Armenian Exports Hurt By Russian Blockade Of Georgia

By Astghik Bedevian

Radio Liberty, Czech Rep.
Oct 3 2006

Armenian companies trading with Russia said on Tuesday that they are
already incurring losses as a result of Moscow’s decision to impose
a transport blockade on Georgia in retaliation for the arrest of its
Tbilisi-based military officers accused of espionage.

The Russian government suspended all land, sea, and postal links with
Georgia on Monday despite the release and repatriation of the four
officers who allegedly worked for Russia’s GRU military intelligence.

It also threatened to ban cash remittances from hundreds of thousands
of Georgians working in Russia.

The extraordinary move, criticized by the European Union, further
complicated Moscow’s already tense relationship with the pro-Western
administration of Georgian President Mikhail Saakashvili. It could
also seriously hamper Armenian exports to and imports from Russia.

Those account for a considerable part of Armenia’s external trade.

Prime Minister Andranik Markarian downplayed the blockade’s effects on
Armenia, arguing that the Russians had already closed their main land
border crossing with Georgia in June and that Armenian companies can
continue to ship cargos to Russia via Ukraine. However, the owners
of some of those companies were far less sanguine, saying that they
are already counting the possible cost of the Russian blockade.

Ashot Baghdasarian, chief executive of the Kilikia beer and soft
drinks company, said a batch of its products bound for Russia was
left stranded in a Georgian Black Sea port following the suspension
of a regular Georgian-Russian ferry service. Kilikia is also unable
to import Russian raw materials used for the packaging of its natural
juices, he said.

"I have information that our cargos were stopped at the border
yesterday," Baghdasarian told RFE/RL. "This is a very big problem for
businessmen." The businessman, who is also a parliament deputy from
the governing Republican Party (HHK), urged the Armenian government
to help sort out the problem.

The government seems reluctant to raise the issue with the Russian side
for the time being. "We have not yet received an official notification
from the Russian side on restrictions placed on shipments of our
goods." the Armenian Foreign Ministry spokesman, Vladimir Karapetian,

Great Valley, a major Armenian brandy firm heavily oriented towards
the Russian market, has also seen its exports grind to a halt. "There
is an option of shipping things by air, something which we have done in
the past," its owner Tigran Arzakantsian told RFE/RL. "But that is very
expensive. We are now examining ways of making shipments via Iran."

Arzakantsian also owns a textile factory in his native town of Gavar
that exports most of its production to Russia.

Other Armenian exporters said they have so far been unaffected by the
escalating Russian-Georgian crisis. Arsen Ghazarian of the Apaven
cargo company said it continued to successfully ferry freight to
Russia on Tuesday. MAP, another major liquor manufacturer, likewise
reported non transportation problems.

"Only the shipment of Georgian cargos has been suspended," the MAP
chairman, Alik Petrosian, told RFE/RL. "So our cargos keep going to
[the Georgian port of] Poti and then proceeding to Russia."

But Petrosian too was worried about the situation. "Nobody knows what
will happen tomorrow," he explained. "Everyone understands what a
serious blow to our economy could suffer."

Armenian exports to Russia, dominated alcoholic drinks and agricultural
products, were already dealt a severe blow with the closure last June
of the main Russian-Georgian border crossing.

Armenian leaders tried unsuccessfully to get the Russians to reopen
the Upper Lars crossing. This prompted renewed complaints by Armenian
politicians and commentators that Russian ignores the interests of
Armenia, its main regional ally, in its dealings with Georgia.

Russian officials have denied any political motives behind the closure
of Upper Lars, saying that the "temporary" measure was necessary for
repairing roads and customs facilities on the Russian side of the
mountainous frontier.

Despite stepping up its economic and diplomatic blockade of Georgia,
Moscow has not cut off its vital natural gas supplies to Georgia and
on to Armenia, something which would have even more severe consequences
for both South Caucasus states.

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