Armenian Inflation Eases Somewhat In October

ARMENIAN INFLATION EASES SOMEWHAT IN OCTOBER
Venla Sipila

World Markets Rsearch Centre
Global Insight
November 3, 2009

According to the latest consumer price figures from the Armenian
National Statistical Service, prices in October increased by 3.5% in
annual terms, the year-on-year (y/y) inflation rate thus returning to
its August rate after measuring 3.7% y/y in September. Specifically,
food prices fell by 2.6% y/y, while the cost of non-food foods
increased by 7.4% and service tariffs soared by 11.9% y/y. Meanwhile,
after a gain of 0.7% in September had seen the month-on-month (m/m)
inflation rate return to a positive range following deflation in the
three preceding months, the m/m inflation rate moderated to 0.5% in
October. Food prices gained 0.6% m/m, while the cost of both non-food
items and services increased by 0.5% m/m. These developments took
the cumulative price growth since the beginning of the year to 3.2%,
while the annual inflation rate for the January-October period came
in at 3.0%.

Significance:Armenian inflation pressures from the demand side
remain extremely weak due to the severe economic contraction. However,
cost-side pressures do play a role, with annual service price inflation
boosted by the increase of Russian gas prices enacted earlier this
year. Upward pressure from this source is likely to persist in the
coming months. Nevertheless, the inflation rate should remain within
the target range of 4% plus or minus 1.5 percentage points specified
by the Central Bank of Armenia (CBA). Then again, given the very wide
external financing needs of the economy in comparison to its foreign
currency earnings, the potential for sharp further depreciation of the
dram exchange rate remains a risk. This has direct relevance for the
inflation outlook because any notable dram weakening would probably
transfer relatively rapidly to intensifying price pressures.

IMF Completes Armenian Review, Approves Modifications To Stand-By Pr

IMF COMPLETES ARMENIAN REVIEW, APPROVES MODIFICATIONS TO STAND-BY PROGRAMME
BYLINE: Venla Sipila

World Markets Rsearch Centre
Global Insight
November 3, 2009

The International Monetary Fund (IMF) has completed the second review
of Armenia’s performance under its current stand-by programme. It
notes that the global crisis has continued to take a serious toll on
the economy, and although the output collapse seems to have bottomed
out, the collapse in construction activity and the drastic fall in
remittance inflows have resulted in a more severe GDP contraction and
deterioration in the fiscal balance than expected. In recognition of
these facts, the IMF also approved Armenia’s request for a waiver of
the end-September fiscal criterion, thus allowing for weaker budget
performance than outlined at the beginning of the current programme.

In addition, the IMF modified the criteria for end-2009 performance,
and allowed for a revision in payment schedules to bring forward
amounts scheduled to become available following the second and third
reviews to completion of the second review. Consequently, Armenia may
immediately withdraw a tranche of 37.72 million Special Drawing Rights
(SDR, some $60US million), bringing to the total amount extended
to Armenia under the current arrangement to SDR 301.94 million. The
28-month stand-by program was approved in March, and extended in June
(seeArmenia: 24 June 2009:).

Significance:The news of the programme review conclusion and
modification of its terms follows staff-level agreement on the review,
and reports that Armenian officials were seeking to soften the loan
terms with both the IMF and the World Bank (seeArmenia: 17 September
2009:) andArmenia: 2 October 2009:). The extensive leniency reflected
in the modification of the programme terms signals the severity of
the current Armenian economic predicament and was facilitated by full
implementation of the Armenian officials of the agreed stabilisation
programme. So far, this has included both fiscal and monetary easing,
and implementation of a flexible exchange rate regime. As noted
by the IMF, fiscal easing this year is needed in order to finance
anti-crisis measures with the collapsing domestic demand, and to
protect social spending. On the other hand, the Armenian authorities
have outlined fiscal consolidation from 2010, in order to ensure
debt sustainability. The Fund also reiterated its recommendation of
continued strengthening of tax administration, as well as for reform
of the financial sector and improvement in the business environment.

Given that about half of Armenia’s budget gap relies on external
financing, whereas the short-term outlook for the economy remains very
bleak and not much choice in covering the wide external financing
needs is available, continued adherence to IMF programme terms is
crucially important, both concerning its economic performance and
financial stability.

VivaCell Unveils Plans For LTE Roll-Out In 2010

VIVACELL UNVEILS PLANS FOR LTE ROLL-OUT IN 2010
BYLINE: Michael Lacquiere

World Markets Research Centre
Global Insight
November 3, 2009

The global push towards LTE appears to reaching the CIS as MTS’
Armenian unit pledges to deploy the technology.

Armenia’s leading mobile operator, Mobile TeleSystems (MTS)-owned
K-Telecom, has indicated that it plans to launch 4G mobile broadband
services based on LTE technology, according to a company statement
cited by ARKA. While it has not revealed any specifics, K-Telecom,
which operates under the "VivaCell" brand, has explained its decision
by pointing to forecasts that suggest mobile broadband access growth
will continue in 2010. At present, it has indicated that around 600,000
of its 2.045 million customers are subscribers to data products,
utilising GPRS, EDGE or UMTS technology, including around 400,000
3G subscribers.

IHS Global Insight Perspective

Significance: While it has not revealed any specifics, K-Telecom has
explained its decision by pointing to forecasts suggesting that mobile
broadband access growth will continue in 2010.

Implications: Having just announced nationwide 3G coverage and with
strong 3G subscriber uptake, the progression to LTE-based services
is understandable.

Outlook: K-Telecom will be one of the pioneers of LTE in the CIS,
a region that has traditionally lagged behind neighbouring European
markets in terms of telecoms sector development, but is now maturing.

Outlook and Implications

Progressive Move from Armenia’s Dominant Mobile Operator: K-Telecom,
like its rival Armentel (owned by MTS’ Russian rival, VimpelCom),
received its 3G licence in October 2007 and launched 3G services in
April 2009, some six months after Armentel. Just last week, K-Telecom
announced that it had achieved nationwide 3G coverage (see Armenia:
30 October 2009: ). Within this context and on the strength of
its 3G subscriber uptake, the progression to LTE-based services is
understandable, particularly as the operator should be able to use
existing 2G and 3G spectrum. K-Telecom had a market share of around 78%
at the end of 2008, so is well-positioned to make a strong assault
on the 4G market. It will face increased competition, with France
Telecom’s Orange Armenia due to launch commercial operations before
the end of the year in the 3G and 2G segment. While Orange Armenia
is planning to enter as a low-cost operator, K-Telecom’s 4G services
will be aimed at a smaller niche of higher-end subscribers.

Global Push Towards LTE Reaches CIS: Global momentum has been growing
in recent months for LTE network commitments from operators, with
the Global Mobile Suppliers Association (GSA) reporting 42 such
commitments globally as of late-October 2008. The GSA anticipates
that 15 such networks will be launched by the end of 2010, with a
further 33 expected to be in service by the end of 2012, and IHS
Global Insight anticipates that the first such launches may occur
in Scandinavia. K-Telecom has given little detail of its planned
deployments and it is unclear whether it expects its 4G services to be
commercially launched by the end of 2010. Nevertheless, the operator
appears to be one of the pioneers of the technology in the CIS,
a region that has traditionally lagged behind neighbouring European
markets in terms of telecoms sector development. Mobile penetration
levels across the region are now approaching and exceeding triple-digit
levels, and 3G roll-outs are gradually being undertaken.

Operators prowling for high-growth opportunities now appear to be
looking elsewhere, such as South-East Asia and Africa, as the CIS
region evolves from an area of growth potential to a maturing market.

MTS-VimpelCom Battle Continues: The only other hint that LTE roll-outs
might be imminent in the CIS have come from VimpelCom-owned KaR-Tel
in Kazakhstan, which late last month indicated that it had received
regulatory permission to deploy 4G test zones (see Kazakhstan:
27 October 2009: ). The fact that just days later an MTS unit had
announced its own 4G plans is indicative of the ongoing rivalry
between VimpelCom and MTS as they battle for supremacy in the CIS.

KUWAIT: Kuwaiti Emir Receives Armenian President

KUWAITI EMIR RECEIVES ARMENIAN PRESIDENT

KUNA – Kuwaiti News Agency
Nov 3 2009
Kuwait

KUWAIT, Nov 3 (KUNA) _ His Highness the Emir Shaykh Sabah Al-Ahmad
al-Jabir Al-Sabah accompanied by His Highness the Crown Prince Shaykh
Nawaf Al-Ahmad Al-Jaber Al-Sabah received on Tuesday at Bayan Palace
Armenian President Serzh Sargsian and his accompanying delegation.

Official talks between the two sides took place and were headed
by His Highness the Emir, His Highness the Crown Prince, and His
Highness the Prime Minister for the Kuwaiti side, and the Armenian
President and high ranking officials in the Armenian government for
the Armenian side.

Minister of Emiri Diwan Affairs Shaykh Nasser Sabah Al-Ahmad Al-Sabah
said in a press release that the talks highlighted bilateral relations
and ways to bolster them at various levels, in addition to discussion
on issues of mutual concern.

KUWAIT: Armenian President Arrives In Kuwait, Received By Hh The Ami

ARMENIAN PRESIDENT ARRIVES IN KUWAIT, RECEIVED BY HH THE AMIR

KUNA – Kuwaiti News Agency
Nov 3 2009
Kuwait

KUWAIT, Nov 3 (KUNA) – Armenian President Serzh Sargsyan and the
delegation accompanying him arrived here Tuesday [3 Nov] for a two-day
official visit, during which he will hold talks with His Highness
the Amir Shaykh Sabah al-Ahmad al-Jabir al-Sabah.

At the president’s reception at Kuwait International Airport was HH the
Emir, HH the Crown Prince Shaykh Nawwaf al-Ahmad al-Jabir al-Sabah,
National Assembly Speaker Jasim Mohammad al-Khurafi, Deputy Chief
of the National Guards Shaykh Mish’al al-Ahmad al-Jabir al-Sabah, HH
the Premier Shaykh Nasir al-Mohammad al-Ahmad al-Sabah, Minister of
Emiri Diwan Affairs Shaykh Nasir Sabah al-Ahmad al-Sabah, advisers,
governors, senior government and security officials.

A mission of honour, head by Emiri Diwan Adviser Mohammad Dheifallah
Sharar, Was formed to escort the guest.

Escorting the visiting guest is an official delegation comprising of
Foreign Minister Edward Nalbandian, Minister of Finance Tigran Davtian,
Minister of Diaspora Hranush Hakobian, Minister of Culture and Youth
Hasmik Poghosian, Minister of Education and Science Armen Ashotian,
as well as senior government officials.

KUWAIT: Armenian President Receives Kuwait Pm

ARMENIAN PRESIDENT RECEIVES KUWAIT PM

KUNA
Nov 3 2009
Kuwait

Kuwait, nov 3 (kuna) _ Visiting Armenian President Serzh Sargsian
received His Highness the Prime Minister Shaykh Nasir Muhammad
al-Ahmad al-Jabir al-Sabah at his residence at Bayan Palace here
Tuesday afternoon [3 November].

The meeting was attended by head of the mission of honour, adviser at
the amiri diwan Mohammad dhaifullah sharaf and assistant undersecretary
at the prime Minister’s diwan shaykh fahad jaber al-mubarak al-Sabah.

BAKU: Changes In Region Can Destabilize Situation In Samtskhe-Javakh

CHANGES IN REGION CAN DESTABILIZE SITUATION IN SAMTSKHE-JAVAKHETI: EXPERTS

Trend
Nov 4 2009
Azerbaijan

The situation in the Georgian region of Samtskhe-Javakheti, largely
populated by the Armenians, can soon destabilize due to ongoing
changes in the region, experts believe.

"After the Turkey- Armenia rapprochement, Georgia will not have an
argument that the return of Meskhetian Turks will create new ethnic
problems in the region," said Georgia’s former economy minister,
senior fellow at the Fund for Strategic and International Studies
of Georgia, Professor Vladimir Papava. "However, in reality, the
Armenians living in those territories [Samtskhe-Javakheti] do not
want and fear the return of the Turks.

The Georgian authorities’ policy may provoke the Armenians of
Samtskhe-Javakheti to demand secession from Georgia, as Abkhazia and
South Ossetia did, Sevak Artsruni, President of "Yerkir" Union of
Public Organizations on Repatriation and Settlement told journalists
on Nov.2, ARMENIA Today reported.

According to him, the population of Samtskhe-Javakheti do not want to
separate from Georgia, but Georgia’s current policy towards Armenians
of the region leads to it.

Artsruni noted that the patience of the Armenians of Samtskhe-Javakheti
can overflow and they can require respecting their rights by civilized
means, as Abkhazia and Ossetia.

Artsruni believes the radical and short-sighted policy of the Georgian
authorities could raise the question of secession by constitutional
means or by more extreme solutions that are not excluded. He noted
that in such cases, the fight begins peacefully but then becomes
more aggressive.

According to experts, the geopolitical changes in the region,
particularly normalization of the Armenian-Turkish relations affect
the situation in Samtskhe-Javakheti.

It looks as first sight that Armenian-Turkish rapprochement will not
in any way affect Javahk, but it is not so Haykazun Alvrtsyan Head
of the Western Armenians’ Center said, PanArmenian reported.

Alvrtsyan said that, by opening border Armenian authorities will lose
control of Javahk, and the Armenian populated region of Georgia will
no longer enjoy Armenia’s support in international tribunals.

"That will also be a moral-psychological blow to Armenians of Javahk,"
Alvrtsyan said.

Regarding the Armenian authorities, he said that the authorities are
not interested in the settlement of the problem of Javahk.

"Issues related to Javakh were never included in Armenian
Parliament’s agenda." Besides, Georgian authorities always reacted
to Javahk-Armenians’ statements and always tried to avert any process
contradicting their interests, Alvrtsyan said.

"I consider fair the opinion of many experts that in the future
the development of the Armenian-Turkish relations can influence the
situation in Javakh," said the General Director of the Information
Analytical Center of Moscow State University, Professor of post-Soviet
foreign countries department Alexey Vlasov said.

"But in what direction the position of Armenia will change is not yet
clear, because, regardless the importance of the issue it is not is
a priority for the country’s leaders. A clear line will be determined
in several months," Vlasov told Trend News over the telephone.

According to Papava, if Armenia feels that the issue of the
Nagorno-Karabakh will be resolved in its favor, then some forces in
the country will begin to provoke conflict in Samtskhe-Javakheti
as well. This process should not be viewed as Georgia’s domestic,
but as a regional process and of course, the issue of Javakh should
be considered in the context of the Turkish-Armenian reconciliation
and the return of Meskhetian Turks to the territory where now the
Armenians live, He said.

"At present, Georgia is in a very difficult position, because the
biggest opponents of the return of Meskhetian Turks to this region
are the Armenians who live there," Papava said.

If the Turkey- Armenia rapprochement happens completely, the Armenian
communities living in Samtskhe-Javakheti should no longer oppose the
return of Meskhetians, but things are different, and this may cause
a wave of ethnic problems in the region, the expert said.

But Russian expert believes the problem of national minorities in
Georgia is not only connected with the geopolitical changes that have
occurred in the South Caucasus.

Georgia has internal problems connected with the enclaves inhabited
by Armenians and Azerbaijanis, not densely inscribed in the social,
economic and socio-cultural issues that should be decided by the
government, Vlasov said.

"All the problems of national minorities in Georgia should not be
connected only with the context of normalization of the Armenia –
Turkey relations," he said.

According to him, recent statements on Armenia’s territorial claims
have sounded mostly by representatives of the Armenian Diaspora. The
Diaspora’s representatives are the "Voice" of the country’s relations
to its neighbors’ lands, rather than the Armenians living within the
country, he said.

"In addition, the Armenian government keeps silence, fearing that any
word can affect the process of normalizing relations with Turkey. Now
the Armenian president and his entourage will focus on how to avoid
from direct answers to direct questions, because it is extremely
disadvantageous to the Armenian authorities," said Vlasov.

U.S.-Armenia Joint Economic Taskforce

U.S.-ARMENIA JOINT ECONOMIC TASKFORCE

Targeted News Service
November 4, 2009 Wednesday 1:44 AM EST

The U.S. Department of State’s International Information Programs
issued the following news release:

The U.S. Department of State welcomed Nersis Yeritsian, Armenia’s
Minister of Economy, and his delegation for the 18th iteration of the
U.S.-Armenia Joint Economic Taskforce (USATF). During his visit to the
U.S., Minister Yeritsian and his team met with officials from several
agencies in the U.S. Government, including the Department of State,
Department of Treasury, Department of Commerce, and the Office of
the U.S. Trade Representative.

The USATF, established in 2000, has met semi-annually to provide a
forum in which to further cooperation between our two countries,
advance economic and market reforms in Armenia, and discuss
opportunities for U.S. assistance to contribute to Armenia’s long-term
economic development. The task force is an open forum to discuss issues
of concern and interest to both countries. This year’s discussion in
Washington, D.C., co-chaired by Daniel N. Rosenblum, Coordinator for
Assistance to Europe and Eurasia, and Minister Yeritsian, focused
on the following themes: promoting good governance and democracy
development, addressing regional issues, and enhancing the business
climate in Armenia. The resulting action plan, which details the
specific actions each side will take to further our mutual cooperation
on Armenia’s development, includes items from all of these areas.

The U.S. Government and the Government of Armenia concluded an
important agreement on science and technology cooperation as part of
the Task Force’s meetings in Washington, D.C. The Director of the
National Science Foundation, Dr. Arden Bement Jr., joined Minister
Yeritsian in signing a memorandum of understanding that will facilitate
cooperation in numerous areas of mutual interest between the United
States and Armenia, including information technology, intellectual
property, earth sciences, and others.

From: Emil Lazarian | Ararat NewsPress

ANKARA: We Should Not Forget Turkey’s Contributions To EU, President

WE SHOULD NOT FORGET TURKEY’S CONTRIBUTIONS TO EU, PRESIDENT GUL

Anadolu Agency
Nov 3 2009
Turkey

BRATISLAVA (A.A) -03.11.2009 -Turkish President Abdullah Gul said
Tuesday Turkey’s contributions to the European Union (EU) should not
be forgotten.

There is no other alternative than full membership in the EU for
Turkey, Gul stressed.

President Gul visited the Comenius University in Bratislava on the
second day of his official trip to Slovakia.

The Senate of the Comenius University decorated President Gul with the
"University Golden Medal".

Addressing the academicians and students of Comenius University,
Gul talked about Turkey’s foreign policy and its relations with the EU.

Turkey’s foreign policy is designed to bring peace, stability and
welfare to the surrounding region, Gul said.

The world was the scene of important changes recently. Due to its
(geographical) status, Turkey got affected more than any other country
by newly emerged risks, Gul said.

As NATO assumed wider missions, Turkey’s role in regions of problems
grew, Gul stressed.

Turkey, firstly, tried to solve its problems with neighbours in the
Balkans. Later, Turkey established good relations with its southern
neighbours. Russia became an important commercial partner of Turkey,
Gul said.

Most recently, Turkey proposed the establishment of the Caucasus
Cooperation Platform for peace and stability in the Caucasus region.

Turkey has made efforts to normalize relations with Armenia, Gul said.

Turkey has deep historical relations with both Pakistan and
Afghanistan. The problems in the region are as important as those in
the Middle East and have a potential to (negatively) affect global
stability. Turkey began the trilateral summit meetings to establish
security between Afghanistan and Pakistan, Gul noted.

Turkey is a bridge between the east and the west. Thanks to our
unique position, we can understand the mentality in different regions,
Gul said.

Touching on Turkey’s EU process, Gul said that Turkey has had relations
with Europe for over 1,000 years.

Turkey has turned its face towards the West and continues EU membership
negotiations with determination. The negotiations have two sides. While
Turkey is doing all it can, the EU lags behind Turkey with its
performance, Gul said.

Turkey’s contributions to the EU should not be forgotten. There is
no other alternative than full membership for Turkey, Gul said.

Turkey will make the EU cake bigger. The membership process of big
countries has always been difficult and we are aware of this as we
conduct entry negotiations, Gul said.

I am very pleased to be here at the Comenius University. I am happy
to see efforts being made to open a Turkish Language Department at
this university. Turkey will extend support to Comenius University
for this purpose, Gul also said.

Rector of Comenius University Frantisek Gaher said that Turkey’s
crucial role for global peace lies in the words of late Ataturk who
had emphasized "Peace at Home, Peace in the World" principle.

Turkey is a bridge between the east and the west and different worlds.

Turkey sends strong messages in this respect. Being a bridge implies
being in a sensitive position, Gaher stressed.

President Gul has worked for peace both as a president and former
foreign minister. As such, we have decided to decorate him with our
university’s golden medal, Gaher said.

Meanwhile, President Gul had a working breakfast with Slovakian Prime
Minister Robert Fico and later met with the Speaker of the National
Council of the Slovak Republic Pavol Paska.

Gul’s meetings with Fico and Paska were closed to the press corps.

BAKU: Armenian MP Worried By Europe’s Approach To Turkey Ties

ARMENIAN MP WORRIED BY EUROPES APPROACH TO TURKEY TIES

AssA-Irada
November 4, 2009 Wednesday
Azerbaijan

An Armenian lawmaker has voiced concern over European politicians
approach to the normalization of Turkey-Armenia relations, saying they
link the process with the settlement of the Armenia-Azerbaijan conflict
over Upper (Nagorno) Garabagh. The statement was made by Stepan
Safaryan, head of the opposition Heritage faction in the Armenian
parliament, who has held meetings with European institutions officials
in Brussels and Strasbourg, Armenia Today news agency reported.

Turkey and Armenia face decades of enmity. Turkey closed its border
with Armenia in 1993 due to Armenian occupation of Azerbaijani
territory and past genocide claims. On October 10, in Zurich, the two
governments signed two protocols to establish diplomatic relations and
reopen their borders, in a bid to normalize their strained relations.

However, the documents require ratification in both countries
parliaments. Safaryan claimed that Turkey is considered by Europeans
today as a rising sun of the region, and the door is open to it to
co-chair the OSCE Minsk Group, which is brokering settlement to the
Armenia-Azerbaijan conflict. The lawmaker maintained that, by signing
the protocols with Armenia, Ankara aims to achieve a solution to
the Garabagh problem by next April and to impede recognition of the
alleged World War I-era genocide of Armenians in US Congress. Another
goal pursued by Turkey, he claimed, is turning into a regional leader.

For this reason Turkey will be delaying ratification of the protocols,
Safaryan alleged. Turkish officials have ruled out approval of the
documents in the Grand National Assembly before progress is made in
the Garabagh conflict.