AAA: Armenia This Week – 07/19/2004

Monday, July 19, 2004

A congressional vote last week reinstated the policy of parity in U.S.
military assistance to Armenia and Azerbaijan, appropriating $5.75 million
to each. The U.S. House of Representatives voted 365 to 41 to pass the
foreign aid bill that also earmarked $65 million in aid to Armenia and $5
million to Nagorno Karabakh. Armenia’s Deputy Foreign Minister Ruben
Shugarian commended the congressional action, saying it would pave the way
to greater U.S.-Armenia military cooperation.

The United States has maintained the unofficial parity approach since the
early 1990s, when the U.S. Congress sanctioned Azerbaijan over its conduct
of the war against Nagorno Karabakh and Armenia (known as Section 907 of the
FREEDOM Support Act). The U.S. first began providing military aid to the two
countries after a 2001 congressional vote, which satisfied the
Administration request to waive Section 907 to allow for a greater U.S. role
in cracking down on Islamic radicals within Azerbaijan and for
counter-proliferation efforts in the Caspian. The waiver mandates that none
of this U.S. military aid could be used against Armenia. Last February, the
Bush Administration attempted to renege on the parity agreement, requesting
more military assistance for Azerbaijan than for Armenia. The vote by the
House of Representatives would reinstate the policy.

Meanwhile, capitalizing on higher oil prices, Azerbaijani President Ilham
Aliyev ordered $35 million in oil revenues to be used for additional
military spending this year. The funds would cover an average of 1.5 times
increase in salaries for officers in the scandal-plagued Defense Ministry
and similar or higher increases in the National Security Ministry. The
salary hike was announced last month shortly after a senior officer at the
Azeri mission to NATO defected to a European country. (Sources: Armenia This
Week 2-6; 6-29, 7-6; RFE/RL Armenia Report 6-29; ANS TV 6-30; AAA
Press Release 7-16; 7-13)

While most Armenians have seen their family budgets grow over the past three
years, only a few of them credit the government for the improvement, a
recent poll found. A survey of 1,127 Armenian citizens was conducted by the
Armenian Center for National and International Studies (ACNIS), a Yerevan
think tank. The surveyed group was mostly female (60 percent), not working
(41 percent unemployed, 10 – retirees and 7 – students) and self-described
as middle class (63 percent; just over 3 percent said they were affluent,
while 33 percent said they were poor).

54 percent of the respondents said their family budgets have grown in the
past three years, but only 44 percent think the recent double-digit economic
growth had a positive impact on them. Most respondents credit their own
personal efforts for the improvement. This view reflects a widely held
belief that economic growth is largely a result of the government’s policies
rather than an indicator of performance by mostly privately-owned Armenian
economy. In 2001-2003, Armenia’s Gross Domestic Product (GDP) grew by over
40 percent, with the volume of exports more than doubling. Between 1999 and
2002, the GNI coefficient, which is used to measure income disparity, had
improved from 0.6 to 0.4.

Fully 75 percent of the surveyed group blamed economic problems in Armenia
on internal factors, such as economic monopolization, corruption,
demoralization and taxation policies, with less than 10 percent blaming
external factors such as the Karabakh conflict and closed borders. Just 26
percent believed that a change of government would be the best way to
address economic problems, with 65 percent arguing for improvement or change
of government policies. Over one half of all respondents said they expect
Armenia to become a prosperous country in 10 to 25 years.

Also, 70 percent of respondents said Diaspora plays an important role in
Armenia’s economic development, while 54 percent named economic links with
Russia and 12 percent – the United States. (Sources: Noyan Tapan 7-15;
7-16; Arminfo 7-16)

Armenia continues to rank ahead of its neighbors in terms of human
development, the United Nations (UN) reported last week. The UN calculates
the rankings based on life expectancy, education and income. According to
the most recent index Armenia was 82nd, Turkey – 88th; Azerbaijan – 91st,
Georgia – 97th and Iran – 101st out of 177 countries ranked. Norway, Sweden,
Australia, Canada and the Netherlands topped the list, and together with
fifty other countries, are “countries with high development.” Armenia and
its neighbors are in the “medium development” group.

The UN rankings were based primarily on 2002 data. At the time, life
expectancy in Armenia was over 72 years, combined elementary, middle and
high school enrollment at 72 percent, and Gross Domestic Product (GDP) per
capita at $3,120 (with purchasing power factored in). In 2003, the GDP per
capita is estimated to have grown to $3,900, compared to $3,500 in
Azerbaijan and $2,500 in Georgia. According to the UN index, by 2002 Armenia
had recovered to slightly over the 1990 pre-independence level of
development. (Sources: Armenia This Week 12-6-02; Arminfo 7-15; Noyan Tapan
7-15; 2004/pdf/hdr04_HDI.pdf)

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