Armenian News

Institute for War and Peace Reporting, UK
Saturday, October 11, 2008
Caucasus Reporting Service
Armenia: Economy Hit by Georgian War

Authorities say country suffered substantial economic losses as a
result of August conflict.
By Naira Melkumian in Yerevan (CRS 463, 10-Oct-08)

The war between Russia and Georgia has cost the Armenian economy
nearly 700 million US dollars, the Yerevan authorities believe.

They say the economy was hit by severe blows to foreign trade, tax
collection and international investment. `The conflict [has been] a
serious test for the sustainability of the Armenian economy,' said
Prime Minister Tigran Sargsian.

Commentators say foreign trade plunged largely because of war-related
damage to the principal transportation routes between Armenia and
Georgia, through which much of the country's imports and exports pass.

As a result, Georgian imports were cut by an estimated 121 million
dollars, slashing import tax revenue. At the same time, exports losses
amounted to about 52 million dollars.

The regional turmoil has also curbed the government's ambitious plans
to boost income tax collection by 30 per cent this year. `Tension in
the area as a result of the South Ossetian conflict meant Armenia did
not collect the levels of income from tax anticipated in the budget,'
said Gagik Minasian, the head of parliament's financial, credit and
budgetary issues commission.

But experts say the greatest damage caused to Armenia by the war has
been the temporary suspension of foreign investments, totaling about
300 million dollars.

`The region itself is not very attractive in terms of investment, and,
today, it has become way too insecure,' said Heghine Manasian,
director of the Caucasus Research and Resource Centre, CRRC.

Manasian said the situation in Georgia had increased inflation and
curbed economic growth.

`If prices go up and people's income remains the same, consumption is
likely to decline, meaning that traders won't be able to sell their
goods. A difficult situation aggravated by the world financial crisis
might emerge,' said Manasian.

However, the authorities denied that consumers had been hit by the
conflict, insisting that any price increases were caused by panic
buying.

`People queued for petrol for two days ` because they panicked [that
supplies were going to run dry],' said Sargsian, noting that state
reserves of fuel had not been touched.

In the wake of the conflict ` which officials believe has cost the
economy 680 million dollars ` analysts say it is important Armenia
does not rely so heavily on the import and export of goods through
Georgia in future.

`Two-thirds of foreign goods are coming through Georgian territory,'
said Andranik Tevanian, the director of the Institute for Political,
Economic and Legal Research. `This is why the Georgian conflict caused
delays to and even suspended the transportation of cargo.'

While an alternative transport route through Iran has been proposed as
a solution, Tevanian believes it would be a prohibitively expensive
option.

There are also indications that Armenia is looking at alternative ways
of transporting goods through Georgia.

On a recent visit to Georgia, Armenian president Serzh Sargsian raised
the prospect of the building a new highway linking Yerevan with the
city of Batumi, the capital of the autonomous republic of Adjara in
southwest Georgia ` cutting the current 700 kilometre route by about a
third.

Previously, much of Armenian exports were ferried through Georgia's
land border with Russia, but the conflict has meant that Yerevan will
become more reliant on its neighbour's Black Sea port.

`If we start working [on the Yerevan-Batumi route] today, in two
years' time, we'll have a transport route that is very important for
Armenian economy,' Armenian transport and communications minister
Gurgen Sargsian told journalists recently.

Experts have also cited the importance of developing alternative trade
partners, emphasising the role Turkey could play. They say that the
continued closure of the land border between Turkey and Armenia costs
the economy around 500 million dollars annually.

The Armenian government hopes that the recent thawing of relations
with its western neighbour might offer new trading opportunities.

A direct electricity supply from Armenia to Turkey will start in 2009,
following the signing of an energy agreement during the visit of the
Turkish president Abdullah Gul to Yerevan in September.

`Developing closer political and economic relations with Turkey could
be a precursor for¦developing Armenia's economy,' said Minasian.

But other analysts remain sceptical. While Tevanian acknowledged that
normalising relations with Ankara was important for the economy, he
pointed out that Armenia had so far gleaned few benefits from the
rapprochement.

`We've made a step towards Turkey, but it is Turkey that had so far
reaped political dividends in Europe ` we see no tangible results from
the so-called warming yet,' he said.

Naira Melkumian is an IWPR-trained journalist.

ARMENIA IN NEED OF AN ALTERNATIVE EXPORT-IMPORT ROUTE
Ashley Corinne Killough
Georgiandaily
October 10, 2008
NY

Although talks of establishing security in the Caucasus had been
underway for months, the crisis in Georgia underscored a sense
of urgency at the September 26 trilateral meeting of the foreign
ministers of Armenia, Turkey, and Azerbaijan. Eduard Nalbandian, Ali
Babacan, and Elmar Mammadyarov met in New York to further discuss a
resolution to the Karabakh conflict, which has created obstacles to
the normalization of bilateral relations between Turkey and Armenia.

Economically bruised Armenia needs an open-border relationship with
Turkey now more than ever. Georgia's Black Sea ports are Armenia's main
gateways for foreign trade, with 70 percent of its imports and exports
carried through Georgian territory. This dependence on its northern
neighbor became vulnerable when the damaged Georgian infrastructure
caused a cessation of a large share of Armenian trade for more than
week in August. After a rail bridge near Gori was destroyed on August
16, Armenia experienced the country's worst fuel crisis since the
early 1990s (www.armenianow.com, September 5). During a two-week
period at the end of August, hundreds of motorists were stranded,
causing higher gas prices and long lines at filling stations.

Artur Baghdasarian, secretary of Armenia's National Security Council,
said that the damage to Georgia's infrastructure had cost the Armenian
economy $680 million, mainly in delayed imports and exports (RFE/RL
Armenia Report, September 3). After the railway was repaired, about
500 freight cars with 54,000 tons of cargo moved from Georgia to
Armenia on September 2 (ARKA, September 2).

Armenia's economic relationship with Georgia also played an important
part in its foreign policy with regard to the crisis. Moscow,
according to a senior Russian security official, had hoped that
Yerevan would agree to the accession of South Ossetia and Abkhazia
into the Collective Security Treaty Organization (RFE/RL Armenia
Report, September 3). The CSTO is a Russian-led military alliance of
six former Soviet republics that agree to abstain both from the use
of force or joining other military alliances. The charter--signed
by Armenia, Russia, Belarus, Kazakhstan, Kyrgyzstan, Tajikistan,
and Uzbekistan--claims that aggression against one signatory would
be perceived as aggression against all. Georgia and Azerbaijan joined
in 1994 but withdrew in 1999.

Despite its CSTO membership, Armenia, realizing the enormous political
and economic risks that acknowledging the breakaway regions would
carry, refrained from recognizing the disputed regions. The
presidential press office released a statement of neutrality
shortly after the crisis broke out, reiterating President Serzh
Sarkisian's position: "The President once again stressed that the
Russian Federation is a strategic ally of the Republic of Armenia
and Georgia a friendly country, and that Armenia is therefore greatly
interested in the conflict's quick, peaceful resolution." In an effort
to maintain regional stability, Sarkisian reached out to Saakashvili,
offering condolences and humanitarian assistance. Sarkisian is also
reported to have presented a comparable message of concern to Medvedev
(RFE/RL Armenia Report, August 14).

Kevork Oskanian, a doctoral candidate at the London School of Economics
and Political Science, is currently researching security in the South
Caucasus. "It [neutrality] was, really, the only decision Armenia
could make considering its dependence on Georgia for its commercial
relations with the outside world and its strategic alliance with
Russia," he said. "Yerevan was basically walking a tightrope."

Since the trade route was repaired, Oskanian said, the economy had
largely returned to normal; but the consequences of Armenia's heavy
reliance on Georgia emphasized the need of establishing another
trading corridor to Europe through its western neighbor, Turkey.

The idea of easing tension with Turkey had already been brewing for
months, as Sarkisian had extended an invitation to Turkish President
Abdullah Gul in July to attend the Turkey-Armenia FIFA World Cup
soccer qualifying match on September 6. Gul's symbolic visit was the
first by a Turkish head of state to Armenia and was also in concert
with Turkey's proposal for a Caucasus Stability and Cooperation
Platform. The initiative is of utmost importance to Turkey's Eastern
foreign policy, as a greater involvement in the Caucasus, a tenuous
region with ties to Europe, could augment Turkey's credibility with
the European Union (Hetq, September 8).

While Turkey stands to benefit from improved relations with Armenia
on a political standpoint, Armenia's advantage would primarily be
economic with a more stable trade link to Europe.

"Despite all claims to the contrary, even outside of periods of
acute conflict and instability, the Armenian population is paying
a high price for the current situation," Oskanian said, noting that
costly imports and a low volume exports had resulted in a significant
trade imbalance. An open border would provide Armenia with access
to the Turkish Black Sea port of Trabzon, as well as the prospect of
connecting Armenia's rail network with Europe.

"This would open new markets and opportunities for Armenia's producers
and foreign investors and ease price pressures on consumers through
dramatically reduced transportation costs and a generally more open
and competitive economy," Oskanian said.

Before any borders are opened, however, Turkey wants the disputed
Karabakh conflict resolved, an issue that also influenced Armenia's
decision to remain neutral. Yerevan has yet to recognize the region
formally because of its current diplomatic efforts with Azerbaijan
under the aegis of the OSCE Minsk Group.

FFA says sorry for removing ‘Ararat’ from the logo, but refuses to be accountable for historical mishaps.

Back to Ararat?: Football chief reverses course in logo controversy

By Suren Musayelyan
ArmeniaNow reporter
Published: 10 October, 2008

Several weeks after introducing a new logo, the Football Federation has

admitted having underestimated the response that the removal of one of the

Armenian national symbols from it would elicit among some political and

public circles.

At a press conference Wednesday, Federation chief Ruben Hayrapetyan,

however, gave assurances that there had been no pressure from any state

structure or anyone else to redesign the coat of arms from the one with the

symbol of Mount Ararat on it to the image of a football enchased into

Armenia’s national emblem.

Several days before a football match between the national football teams

of Armenia and Turkey that many politicians and analysts in both countries

and well beyond viewed as a possibility for fence mending between the two

estranged neighbors, the Armenian Football Federation presented its new

logo which no longer had on it the usual depiction of Ararat – a biblical

mountain now in the territory of Turkey that also gave the name to Soviet

Armenia’s best known football club.

The move in early September was construed by critics as an appeasement

of the Turkish side ahead of a crucial summit between the two countries’ l

eaders in Yerevan. A number of opponents also alleged derogatory treatment

of the national emblem with the use of a football on it and threatened lawsuits

against the Federation for what they claimed to be an abuse and violation

of Armenian law.

“I assure you that no one forced us to change the logo and remove [the symbol

of] Mount Ararat from it. We simply wished to change our logo and use the

element of the Republic of Armenia’s emblem on it,” Hayrapetyan said. “We

could not imagine that the change of the Football Federation’s logo could elicit

such a wide response and become a politicized matter.”

The Federation chief also explained that the decision to change the logo and

the competition for a new one was organized still last year -- even before it was

learned that Armenia would be competing in the same World Cup 2010

qualifying group with Turkey.

At the same time, Hayrapetyan admitted that the decision may have been

erroneous but said it could not serve as a basis for challenging his or the

Federation’s integrity.

“I assume the whole responsibility and admit that we made an omission.

However, it does not mean that I should be blamed for all sins. I did not sign

either the treaty of Kars or the treaty of Alexandropol,” Hayrapetyan said in

reference to the post-World War I peace and border agreements signed in

one case between the governments of three Caucasus republics and Turkey,

with Bolshevist Russia’s participation, and in the other case between Armenia

as an independent state and Turkey. Those treaties determined by and large

the new frontiers between the state of Turkey and the South Caucasus and in

fact constrained Armenia within its current borders, with Mt. Ararat’s location

becoming the territory of modern-day Turkey.

Hayrapetyan also announced that the Federation will have a completely new

logo soon and that members of national teams will bear the image of the

Republic of Armenia national emblem on their shirts, which, he said, is a

legitimate use for representation in international arenas.

With a fresh competition for a new logo design to be announced soon,

it remains unclear whether Mt. Ararat will be depicted in some form on the

new logo of the Federation.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~