[CENN] CENN – June 1, 20004 Daily Digest – Armenia {01}


Table of Contents:
1. The Death of Green Spaces
2. The Windfall from Cutting Trees
3. Russians Take Over Armenian Chemical Plant
4. 120 Million Drams Provided ILLION To Shirak Region for Work Against
Money Project
5. Germany to Allocate 6m Euro to Armenia for Reconstruction of Power
6. UN Millennium Development Goals to be implemented in Armenia
7. Medicine registration fees to be leveled


Source: Transitions Online, Czech Republic, May 28 2004

In 1988, the large, leafy public square next to the Opera House in
Yerevan was renamed Freedom Square, in honor of the movement that
eventually led the country to independence from the Soviet Union in

With its benches, open spaces, and trees, the square has long been a
popular place for people to come and relax.

But situation is changing at alarming speed, however, as the square’s
green spaces are paved over to make room for cafes, restaurants, and
dance clubs. So many of these places have sprung up that in some corners
of the square it is impossible to tell where one establishment stops and
another begins – the outdoor tables and chairs all run together, and the
music from competing loudspeakers merges.

Every time a caf? is built, another bit of public space is lost. Here,
dozens of trees have been felled, benches have been ripped up, and grass
has been replaced by cement patios. It’s a phenomenon that can be seen
across the city. According to the Social Ecological Association, more
than 700 hectares of trees have been chopped down over the past decade
in Yerevan’s construction boom.

By law, it shouldn’t be happening this way. According to government
records, the building permits for most of the cafes violate the cities
own ecological and planning standards. The rules say that before
construction can begin on a new establishment, an owner must submit a
design that meets the approval of ecologists. According to 2002 data
from the Ecology Ministry, only one of the 12 cafes in Opera Square, the
Astral, followed that procedure.

Yerevan’s chief architect, Narek Sargisian, defends the onslaught of
development as a market response to public demand. “If so many cafes are
being built, it means that there is a demand for them,” he said.
Sargisian admits that the park’s planners didn’t anticipate the
displacement effect that the retail establishments would have on people
who are looking for a public green space to relax in. On the other hand,
he said, “the cafes are always full.”

But they’re not making much money, or so believes Srbuhi Harutiunian,
head of the Social Ecological Association. Harutiunian said the group
had undertaken an unofficial survey of the park’s caf? and restaurant
owners and came up with surprising results.

“We found that 40 percent of these establishments are unprofitable,”
Harutiunian said. “Among the rest, 40 percent don’t worry about profit
at all [and are more interested in the prestige of their location], and
the remaining 20 percent secure a profit only by not paying their

Yet the building continues. To understand why, it’s necessary to look at
who’s behind the chattering crowds, loud music, and frothy cappuccinos.


Ordinary Armenian businesspeople patronize the restaurants and cafes
around Opera Park, but they certainly don’t own them. So far, at least,
it seems that ownership is a privilege reserved for the political elite
– members of parliament, ministers, influential bureaucrats, and their
cronies. A loophole has enabled the concreting over of Yerevan’s green
spaces in the city’s law on allocation of land that has allowed the city
to chop up and sell small caf?-size plots that it owns. Any plot larger
than 20 square meters must be sold at public auction; anything less can
be quietly sold to any buyer, for any price. Former Mayor Robert
Nazarian, a man appointed by the president, was a champion of the

Although he is no longer in office, Nazarian’s legacy of political
favoritism continues to deprive the city treasury of public funds and to
line the pockets of government officials who “bought” parcels of land. A
case in point: recently, according to reliable sources, a caf? in
Freedom Park that was owned by a senior government official sold for
$250,000. The official had spent $15,000 on the land on which the caf?
has constructed. His final take after including construction costs? More
than $220,000.

Some estimates of the total losses to the state treasury from corrupt
land sales near the Opera, where 15 companies have built cafes, exceed
$1 million.

Typically, the new owner begins to expand his cafe. After the event, the
Mayor’s Office “legalizes” the expansion of the caf? rather than taking
action against the owners – who are high-level public officials.

Whatever the procedure, the results can be gargantuan. In early 2002,
Nazarian “sold” a 20-square-meter plot of parkland to a company
(inappropriately) named Magnolia. The area of the plot has continued to
expand until today. According to the city’s Architecture and Planning
Department, the Magnolia Caf? occupies a staggering 2,615 square meters,
making it the largest establishment in the park. The businessman who
managed to take over so much land? Grigor “Bellagio Grish” Margarian, a
member of parliament from the Orinats Yerkir Party.

Nazarian has explicitly intervened in some developments. In January
2002, a company named Only Merriment requested permission to buy a plot
of land and build a video arcade next to Freedom Square. Permission was
granted, and approval from the city planning department awarded. One
month later, Only Merriment was allowed to acquire an additional
312-square-meter plot of land adjacent to the arcade site, to build an
outdoor caf?.

Then, one month after that, Nazarian abruptly amended both decisions and
issued blanket permission to Only Merriment to build a combined
arcade-caf?, although this hybrid had never been approved by the city’s
architecture department. Only Merriment was re-registered as Atlantic
Garden and, according to official documents, was authorized to occupy
332 square meters in a public tender. Today, it’s hard to tell how much
of the park Atlantic Garden occupies – much more than 332 square meters,
though, since, during construction the building was considerably
expanded by its owner. The owner? Anush Ghazaryan (better known as
Kamvolny Anush, or Pretty Anush), a man widely thought to enjoy the
protection of National Security Minister Karlos Petrosian.

Levon Khachatrian, a member of parliament, has also benefited from the
generosity of the Mayor’s Office. Just as with Only Merriment and
Magnolia, the major expansion of his caf? was within the law:
Khachatrian first received a 20-square-meter plot and then permission to
expand the plot. Khachatrian’s caf? today obscures part of the Opera
House from Sayat-Nova Street.

Asked recently if any establishment in Freedom Square of the area near
the Opera House was built according to city-approved plans, chief
architect Sargisian replied with one word: “No.”


Official corruption in Armenia is a problem recognized by a host of
international organizations. The Office for Security and Cooperation n
Europe has been at the forefront of international efforts to bring
attention to the problem and help the government tackle it, in part with
the help of a joint OSCE-Armenian task force. President Robert Kocharian
has even appointed a special adviser to coordinate the fight.

So why hasn’t anything been done to stop the corrupt practices that are
doing obvious damage to public life in the capital? “Unfortunately, the
people with power in this city are above the law,” says biologist
Oganezova, voicing a common public sentiment. “But they don’t realize
that they, too, lose. We lose our city’s environment, literally and

He may have final approval over all new construction and land sales in
the capital, but chief architect Sargisian says he can do nothing. “I
try to do everything in my power, but there are too many senior
officials in our government. They build these structures and consider
themselves to be above the law,” he said. But, as someone who has kept
his post through three mayors, Sargisian has become vulnerable to
accusations by some nongovernmental organizations that he allows the
situation to continue.

In November 2003, two months before he was dismissed from office, Mayor
Nazarian admitted to reporters that he had come under pressure by
government authorities to approve the land sales. Ninety-nine percent of
the cafes near the Opera House were illegal structures, he acknowledged,
adding, “We did not approve these designs.” But none of the structures
was torn down. In fact, since he made those remarks, new ones have gone

According to City Deputy Kamo Areyan, current Mayor Yervand Zakharian
has given his staff a “strict order” to examine how building licenses
and land sales are approved.

Armenia’s Association of Investigative Journalists has tried several
times to gain access to mayoral decisions on land allocations during the
period from 1997 to 2003, without success. Zakharian has refused to
provide the group with this public information and has not given an
explanation for his refusal. President Kocharian has refused to
intervene. The matter is now with the courts.


By Tigran Avetisian in Yerevan and IWPR in London (CRS No. 235,

Armenia’s giant chemical factory, Nairit, the object of ownership
battles over the last few years, has acquired a new and little-known
Russian owner, in a sale welcomed by both government and workers.

The takeover of one of Armenia’s prize assets follows the acrimonious
departure last year of Ransat, the British-based company that tried to
turn around the factory, but ended up quarrelling with the Armenian

A provisional deal was struck on April 16, 2004 by Armenia’s central
bank, which was in de facto control of the company, to sell Nairit to
the Volgaburmash Company, based in the Russian city of Samara.

The final details of the deal are still pending as currently an audit is
being carried out to determine the worth of the factory. Its results
will be announced in August.

Nairit produces chloroprene rubber. In Soviet times it had a monopoly
and was the only factory in the USSR making the product. It is still one
of only five factories around the world turning out the synthetic rubber
and has customers in 20 countries. Anil Kumar, general director of
former owner Ransat, told IWPR last year that if the plant operated
well, it would be worth 50 million US dollars.”

Ransat pulled out last May after a row over who was responsible for the
factory’s energy debts. Kumar said he had “spent ten million dollars
before a single ton of rubber was produced” and blamed the Armenian
government for not supporting his plans to turn around the company. (See
“Armenian Chemical Deal Ends in Tears, CRS 177, May 1 2003

Kumar said Ransat had promised to invest 25 million US dollars in the
factory over a five-year period and progressively settle its debts,
estimated variously at between 30 and 35 million dollars.

After Ransat pulled out of Armenia, the factory’s shares passed to
Haykapbank and, as the bank did not have enough assets and was therefore
taken under administration by the central bank, effectively placing it
under Armenian government control.

The Armenian government then handed management of Nairit to the Russian
bank Runabank, one of whose major shareholders is the Volgaburmash
holding company. Volgaburmash is owned by Samara businessman Andrei
Ishchuk who is also a member of Russia’s upper house of parliament, the
Federation Council.

The holding company has several factories in Ukraine and Russia that
produce drilling equipment and several factories producing heating
equipment, 11 construction companies and two banks. The Russian news
agency Interfax reported that Volgaburmash had an annual turnover of 200
million dollars.

However as Volgaburmash has not previously dealt in chemicals, questions
are being asked about how and why it acquired Nairit.

“The Yerevan chemical factory is not a prestige project for
Volgaburmash,” Gleb Stolyarov, Samara correspondent of the Russian
business newspaper Vedomosti told IWPR.

Volgaburmash declined to answer IWPR’s questions, but Stolyarov pointed
out that the company’s vice-president Yury Trakhtenberg had told a press
conference that, “the personal connections of the president of the
holding, Andrei Ishchuk, played a role.”

The acquisition of Nairit follows a pattern where major plants in
Armenia have been acquired by Russian companies, while western companies
have experienced significant difficulties in the Armenian market. The
Razdan hydroelectric power station and the Metsamor nuclear power
station are managed by Russian companies.

The Armenian government is enthusiastic about Nairit’s new owner. Karen
Chshmaritian, minister of trade and economic development said that,
“Four or five years ago, no one believed that Nairit would ever be
privatized – first of all, because of its size, and secondly because of
all the problems that had accumulated. But today that has become a

Political analyst Aghasi Enokian commented that a big business like
Nairit could not succeed in Armenia without support from top levels of

Whatever the politics of the deal are, there is general agreement that
Nairit is now undergoing a revival.

Mikhail Zavetyayev, who represents Volgaburmash, said that 3.5 million
dollars had already been invested in the factory over the past ten
months and that it was already bringing in a profit.

Ruben Saghatelian, the new executive director of the factory, told IWPR
that Nairit was now working at full capacity and that “we have no more
problems with putting out the product”.

Chshmaritian said that thanks to its new owner Nairit had not acquired
any new debts over the past ten months, that the almost 2,000 workers on
the payroll were receiving their wages regularly and that 350,000
dollars worth of back wages had been paid out. Factory director
Saghatelian said that they had worked out a schedule for paying off

The workers are also pleased with the new management. “We are happy that
finally we’ve started to receive our salaries on time,” Hrachik
Tadevosian, chairman of the trade union representing the factory’s
workers, told IWPR.

But he added, “We are still owed a lot of money. Not only from the
Ransat period but from much earlier.”

“I have no interest at all who owns Nairit or where our rubber gets
sold,” said Sarkis, a 43-year-old worker at the factory.”I am content
now, thank God. “If only they could pay us the money we’re owed from

Tigran Jrbashian, an economic analyst, said that the situation at Nairit
was now “very promising”. But he said that a lot of the previous
problems plaguing the factory remained. “The problem of transporting the
product still remains very serious and that directly puts up costs.”

Tigran Avetisian is a journalist for Aravot newspaper in Yerevan.


ArmenPress, May 27, 2004

About 25 percent of the 500 million drams provided by the Armenian
government for “Work Against Money” project is given to Shirak taking
into consideration the level of unemployment in the region and the
previous effectiveness of the project.

According to the data provided by regional employment center from the
total 120 million provided to the region 82 million is given to Akhurian
and Gyumri, 20 million to Artik and its neighboring territories, 10
million to Maralik city and its neighboring communities and 4 million
each for Amasia and Maralik communities.

As different from the previous years, this year instead of cleaning the
streets people will renovate green zones and forest areas. At the same
time reconstruction of secondary and cultural establishment and streets
will be conducted.

Shortly registration of citizens eager to participate will start. Last
year such an initiation provided work to 1500 unemployed.


Source: Public Television of Armenia, Yerevan, May 26, 2004

[Presenter] As a result of the two-day (25-26 May) working session of
the Armenian-German financial and technical cooperation it was confirmed
that Germany would allocate Armenia a grant of 6m euros in July. This
financial aid will be channelled to the reconstruction of small
hydroelectric power stations. During the 11 months of the
Armenian-German cooperation programmes the Germans assisted Armenia with
more than 150m euros.

[Correspondent over video of meeting] A protocol adopted during the
two-day inter-parliamentary session of the Armenian-German financial and
technical cooperation, confirmed and signed over some champagne, was
headed by Armenian Finance and Economy Minister Vardan Khachatryan and
the head of Transcaucasus and Middle Asia Department of Germany Ministry
of Economic Cooperation and Development, Wolfgang Armbruster.

[Wolfgang Armbruster, captioned, in Germany with Armenian voice over]
The Armenian government within the framework of the economic reforms
achieves our cooperation. These are water supply, reconstruction of
small hydroelectric power stations, assistance to the communities,
health programmes, etc.

[Correspondent] The finance and economy minister said that all the
programmes have been discussed one by one. There is a problem in the
water supply system which is being resolved in Armavir town and also 10
communities. Noragung company is implementing the programme.

Similar programmes will be implemented in Lori and Shirak Regions. Among
the republic’s regions, Armavir is the first which will have a 24-hour
quality water supply system. Lori and Shirak will follow after Armavir
this year.

An additional programme on the reconstruction of small hydroelectric
power stations will be confirmed in Bonn in July.

The next interparliamentary negotiations will be held in Bonn, in the
spring of 2005.

Armenian president and ecology minister discuss Lake Sevan, environment
Public Television of Armenia, Yerevan 26 May 04 [Presenter] President
Robert Kocharyan held a working meeting today with Ecology Minister
Vardan Ayvazyan where they discussed protection of Lake Sevan, forests
and other environmental issues. The ecology minister assured the head of
state that the efforts directed to the restoration of the green areas
all over the republic would be felt this year. [Correspondent] During
the discussion of the environmental issues with the president, Ecology
Minister Vardan Ayvazyan outlined the issue of Lake Sevan. Already in
1998, President Robert Kocharyan urged to stop the use of Lake Sevan’s
water for energetic aims. As a result of some years’ works, the water
level in Lake Sevan has risen by 98cm, which means that now the lake
contains 1.18bn cu.m. more water. The minister announced that now they
are concerned about the rising water level in Sevan. The Ecology
Ministry is implementing the programmes on protection of the ecosystem
of Lake Sevan and development of the surrounding environment, with the
assistance of the international organizations. [Armenian Ecology
Minister, Vardan Ayvazyan, captioned] We discussed the issues connected
with the protection of the ecological system of Lake Sevan, and
especially the Ecology Ministry, which is implementing an 8m-dollar
programme in the area of Lake Sevan. We are trying to implement various
programmes in the villages too, starting with protection and restoration
of the green areas and development and implementation of small
businesses. [Correspondent over video of Lake Sevan] The president
focused attention on the issues of building a National Park around Lake
Sevan. The forests’ issues are also always in the president’s centre of
attention. The minister assured him that cultivation of 360,000 hectare
of forests in Gegargunik and Tavush Regions will yield a positive
result. The president also stressed the importance of adopting a law on
ecology, which according to the ecology minister it is already ready.
The government will submit it to parliament for discussion soon.


Source: Public Television of Armenia, Yerevan, 26 May 2004

[Presenter] According to the UN experts’ assessments, the successes
achieved in Armenia by the implementation of the UN Millennium
Development Goals are impressive. The regional representative of the UN
Millennium Development Goals, Yeji Osiatynski noted that apart from the
successes that have been achieved, there are a lot of works to be done
in education, health care and other spheres. Osiatynski said that if we
are speaking about the reduction of poverty it is necessary to increase
the level of higher education. When people are educated it is easier for
them to find a job, and more jobs means less poor people.

[Correspondent] Armenia has joined the UN new programme four years ago,
which is called the Millennium Development Goals, with 190 other
countries. The programme encompasses the following eight areas of human

These are: To reduce poverty and starvation, to achieve primary
education, gender equality, to reduce child mortality, maternal health,
to struggle against HIV/AIDS, malaria and other diseases, to ensure
environmental protection and to create a global partnership for

Among these eight goals, the first, poverty reduction is the most
important for Armenia. The regional representative of the UN Millennium
Development Goals, Yeji Osiatynski noted that the time has come when the
economic growth registered in Armenia will be directed to the reduction
of poverty.

[Yeji Osiatynski, captioned in his office, in English with Armenian
voice over] It is not important that poverty will be reduced in 2005,
2010 or 2015. It is a necessary political and social aim and we are
moving forward in this direction. The democratic system, a free economy
and creative and talented people will help you in this work.

[Correspondent] The Polish official who visited Armenia for the first
time, who was finance minister in his home country, considers that the
time is right to clear the county of corruption and to reduce the number
of poor people in the country. Osiatynski thinks that the young hold
great potential for the newly developing countries and also for Armenia.
The future of the country is in their hands. Armenian Prime Minister
Andranik Markaryan also agreed with Osiatynski’s opinion.

[Yeji Osiatynski] Today during the meeting with the prime minister I
understood that there is a readiness and intention to implement the
Millennium Development Goals for the sake of the country and their
people. With all your efforts you must build a democratic state, have a
free economy and you will succeed.

[Correspondent] The representatives of the government and political
organizations discussed the UN Millennium Development Goals.


Source: ArmenPress, May 26,2 004

According to a health ministry-affiliated agency for medications and
medical technologies, foreign pharmaceutical companies seeking
registration of their products in Armenia will pay as much fee for
expert examination of their medicines as local companies. Until now
overseas companies have paid $1,500 for conducting expert examination of
their medicines and local companies-$400. The lower price for domestic
companies was to help boost home pharmaceutical production.

Under the new scheme, both local and foreign companies, will have to pay
$1,200. Leveling of fees is one of the requirements Armenia assumed when
joining the World Trade Organization. According to the agency, around
4,000 medicines are registered in Armenia, of which 7.4 percent are
domestically produced. Armenia brings medicines mainly from US, Great
Britain, France, the Czech Republic, Hungary and CIS countries.

Two of 11 Armenian companies, licensed to manufacture medicines,
Pharmatech and Arpimed have brought their products in compliance with
GMP requirements.

Caucasus Environmental NGO Network (CENN)

Tel: ++995 32 92 39 46
Fax: ++995 32 92 39 47
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