Author: Chakhmakhchian Vatche

CO-OWNER OF VTB-ARMENIA COULD SELL 30% STAKE TO VTB
Interfax News Agency
Russia & CIS Business and Financial Newswire
August 28, 2006 Monday 5:06 PM MSK
Armenian businessman Mikhail Bagdasarov is planning to sell his 30%
stake in VTB-Armenia Bank (formerly Armsberbank).
Bagdasarov told reporters that he is holding negotiations on selling
his stake with Vneshtorgbank (RTS: VTBR) (VTB), the owner of 70%
of the bank’s shares and an initial right of refusal to buy up the
remaining shares. Talks are also being held with other potential
investors, but Bagdasarov did not give any further details about them.
VEB refused to comment.
VTB acquired 70% of Armsberbank in March 2004 and has provided
financial institutions with subordinated loans for approximately $15
million-$20 million since then. VTB-Armenia had charter capital of
around $18 million at the end of the first half of 2006.
Bagdasarov owns Armenia’s Armavia Airlines, the Mika Cement plant
and oil trader Mika Limited.
VTB-Armenia is a mid-sized bank in Armenia. There were 21 banks in
Armenia at the beginning of 2006.

Garegin II presents condolences on Tu-154 crash
ITAR-TASS, Russia
Aug. 25, 2006
YEREVAN, August 25 (Itar-Tass) — Head of the Armenian Apostolic
Church, Catholicos Garegin II has presented condolences to Russian
President Vladimir Putin in connection with the Tu-154 crash, Holy
Echmiadzin spokesman Vagram Melikyan told Itar-Tass on Friday.
“On behalf of the clergy and the flock of the Armenian Apostolic
Church, we present profound condolences to Your Excellency, families
of the dead and the entire people of Russia,” the message runs.
Garegin II prayed for the crash victims. He also presented condolences
to head of the Russian Orthodox Church, Patriarch Alexy II.

EXHIBITION OF IRANIAN CONSTRUCTION PRODUCTION TO BE HELD IN YEREVAN ON NOVEMBER 3-11
YEREVAN, AUGUST 24, NOYAN TAPAN. A specialized exhibition of Iranian
construction production will be held at the Sport and Culture Center
after Karen Demirchian in Yerevan on November 3-11. According to the
newspaper “Alik” (Tehran), Director of the Iran-Armenia Chamber of
Commerce Levon Aharonian stated this during a press conference in
Tehran on August 23.
In his words, it is expected that at least 60 Iranian companies
producing building material, electric devices, furniture, etc, will
participate in the exhibition.
L. Aharonian said that information about large industrial centers
of Iran will also be presented at the exhibition. According to
him, Iran is Armenia’s fifth largest trade partner: trade turnover
between Iran and Armenia reached 200 mln USD a year, 160 mln USD of
which is exports from Iran into Armenia and 40 mln USD is imports
from Armenia. L. Aharonian expressed a hope that organizing such an
exhibition will allow the Armenian consumer to get to know Iranian
products, thanks to which exports from Iran into Armenia currently
making 17% will soon reach 30%.

DAYS OF YEREVAN IN MOSCOW
AZG Armenian Daily
25/08/2006
>From September 9 to 10 days of Yerevan will be celebrated in
Moscow. Novosti agency quoted representatives in Moscow Municipality
as saying that the celebrations are held “for further development of
relations between Moscow and Yerevan.” “Golden Pomegranate” exhibition
of Armenian goods will be held on those days.

EXPERT: DIVISION OF KOSOVO PRECEDENT AND KARABAKH’S CHOICE
Viktor Yakubyan – expert on South Caucasus
Regnum, Russia
Aug. 22, 2006
While Lebanon is healing its wounds, the UN is knocking together
an international peacekeeping force for deployment in the south of
that country. In its turn, the international community is trying to
understand the reason for so tough an operation against Lebanon –
a campaign that has nearly wiped that country off the world map. Was
it actually the kidnapping of two Israeli soldiers?
Well-known American journalist Seymour Hersh says that Israel’s war
against Hezbollah was “an experiment.” He has carried out his own
investigation and has found out that the plan to invade Lebanon was
drafted long before the kidnapping of Israeli soldiers. Hersh says
that the whole campaign was nothing but a test of strength before
attacking Iran. Referring to US administration sources, Hersh says
that the Israelis were supposed to test in practice the forms and
methods the Americans are planning to apply against Iran.
There are also some reports that the Pentagon is going to deploy
an interceptor-missile base in Europe. It will be the first US
anti-missile defense land base outside the US territory. Besides,
the US is planning to enlarge its presence in the South Caucasus. To
two radar stations in Azerbaijan, they may add similar facilities on
the Armenian-Iranian border – in Kapan ad Meghri (Armenia).
US block facilities are being actively built in Georgia too.
The process of base and buffer zone deployment in the South Caucasus
got especially active after the NATO Summit in Istanbul and after
the US President proclaimed the EUCOM Transformation plan in the
summer 2004. Under the guise of strengthening the security system in
the Caspian Sea basin (the zone of strategic influence of Iran and
Russia), the US is also unfolding the “Caspian Border Initiative”
program involving Azerbaijan and Kazakhstan. In the meantime, the US,
NATO and the EU are showing quite an unprecedented interest in the
“frozen” post-Soviet conflicts.
They in the West believe that those conflicts destabilize the situation
on the new – very close to Russia – NATO and EU borders. In this light,
the West may well be seeking to debar Russia from the peace processes
in the Caucasus and Transdnestr and to finalize them the way it wants,
based on the support of its regional partners from GUAM (Georgia,
Ukraine, Azerbaijan and Moldova). During a recent meeting in Baku GUAM
representatives confirmed their plans to form own peacekeeping troops.
It is exactly in this context that the Georgian government is trying
to fulfill the instruction of its parliament to ensure the withdrawal
of Russian peacekeepers from Abkhazia and South Ossetia, while the
parties to the Nagorno-Karabakh conflict are showing unprecedented
constructivism. Drastically differing on all the key points of the
Karabakh agenda, Yerevan and Baku are coming to an agreement on one
thing: peacekeeping forces will be deployed in the conflict zone. In
this light, we would like to compare the efficiency of the Russian
peacekeeping operations in Abkhazia, South Ossetia and Transdnestr with
the NATO mission in Kosovo. To remind, in Nagorno-Karabakh cease fire
has been preserved for over a decade already due to balance of forces.
Doctor of History Miroslav Jovanovic says that from June 1999 to March
2006 the NATO “peacekeeping operation” in Kosovo gave the following
results: 927 Serbs killed, 230,000 expelled, 156 Orthodox churches
and cathedrals and several thousands of Serbian houses destroyed,
almost 7,000 attacks on Serbian civilians (an average of 1,000 a year
or 3 a day). During this period, 8,000 Serbs got papers for returning
to Kosovo, but only 1,800 returned.
To compare, from 1992 until recently Russia’s peacekeeping operation
in the Georgian-Ossetian conflict zone was regarded as unique –
no single soldier, not mentioning civilian, was killed in the zone
throughout the period. Only 4 peacekeepers and 1 civilian were blown
up by mines. After the advent of Mikhail Saakashvili in Georgia in 2004
and the deployment of Georgian special purpose troops in the zone, the
situation got much worse. 4 employees of the South Ossetian Interior
Ministry were killed near the Georgian village of Tamarasheni in May
2004. In July-August 2004 Georgian troops attempted a breakthrough in
the Javi region. They shelled Tskhinvali killing three civilians. One
of them was a child.
Serviceman Gennady Sanakoyev was wounded then. He was later killed
(Georgian Ex Minister for Conflict Resolution Georgy Khaindrava
says Georgian Defense Minister Irakly Okruashvili is to blame
for this murder). Two Ossetian peacekeepers were killed in 2005. 4
Georgians (3 Khachapuridze brothers and their friend) and 11-year-old
Geno Petriashvili were kidnapped last year. With the help of the
peacekeepers, the Ossetian police disclosed all these crimes and
blamed the Georgian side.
Tskhinvali was shelled once again in 2005 during the celebration of
the Day of Independence of the Republic of South Ossetia. 10 people
were wounded, of them two were children. This year the Georgian side
attacked the Ossetian village of Khelchua. One Ossetian was killed,
but before that he had shot two attackers. In May 2006 Georgian special
purpose men captured 60 Ossetians. They beat them and let free. The
secretary of the South Ossetian Security Council Oleg Alborov was
killed in a terrorist act in July 2006. One more terrorist act a week
later killed two teenagers.
Quite strangely the explosions in Tskhinvali were followed by two
terrorist acts in Tiraspol (Tskhinvali). 10 were killed and 25 wounded.
Experts are unanimous that the authors of the terrorist acts sought
to destabilize the peaceful life in the zones guarded by Russian
peacekeepers with a view to create an illusion of poor control –
something that would allow them to lay claims against the peacekeepers.
Russia’s peacekeeping operation on Dniestr started 14 years ago and is
regarded as one of the best in the world. Initially, there were 3,100
peacekeepers but in the following years their number was reduced to
385. From the very first day, the peacekeepers started active demining
of the region (first of all, the areas near Benderi and Dubossari). The
United Headquarters of the Collective Peacekeeping Forces report that
in the past 14 years they have cleared 12,000 explosives. During the
first years after the conflict 1992, the peacekeepers seized lots
of arms: 100 tommy guns and pistols, over 30 hand grenade launchers,
almost 1,200 grenades, 132,000 units of ammunition.
The peacekeepers’ responsibility zone (Security Zone) has become a
kind of dividing line between the conflicting parties. The situation
in Benderi was especially complicated, that’s why that town was
proclaimed a high-security zone. In 1992-2001 it was under curfew.
The Collective Peacekeeping Forces have military commandant’s offices
in Benderi and Dubossari. They control the situation on a daily
basis. There were single cases of death among civilians from the
start of Russia’s peacekeeping in Transdnestr up to the terrorist
acts in Tiraspol.
The CIS Collective Peacekeeping Forces were deployed in the
Georgian-Abkhazian conflict zone on June 21 1994 in line with the
May 14 1994 Cease Fire and Disengagement Agreement. 112 Russian
peacekeepers and very few civilians have been killed in the region
since then. Permanent tensions are observed in the mostly-Georgian
Gali region of Abkhazia. Skirmishes and kidnappings are due mostly
to the activities of various groups engaged in walnut and citrus
business. The number of provocations has been growing in the last
years. The Georgian side has repeatedly seized goods and cargoes,
including food, intended for the peacekeeping forces.
The situation there got remarkably more tensed after a Georgian police
contingent under the command of Defense Minister Irakly Okruashvili
was deployed in the upper part of Kodori Gorge. Shortly the region will
be monitored. Georgia objects to Russia’s involvement in this process.
Thus, obviously, only certain political motives can force one to say
that Russia’s peacekeeping mission in Abkhazia, South Ossetia and
Transdnestr is inefficient. It is clear that Russia is being gradually
forced out of these formats to give place to wider American-European
maneuvering. It is also clear that the West’s attempts to “unfreeze”
the post-Soviet conflicts may lead to calamities comparable
to the tragedy in Kosovo. That’s exactly why they are trying to
internationalize the conflicts by carrying out an actively propaganda
that the unrecognized republics are instability zones.
If in Abkhazia and South Ossetia the international community will
find it very hard – and almost impossible in the near future – to
push the Russian peacekeepers away, in Nagorno Karabakh they have no
such obstacle.
Here it is for the conflicting parties to choose between the Kosovo
and Abkhazian “peacemaking precedents.”
It is noteworthy that during his first meetings in Pristina the
new head of the UN Interim Administration Mission in Kosovo Joachim
Rucker said that his priority is to get the Kosovo status finalized
by the end of this year. To remind, the US OSCE MG co-chair Matthew
Bryza is as confident in making the same forecast for the Karabakh
conflict. Well, while Rucker is hurrying to legalize the Kosovo
“peacemaking precedent,” the Americans are hurrying to prevent
Nagorno-Karabakh from using the Kosovo “legal precedent.” Here the
rapture of the Kosovo Albanian leaders will be probably as strong as
the pride of the Armenian leaders for the uniqueness of the Karabakh
factor.
As regards the US, it will gain strategic dominance inside the
Russia-Iran-Turkey triangle – dominance that will give it checks and
balances in the whole regional architecture of security.

MINISTER GAVE A SURPRISE TO U.S.
Lragir.am
23 Aug 06
The sources standing close to the U.S. government say the Bush
administration was surprised by the aspirations of the defense minister
of Armenia to presidency. The United States were especially amazed
by the willingness of Serge Sargsyan to make any concession to reach
his goal. This information worried the Command of the Armed Forces
of Armenia considerably, and some representatives of the Command
are said to have announced in a narrow circle that long before
the standpoint of the United States they had been worried by the
measureless willingness of the defense minister to make concessions
for the sake of his political ambitions.

The Economist
August 19, 2006
U.S. Edition
Too much of a good thing; Azerbaijan and oil
Managing oil revenues
A case study in the perils of being a petro-state
THE beaches near Baku are popular weekend spots. But their view of
the Caspian is spoiled by a rusty oil platform towed close to the
shore years ago. By contrast, an hour’s drive south is the gleaming
Sangachal terminal, the starting-point of the new $3.9 billion
Baku-Tbilisi-Ceyhan (BTC) oil pipeline.
The old and the new, the past and the future, are never far apart in
Azerbaijan, which 100 years ago was briefly the world’s largest oil
producer. Now, after 15 years of independence, Azerbaijan is seeing
another boom. By 2010, oil production is expected to triple, to
1.3m barrels a day, and gas output to quadruple, to 28 billion cubic
metres a year. The first oil was delivered through the BTC pipeline
in June. A Baku-Tbilisi-Erzurum gas pipeline will open later this
year. If oil prices average $50 per barrel (they are now over $70),
these two will bring a massive $140 billion into Azerbaijan’s state
coffers over the next 20 years, claims President Ilham Aliev.
Such a gushing of money ought to be a blessing for this impoverished
country. It has just 8m people, but that includes some 800,000 refugees
left from the war with Armenia over Nagorno-Karabakh in the early
1990s. Yet few oil-rich countries have avoided the triple threats
of corruption, competitive rent-seeking or “Dutch disease”-in which,
thanks to exchange-rate appreciation, oil production crowds out other
economic activity.
Azerbaijan is, according to Transparency International, one of the
most corrupt places in the world. Under Mr Aliev, it is a thinly
disguised autocracy. Yet it has taken some steps. A national oil fund,
set up in 1999, holds some $1.6 billion. Azerbaijan has also signed
up to the Extractive Industries Transparency Initiative (EITI),
an anti-corruption scheme established by Britain’s Tony Blair in
2002. Oil companies report payments to the oil fund, which publishes
full details. An independent auditor checks the fund. “I think it
has worked very well,” says David Woodward, associate president of
BP Azerbaijan, the biggest foreign investor in the oil industry.
The problem is that, even if revenues are well-monitored, spending is
not-since it is not covered by the EITI. Observers in Baku say the
government is already spending too much money, too quickly and with
too little oversight (needed to stop such things as the awarding of
contracts to close relatives). Inflation has risen and the currency,
the manat, has appreciated, symptoms of a possible outbreak of Dutch
disease.
The model that Azerbaijan, like other oil producers, aspires to is
that of Norway, which has built a huge stabilisation fund without
distorting its economy. Even Russia’s economic management has been
better than some critics feared. But it would be miraculous if a poor
country, under intense social pressure, managed a similar feat. The
risk for Azerbaijanis, as for Venezuelans or Nigerians, is that the
oil bonanza will end up hurting the people it ought to help.
GRAPHIC: Nice beach, shame about the view

AZERBAIJAN TO ATTRACT OVER $1B. TO ROAD BUILDING IN 2006-2008
Author: S. Aliyev
TREND, Azerbaijan
Aug. 17, 2006
A presentation of projects being implemented, and projects to be
implemented in the sector of road building was hold at the Ministry of
Transport of Azerbaijan Republic today.Javid Gurbanov, the Head of the
Department of Road Building of Yolnagliyyatservis of the Ministry of
Transport of Azerbaijan Republic told that at present there are about
30,000 km of highways in Azerbaijan. 17,326 km out of the 18,799 km
highways of common use belong to the Ministry of Transportation,
2,661 km of highways are under of the Armenian occupation on the
territory of Nagorno-Karabakh, 1,473 km belong to the State Company
of Nakhavtoyol, and the other highways belong to municipalities,
different transportation managements, and enterprises, Trend reports.
J. Gurbanov also pointed out that at present the indicator of
development of roads in the country is on the lower level. Today
works aimed at changing of this indicator are carried out.
1st category roads (dual-dual highways) make up just 1 per cent
(175 km) out of the total volume of roads of common use in the country.
“About $5 b. are needed for the reconstruction of roads of the
country”, pointed out the Head of the Department.
According to the Department, since 1998 till August 2006 $78,04 m
have been spent on the road building of the country as credits of
different international financial institutions. $20,2 m were spent in
2005.$16,93 m had been spend over the seven months of this year. The
share of Azerbaijan in the total volume of means being spent on
the road building since 1998 till August 2006 makes $12,63 m. This
indicator in 2005 was $2,12 m. Over the seven month of this year the
share of Azerbaijan in the road building makes up $3,14 m.
According to forecast in 2006-2008 $1 b. are expected to be invested
as credits to the road building in the country (124,7 m in 2006,
$399,3 in 2007, and $545,4 m in 2008). The share of Azerbaijan in
the road building projects is expected at the volume of $238,887 m.
($20,247 m in 2006, $95,21 m in 2007, and $123,43 in 2008).

AZERBAIJAN RETURNED THREE ARMENIAN CAPTIVES
Author: E.Javadova
TREND, Azerbaijan
Aug. 17, 2006
On August 17, three Armenian captives kept in Azerbaijan were returned
to Armenia, Trend has been told in the State Committee on Captives
and Missing People of Azerbaijani National Security Ministry.
Kept within July 2006, three Armenians – Galumyan Martun Kolyalevich,
Karapetyan Goren Victorovich and Aleksanyan Roman Arkadevich –
were transferred to Armenian side on the border territory between
Balajafarli village of Gazakh district of Azerbaijan and Ijevan
district of Armenia.
The process was realized the State Committee on Captives and Missing
People and the Defense Ministry through the mediation of International
Red Crescent Organization.

HELL ON RAILS: TBILISI-BATUMI TRAIN LIKE ‘TRAVELLING IN A SAUNA’
By Anna Arzanova
The Messenger, Georgia
Aug. 17, 2006
Contrary To Previous Announcements
Georgian holidaymakers are forced to travel to Batumi on trains
like this
As holiday season reaches its peak, travelling by train from Tbilisi
to Batumi is turning into a nightmare.
In an effort to attract more Armenian tourists, Georgian Railways
moved its recently renovated rolling stock from the Tbilisi-Batumi
service to the Yerevan-Makhinjauri (Adjara) route. Eight old,
un-refurbished carriages have made an unwelcome reappearance at
Tbilisi railway station.
The current heat wave makes travelling in these Soviet-era dinosaurs
almost unbearable, and despite the fact that there are not air
conditioners or renovated toilets, the price remains the same:
GEL 20-35.
“It was awful. I could hardly bare such conditions. We knew that
there should have been conditioners and the toilets should also
have been good, but unfortunately there was nothing. We paid GEL 20
per ticket and travelled in a sauna! How can they deceive people in
such a manner?” Maia Gagoshidze, who had just arrived from Batumi,
told The Messenger.
At the beginning of the season, Georgian Railways declared that
carriages newly refurbished in a Dneipropetrovsk factory with TV sets,
DVDs, air conditioners and high-level customer service, would ply
the Tbilisi-Batumi tourist route all summer.
Lika Menteshashvili, who will soon leave for the resort town of
Kobuleti, Adjara, complained that she bought her ticket, but does
not know in what conditions she will travel.
“I want to know why they added eight old carriages and did not warn
anybody. People should have known about this beforehand by and then
to chosen how to travel. Yes, they post up statements in front of the
ticket office but not everybody pays attention, and they also refuse
to refund tickets.” Menteshashvili stated.
Georgian Railways say that the notices were put up to protect
passengers’ rights. The notices say that Georgian Railways has been
forced to add un-modernised carriages to the overnight Tbilisi-Batumi
train, and advise passengers to take this into account before
purchasing their tickets.
“In order to avoid misunderstandings, we put up notices at the ticket
office. We warned people that these are old trains and gave them
the possibility to choose whether or not to buy a ticket,” head of
Georgian Railways Ltd., Irakli Ezugbaia, stated.
According to cashiers at the railways station however, passengers
have not been inquiring about the conciliations of the carriages,
as the most important thing for holidaymakers is to get a ticket,
and get to the beach.