USD 350 Million in First Quarter Remittances from Russia to Caucasus

Monday, June 18, 2007, #113 (1380)
Messenger.ge, Georgia
By M. Alkhazashvili

People in Russia sent USD 350 million to the South Caucasus in the first quarter of 2007. Most of the transferred money was destined for Armenia; Georgia received the least, according to the news agency Regnum.

Transfers from South Caucasus countries to Russia were USD 21 million in the same period, with the majority of the money coming from Armenia.

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.

Caucasus: Russian Radar Proposal Could Upset Region

June 8, 2007
RFE/RL
By Jeffrey Donovan

In geopolitics, particularly in a place as strategically important as the South Caucasus, even the smallest shift can unleash major consequences.

What would the impact be on that volatile region -- a crossroads for the competing interests of Russia, the United States, and Iran -- if Washington accepted Russian President Vladimir Putin's offer to jointly use a Russian-leased radar base in Azerbaijan as part of an antimissile shield?

In a word: profound.

After all, Azerbaijan and Armenia, which fought a war in the early 1990s, are still locked in a bitter dispute. And Iran, meanwhile, is unlikely to view favorably more U.S. military moves on its border. Iranian state radio said today that Putin's proposal could have "serious regional implications in the domain of security."

Radio Farda acting Director Mosaddegh Katouzian notes that Tehran and Baku's good relations could be affected, and that the issue is likely to be discussed in two weeks during Iranian President Mahmud Ahmadinejad's scheduled visit to Baku

"Definitely Iran would be concerned about having those types of bases in Azerbaijan because of its own security," Katouzian says. "So probably in the next talks between President Mahmud Ahmadinejad and Baku officials, this is going to come up as a big concern."

Frozen Conflict

Then there's Armenia and Azerbaijan, who fought a war in 1991-94 in which 25,000 died. They have since been locked in a bitter dispute over the object of that conflict: Azerbaijan's predominantly ethnic-Armenian-populated region of Nagorno-Karabakh.

Ironically, Putin's offer comes as Azerbaijani President Ilham Aliyev and Armenian President Robert Kocharian, himself a former Karabakh leader, are to meet in St. Petersburg on June 9 to discuss the standoff over the enclave.

International mediators have hoped that the two presidents can agree on small steps to improve life for people in Nagorno-Karabakh. But they also fear if dialogue fails, violence could resume, destabilizing an area that is emerging as a key energy producer and transport route between the Caspian Sea region and Europe.

Putin's missile-defense proposal, however, appears to risk tipping the balancing act on Nagorno-Karabakh toward Azerbaijan.

Upsetting Regional Balance

Rasim Musabekov, a political analyst based in Baku, suggests Azerbaijan could parlay any pivotal role in Washington's missile-defense shield into obtaining concessions from Armenian in the standoff over Nagorno-Karabakh.

"The discussion of this issue alone is raising Azerbaijan's strategic importance. This is a win for Azerbaijan. If we are taken as partners of the United States of America and Russia, this would give us certain security guarantees and would lead to obligations [on the part of Russia and the United States] to settle problems that Azerbaijan is concerned about," Musabekov says.

Click image to enlarge"In the first place, this means restoring Azerbaijan's territorial integrity, which was violated by Armenian aggression against 20 percent of Azerbaijan's territory," he adds.

So far, Azerbaijani authorities have refrained from offering a full reaction to Russia's proposal.

However, Azerbaijani Foreign Minister Elmar Mammadyarov has told RFE/RL's Azerbaijani Service that Baku is ready to negotiate "bilaterally, or we can do it in the trilateral format" with the United States and Russia, which currently leases the radar base from Azerbaijan.

Armenia, meanwhile, would appear to be concerned about that prospect.

Armenian Foreign Ministry spokesman Vladimir Karapetian tells RFE/RL that both Russia and the United States should "take into account the balance of the power in the region before making such a decision."

Armenia Nervous

But for weeks now, even before Putin made his surprise proposal at the Group of Eight (G8) summit in Germany, that balance has already appeared to be tilting away from Armenia.

Yerevan is traditionally a close ally of Russia. But Harry Tamrazian, head of RFE/RL's Armenian Service, says that in recent weeks there's been a flood of Russian officials visiting Baku, including a visit by Russian Foreign Minister Sergei Lavrov.

"Now, it appears that [the] Russians are talking to [the] Azeris. Russian high-level officials are frequently in Baku. You can see them almost every week in Baku, talking to Azeri leaders," he says. "And this makes Armenian leaders nervous. Obviously, there is a clear rapprochement between Moscow and Baku."

Together with France, the United States and Russia are co-chairs of the Minsk Group, the body set up by the Organization for Security and Cooperation in Europe to seek solutions to the Nagorno-Karabakh crisis.

Yerevan's chief concern now, says Tamrazian, is that if Russia and U.S. interests converge in Baku, Armenia could pay the price.

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.

Poti-Caucasus Ferry Route at Risk

Thursday, June 7, 2007, #106 (1373)
Messenger.ge, Georgia
By M. Alkhazashvili
(Translated by Diana Dundua)

Armenia remains Russia's strategic ally in the South Caucasus. Armenia's economic sector has been for a long time tied to the Russian market although, currently, the Kremlin has no transportation links with Armenia.

Transportation blockade aimed to "punish" Georgia during the "spy row" last October has negatively influenced Armenia in the process.

Last year, Russia unexpectedly blocked the Kazbegi-Lars customs checkpoint - the only customs checkpoint controlled by Georgians on the Georgian-Russian border. Russian authorities argued the checkpoints needed renovations. The route continues to be blocked and it hurts not only Georgia's interests but also those of Armenia.

The checkpoint at the Roki Tunnel is not well- controlled, linking Russia with Tskhinvali separatist authorities.

Russia hoped that the Georgian administration would get accustomed to travelers and cargo passing through separatist-controlled customs checkpoints. However, the Georgian government is not supporting this idea. As a result, Russia has lost its transportation link with Armenia.

The railway connection with Russia is very important for Armenia too. Armenian experts calculated that Armenian economic sector was losing USD 500 million annually because of the closed railway via Abkhazia.

A while back, Armenia actively demanded that Georgia open the railway, although they also asked Russia to allow Georgians to control the customs checkpoints at Psou (Russian-Abkhaz border) and the Roki Tunnel. The Russian authorities did not do this and later imposed a transportation blockade.

But to support Armenia's interests, Russia was obliged to help create the Poti-Caucasus ferry route.

This ferry route doesn't make much sense as the cost to transport cargo appears to be very expensive and if the railway via Abkhazia is reopened, no one will need it.

According to the Chairman of Armenian Union of Industrialists and Entrepreneurs Arsen Kazarian, currently the Poti-Caucasus ferry route is not functioning, as it does not have any cargo to load. He also expressed dissatisfaction about the tariffs for the route.

Armenian authorities worry that the new ferry route will not last long. The Swedish company Reserve Capital Enterprising Corporation that controls the ferry intends to sell 45 percent of the shares in the near future.

According to the Armenian newspaper Aiots Ashkher, the Swedish company wants to attract funding from Armenian companies to reduce its business risk and to decrease possible losses to the company as well.

The newspaper reports that when the Poti-Caucasus ferry route was opened, the company bragged that cargo transportation would not take much time and it would be cheaper compared to the Poti-Ilichevsk ferry route. Now it is clear that the cost is approximately the same and cargo arrives in 2 days instead of 7.

At the same time the owner of the Swedish company wants to be the sole cargo transporter from Yerevan to Poti and this could put Armenians in a difficult position. If the existing problems are not solved, the Poti-Caucasus ferry route will have no future.

Thursday, June 7, 2007, #106 (1373)

Poti-Caucasus Ferry Route at Risk
By M. Alkhazashvili
(Translated by Diana Dundua)

Armenia remains Russia's strategic ally in the South Caucasus. Armenia's economic sector has been for a long time tied to the Russian market although, currently, the Kremlin has no transportation links with Armenia.

Transportation blockade aimed to "punish" Georgia during the "spy row" last October has negatively influenced Armenia in the process.

Last year, Russia unexpectedly blocked the Kazbegi-Lars customs checkpoint - the only customs checkpoint controlled by Georgians on the Georgian-Russian border. Russian authorities argued the checkpoints needed renovations. The route continues to be blocked and it hurts not only Georgia's interests but also those of Armenia.

The checkpoint at the Roki Tunnel is not well- controlled, linking Russia with Tskhinvali separatist authorities.

Russia hoped that the Georgian administration would get accustomed to travelers and cargo passing through separatist-controlled customs checkpoints. However, the Georgian government is not supporting this idea. As a result, Russia has lost its transportation link with Armenia.

The railway connection with Russia is very important for Armenia too. Armenian experts calculated that Armenian economic sector was losing USD 500 million annually because of the closed railway via Abkhazia.

A while back, Armenia actively demanded that Georgia open the railway, although they also asked Russia to allow Georgians to control the customs checkpoints at Psou (Russian-Abkhaz border) and the Roki Tunnel. The Russian authorities did not do this and later imposed a transportation blockade.

But to support Armenia's interests, Russia was obliged to help create the Poti-Caucasus ferry route.

This ferry route doesn't make much sense as the cost to transport cargo appears to be very expensive and if the railway via Abkhazia is reopened, no one will need it.

According to the Chairman of Armenian Union of Industrialists and Entrepreneurs Arsen Kazarian, currently the Poti-Caucasus ferry route is not functioning, as it does not have any cargo to load. He also expressed dissatisfaction about the tariffs for the route.

Armenian authorities worry that the new ferry route will not last long. The Swedish company Reserve Capital Enterprising Corporation that controls the ferry intends to sell 45 percent of the shares in the near future.

According to the Armenian newspaper Aiots Ashkher, the Swedish company wants to attract funding from Armenian companies to reduce its business risk and to decrease possible losses to the company as well.

The newspaper reports that when the Poti-Caucasus ferry route was opened, the company bragged that cargo transportation would not take much time and it would be cheaper compared to the Poti-Ilichevsk ferry route. Now it is clear that the cost is approximately the same and cargo arrives in 2 days instead of 7.

At the same time the owner of the Swedish company wants to be the sole cargo transporter from Yerevan to Poti and this could put Armenians in a difficult position. If the existing problems are not solved, the Poti-Caucasus ferry route will have no future.

© The Messenger. All rights reserved. Please read our disclaimer before using any of the published materials.

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.

Armenian Genocide recognition the only way to enhance Turkey’s prestige

19.05.2007
PanARMENIAN.Net

“The most efficient way to enhance Turkey’s prestige is to acknowledge the atrocities and apologize for them. This would put an end to the mistakes of the past and Turks could meet the future with an open heart,” Director of the Institute of CIS Studies Konstantin Zatulin writes in a letter addressed to Lala Ulker, an advisor at the Turkish Embassy in Moscow.

In his letter Zatulin brings in the words of well-known Turkish writer Ahmed Altan who used to say that the Armenian Genocide is a historical fact and it must not be forgotten.

“I cannot agree with you that the investigation of the Armenian Genocide issue is a task for historians only. As you know, atrocities are assessed by lawyers and not by historians. That is why this outrageous episode of the world history should be given a juridical assessment first of all. Documents are more than enough. Turkey’s policy towards Armenians at those times can be defined as genocide, as it’s interpreted by article 2 of UN 1948 Convention On the Prevention and Punishment of the Crime of Genocide.

According to Zatulin, Turkey’s denial of the Armenian Genocide is the most annoying factor in the Armenian-Turkish relations and hampers their normalization. Ankara’s stubborn desire to force Armenia to abandon its position on the Armenian Genocide issue in exchange for normalization of relations cements tension between the two states. I am hopeful that common sense will prevail in Ankara and it will take this painful but courageous and essential step that put an end to hostility between the two peoples,” the Russian politician writes.

Earlier, Ms. Lale Ulker accused Konstantin Zatulin of “jaundice and distortion of history” in response to his article titled “The bill on genocide will keep memory of Genocide awaken.”

! Reproduction in full or in part is prohibited without reference to «PanARMENIAN.Net».

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ARMENIA AND RUSSIA AGREE: FOREIGN POLICY CHANGE UNLIKELY AFTER ELECTIONS

5/10/07
Eurasianet
Haroutiun Khachatrian

"Political scientist Iskandarian noted that Russia is losing its traditional influence in Armenia since Moscow "works only with the state and not with [Armenian] citizens." Among more than 30 think tanks in Armenia, he added, only two or three are supported by Russians. At the same time, he noted, Russian is losing ground to English as a second-language for Armenians.

Moscow-based political scientist Andranik Migranian had a simple explanation: Russia is still recovering from the economic collapse of the 1990s, he claimed. Assistance to Armenian civil society will "increase rapidly," he predicted. "

Changes may come after Armenia’s upcoming parliamentary vote, but don’t look for them in the country’s close bilateral ties with Russia, a group of Armenian and Russian experts concluded at a May 10 government-sponsored conference in Yerevan.

"I am often asked: What will happen after the elections? The answer is: nothing will happen in terms of foreign policy," said political scientist Alexander Iskandarian, head of Yerevan’s Caucauss Media Institute. "Because there are no forces in Armenia which are striving to come to power with the purpose of spoiling its relations either with Russia or the West."

The most outspoken members of Armenia’s opposition are largely pro-Western; pro-government parties, billed as the frontrunners in the parliamentary race, take a more measured stance; or, in the case of pro-government Prosperous Armenia Party, an avowedly pro-Russian stance.

Prosperous Armenia Party leader Gagik Tsarukian recently told one Russian media outlet that 90 percent of Armenia’s foreign relations should be focused on Russia and only 10 percent on the West. A party representative, however, confirmed Prosperous Armenia’s support for the current official government policy of attempting to balance Armenia’s ties with both.

No doubt with such considerations in mind, Russian parliamentarian Konstantin Zatulin, director of the Moscow-based Institute of Commonwealth of Independent States, noted that the timing of the conference was deliberate. The gathering was organized by Zatulin’s institute, which recently opened a Yerevan branch office, and supported by the Armenian government.

"It is extremely important for us in Russia to know what will be the situation in Armenia, in a country which is of great importance for Russia," Zatulin said. Zatulin is one of more than 40 Russian Duma deputies who are observing the May 12 parliamentary vote.

Competition between Russia and the West was among the main topics discussed at the event.

In a nod to Armenia’s existing foreign policy, Armenian Justice Minister David Haroutiunian, a leading member of the ruling Republican Party of Armenia, assured conference participants that the country wants to preserve its ties with both Russia and other outside powers interested in the South Caucasus, a veiled reference to the United States and other Western states.

Both Russia and the West want stability in the region, he continued, but differ on tactics. "[E]ach side believes that the best way of keep stability is by establishing its own dominance. Armenia does not share this vision, and this is why it will oppose efforts to push Russia out of the region," the minister said.

Haroutiunian named Armenia and Russia’s joint membership in the CIS Collective Security Treaty as the most important aspect of relations between the two states, noting that he preferred the term "alliance" to "partnership."

In turn, Aleksei Gvinianin, a Russian foreign ministry department head who represented the ministry at the conference, hailed Armenia for providing "a good source of security, given Russia’s problems in both the North and South Caucasus." In an apparent tit-for-tat overture, Gvinianin did not exclude the possibility that Moscow could join Western countries in encouraging Turkey to reopen its borders with Armenia. Policy-planning cooperation on this front with Yerevan was also proposed.

Sympathy for Armenia’s own sensitive areas in its relations with the West was made clear. Gvinianin went so far as to recommend that Armenians not take recommendations about the parliamentary elections from the Organization for Security and Cooperation in Europe/Office for Democratic Institutions and Human Rights (OSCE/ODIHR) as "truth of the last instance." Moscow has a long history of conflicts with the OSCE about the organization’s various activities in the former Soviet Union.

Russian political scientist Vitaly Tretyakov, editor of the Moscow News weekly, added that former Soviet republics might not have any other choice but to ally with Russia on various issues, as the "EU or NATO cannot grow infinitely." Tretyakov went on to predict that further incentive for strong Armenia-Russia ties could lie in the creation of a new organization of former Soviet republics, in which Russian President Vladimir Putin, would play a leading role. Tretyakov put the timeline for such an event at "less than a year," but did not provide further details or cite sources for his information.

Nonetheless, as shown at the conference, ties between Moscow and Yerevan are far from trouble-free. Russian representatives did not answer questions from Republican Party parliamentarian Armen Ashotian on whether signatories of the 1992 CIS Collective Security Treaty would help Armenia in case of "possible aggression" from Azerbaijan, nor whether Russia might recognize the disputed territory of Nagorno-Karabakh if Western states recognize the breakaway territory of Kosovo in the Balkans.

Other problems were also raised. Political scientist Iskandarian noted that Russia is losing its traditional influence in Armenia since Moscow "works only with the state and not with [Armenian] citizens." Among more than 30 think tanks in Armenia, he added, only two or three are supported by Russians. At the same time, he noted, Russian is losing ground to English as a second-language for Armenians.

Moscow-based political scientist Andranik Migranian had a simple explanation: Russia is still recovering from the economic collapse of the 1990s, he claimed. Assistance to Armenian civil society will "increase rapidly," he predicted.


Editor’s Note: Haroutiun Khachatrian is a Yerevan-based writer specializing in economic and political affairs.


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.

RUSSIA ACTS TO KEEP TIES WITH ARMENIA STRONG

Monday, April 23, 2007
EurasiaNet
By Sergei Blagov 4/23/07

The April 23 announcement that Russia and Armenia are entering into a joint uranium excavation venture underscores the Kremlin’s strong commitment to maintaining Yerevan’s allegiance.

Armenia has long been Russia’s closest ally in the South Caucasus. As Armenia prepares to hold parliamentary elections in May, Russian officials have seemed keen to play up the close bilateral ties, while striving to avoid creating an impression of meddling in Armenian domestic politics.

Armenian Ecology Minister Vartan Aivazian and Sergei Kiriyenko, a former Russian prime minister who now heads the country’s Atomic Energy Agency, announced the uranium extraction project following a meeting in Yerevan. The joint venture is expected to get underway this year, Kiriyenko indicated, adding that Moscow was ready to help Yerevan build a new nuclear energy plant, in the event that Armenian officials opted to head in that direction. Aivazian also announced that Yerevan had agreed to join the international uranium enrichment center, located in Russia’s Irkutsk region.

A higher profile display of friendship occurred earlier in April, when Russia’s first deputy prime minister and rumored presidential successor, Sergei Ivanov, visited the Armenian capital. "I think Armenia is our strategic partner. This is gauged not only by military and political interest", Ivanov told journalists in Yerevan, where he held meetings with all the country’s top officials, including President Robert Kocharian and Prime Minister Serzh Sarkisian.

No deals were signed during Ivanov’s April 11 visit. Officially, Kocharian and Ivanov just discussed economic ties. Perhaps the most important point of Ivanov’s visit was his meeting with Kocharian’s perceived successor, Prime Minister Sarkisian. Officially, both officials also focused on economic issues, including transportation routes. Ivanov reportedly told Sarkisian that the opening of a ferry route from Russian Black Sea ports to the Georgian coastal city of Poti would ease transportation difficulties between Russia and Armenia. The ferry, which is capable of carrying up to 50 rail carriages, would improve access to Armenia, Ivanov said, without mentioning that the ferry would also come as a move toward relaxing Russia’s ban on transport with Georgia. [For background see the Eurasia Insight archive].

Russia remains the top foreign investor in Armenia, Ivanov told a briefing in Yerevan on April 11. According to official statistics, Russia was Armenia’s leading foreign investor in 2006, pumping about $87 million into the Armenian economy, including investments in ArmenAl, ArmenTel and ArmRosgazprom. [For additional information see the Eurasia Insight archive].

There are several sources of tension in bilateral relations, however. Ivanov indicated Russia’s dissatisfaction with an agreement under which Armenia swapped assets in return for debt relief. [For background see the Eurasia Insight archive]. The quality of the Armenian enterprises taken over by Russia has not met the Kremlin’s expectations, Ivanov hinted. Sarkisian expressed the Armenian government’s willingness to revisit the issue.

Sarkisian also echoed the Russian view that the South Caucasus should not become the home of a possible North Atlantic Treaty Organization base. Armenia’s neighbor, Georgia, has expressed the intent to join NATO at the earliest possible moment. [For background see the Eurasia Insight archive]. Sarkisian said a NATO base in the region would dramatically increase tension in an already tense region. [For additional information see the Eurasia Insight archive]. "The reduction of Russia’s military presence in the region should not result in the automatically increased military presence of another country or organization," Sarkisian said at the April 11 news conference.

Meanwhile, some Armenian political figures have publicly questioned the need for Russia’s on-going action to guarding Armenia’s borders. On April 13, a former Armenian foreign minister, Raffi Hovannisian, called on Kocharian’s administration to enhance Armenia’s sovereignty by seeking to ease Russian border guards out, and for Yerevan-controlled troops to assume responsibility for the control of the country’s borders.

In Yerevan, Ivanov defended the presence of a Russian military base in Armenia, saying it did not threaten the security of third countries, while ensuring the security of Armenia and Russia.

Editor’s Note: Sergei Blagov is a Moscow-based specialist in CIS political affairs.

Posted April 23, 2007 © Eurasianet

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Russian nationalist extremists jailed

March 24, 2007

ST. PETERSBURG, Russia, March 24 (UPI) -- Russian authorities have rounded up members of two nationalist extremist groups suspected in a string of explosions and other attacks on immigrants.

St. Petersburg city prosecutor Sergei Zaitsev said 10 area residents ages 17 to 23 were charged in connection with attacks on citizens of Armenia, Uzbekistan, Moldova and Cameroon in the past month in St. Petersburg and Pushkin, Itar-Tass reported Saturday.

Authorities said three of five suspects in the bombing of a McDonald's fast-food restaurant also have been arrested, and explosives and bomb parts were seized. Police, who have confirmed the identity of the bombs used at both the McDonald's attack that injured six people and an explosion at a flower kiosk near a train station, said the arrests prevented at least two more explosions.


Zaitsev said the suspects were taking part in actions organized by the Movement Against Illegal Migration. "The perpetrators wanted not only to breach the order but also to intimidate the authorities," he said.

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Six Russians Jailed For Racist Killing Of Armenian

RFE/RL
Source: Reuters

March 14, 2007 -- Six Russians, including three brothers, have been jailed for up to 11 1/2 years for the racially motivated killing of an Armenian.


A Supreme Court spokesman said on March 13 that an appeal had slightly reduced some of their sentences.

Investigators found a notebook with drawings of swastikas and calls for violence against non-Slavs at the home of the brothers who together with their friends attacked and killed the dark-skinned Armenian on a train in the Moscow region in 2005.

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.

Playing a Losing Game

Tuesday, February 27, 2007
Moscow Times
By Thomas de Waal

This is a realistic view of where the Russian diplomatic influence is headed in the South Caucasus. Weaker Russian influence opens the door up for EU influence.

Late last month, Moscow quietly returned its ambassador, Vyacheslav Kovalenko, to Georgia. The restoration of diplomatic ties occurred with much less fanfare than their angry rupture in October but was in its own way just as significant. Nothing substantial has changed in Georgian-Russian relations since the blowup -- only perhaps the belated realization in Moscow that breaking off relations was a strategic mistake.

Georgia has not only endured Russia's blockade, but used it to become more economically independent. Thanks to Azeri gas, Georgia is surviving the winter and Gazprom has lost a big customer. Georgian President Mikheil Saakashvili has said the economic punishment has helped Georgia diversify its markets.

This own-goal is part of a larger picture about which the Kremlin, preoccupied with Russia's resurgence as a world power, seems only dimly aware: Russia is losing the South Caucasus.

It is not just Georgia, although recent Russian policy there has been spectacularly unproductive. A country that has 200-year-old historical, cultural, linguistic and religious ties to Russia has now set a firm course in pursuit of NATO membership and alliance with the United States. This was by no means inevitable. It was Russia's foreign minister at the time, Igor Ivanov, who brokered the deal that led to the resignation of former Georgian President Eduard Shevardnadze and Saakashvili's arrival in power in 2003. I myself heard Saakashvili at his first news conference following the Rose Revolution in Tbilisi going out of his way to say that he wanted "normal" relations with Moscow.

Since then, prickly Georgian nationalism has played its part in the subsequent decline in relations, but the bigger factor has been the high-handed behavior of the bigger neighbor on a whole range of issues, from energy policy to South Ossetia to the treatment of Georgian workers inside Russia.

Now that same highhandedness is harming Moscow's relations with the two other South Caucasus countries as well.

One of Vladimir Putin's first acts as president was to visit Baku and start to repair relations with Azerbaijan, the largest, richest and most strategically important country in the South Caucasus. In the 1990s, the adversarial relations between Russia and Azerbaijan were only barely concealed. Putin cleverly played on his common KGB past with President Heidar Aliyev. After Aliyev's death, he supported and cultivated his successor and son, the Moscow-educated Ilham Aliyev.

That improvement in relations was all but destroyed at beginning of this year, when Gazprom tried to impose higher gas prices on Azerbaijan and Moscow clumsily told Baku to abandon support for the Georgians. Aliyev Jr. promptly used the opportunity to demonstrate that Azerbaijan was an emerging power. He rejected Russian gas, halted oil shipments through the Baku-Novorossiisk pipeline, ordered the pulling of Russian channels from Azeri television, called into question the usefulness of the Commonwealth of Independent States and threw extra support behind a new non-Russian regional project, the Baku-Kars railway line. Azeris cheered enthusiastically.

This is bad enough for Russia. More remarkable is that Armenia, once the most fiercely loyal of Russia's neighbors, is also experiencing a cooling of affections for Russia. Russian elites have failed to notice that the wholesale grab of Armenian economic assets by Russian companies has turned public opinion there against them. Last autumn, Armenians were outraged when the Russian blockade of Georgia hurt them almost as badly, as most of Armenia's trade with Russia goes via Georgia. Worse, Armenians in Russian cities were picked up and harassed by the police with almost the same nastiness as Georgians -- after all, one person from the Caucasus looks very much like another to your average Russian police officer. The upshot has been unprecedented demonstrations against Russian xenophobia outside the Russian Embassy in Yerevan and the emergence into the mainstream of the first serious Armenian politician to say that Armenia's future lies with the EU and NATO -- former parliament Speaker Artur Baghdasarian.

This should be enough bad news for anyone sitting in the Kremlin. But let's provide some more. The breakaway Black Sea statelet of Abkhazia is perceived by most of the world as being entirely in Russia's pocket. Russia saved it from being overrun by the Georgian army in 1993, most of its citizens now have Russian passports, and its elderly residents draw Russian pensions. But the Abkhaz are also a people of the Caucasus, and their support for Russia is based on pragmatism, not love, and it may be that Russian-Abkhaz relations are now declining from their high-water mark. The reason is that many Abkhaz have been waiting for Russia to recognize Abkhazia's unilateral declaration of independence from Georgia, but the realization is dawning that Moscow is merely playing with them, using the prospect of recognition as a card to play against Georgia and the West. The Abkhaz are not happy about this, and some of them are now saying as much. This does not mean that they will turn back toward Georgia, but it does mean that they may try to engage more with Turkey and Europe and rely less on Russia.

Russia is in such a state of proud introspection that few in the leadership seem to be aware where its Caucasus policy is heading -- toward a deeper divorce between the South Caucasus and Russia than at any time since the 18th century. The trouble is that policy toward the region seems to be more driven by domestic and energy politics than the calculations of diplomacy. A friendly policy toward people from the South Caucasus does not win many Russian votes in a year running up to State Duma and presidential elections.

Yet the pity of it is that Russia still has a lot to give the South Caucasus, if only it would seek to cooperate instead of wanting to dominate. The people of the South Caucasus are not instinctively anti-Russian -- a huge number have lived in Russia and large numbers work there now. And Moscow has one great asset in the region that could be a source of immense "soft power" -- the Russian language. But Moscow is doing nothing to promote it, and Russian is dying out for want of teachers or language centers in all three countries. Entire university libraries full of Russian-language books are being rendered redundant as a new generation of students lacks the ability to read them. I suspect that in about 10 years, someone in Moscow will wake up to this reality -- but by then it will be too late.

Thomas de Waal is Caucasus editor at the Institute for War and Peace Reporting in London.

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

Armenia To Get Crucial Ferry Link With Russia

Tuesday 13, February 2007
Armenialiberty

By Shakeh Avoyan

Armenia will gain next month a long-awaited second rail ferry link with the outside world that will substantially reduce the cost of its transport communication with Russia and possibly other countries, officials said on Tuesday.

Transport and Communications Minister Andranik Manukian and a top representative of a Swiss-based company signed in Yerevan a memorandum on the launch of a regular ferry service between the Georgian Black Sea port of Poti and Russia’s Port-Kavkaz.

The company, Reserve Capital Corporation, is to operate the link with two heavy ferryboats that are reportedly undergoing technical tests at the moment. The Armenian side, for its part, will agree all legal aspects of the cargo service with the Georgian and Russian governments.

“This ferryboats will work only for Armenia,” said Manukian, adding that they will accept the first Armenian cargos in mid-March. He said Russia’s continuing transport blockade of Georgia will not affect their operations.

“This service will ensure a direct connection between the Armenian and Russian economies, which is very important,” said Arsen Ghazarian, chairman of the Armenian Union of Industrialists and Entrepreneurs, a business association that has lobbied for its creation.

Armenian companies currently import and export goods to Europe and the former Soviet Union through a similar service linking Poti with the Ukrainian port of Ilyichevsk. The Russian blockade imposed on Georgia last year stripped them of any alternative and less costly ways of making shipments to and from Russia, a key export market for many Armenian firms.

They have for years lobbied the government in Yerevan to help to open a direct Russian-Georgian ferry link that would reduce their high transportation costs. Officials said shipping a cargo consignment from Poti to Port-Kavkaz will take just over 30 hours, or almost half the time need for sending it to Russia via the Ukrainian port. They also expect a Ukrainian company operating the Poti-Ilyichevsk link, Ukrferry, to cut its transport fees.

“It’s obvious that there will be lower tariffs as a result of competition,” said Manukian. “I think Ukrferry will lower them.”

A Russian-Armenian ferry link was already launched two years ago but was cancelled shortly afterwards after reportedly incurring losses. According to Ghazarian, Reserve Capital’s ferryboats will be far more cost-effective because of their bigger capacity. He said they can carry not only up to 55 rail cars but also heavy trucks and cargo containers.

“In one year from now we will have a 50 percent increase in exports to Russia,” predicted Ghazarian. “The increase in imports will be slower.”

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.

RUSSIA SET TO EXPAND ECONOMIC PRESENCE IN ARMENIA

Tuesday, February 6, 2007
Eurasia Daily Monitor
By Emil Danielyan

Russia looks set to enhance its already strong economic presence in Armenia by capitalizing on Armenian President Robert Kocharian’s apparent desire to secure his political future with the Kremlin’s backing. The two governments have indicated that Russian companies will soon get hold of more chunks of the Armenian economy involving transportation and mining. They are also considering building a big Russian-owned oil refinery on Armenia’s border with Iran.

The developments result from Kocharian’s latest talks with President Vladimir Putin, which took place in the southern Russian city of Sochi on January 24. Putin was visibly satisfied with the outcome during an ensuing joint news conference, praising a major increase in Russian-Armenian trade in 2006 and the absence of “unresolved problems or difficult issues in our relationship.”

Kocharian, for his part, recalled Putin’s earlier public complaint that Russia is only Armenia’s third-largest foreign investor. “I have a sense that Russia will definitely hold the honorable first place by next March,” he said. He noted in particular that he and Putin had discussed Russian involvement in the Armenian mining industry, which is currently dominated by non-Russian foreign investors.

Kocharian’s press secretary, Victor Soghomonian, told reporters in Yerevan on January 29 that Russia would specifically like to help Armenia develop its uranium deposits, which were first discovered in Soviet times. Last year a U.S. mining company began exploratory work in a northeastern Armenian region that geologists say is rich in the radioactive metal. It is not clear if the Russians have set their sights on the same area.

Citing unnamed government sources, the Armenian newspaper 168 Zham said on February 1 that Yerevan has also decided to place Armenia’s largest gold mines under Russian control. The paper claimed that an Indian company that operates those mines along with a gold-recovery plant is being forced out of the country. The Armenian authorities recently accused the company, Vedanta Resources, of large-scale tax evasion, and it is currently under investigation.

Kocharian also referred to Russian-Armenian cooperation in the area of transport, widely understood to be a confirmation of earlier reports that Russia’s state-run railway company will run Armenia’s moribund rail network. The takeover is expected to take the form of a long-term management contract.

In addition, it emerged after the Sochi talks that the oil division of the Gazprom monopoly is in talks with the Armenian government to explore the possibility of building a refinery in southeastern Armenia that would process oil from neighboring Iran. The ambitious project envisages shipping Iranian crude to the Armenian border town of Meghri through a 200-kilometer pipeline and transporting refined oil products back to Iran by rail. According to Kocharian’s spokesman Soghomonian, Armenian, Iranian, and Russian officials will meet soon to discuss the project in greater detail.

Despite its vast oil reserves, Iran lacks refining facilities and has to import gasoline to meet domestic demand. Nonetheless, some Russian experts question the economic wisdom of building such a facility in the most remote and least accessible part of Armenia, saying that it would cost a staggering $1.7 billion. Soghomonian dismissed the estimate as “grossly exaggerated” and insisted that the project “makes economic sense to all three parties.”

The latest Russian-Armenian talks come on the heels of highly controversial deals that gave Moscow near total control over the Armenian energy sector. The most recent of those deals, finalized in April 2006, enabled Armenia to avoid a hike in the price of Russian natural gas until January 2009 in exchange for ceding more energy assets to Gazprom. Those included an incomplete but modern thermal power plant and a considerably higher stake in the South Caucasus state’s gas distribution network. The Russian giant will also likely get a controlling share in a gas pipeline from Iran that is due to come on stream this spring. In addition, Kocharian’s late October visit to Moscow was followed by the $500 million sale of ArmenTel, the Greek-owned national telecommunication company, to Russia’s VimpelCom mobile phone operator.

Many commentators in Yerevan view Kocharian’s willingness to place more Armenian industries under Russian control as being part of his strategy to retain a key role in the country’s government after completing his second and final term in office in March 2008. Throughout his nine-year rule the Armenian leader has sought the Kremlin’s backing to neutralize political opponents challenging his legitimacy. Significantly, Kocharian was received by Putin in Sochi just one week after paying a confidential visit to Moscow. Armenia’s upcoming parliamentary elections were reportedly high on the agenda of that trip. The outcome of the vote, slated for May 12, will be vital for his political future.

Whatever Kocharian’s real motives, there are mounting concerns about the implications of the ruling regime’s economic dealings with Moscow -- arguably the least transparent area of governance in Armenia -- that are not overseen by parliament or even the cabinet of ministers. “Many economists consider Russia’s presence in the Armenian economy to be dangerous,” commented 168 Zham. Another paper critical of the government, Haykakan Zhamanak, accused Kocharian of “playing with our country’s sovereignty.” “The problem is that Russian companies are acquiring not just Armenian enterprises but whole infrastructures,” it wrote on January 26. “And that is a matter of national sovereignty.”

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.

Armenians see Russian economic takeover

Nov. 26, 2006
The Sun News
By NAIRA MELKUMIAN

YEREVAN, ArmeniaThe recent acquisition of Armenia's dominant telephone company by a Russian company is raising concerns here that Moscow is attempting to exert economic control over the republic it once controlled politically.

The purchase of a 90 percent stake in ArmenTel, which holds a monopoly on telephone and Internet service in Armenia, by the Russian company Vympelkom only serves to strengthen Russia's economic hold on major economic assets in the republic.

The sale was announced shortly after the return of Armenian President Robert Kocharian to Moscow.

It was during that trip that Russian President Vladimir Putin announced that he considered Russia's position as only the third-largest investor in Armenia, behind Germany and Greece, as "shameful."

The purchase, the latest in a series of Russian takeovers in key areas of the Armenian economy, comes as public attitudes toward Moscow are cooling because of the effect Moscow's economic blockade of neighboring Georgia is having on the Armenian economy.

Many here are also becoming increasingly worried by signs of rising xenophobia in Russia toward Caucasians in general and Armenians in particular.

Already, Russian companies own the major producers of electricity and natural gas, as well as the country's rail system.

"Just take a look," said Aram Manukian, a leading opposition politician. "The energy sector, communications, and the railway system have all been given to Russia. All this essentially weakens Armenia's independence."

But Defense Minister Serzh Sarkisian, considered by most to be the second most powerful figure in the government, has rejected such charges.

"You won't find to this day any examples of how Russian capital in Armenia has been used as a tool for political pressure," he said at a recent news conference.

Since the collapse of the Soviet Union in 1991, Russian companies have poured billions of dollars of investments into Armenia. Some contend it just makes good business sense.

"Russia's desire to become established in Armenia as the most stable country in the South Caucasus is understandable, as the attitude toward Russian business is better here than in Georgia," said political analyst Anna Harutyunian.

But Aram Sarkisian, head of the opposition Democratic Party, said the government should not have ceded control of a key industry so easily.

"All power-generating operations are effectively in Russia's hands," he said.

"There are no problems with Russia. That country is our ally and I am in favor of deepening cooperation with it. But the government should control our strategic facilities."

By and large, the average telephone user, who has long complained of poor service, doesn't seem to care who owns the company as long as service improves.

"It doesn't matter to me who the operator will be," said Suren Minasian. "Ordinary consumers just need easy, high-quality communications."

--------------------------------------------------------------------------------
Contact Melkumian, a journalist in Armenia who writes for The Institute for War & Peace Reporting, at 48 Grays Inn Road, London WC1X 8LT, U.K.

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.

RUSSIAN-GEORGIAN TENSION RAISE CONCERNS IN ARMENIA, BUT NO REAL IMPACT YET

CENTRAL ASIA - CAUCASUS ANALYST
Wednesday / November 15, 2006
Haroutiun Khachatrian

Armenia, a vulnerable country in both the geopolitical and geographical senses, stands to suffer serious damage due to the increasing tensions in the crisis in Russian-Georgian relations. The danger has several aspects. First, Armenia is a military ally to Russia, and risks to become separated from it by a potential member of NATO, which Georgia seeks to adhere to.

Second, the Russian-Georgian conflict, not to mention any instability in Armenia’s northern neighbor, would cut the most important communication link between Armenia and the outer world. As the land borders of Armenia with two of its neighbors – Azerbaijan and Turkey – are closed due to political reasons, Armenia can trade goods with the outer world only through Iran and Georgia, the latter serving more than half of Armenia’s foreign cargo turnover. Third, worsening Georgian-Russian relations could hinder vital supplies from Russia from reaching Armenia, first of all natural gas, which flows to Armenia through a pipeline crossing the territory of Georgia. Fourth, the large Armenian community of Georgia may be involved in the conflict, especially the Armenians living in the Samtskhe-Javakheti region of southern Georgia, whose living standards are poor and who are traditionally pro-Russian. The latter danger becomes more acute given the perspective of construction of the Kars-Akhalkalaki-Tbilisi railroad, which is to traverse the region, bringing fears among local Armenians that the region would fall into the sphere of Turkish influence. Finally, of vital importance for Armenia are not only its good relations with the immediate parties of the conflict, Georgia and Russia, but also with the western countries and in particular the United States. These relations might suffer should Washington protect Georgia more actively in its conflict with Russia.

Not surprisingly, the tension among Russia and Georgia provoked vivid discussions in the Armenian political elite. For the second time in less than a year, politicians – even those belonging to the parties of the ruling coalition – raised the issue of the necessity of a revision, or at least clarification, of the terms of the “Strategic alliance” with Russia. The first instance was in January, when Armenian politicians were surprised to learn that the “strategic partnership” with Russia did not protect Armenia from a sudden doubling of the price of the Russian natural gas. There is a consensus in Yerevan that in its actions, Russia does not always take into account the interests of its only ally in the Caucasus. The criticism was especially high after Konstantin Zatulin, a member of the Russian State Duma, said in an interview with a local newspaper that Armenia “does not support its strategic partner [Russia]” in its conflict with Georgia. If Armenian-Georgian relations are an obstacle for Russia’s relations with Armenia, we [the Russians] have the right to call on Armenia to choose: either you have normal relations with Russia or you have normal relations with Georgia,” Zatulin said.

The Armenian leadership has managed to escape such a pitfall, at least for the time being. The transport blockade of Georgian territory did not harm Armenian cargoes, as formally Russia banned only contacts with the Georgian transport operators, and Armenian businessmen never used their services. Ironically, Russia’s earlier actions had indeed hurt the interests of Armenian business, but this did not attract significant attention. It was the closure of the Verkhnii Lars (Upper Lars) checkpoint on the Russian-Georgian border last June, the only land link between Russia and Armenia. By closing it under the pretext of “repairs”, Russia sought to activate an alternative route through the territory of pro-Russian South Ossetia, not controlled by Georgian authorities. However, Tbilisi prohibited foreigners from using this route (and there were no other foreigners except Armenians which needed it), whereas the citizens of Georgia were free to use it. Thus, Armenian carriers were forced to switch to other existing options, namely, through the Black Sea ports of Georgia to Russia or Ukraine, causing another wave of grumble in Armenia. In any case, these latter routes were not affected by the Russian October sanctions against Georgia, and the Armenian businessmen did not suffer anew.

Armenia’s gas supplies are also unlikely to suffer, even if Georgia and Russia fail to reach a purchase agreement for the next year, similar to what happened last winter in the Ukraine. First, Georgia is unlikely to take gas set for Armenia, as this would be seen as an obvious hostile action in Yerevan. Second, in December, Armenia will inaugurate an alternative gas supply pipeline, from Iran, which can in principle fully cover the needs of Armenia, enabling Russia simply to cut its supplies through Georgia.

As for the Samtskhe-Javakheti issue, the surprise October arrest in Yerevan of Vahan Chakhalian, a radical leader of the Javakheti Armenians, was interpreted by most of experts as a gesture aimed to show the Georgian leadership that Yerevan would not support any actions capable to destabilize that sensitive region.

Yerevan has managed to keep stable relations with both conflicting parties, which was demonstrated in a series of recent contacts, including the Russian-Armenian summit meeting in Moscow in late October and a meeting between the foreign ministers of Armenia and Georgia, also in Moscow. The relations with Washington have not suffered either, as evident from the recent statements of American officials that the Millennium Challenge program of Armenia will not be interrupted despite the calls of human rights watchdogs.

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.

Armenia balancing between Russia and Georgia

Worsening relations between Georgia and Russia continue to pose a difficult problem for Armenia, as it tries to maintain some form of balance in its relations with the two sides.

By Haroutiun Khachatrian for Eurasianet (09/11/06)

The effect of these tensions for the Armenian economy remains a paramount concern. Armenian President Robert Kocharian’s 30 October – 1 November state visit to Russia, which included meetings with Russian President Vladimir Putin and Prime Minister Mikhail Fradkov, was a case in point. In remarks to reporters, Kocharian noted that while Russia’s transportation blockade with Georgia could pose difficulties for bilateral trade between Russia and Armenia, "serious [Russian] investment projects" would help compensate Yerevan for any economic damage done by the Georgian embargo, the ITAR-TASS quoted Kocharian as saying.

Those investments appear to be growing. Russian energy giant Gazprom’s acquisition of a controlling stake in the country’s gas distribution network and, through this, potential control over an Armenian section of an Iranian gas pipeline, its recent takeover of the fifth unit of the Hrazdan electricity plant, and Russian company Rusal’s modernization of aluminum manufacturer Armenal are among the most prominent of these "serious" investment projects. Unlike neighboring Georgia, Armenia will see its current US$110 per 1,000 cubic meters price for Gazprom gas frozen until 2009 in return for transferring ownership of the Hrazdan unit to the Russian company, the government has announced.

On 3 November, announcement was also made that the Russian firm VimpelCom has purchased a 90 percent stake in ArmenTel, the country’s main mobile telecommunications carrier. The government will retain the remaining 10 percent stake in the company.

Despite these signs of robust business ties, concerns about Russia’s position toward Armenia have been growing since mid-October, when nationalist Russian parliamentarian Konstantin Zatulin, a member of the pro-Kremlin party United Russia, protested at a 17 October meeting of the Russian-Armenian inter-parliamentary commission in Yerevan that Armenia "does not support its strategic partner [Russia]" in its conflict with Georgia. Zatulin, who has previously cast himself as pro-Armenian on the issue of the disputed territory of Nagorno-Karabakh, called on Yerevan to choose between "normal relations" with Russia or Georgia, the daily newspaper Haykakan Zhamanak reported.

.
Zatunin’s statements met with almost unanimous protest by the Armenian political elite, although some, like Armen Ashotian, a member of the governing Republican Party, have stressed that the remark is the view of one politician, not the official position of the Russian Federation.

Nonetheless, Armenian officials have continued to address the Russian-Georgian dispute cautiously. "Current Russian-Georgian relations are these countries’ internal problem," Prime Minister Andranik Margarian said at a joint press conference on 24 October with Belarusian Prime Minister Sergei Sidorski. "Armenia […] should not interfere with the resolution of this problem."

Margarian, however, has stated that Armenia is ready to "help with the [...] solution" for the impasse between President Putin and Georgian President Mikhail Saakashvili if asked by Russia or Georgia.

So far, neither Moscow nor Tbilisi has shown interest in mediation. At a 1 November meeting on the sidelines of a Moscow gathering of the Organization of Black Sea Economic Cooperation, Armenian Foreign Minister Vardan Oskanian and Georgian Foreign Minister Gela Bezhuashvili met, but details on the conversation were scarce. In a succinct statement, the Armenian Foreign Ministry stated that the two men discussed "issues of bilateral relations, the influence of Russian-Georgian relations on the region and possibilities for softening the current tension," the news service Mediamax reported.

Before the talks, Georgian Ambassador to Armenia Revaz Gachechiladze, in a 30 October meeting with National Assembly Chairman Tigran Torosian, thanked Armenia for its "balanced approach."

Greater speculation about Armenia’s relations with Georgia and Russia has surfaced in media coverage of the 10 October arrest of Vahagn Chakhalian, one of the leaders of the Miasnakan Javakhk, or United Javakhk, non-governmental organization in Georgia’s predominantly ethnic Armenian region of Samtskhe-Javakheti. Chakhalian was jailed for two months pending trial for having allegedly "illegally" crossed Georgia’s border with Armenia. On 30 October, he was released. Some local publications have argued that the release was at Russia’s request.

Chakhalian’s arrest surprised most Armenians since no visa regime exists between the two states; the arrest of an ethnic Armenian for entering Armenia struck many as strange. Some members of the opposition, including the Dashink Party of former Nagorno-Karabakh warlord Samvel Babayan, said the arrest had been made at the request of Tbilisi officials who wanted to curtail United Javakhk’s support for ethnic Armenians in Samtskhe-Javakheti. (The leader of a rival non-governmental organization to Miasnakan Javakhk has gone even further, charging that Chakhalian was working with Georgian special services to destabilize the region and push ethnic Armenians out of the area.) The movement’s opposition to the construction of the Kars-Tbilisi-Akhalkalaki railroad, which will connect the region with Turkey, was seen as the reason for such action.

Both pro-government and opposition publications share strong opposition to this project. Yerevan fears the line would further isolate Armenia, currently hemmed in by blockades on its borders with Turkey and Azerbaijan. On 19 October, the pro-government daily newspaper Hayots Ashkharh published an analysis that argued that the railroad would damage ties between Armenia and Georgia, and urged the Saakashvili government not to harm its relations with Armenia for "a US$200 million bribe by Turks and Azeris."

The opposition newspaper Haykakan Zhamanak, a pro-Western publication close to former President Levon Ter-Petrossian’s Armenian National Movement, has taken a different approach. In its 19 October issue, the paper argued that Russia could use Miasnakan Javakhk to put pressure on Georgia. The newspaper Iravunk followed that line on 3 November, saying that Miasnakan Javakhk’s "strongly pro-Russian" position and activities are "certain to worry Armenian Prime Minister […] Margarian and [Defense Minister] Serzh Sarkisian" as they pursue dialogue with the West.

The government, to date, has not responded to the allegations.

EurasiaNet provides information and analysis about political, economic, environmental, and social developments in the countries of Central Asia and the Caucasus, as well as in Russia, the Middle East, and Southwest Asia. The website presents a variety of perspectives on contemporary developments, utilizing a network of correspondents based both in the West and in the region. The aim of EurasiaNet is to promote informed decision making among policy makers, as well as broadening interest in the region among the general public. EurasiaNet is operated by the Central Eurasia Project of the Open Society Institute.


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.

Armenia Surrenders to Russia…

11.06.2006 Monday - ISTANBUL 15:43
Zaman Online
By FIKRET ERTAN

Georgia is not pleased with its dependence on its enemy, Russia, for natural gas; neither is Armenia which is Russia’s ally.

As a matter of fact, both countries are looking for alternative natural gas sources. In this context, Georgia is holding meetings with Azerbaijan, Turkmenistan and Iran. And Armenia believes that the Iran-Armenia natural gas pipeline, still under construction over the last several years, would curb its dependence on Russia.

The construction of this natural gas pipeline started in 2004 after an agreement between Armenia and Iran’s national natural gas company, NIGC. The pipeline which starts from the vicinity of the Iranian city of Tabriz, will end in the Iran-Armenia border and then will be linked to Armenia’s own natural gas pipeline. Forty kilometers of the 160-kilometer pipeline, extending from Kacaran to Mergi, is expected to be completed next month. The second part of the pipeline, which extends to Armenia’s Ararat region, will be completed in 2007 and is expected to be linked to the existing ArmRosGazprom (ARG) pipeline there.

As the name suggests, ARG is a joint natural gas pipeline project. Until early November, Armenia owned 45 percent of this pipeline, Russian natural gas giant Gazprom 45 percent and the remaining 10 percent belonged to an obscure intermediary company called ITERA. However, the percentage of shares has changed after a deal between Armenia and Gazprom in early November.

According to the agreement reached early this month during Armenian President Robert Kocharyan’s visit to Moscow, Armenia increased its shares in the ARG Company from 45 percent to 58 percent. This increase took place after ARG announced new shares amounting to $119 million and Gazprom bought these shares. With these new shares, Gazprom has effectively taken control of the 5th unit of the Hirazdan electricity plant along with the Iran-Armenian natural gas pipeline.

The basis of this recent development lay in the agreement signed between Armenia and Gazprom in April 2006. Under the deal, Gazprom raised the natural gas price for its ally, Armenia, from the preferential $54 per 1,000 cubic meters to the still preferential $110 per 1,000 cubic meters, which will remain in force until Jan. 1, 2009. This in fact was a favorable price for Armenia, which is highly dependent on Russia for natural gas.

However, there was a price to Russia’s compromise. In return, Russia demanded concessions from Armenia as regards the acquisition of the Iran-Armenia pipeline and the 5th unit of the Hrazdan electricity generating plant. Russia particularly insisted on limiting the Iran-Armenia pipeline’s diameter to 700 millimeters instead of 1.420 millimeters as stipulated in the original agreement reached with Iran. The reason is obvious. Russia was trying to block the transfer of Iranian natural gas via Armenia to Georgia and Ukraine in particular, and to Europe through the Black Sea, by keeping the diameter of the pipeline limited. The recent deal and latest news reports show that Russia achieved its goal and prevented use of the Iran-Armenia pipeline for the transfer of natural gas to other countries.

Armenian Prime Minister Andranik Markaryan defended the recent agreement and said it would be illogical to have a separate ownership for the Iran-Armenia pipeline since Gazprom already controlled natural gas supply in Armenia, thereby trying to rationalize the deal.

This recent deal I have dwelled upon is a geo-political achievement for Russia (thanks to this deal Russia has limited the potential significance of the Iran-Armenia pipeline in the future) while sealing Armenia’s dependence on Gazprom, and consequently on Russia. This is the picture the recent geo-political success of Russia, using its natural gas card.

11.06.2006
e-mail:f.ertan@zaman.com.tr

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.