Month: September 2013

HOW RUSSIA PULLED ARMENIA INTO THE CUSTOMS UNION – OPED

Eurasia Review
Sept 6 2013

September 6, 2013
By Luke Rodeheffer

The European Union’s Eastern Partnership was dealt a major blow
as Armenia’s President Serzh Sargsyan made a surprise announcement
that his republic will join Russia’s Customs Union during a visit to
Moscow in early September. E.U. leaders expressed shock and dismay
at the surprise about-face, while members of the Armenian opposition
protested the decision outside the presidential palace in Yerevan.

The announcement was all the more surprising given that Armenia’s
leadership had appeared genuinely cold to Moscow only a few months
prior. President Sargsyan had snubbed the most recent meeting of
the Russia-led Collective Security Treaty Organization in Kyrgyzstan
in late May, as well as the subsequent Eurasian Economic Community
conference in Kazakhstan. Proponents of European integration had been
delighted with the news when it was announced at the beginning of the
summer that Armenia had completed the sixth round of negotiations on
a Deep and Comprehensive Trade Agreement with the European Union.

Yet Moscow played its cards well in the poker game between the
European Union and Russia for the former Soviet states of Eastern
Europe and the South Caucasus. Following the announcement of the
trade negotiation results, Russia threatened to raise Armenia’s gas
prices by 60%. Armenia was forced enter into negotiations on a 18%
raise in exchange for allowing Gazprom to take the remaining shares of
ArmRusGazprom that belong to the Armenian government. Detente between
Moscow and Baku, manifested in the $1 billion worth of Russian weapons
sold to Azerbaijan since July and Putin’s visit to Baku in August,
served as further warnings to Yerevan about the consequences of its
disobedience.

The energy crisis provoked by Russia’s threats is a sign of how deeply
dependent Armenia has become on Moscow. Although the European Union
was Armenia’s number one trade partner in 2012, much of Armenia’s
economy has been sold off to Russian business interests since the end
of the Soviet Union. In addition to dominating the nation’s gas market,
Russian companies own almost all of Armenia’s power plants and many of
its mining operations. The Russian state also plays a heavy hand in
the Armenian economy, investing hundreds of millions into Armenia’s
national railways. This fact was alluded to by Putin’s announcement
of another $ 450 million into the network during his meeting with
President Sargsyan.

Furthermore, Armenia’s economy remains in very weak shape following
the global economic crisis. In 2011, Forbes granted Armenia the
ignoble title of the world’s second-worst economy as a result of
its GDP plunging by 15% during the global economic crisis. Russia
further increased control over Armenia by granting the South Caucasus
republic a $500 million loan in the wake of the crisis. With such a
fragile and Russia-dominated economy, Armenia is in no position to
leave Moscow’s Collective Security Treaty Organization or demand the
end to Russia’s military base in Gyumri, Armenia’s second largest city.

Despite Russia’s already heavy hand in the state and economy of
Armenia, even Russian experts admit that joining the Customs Union
will likely not provide the post-Soviet state with any real benefits.

Alexander Knyazev, an expert at the Russian Academy of Sciences,
recently noted that Armenia does not even share common borders
with Russia, Belarus, or Kazakhstan, the current Customs Union
member states. The Customs Union is built around the idea of a
common economic space with no customs controls at the border, but
trade between Armenia and the other member states must first move
through Georgia. The only benefit that Armenia stands to gain from
entering the Russia-dominated trade zone, according to Knyazev, is
the simplification of the migration process, making migration out of
Armenia and into Russia easier.

It is ironic that the major benefit for Armenia will be access to
Russia’s labor market, as the Sargsyan’s government has previously
viewed emigration of Armenians into the Russian Federation with deep
concern. Yet beyond lodging complaints, there is little that the
Armenian state can do, as remittances from Armenian guest workers in
Russia constitute a sizable portion of the Armenian GDP.

But what can Armenia’s post-Soviet generation hope to get out of the
Customs Union, beyond an easier path from their homeland into Russia?

Sargysan’s government has stated that corruption remains Armenia’s
number one obstacle to reform, but choosing to join a Customs
Union dominated by highly corrupt post-Soviet states, as opposed
to continuing on a path to European integration that encourages
transparency and anti-corruption efforts, is certainly no way to
make inroads against the problem. Russia’s increasingly stagnant
economy, with low levels of human capital, a terrible climate for
small business, capital outflows of $350 billion since the onset
of the crisis, and a heavy dependence on raw materials exports is
certainly no model to emulate and closer economic integration with
Russia will only hinder the modernization that Armenia and other
former Soviet economies so desperately need. Armenia’s choice will
bring a few short-term benefits but will do little to improve the
country’s standing in the long term. With the failure of European
integration efforts in Armenia, the pressure on other former Soviet
states, particularly Ukraine, to choose between Brussels and Moscow
is higher than ever before.

About the author:

Luke Rodeheffer is an MA candidate in International History at
Koc University in Istanbul and intern analyst at Wikistrat. He has
previously written for The Interpreter, NewEastEurope, and George
Washington University’s International Affairs Review. He tweets on
Eurasian geopolitics at twitter.com/lukerodeheffer.

From: Emil Lazarian | Ararat NewsPress

OBAMA, KERRY, AND MCCAIN HAVE A ‘MODERATE’ PROBLEM IN SYRIA

Canada Free Press
Sept 6 2013

Either they aren’t moderates, or ‘moderate’ has a frightening new
definition…

The Syrian rebels are moderates. That’s the message from those who want
the US to involve itself in the Syrian civil war. Be it from Obama,
John McCain, or John Kerry, the message is the same. Those who seek to
portray the Syrian rebellion as a radical movement are just out to hurt
the President politically. They’ve said this over, and over, again.

…But it’s not working. No one is buying the myth of the
middle-of-the-road Syrian rebellion – and why should they?

Two days ago, we saw the video where rebels down a Syrian plane. They
immediately start shouting “Alahu Ackbar” in celebration. This,
according to John McCain was no different than a Christian saying
“thank God, thank God.” It’s practically a sign of their moderate
views.

“Of course they’re Muslims but they are moderates. I guarantee you they
are moderates,” McCain said. “I know them, and I’ve been with them.”

Well, sure. Of course they are. Anyone who thinks otherwise clearly
doesn’t possess John McCain’s extraordinary level of understanding,
compassion, and global awareness.

Who cares that Armenian news outlets are reporting that the rebels
are attacking Christian villages, burning churches, and kidnapping
or killing the faithful? These are all clear signs of their moderate
positions.

The St. Gevorg church in Aleppo’s Armenian-populated district of
Nor Kyugh was set ablaze on Monday, reported Tert.am, quoting a
representative of the local Armenian prelacy. Speaking to the online
paper, the spokesman, Zhirayr Reisian, confirmed that the church
had become a target of rebels and that it had almost been reduced to
ashes. Reisian also said that the Mesrobian Armenian School adjacent
to the church has been seriously damaged, too. Earlier on Monday a
blast near an Armenian district of Syrian capital Damascus reportedly
killed 10 people and wounded around 50. Armenians were feared to
be among both dead and wounded. Later Reisian told state-run agency
Armenpress that a group of 10 Christians, including seven Armenians,
was kidnapped near Aleppo. About four dozen Syrian Armenians have
reportedly been killed since the start of the conflict in Syria in
March 2011. Hundreds of an estimated 80,000 Syrian Armenian, mostly
concentrated in Aleppo, have taken refuge in Armenia since fighting
between government and opposition forces reached the city last July.

Heck, maybe the rebels just despise all religions equally. They’re
probably secular atheists or something. It’s not like they’re the
favored party of the Muslim Brotherhood. No one is running around the
country threatening those who refuse to embrace Sharia Law. We don’t
have any video of such actions, do we? They’re moderates after all.

>From The Blaze:

The video, originally posted by the nongovernmental watchdog Syrian
Observatory for Human Rights, shows 30 members of the Syrian PKK,
also known as the Kurdistan Worker’s Party being held hostage by
the armed gunmen. The group of PKK members is seen sitting on the
Persian rugged floor of an empty room, while a member of the Muslim
Brotherhood fighters tells them that they must “practice the real
Islam and follow Sharia law” or face the “consequences.”

The men identified themselves as members of the Muslim Brotherhood
and they spoke in a distinct classic Arabic with an Egyptian accent,
an Arabic translator, who viewed the video, told TheBlaze.

Strangely enough, the Kurdish rebels were forced to sign a contract
and were told that if they prayed with the Muslim Brotherhood, turned
over all their weapons and refrained from fighting for a full year
they would not be harmed.

“If you don’t do this, you know the consequences?” warned a man with
a strong Egyptian accent. The Kurdish men sat quietly, listening.

Hmmmm… OK, well Secretary of State Kerry did admit that as many as
20% of the 100,000 Syrian Rebels could be considered radical. But
hey, that’s no big deal, right? Clearly, the moderates are in the
vast majority and – as Kerry points out – the minority isn’t really
worth our concern.

Someone should tell that to the New York Times, because they seem to
think “moderate” Syrian forces are carrying out mass executions of
Syrian prisoners:

The prisoners, seven in all, were captured Syrian soldiers. Five
were trussed, their backs marked with red welts. They kept their
faces pressed to the dirt as the rebels’ commander recited a bitter
revolutionary verse.

“For fifty years, they are companions to corruption,” he said. “We
swear to the Lord of the Throne, that this is our oath: We will
take revenge.”

The moment the poem ended, the commander, known as “the Uncle,”
fired a bullet into the back of the first prisoner’s head. His gunmen
followed suit, promptly killing all the men at their feet.

This scene, documented in a video smuggled out of Syria a few days
ago by a former rebel who grew disgusted by the killings, offers
a dark insight into how many rebels have adopted some of the same
brutal and ruthless tactics as the regime they are trying to overthrow.

We’re sure the administration is unfazed because, after all, war is
hell. Executing the soldiers of a brutal thug like Assad is just par
for the course. Unpleasant maybe, but that’s the way it goes. It’s
not like these moderates are harming civilians who choose to stand
against them. They’re not a bunch of ruthless baby-killers, are they?

>From the Centre for Global Research:

Al-Qaeda linked terrorists in Syria have beheaded all 24 Syrian
passengers traveling from Tartus to Ras al-Ain in northeast of Syria,
among them a mother and a 40-days old infant.

Gunmen from the terrorist Islamic State of Iraq and Levant stopped
the bus on the road in Talkalakh and killed everyone before setting
the bus on fire.

According to media reports, the attack was carried out because the
passengers who were from three different villages in Ras al-Ain,
supported anti-terrorist Kurdish groups which were formed recently
to defend Kurdish population against anti-Syria terrorists.

Bodies of a mother and her 40-days infant were also seen among the
dead, which were recognized by their relatives.

This simply must be incorrect. This can’t be happening. The Obama
administration, along with staunch GOP members like McCain, has
guaranteed that the people we seek to help in Syria are poor,
downtrodden, souls who just seek peace and tolerance.

As Kerry puts it:

“The opposition has increasingly become more defined by its
moderation, more defined by the breadth of its membership and more
defined by its adherence to some, you know, democratic process and
to an all-inclusive, minority-protecting constitution, which will be
broad-based and secular with respect to the future of Syria.”

See? Everything’s fine! These are simply peaceful factions who
are incapable of self-defense.They’ve got the John Kerry stamp of
approval. Coming to their aid is a moral imperative of the first
order. Surely, traditionally left-leaning news outlets like Reuters
understand that the “moderate” movement in Syria is growing in power
with – as Kerry puts it – “each passing day.”

Uh-oh. From Reuters:

Secretary of State John Kerry’s public assertions that moderate
Syrian opposition groups are growing in influence appear to be at
odds with estimates by U.S. and European intelligence sources and
nongovernmental experts, who say Islamic extremists remain by far
the fiercest and best-organized rebel elements.

“And the opposition is getting stronger by the day,” Kerry told the
Senate Foreign Relations Committee on Tuesday.

U.S. and allied intelligence sources and private experts on the Syrian
conflict suggest that assessment is optimistic.

While the radical Islamists among the rebels may not be numerically
superior to more moderate fighters, they say, Islamist groups like the
al Qaeda-aligned Nusra Front are better organized, armed and trained.

Hmmmm. …The administration has even managed to lose Reuters. That’s
not a good sign.

Here’s the problem: Obama, Kerry, and McCain’s Claims of widespread
“moderation” in Syria simply don’t pass the smell test. If they’re
going to sell their war to the American people – not to mention the
rest of the world – they’re going to have to be able to show that
the people who will benefit from US military action are deserving of
our involvement.

As news from the region continues to pile up, it’s becoming clear
that they have a long way to go.

From: A. Papazian

FRONTIER MARKETS: NOT TOO EDGY

Wall Street Journal
Sept 6 2013

It might seem borrowers in frontier markets-the very riskiest end of
the emerging-markets scale-should be looking down and out after this
summer’s rumbles.

But just this week Armenia, Kenya and Mozambique were getting active
in the global bond markets. This counters some opinions that once
the Fed pulls back from its stimulus, frontier markets could be left
entirely in the cold.

Efforts by governments to engage with international bond markets
shows investors are still receptive to cutting deals. Governments
appear to be willing to pay a bit more to get the funding, and the
investors are willing to take on the perception of higher risks.

Armenia will start schmoozing with investors for an inaugural dollar
bond next week. The meetings start Tuesday in L.A., before moving to
New York, Boston and London through the rest of the week.

Timothy Ash, emerging market credit strategist at Standard Bank,
scouted out the country in May. “Generally I am pretty constructive
on this credit,” he said. Growth and debt numbers look good, and
politically, “the Armenians seems to have done what the Ukrainians
have failed to do, i.e. keep relations with Russia, the U.S. and Iran
good at the same time,” Mr. Ash said.

To the casual observer with a penchant for U.S.-immigration history,
the roadshow kicking off in Los Angeles might look to have something
to do with the city’s substantial population of Armenian Americans.

U.S. Census Bureau statistics put the number at around 214,618 in 2011.

But, as Richard Segal, emerging-market strategist at Jefferies
International, pointed out, there are many emerging-market investors
based in and around L.A., including some big players. “Borrowers will
often travel for the sake of the two or three large EM funds based
there,” Mr. Segal said.

For instance, PIMCO and TCW are based in L.A.

If there are any doubts that the Armenia deal is some kind of outlier,
just look to Africa.

Earlier Friday, Mozambique completed the sale of its first bond,
a $500 million agency deal, backed by the government, to support the
country’s agricultural sector. This didn’t come cheap, yielding 8.5%
for the seven-year money, a number slightly higher than the low-8%
range that the country had initially touted. But it got done.

Next up could be Kenya, with a deal that would be its first on
international markets. If the country gets at least the $1.5 billion
it’s looking for, this will be the biggest-ever debut from an African
country. The money will be used to build or fix its roads, rails
and ports.

During recent market turmoil, frontier markets held their ground
comparatively better than the broader emerging market investment
world. Data from J.P. Morgan showed that since March, a widely-used
dollar bond index for emerging markets , the EMBI Global, lost 9%
of its value. The NEXGEM index, referencing frontier markets, lost
only 5%.

These dips are pretty big drops, showing investors need to weather
bouts of volatility in these markets. When the mood sours, they are
often first to be hit.

The cheap deal that Rwanda got on its debt debut earlier this year
may prove to be a genius bit of timing by that tiny state. Those days
are over for now.

Still, frontier markets are down but not out.

Ben Edwards and Serena Ruffoni contributed to this report.

GENNADY ZYUGANOV: “ARMENIA AND AZERBAIJAN WILL FIND PEACE ONLY IN CLOSE COOPERATION WITH RUSSIA”

Vestnik Kavkaza, Russia
Sept 6 2013

6 September 2013 – 1:51pm
Interview by Vestnik Kavkaza

Comment by the chairman of the Central Committee of the Communist Party
of the Russian Federation, the head of the Communist Party faction
in the State Duma, Gennady Zyuganov. The politician told VK about
figures who benefit from creating a negative image of the Caucasus.

– Why do the mass media create a negative image of people from the
North Caucasus?

– A negative image of our country, our history and culture is being
created. We started with a negative image of leadership – Stalin,
Lenin – then Russia became a “wrong” power, now the Russian people are
drunkards and idlers. It is a well thought-out strategy that destroys
the fabric of our being, our life. After all, the wisdom and talent
of the Russian people lies in the fact that in our history we have
gathered under our banners 190 languages, nationalities, not tearing
down any culture, any faith. We did everything to multiply and keep
them. On our territory there has never been any religious hatred.

Therefore, those who do not want Russia to be united fomented war in
the Caucasus. I explained to Yeltsin and his accomplices a hundred
times that a military solution to the Chechen problem does not exist,
but they broke everything. I told them twenty times that we are all
interested in the development of production; in the Caucasus, there
are a lot of interesting, surprisingly useful things. Instead, they
only ruined the industry. People lost their jobs, and uncontrolled
migration began. There are quite strong influential circles in this
country who are willing to play the Caucasian card and international
relations and to push their advantage.

The criminal oligarchic bourgeoisie, when its difficulties arise,
sees a way out especially in military, ethnic and religious conflicts.

These conflicts have been ignited all the time. Today they have
reached us and are trying to set fire to the North Caucasus. We have
no right to allow this. It’s an absolutely criminal policy which will
harm all the people living on our territory.

– What do you think about relations between Moscow and the South
Caucasus states?

– The Caucasus is a unique land, a beautiful territory. As for
relations with Georgia, they have always been good and friendly.

Relations with Armenia have been historically neighborly and hearty.

We have always had close contacts with Azerbaijan – friendly and
industrial. During the Great Patriotic War we received 80% of
our oil from Baku; we couldn’t win the war without Baku oil. We
should remember, develop, and improve this. What are they doing
now? They are trying to debase our relations and split the citizens
of our countries. We should provide an information policy aimed at a
respectful attitude to all traditions, customs, nations. The beauty
of the world is in its multi-hued cultures, languages, nations,
religions. The planet cannot live without it. There is no normal life
without it. However, we need reasonable thoughtful policy, smart
heads, rather than attempts to settle all questions by the rule of
the police. Ethnic issues cannot be solved like that.

– What do you think about settlement of conflicts in the Caucasus,
for example, the Nagorno-Karabakh conflict?

– It is a delicate, painful theme. Bloody military wounds heal
with difficulty. That’s why we should sit down to talk and search
for settlements. I think a settlement is coming. But without Russia’s
efforts in the regions it would be very difficult to find a way out.

Those who want to humiliate Russia, who want to make it stop developing
effectively, will do their best to continue the conflict.

Yerevan and Baku should remember that they will find peace only
through close cooperation with Russia.

FOREIGN MINISTRY: BELARUS IN FAVOR OF CUSTOMS UNION ENLARGEMENT

Belarusian Telegraph Agency, Belarus
Sept 6 2013

05.09.2013 18:07

MINSK, 5 September (BelTA) – Belarus welcomes a possibility of the
Customs Union enlargement, Spokesman for the Foreign Ministry of
Belarus Andrei Savinykh told BelTA when asked about Belarus’ attitude
to Armenia’s plans to join the Customs Union and take part in the
formation of the Eurasian Economic Union.

“The Customs Union is an important regional association which role
will keep growing over time. The potential of this association might
also increase by means of new members that have trade and economic
contacts with the participants of the Customs Union. This trend is
welcome,” Andrei Savinykh said.

President of the Republic of Armenia Serzh Sargsyan announced Armenia’s
decision to join the Customs Union and take part in the formation of
the Eurasian Economic Union.

From: A. Papazian

BOTH RUSSIA AND EUROPE OPPOSE ARMENIAN MIXED DESIRES

Vestnik Kavkaza, Russia
Sept 6 2013

6 September 2013 – 9:11am

David Stepanyan, Yerevan. Exclusively to Vestnik Kavkaza

Armenian leader Serge Sargsyan’s statement on Armenia’s intention to
join the Moscow-dominated Customs Union and take part in establishing
the Eurasian Economic Union came as a bombshell in Europe; even though
it was clear before September 3rd that Yerevan cannot ignore Moscow’s
interests in the question of integration with the EU.

In November, Vilnius hosts the summit of the EU leadership and heads
of the countries which participate in the Eastern Partnership Program.

It is expected that the association agreements and agreements on deep
and comprehensive free trade area will be initialed with Ukraine,
Moldova, Georgia, and Armenia. Yerevan has many times stated that
in relations with the EU and with Russia it relies on the principle
“both”, rather than “either-or”. However, as “both” faced resistance
both in Russia and Europe, Yerevan had to change its rhetoric. The
result of it was the statement by Sargsyan.

On September 4th a crowd of protesters against Armenia joining the
Customs Union gathered near the presidential palace. Participants of
the demonstration, organized through Facebook, chanted “No return to
the USSR” and stated that they wouldn’t let Armenia join the CU, as
it would lead to the loss of independence. There was a brawl between
the policemen and protesters. 9 people were arrested. The Secretary
General of Heritage, Stepan Safaryan, said that the intention to join
the CU was unacceptable due to Armenia’s commitments to Europe. The
common dissatisfaction of the opposition layers of the society was
summed up by the MP from the ANC, the former prime minister Grant
Bagratyan. He said that the problem of membership of Armenia in the CU
and signing the association agreement should be solved by a referendum,
rather than by one person.

Later that day the head of the presidential administration Vigen
Sarkisyan stated that Armenia had no plans to reject initialing of
the association agreement with the EU. The politician stressed that
Yerevan’s decision to join the CU didn’t mean breaking the political
dialogue with the EU. Sarkisyan also disproved the views that the
Eurasian integration of Armenia was a result of Moscow’s pressure
on Yerevan.

The head of the political studies department of the institute
“Kavkaz”, Sergey Minasyan, explained Yerevan’s readiness to join
the CU by political reasons. He thinks that Yerevan will continue
its European integration, but without commodities and political and
financial support from the EU. According to the expert, Armenia has
taken a time-out in initialing of the association and DCFTA agreements,
as chances for the initialing in Vilnius are small.

However, the documents will wait for a right moment.

The crucial factor in relations between Russia and Armenia is still
security. No Armenian presidents can ignore this factor. From this
point of view economy plays a second role. Sustaining losses in the
security sphere, Armenia can appear in the situation of zugzwang. Some
forces in Yerevan state that Armenia’s security which is provided today
by CSTO/Russia could be provided by NATO someday. However, Armenia has
no time to wait due to well-known circumstances. If Yerevan rejects
integration with the CU, Armenia will get cool relations with Moscow in
the military technical cooperation. Security determines “the red line”
which Yerevan cannot cross. At the same time, if Yerevan refuses from
the association with EU, it won’t speed up its membership in the CU.

We can assume that President Sargsyan tries to gain time again. There
are too many questions to him both in Armenia and the West. And they
need answers right now because little time remains before the summit
of the Eastern Partnership. It seems Sargsyan’s statements won’t lead
to a radical change of the course of Armenia and his own party.

However, the main goal was reached – Russia wouldn’t change its policy
toward Armenia. Moscow again pretends that it believes Yerevan.

Whether Brussels is going to pretend as well will be clear in a month
or two. At the moment, the EU leadership states that unfortunately,
Armenia’s joining the CU doesn’t require further participation of
Armenia in the association and DCFTA agreements with the EU.

SWEDEN BILDT: RUSSIA THREATENED ECONOMIC WARFARE WITH MOLDOLVA, ARMENIA, OTHERS

Wall Street Journal
Sept 6 2013

VILNIUS, Lithuania–Swedish Foreign Minister Carl Bildt Friday slammed
what he called “brutal” pressure by Russia on the European Union’s
eastern neighbors.

Earlier this week, Armenia said it would join Russia’s customs union,
effectively tearing up more than three years of talks with the EU on
a trade and political deal. The negotiations on the EU accord were
completed in July and the two sides had been set to sign in November.

EU diplomats have claimed Armenia’s switch came after strong pressure
from Moscow, pressure they say that has been placed on the likes of
Moldova, Georgia and Ukraine.

“I think what we have seen during the last few weeks is brutal Russian
pressure against the (Eastern) partnership countries of the sort that
we haven’t seen in Europe for a very long time,” he told reporters
on his way into a meeting of EU foreign ministers.

Mr. Bildt said Russia seemed to have timed its pressure when the
world was focused on Syria “so they don’t think it will be that
much noticed. That’s why it’s important that we bring it up here and
discuss what we can do.”

Mr. Bildt highlighted the pressure on Moldova over gas supplies and
wine sales.

“This is economic warfare they are threatening against these
countries,” he said.

RPT-FITCH RATES ARMENIA’S BOND ‘BB-(EXP)’

Reuters
Sept 6 2013

(Reuters) – (The following statement was released by the rating agency)

Fitch Ratings has assigned the Republic of Armenia’s potential upcoming
USD-denominated notes an expected ‘BB-(EXP)’ rating. The final rating
is contingent on the receipt of final documentation conforming to
information already received.

The expected rating is in line with Armenia’s Long-Term foreign
currency Issuer Default Rating (IDR) of ‘BB-‘. The Outlook on the
rating is Stable.

KEY RATING DRIVERS

Fitch affirmed Armenia’s ratings on 16 August 2013, reflecting the
following factors:

The consolidated general government deficit fell to 1.4% of GDP in
2012, down from 2.8% of GDP in 2011, outperforming the target for
the second successive year. The government succeeded in meeting its
goal of increasing tax revenues, although under-execution of capital
spending also contributed, by 1.2pp of GDP. The deficit will increase
again in 2014 due to the costs of introducing a pension reform,
estimated at 0.5% of GDP in the first year.

General government debt rose 1.8pp of GDP to 44.1% of GDP in 2012, but
Fitch expects it to stabilise from 2013 onwards. Currency depreciation
is a risk to solvency given that over 80% of government debt is foreign
currency-denominated. External sovereign debt service is modest,
but rising. The government aims to deepen the local capital market.

Real GDP grew by 7.2% in 2012, faster than in any other rated sovereign
in Emerging Europe, driven by agriculture, mining and services. Faster
growth has accompanied a government drive to improve the business
climate, although qualitative weaknesses persist. Growth slowed
in Q213, but Fitch expects it to reach 5% in 2013-15, higher than
its previous forecasts. Consumption and net trade are contributing,
while investment is weak. Headwinds will come from higher gas prices
and slower growth in Russia.

A current account deficit (CAD) above 10% of GDP is still a rating
weakness, although it is gradually narrowing, driven by exports. The
CAD is forecast to fall below 10% of GDP in 2014, with FDI accounting
for an increasing share of CAD financing. Reserves will be flat
as Armenia starts to repay IMF lending. Governance indicators are
slightly below ‘BB’ medians. Serzh Sargsyan won a second term as
president in February 2013, completing a smooth election cycle and
pointing to policy continuity. However, an angry popular response
to a proposed rise in public transport fares in Yerevan suggests
dissatisfaction and latent political risks.

Armenia’s rating is supported by a relatively strong macroeconomic
framework and a good inflation track record in comparison with the
peer group of ‘BB’ rated sovereigns. However, rising food prices
and a 15.1% rise in energy tariffs (stemming from higher gas import
costs) pushed up inflation to 8.5% year on year, in July 2013. By 2014
inflation should return to the target range, below 5.5%. The Central
Bank of Armenia (CBA) is allowing greater exchange rate flexibility,
although dollarisation is high at 63%.

Fitch previously highlighted the risks to the banking sector from
strong lending growth, albeit from a low base. Headline growth in
bank lending to the private sector slowed to 16% year on year in May
2013, from 27% at end-2012. The CBA has moved to dampen growth in
foreign currency lending. Bank risks to sovereign creditworthiness
are mitigated by loss absorption capacity and predominantly foreign
ownership of the banks.

RATING SENSITIVITIES

The Stable Outlook reflects Fitch’s assessment that upside and downside
risks to the rating are currently well balanced.

Consequently, Fitch’s sensitivity analysis does not currently
anticipate developments with a high likelihood of leading to a
rating change.

The main factors that, individually or collectively, could lead to
positive rating action are:

Ongoing improvement in the CAD and a stronger reserve position.

Setting the debt/GDP ratio on a downward path. A track record of
sustainably low fiscal deficits while navigating the challenges of
the pension reform would improve creditworthiness, especially given
the forecast rise in sovereign external funding costs.

The main factors that, individually or collectively, could lead to
negative rating action are:

A fall in reserves and pressure on the dram originating from an
external shock or inconsistent economic policies. A sharp depreciation
would worsen solvency risks given the government’s largely foreign
currency-denominated debt, and pose risks to the financial system in
view of the high level of dollarisation. An upswing in political risk,
which is less likely now that the election cycle is complete.

Material slippage in the performance of public finances that led to
a rise in the debt/GDP ratio

From: Emil Lazarian | Ararat NewsPress

BISHOP’S FAREWELL VISIT TO ARMENIA

Anglican News
Sept 6 2013

By Canon Meurig Williams on the Diocese of Europe website

Bishop Geoffrey [Rowell, Bishop of Gibraltar in Europe] visited
Armenia from Friday 23 August until Tuesday 27 August. This was a
farewell visit to Catholicos Karekin II and the Armenian Apostolic
Church before Bishop Geoffrey retires in November.

In his role as Anglican co-chair of the theological dialogue with
the Oriental Orthodox Churches of which the Armenian Church is one,
Bishop Geoffrey has a long standing relationship going back many
years. He has accompanied both Archbishops George Carey and Rowan
Williams on their official visits to the Armenian Church and was
present also at the 1700th anniversary of Armenian Christianity.

Bishop Geoffrey and his chaplain and commissary, Fr Meurig, received
the warmest of welcomes. He was able to talk to Catholicos Karekin
about Anglican-Armenian relations, the forthcoming meeting of the
theological dialogue and the anniversary of the Armenian Genocide
in 2015.

On Sunday morning Bishop Geoffrey and Fr Williams attended the Holy
Liturgy in the Cathedral at Etchmiadzin. In the evening Bishop
Geoffrey presided at the eucharist for the newly re-established
Anglican congregation, now led by Deacon John Barker, which meets
in the ancient Armenian church of Saint Zoravor, Yerevan, where
hospitality is generously given by the Armenian Church.

On Monday Bishop Hovakim organised a visit to the newly established
diocese to Artvik of which he is the bishop as well as heading up
the ecumenical relations of the Armenian church. In the evening the
British ambassador to Armenia, Her Excellency Kathy Leach, generously
hosted a reception for Bishop Geoffrey and leading Armenian religious
and cultural figures.

Bishop Geoffrey commented ” I have been delighted to be once again
in Armenia, a country and church which has suffered much in the
past. The warmth of the welcome we have received reminds us of how
much we share in our common Christian faith and how valued these
ecumenical relations are.”

WIRRAL WOMAN GIVES A GUIDING HAND TO ARMENIAN COMMUNITY

Wirral Globe, UK
Sept 6 2013

9:42am Friday 6th September 2013 in News By Stephanie Cureton

A GIRL Guide leader from Wirral has worked to make a difference among
communities in Armenia.

Rachael O’Sullivan, from Wallasey, joined five other girl-guiding
members for the Guiding Overseas Linked with Development (GOLD)
scheme from July 25 to August 18.

During the three-week trip, the 24-year-old organised training
sessions for potential new leaders across Armenia, which is in the
South Caucasus region, as well as running activities for Brownie and
Guide-aged girls to encourage them to sign up to their local groups.

Rachael, who works as an occupational therapist at Clatterbridge
Hospital, said: “I think the best thing was probably the enthusiasm
from all of the people we met and trained in Armenia – including
current leaders, girls and potential new members.

“They all participated so enthusiastically in all of the sessions
we facilitated, and we were also made to feel so welcome everywhere
we went.”

Set up in 1991, GOLD offers young women between the ages of 18 and 30
the chance to improve their skills and make a “long-lasting positive
difference” in communities as far afield as Honduras, Madagascar,
Russia, South Africa and Thailand.

Rachael, who is an assistant leader with both the 3rd Wallasey Brownies
and the 14th Wallasey Guides, added: “I’ve certainly gained a lot
from participating in GOLD, it really has been an amazing experience.

“I’ve made lots of great friendships, it’s helped me to gain much more
confidence and I’ve developed lots of skills including organisation,
leadership and teamwork.

“I’m really keen to be able to give more girls the opportunity to
have an international experience in guiding and to promote all of
the opportunities that guiding can offer.”

For more information on GOLD and how to join Girlguiding visit

[Wallasey is a small town in England, near Liverpool]