Armenian News

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ARMENIA: QUAKE VICTIMS BITTER AT EMPTY PROMISES
Twenty years after disaster, many in north of country remain homeless.
By Naira Bulghadarian in Vanadzor

People made homeless by the Spitak earthquake, which devastated towns and villages

across northern Armenia exactly two decades ago, say they no longer believe government

promises to clear up the mess.

Some 25,000 people died when the 6.9 magnitude earthquake struck the then-Soviet

republic on December 7, 1988, destroying 21 towns and 341 villages. Around 6,000

people are without homes in towns scarred by ruined houses and hastily built shacks.

Last year, Serzh Sargsian, then prime minister and now president, promised the

government would finally fix the damage by 2013.

But some people in the town of Vanadzor, which was one of the worst affected, did not

celebrate. Such promises have been frequent over the 20 years since their homes were

destroyed.

"In these 20 years, if they'd wanted to, all traces of the earthquake could have been taken

away. Now it's hard to believe that this will all end by 2013," said Suren Grigorian,

a 72-year-old.

His 64-year-old neighbour Suren Aghababian was even more cynical.

"Why couldn't they do this in less time? They should have spent less money on their cars,

their bodyguards and their houses, and restored the damaged area instead," he said.

The two men could easily remember the events of 1988, when the Soviet government

vowed to sort the wreckage in just two years. But the scale of the disaster, which destroyed

almost all the housing in the Lori and Shirak regions, defeated their attempts.

Redevelopment efforts got off to a promising start.

"Every day, 360 railway wagons full of building materials arrived," remembered Levon

Aslanian, now an adviser to the governor of the Lori region.

However, after the Soviet Union collapsed in 1991, the Armenian economy could no longer

support the reconstruction, especially after Azerbaijan and Turkey imposed an economic

blockade when the war started in Nagorno-Karabakh.

"It is easy now to criticise everyone and everything for the fact that two years expanded to

fill 20," said Aslanian.

He said that the authorities have done much to replace the 15,000 apartments and 7,000

houses lost in the Lori region, and the 22,500 homes destroyed in neighbouring Shirak.

According to official figures, buildings containing 26,000 apartments have been built in the

two regions. Separately, almost 18,500 certificates giving people the right to buy

accommodation have been handed out.

More houses will now be built, the government has said, with certificates being awarded

to people who, like the Saribekian family, remain homeless.

Alvard Saribekian's shack is in a temporary settlement on the site of the Vanadzor

Chemical Factory. Most of the people who lived there have now received housing, and

her family is one of the few still waiting its turn.

Saribekian lived with her five children in a two-room apartment when the earthquake hit.

After her building was rendered unsafe, residents were sent to the Russian town of Kharkov

for a while. When they returned to Armenia, their block had been demolished.

"There was nowhere to live. We were given this little shack in 1995, and we still live here,"

she said. Although her family has added two small rooms, it is still cramped for her, her

mother and her daughter who all live together. The daughter's three sons are all in the army,

otherwise they too would be there.

President Sargsian has expressed confidence that the country has the resources to house

families like hers in the next five years, and has even suggested three years could prove

sufficient. But at the current rate of building - which stands at 70 homes a year - that looks

optimistic.

In Vanadzor, 26-year-old Haykuhi Harutiunian said that building was behind schedule.

"In these conditions, they won't achieve anything by 2013," she said.

To date, the government has concentrated on helping people in towns, leaving villages largely

untouched. In the villages of the Lori region, more than 1,800 families still live in shacks and

temporary structures, while in the Shirak region the situation is even worse.

"Construction is definitely proceeding slowly, but we hope that the new government will be

able to speed up the rate," said Edic Hovsepian, an adviser to the region's governor.

Naira Bulghadarian is a correspondent from the Vanadzor newspaper Civil Initiative and the

online weekly Armenianow.


CREDIT CRUNCH THREATENS EVEN ISOLATED ARMENIA
Until recently, banking system had managed to survive relatively unscathed, mainly

because it is only slightly integrated into world markets.
By Naira Melkumian in Yerevan

Armenia's economy appeared to be safe from the world's financial crisis, being small and

isolated - though even here the shock of the credit crunch is making itself felt.

Property prices have tumbled, and construction projects have been forced to slow or close

altogether, while the supply of remittances from Armenians in Russia also threatens to dry up.

"The first wave of the crisis in the world markets, happily, did not have a major negative effect

on Armenia's financial system, but we know well that after a financial crisis, an economic crisis

starts and we must be ready," Prime Minister Tigran Sarkisian told parliament, when

presenting a plan to support the economy and subsidise companies.

He also proposed establishing a commission to examine ways of creating more jobs, but

that may be too late for workers at Armenia's copper smelters.

The three smelters in Kajaran, Kapan and Agarak have all reduced output and laid off workers,

which threatens to be a catastrophe for the Syunik region where there are no other jobs.

A government delegation has already been forced to go to the region to prevent a strike.

Arpik Simonian is one of those workers struggling to know what to do if he loses his job.

"The worst case scenario is that I remain here. I will survive, as they say. I'll have to borrow

money. But I have no idea how I would pay it back," he said.

He would, he says, prefer to go and get work in Russia but that may not be possible, in the

light of the crisis there.

"If the Russian financial crisis continues to deepen, then the Armenian economy will

experience an insufficient supply of direct investment and remittances, which come to the

country primarily from Russia," said Andrankik Tevanian, the head of the Politekonomia

think tank.

He said 90 per cent of Armenians in Russia are working in the construction sector, which

is seriously affected by the crisis. Half of them may fail to find work in Russia next year.

Since Russia is the source of 75 per cent of the remittances coming into the

country, experts predict a reduction in the amount of money available to families

and a corresponding reduction in citizens' purchasing power, which in turn

threatens producers.

However, remittances are currently still increasing, with a record 203 million US

dollars coming into the country in September. The central bank does not predict

remittances to fall before the end of the year.

These same experts believe the government may struggle to maintain its budget plans for

2009, since they were drafted before the crisis struck. Expert Andranika Tevanian, for

example, said the 3.3 billion dollar budget relied on increased tax receipts, which threatens

to worsen the tax burden on small and medium businesses.

"In connection with the crisis, all countries in the world are taking steps to ease the tax burden

on business. In Armenia, on the other hand, the government is taking steps to worsen

business's condition," he said.

The expansive budget may, experts fear, also stoke inflation, which is already running above

the government target. The International Monetary Fund predicts full-year inflation of 9.4 per

cent, which is significantly higher than the budget target of four per cent.

"I don't even know what to think, everyone's talking only about a crisis. They have promised to

increase the pensions, but what's the use if the prices go up as well," Lyudmila Nikolayevna,

a pensioner, said.

The banking system has managed to survive relatively unscathed so far, mainly because it is

only slightly integrated into world markets. But all the same commercial banks have drastically

reduced lending, and now charge a higher interest rate on loans that they do give out.

Just a few months ago, a bank would agree to a mortgage of 15 or 20 years, but now a ten-year

loan is more likely. This has had a knock-on effect on the housing market, and caused prices to

fall.

According to David Sukiasian, executive director of Armeconombank, foreign banks are

charging Armenian customers a rate three full percentage points higher than they were,

forcing his bank to raise its own rates. Deposit rates have in turn increased from nine

to 11 per cent, as banks seek to attract money.

Bankers expect credit rates to rise by one or two percentage points over the next six months,

which means credit will undoubtedly be harder to come by and the economy will suffer.

"We currently are not seeing serious consequences of the global crisis in Armenia. The main

reason for this is that in Armenia the financial system is still not very big. On the one hand, this

is not very good for the growth of the economy. But on the other, it is even an advantage, because

Armenia is out of the path of possible shocks," said Ninke Omes, the permanent representative

of the IMF in Yerevan.

However, the crisis has already impacted on the building sector in the capital, where property

prices have fallen by 15 to 20 per cent, and some construction projects have been frozen for

lack of funds

"The crisis situation on the international markets requires investors and agents, who regard the

property market as profitable and secure, to be careful. This is the main reason for the reduction

in the number of deals on the local property market recently," said Artur Javadian, head of the

central bank.

Experts currently predict the falls in the property market to continue until at least the

middle of next year, which will have a bad effect on the economy as a whole, since

construction and services together make up 61.9 per cent of Gross Domestic Product.

Naira Melkumian is a freelance journalist in Yerevan. Nelli Mirzakhanian, a journalist from the

Sosi Studio in the city of Kapan, also contributed to this article.

Mediators Renew Calls For Karabakh Peace
By Emil Danielyan and Anush Martirosian

The United States, Russia and France urged Armenia and Azerbaijan on
Thursday to build on reported progress in recent talks between their
president and reach a framework agreement on Nagorno-Karabakh in the
`coming months.'

High-ranking diplomats from the three nations jointly spearheading the
drawn-out peace process reaffirmed the basic principles of a Karabakh
settlement that were formally submitted to the conflicting parties in
Madrid last year.

`We call on the parties to work with the Co-Chairs [of the OSCE Minsk
Group] to finalize the Basic Principles in coming months, and then begin
drafting a comprehensive peace settlement as outlined by those agreed
principles,' Foreign Ministers Sergei Lavrov of Russia and Bernard
Kouchner of France and U.S. Assistant Secretary of State Daniel Fried
said in a joint declaration.

The declaration was issued after the three men met with the Armenian and
Azerbaijani foreign ministers on the sidelines of an OSCE ministerial
meeting in Helsinki. A spokesman for Foreign Minister Eduard Nalbandian
told RFE/RL that the meeting lasted for about 15 minutes but gave no
further details.

Nalbandian and his Azerbaijani counterpart, Elmar Mammadyarov, held much
lengthier talks in the Finnish capital on Wednesday in the presence of
other American, French and Russian diplomats co-chairing the Minsk
Group. A statement by the Armenian Foreign Ministry said they agreed to
maintain the `positive atmosphere' created by the Armenian and
Azerbaijani presidents at their November 2 talks outside Moscow. In a
joint statement with Russian President Dmitry Medvedev, Serzh Sarkisian
and Ilham Aliev pledged to `intensify' the peace process.

Lavrov, Kouchner and Fried likewise emphasized the `positive momentum'
which they said was established by the two presidents. `The Moscow
Declaration signed that same day opened a new and promising phase in our
shared endeavor to expand peace in the South Caucasus,' they said.

The Helsinki statement called on the conflicting parties to bolster the
ceasefire regime along the Line of Contact east of Karabakh and the
Armenian-Azerbaijani frontier by pulling back snipers from their
frontline positions. `We reiterate our firm view that there is no
military solution to the conflict and call on the parties to recommit to
a peaceful resolution,' it said.

The declaration said nothing about the next meeting of Aliev and
Sarkisian which the mediators say could prove decisive for the signing
of an Armenian-Azerbaijani peace accord. Matthew Bryza, Washington's
chief Karabakh negotiator, said last month the holding of yet another
Armenian-Azerbaijani summit hinges on the outcome of the Helsinki
talks.

Speaking to an RFE/RL correspondent in Helsinki on Thursday, Bryza
expressed hope that Aliev and Sarkisian will meet again `in a couple of
weeks' and insisted that the peace process is `moving forward.' `We need
to see the basic principles finalized, and we believe they can be soon,'
he said. `And we also want to see serious confidence-building measures
and finally make sure everybody realizes there is only a peaceful
settlement to this conflict. You cannot solve this conflict through a
military way."

In Yerevan, meanwhile, a former military leader of Karabakh, Samvel
Babayan, predicted that the Armenian-Azerbaijani dispute will remain
unresolved in the next five years. He also criticized the Armenian
government's Karabakh policy.

`Even though our foe hasn't accepted any compromise variants, we are
saying that are ready to compromise,' Babayan told journalists. `Nobody
knows what are giving up and why.'

The once influential general also accused Yerevan of helping to
effectively drive the Karabakh Armenians out of the negotiating process.
`Yerevan should not have become a negotiating party,' he said.
`Stepanakert should have.'

Arkady Ter-Tadevosian, another retired army general who played a major
part in the 1991-1994 war with Azerbaijan, was also skeptical about
chances of Karabakh peace. He claimed that oil-rich Azerbaijan is making
`intensive preparations for hostilities.'

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