SURGE IN RUSSIAN GAS PRICES RAISES EYEBROWS IN ARMENIA
December 7, 2005
Eurasia Daily Monitor
By Emil Danielyan
Russia's decision to drastically raise the cost of the natural gas it supplies to several former Soviet republics has been widely attributed to its desire to stave off a further spread of Western influence across its "near abroad." What makes it even more noteworthy is the fact that at least one of those republics, Armenia, is not normally considered to be quite "pro-Western."
On the contrary, the small South Caucasus state has developed a reputation as one of Russia's most loyal allies in the entire ex-Soviet space. Despite overtures to the United States and the European Union, its leaders maintain close military and political ties with Moscow and have never expressed a desire to join NATO. There is little wonder that the Russian move has clearly caught Yerevan off guard. It suggests that the Kremlin is less than happy with Yerevan's actions aimed at easing the tight Russian grip on the Armenian energy sector.
[...]
[...] With Russian gas used for generating about 40% of Armenia's electricity, the measure will inevitably push up the already high electricity prices in the country. That could in turn have broader effects on the Armenian economy.
Armenian Prime Minister Andranik Markarian said on December 5 that he was "surprised" by the {100%} tariff rise announced by Gazprom's vice-chairman Alexander Ryazanov on November 29. He said the Russian side had earlier assured his government that the gas tariffs would remain unchanged in the next two years. [...].
[...] {Mikhail} Fradkov {Russian Prime Minister} made it clear in Yerevan that the "strategic partnership" with Russia does not entitle Armenia to privileged treatment on economic issues. [...].
[...] Gazprom insists that it is driven by solely economic considerations, pointing to a big disparity between the prices of its gas pumped to Western Europe and the Commonwealth of Independent States. But some Kremlin-connected politicians (and even TV commentators) do admit that Moscow is using its arguably strongest leverage against former Soviet states like Georgia and Ukraine in retaliation for their accelerating drift toward the West. Why traditionally pro-Russian Armenia should be punished has not been specified.
Ironically, the more expensive gas will create additional problems for an energy sector already dominated by Russian giants like Gazprom and Unified Energy Systems (UES). They supply as much as 80% of Armenia's energy resources. Gazprom also holds a 45% stake in the local gas distribution network. Furthermore, three years ago Russia was granted ownership of the impoverished country's largest thermal power plant and financial control over the nuclear power station at Metsamor as a result of controversial swap agreements that settled Armenia's $150 million debts to the Russian government and fuel suppliers. As if that was not enough, the Kocharian administration agreed earlier this year to a murky sale of the Armenian power grids to UES.
The Armenian authorities are at the same time trying to reduce that dependence by embarking on multimillion-dollar energy projects with neighboring Iran.[...].
[...]
The gas price hike, whatever its real reasons, is giving more ammunition to a growing number of people in Armenia who question the long-term future of their country's alliance with Russia.[...].
[...]
Note: Above are excerpts from the article. The full article appears here. Clarifications and comments by me are contained in {}. Deletions are marked by [...]. The bold emphasis is mine.
Eurasia Daily Monitor
By Emil Danielyan
Russia's decision to drastically raise the cost of the natural gas it supplies to several former Soviet republics has been widely attributed to its desire to stave off a further spread of Western influence across its "near abroad." What makes it even more noteworthy is the fact that at least one of those republics, Armenia, is not normally considered to be quite "pro-Western."
On the contrary, the small South Caucasus state has developed a reputation as one of Russia's most loyal allies in the entire ex-Soviet space. Despite overtures to the United States and the European Union, its leaders maintain close military and political ties with Moscow and have never expressed a desire to join NATO. There is little wonder that the Russian move has clearly caught Yerevan off guard. It suggests that the Kremlin is less than happy with Yerevan's actions aimed at easing the tight Russian grip on the Armenian energy sector.
[...]
[...] With Russian gas used for generating about 40% of Armenia's electricity, the measure will inevitably push up the already high electricity prices in the country. That could in turn have broader effects on the Armenian economy.
Armenian Prime Minister Andranik Markarian said on December 5 that he was "surprised" by the {100%} tariff rise announced by Gazprom's vice-chairman Alexander Ryazanov on November 29. He said the Russian side had earlier assured his government that the gas tariffs would remain unchanged in the next two years. [...].
[...] {Mikhail} Fradkov {Russian Prime Minister} made it clear in Yerevan that the "strategic partnership" with Russia does not entitle Armenia to privileged treatment on economic issues. [...].
[...] Gazprom insists that it is driven by solely economic considerations, pointing to a big disparity between the prices of its gas pumped to Western Europe and the Commonwealth of Independent States. But some Kremlin-connected politicians (and even TV commentators) do admit that Moscow is using its arguably strongest leverage against former Soviet states like Georgia and Ukraine in retaliation for their accelerating drift toward the West. Why traditionally pro-Russian Armenia should be punished has not been specified.
Ironically, the more expensive gas will create additional problems for an energy sector already dominated by Russian giants like Gazprom and Unified Energy Systems (UES). They supply as much as 80% of Armenia's energy resources. Gazprom also holds a 45% stake in the local gas distribution network. Furthermore, three years ago Russia was granted ownership of the impoverished country's largest thermal power plant and financial control over the nuclear power station at Metsamor as a result of controversial swap agreements that settled Armenia's $150 million debts to the Russian government and fuel suppliers. As if that was not enough, the Kocharian administration agreed earlier this year to a murky sale of the Armenian power grids to UES.
The Armenian authorities are at the same time trying to reduce that dependence by embarking on multimillion-dollar energy projects with neighboring Iran.[...].
[...]
The gas price hike, whatever its real reasons, is giving more ammunition to a growing number of people in Armenia who question the long-term future of their country's alliance with Russia.[...].
[...]
Note: Above are excerpts from the article. The full article appears here. Clarifications and comments by me are contained in {}. Deletions are marked by [...]. The bold emphasis is mine.
posted by Vahe Balabanian at 6:51 AM
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