within several months due to the price differentiation,.
However, just after that we shall face an absolute «lawlessness», as it
was before the market demonopolization.



- Will the appeal to the relevant governmental bodies on market
regulation be of help under these conditions?
- Under the developed conditions, this is the only possible solution.
Thus, we are going to apply to RA Public Services Regulatory Commission
the next few days, to consider the created 00situation and make an
adequate decision for the healthy market atmosphere.

Thank you for the interview

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RA State Commission for Protection of Economic Competition starts considering 'Web' and 'Arminco' internet providers' statements

2008-05-07 22:03:00

ArmInfo.

The Armenian State Commission for the Protection of Economic
Competition started considering "Web" and "Arminco" internet providers'
statements.

To recall, on April 30 the "Web" and "Arminco" companies applied to the
Commission stating that the terms of provision of internet
communication services offered by Beeline company contain phenomena of
artificial restraint of competition. According to the statements,
Beeline provides internet communication in the Hi-Line Unlimited format
"using the phone lines' infrastructure belonging to it the monopoly
order, while other companies engaged in provision of internet
communication are deprived of the opportunity to use this
infrastructure". The "Web" company thinks that "these steps of Beeline
are evidently aimed at acquisition of monopoly in the sphere of
internet communication provision as well". The two providers think that
Beeline deny them the opportunity to provide channels of distinguished
communication, i.e. potentially competitive type of services on
internet communication. The applicants expressed a request to consider
the issue and take relevant measures, as well as to discuss the issue
of Beeline's status as the dominating company in the sphere of
provision of relevant services.

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Armenian Economy Minister: legislative restriction of ArmenTel's powers not best way to settle conflict with Internet providers

2008-05-04 14:38:00

ArmInfo.

Legislative restriction of ArmenTel's powers is not the best
way to settle the conflict with Internet providers, Economy Minister
Nerses Yeritsyan said at an IT-Forum in the resort town of Tsakhkadzor
on 3 May.

He said that any restriction will lead to a relevant response by the
company and it is necessary
evaluate 'whether we will win or lose'. He is sure that providers do
not think 'globally' when expressing their dissatisfaction with
ArmenTel. He assured those present that the government aims to form an
IT-society, which requires revealing and settling the key problem. It
is necessary to carefully analyze the demand and supply in the market
before making any specific decisions, the minister said. 'Maybe it
would be reasonable for the providers to combine efforts to create an
alternative telecommunication network', the minister said. The
government will not attract investments in creation of an alternative
network for it is the business of private companies. 'It is already the
third or the fourth discussion in this format and no consensus has been
found so far. Unfortunately, we failed to interest either ArmenTel or
VivaCell and I think that such meetings should be continued>, N.
Yeristyan said.

The event organizers were the Union of IT Enterprises, Ministry of
Economy, and Competitive Armenian Private Sector Project (CAPS) funded
by USAID.

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