Author: Jagharian Tania

Arinc: Number Of Turkish People’s Applications To E.C.H.R. Has Dropped
Anadolu Agency
May 20 2004
STRASBOURG – Number of Turkish people’s applications to the European
Court of Human Rights (ECHR) has dropped, Turkish Parliament Speaker
Bulent Arinc said on Wednesday.
Arinc, who is currently in Strasbourg to attend conference of
parliament speakers of member countries to the Council of Europe,
held separate talks with ECHR Vice President Jean Paul Costa and
Turkish jurists at the ECHR on Wednesday.
Holding a news conference following the meetings, Arinc said,
“number of Turkish people’s applications to the ECHR about right
to live, torture and maltreatment have dropped. It is a pleasing
development. Reforms made in democratization in Turkey have a
significant role in this development. Turkish people do not apply to
the ECHR about freedom of expression and closure of political parties
any longer. Our government has been making legal changes for a more
free life in Turkey.”
Upon a question about decision of the State Security Court (DGM)
in the re-trial process of former deputies of the Democracy Party
(DEP) which was banned by the Constitutional Court, Arinc said that
the ECHR had made some legal objections to the DEP case.
“Following decision of the ECHR, former deputies of the DEP were
re-tried, and the court ratified its first decision in accordance with
Article 341/1 of the Code of Criminal Procedure (CMUK) arranging the
decision to be made in retrial process,” he said.
Recalling that the jurisdiction was independent in modern and
democratic societies, Arinc said that judicial independence was valid
in Turkey, and no one could affect decisions of courts.
Arinc also gave information about his meetings at the Council of
Europe.
He recalled that he had held very positive and constructive bilateral
meetings with parliament speakers of Greece, Georgia, Armenia and
Russia.
Arinc is expected to return to Turkey on Thursday.

Mikhail Fradkov: Russia Interested in Development of Relations with Armenia
RIA OREANDA
Economic News
May 14, 2004 Friday
Moscow. Russia is interested in the development of the relations
with Armenia and is ready to consider all the issues of bilateral
cooperation. RF Prime Minister Mikhail Fradkov made the respective
statement in the course of the meeting with Armenian President Robert
Kocharian.
Our relations are positively developing in all the directions but at
the same time we have topics to discuss with each other in order to
discover new efficient opportunities for cooperation, Mr. Fradkov
said. We are ready to consider the topics on the agenda that will
contribute to the extension of the Russian-Armenian relations, the
Prime Minister assured.
Robert Kocharian, in his turn, noted that the volume of cooperation
between the two countries is rather wide and we managed to considerably
develop it recently.

Agency WPS
What the Papers Say. Part B (Russia)
May 14, 2004, Friday
KOCHARJAN HAS PROBLEMS
SOURCE: Vremya Novostei, May 14, 2004, p. 5
by Arkady Dubnov
President Robert Kocharjan of Armenia is visiting Moscow. Kocharjan
is the first Caucasus leader to meet with Vladimir Putin since his
inauguration. He will meet with Vladimir Putin and Prime Minister
Mikhail Fradkov today. Yesterday, he met with Alexei Miller, CEO of
Gazprom. The visitor also expects to meet with Igor Materov of ITERA.
The natural gas problem is no longer an economic issue for Armenia;
it is geopolitical. Yerevan wants gas from Moscow and also from Iran.
It even hopes to provide Iranian pipeline transit in future. Ukraine
also wants Iranian gas. All of these routes will bypass Russia, and
the Kremlin has some question for Armenia, known as one of Russia’s
most loyal allies in the CIS.
Putin and Kocharjan will also discuss the situation in the Caucasus.
This is the subject where the visitor will be asking questions
because the consequences of the Revolution of Roses in Georgia cannot
help worrying him.
Like Georgia not long ago, Armenia – that is, Kocharjan – has serious
problems with the opposition that demands the president’s
resignation. A large demonstration will take place in Yerevan today.
On April 13, the Armenian authorities dispersed a demonstration
staged by the opposition and the political crisis in this country
entered a new phase. On April 28, the Parliamentary Assembly of the
Council of Europe (PACE_ adopted a resolution giving Kocharjan three
months to release the opposition activists arrested on April 13. The
PACE will insist on economic sanctions against Yerevan otherwise. All
this explains why Robert Kocharjan needs Moscow’s support so badly.
To secure it, he may have to sacrifice something. According to our
sources, the matter may concern a controlling interest in
Armrosgazprom for Gazprom (these days, Gazprom controls a 45% stake,
ITERA 10%, and Armenia the remaining 45%; the subject may have been
discussed by Kocharjan in Moscow yesterday).
Presidents Putin and Kocharjan will discuss Nagorno-Karabakh as well.
No sensational developments are expected in this particular sphere.
Translated by A. Ignatkin

Guardian, UK
May 12 2004
EU sets out how new neighbours can become good friends
Ian Black in Brussels
Thursday May 13, 2004
The Guardian
The expanded EU is offering its new neighbours greater cooperation
and assistance – but also keeping them at arm’s length.
“We want to give them a real stake in the enlarged EU so that they,
too, can develop and prosper,” Günter Verheugen, the commissioner for
enlargement, said yesterday. “A ring of well-governed countries
around the EU offering new perspectives for democracy and economic
growth is in the interests of Europe as a whole.”
However, Mr Verheugen made it clear that EU membership was not on
offer.
This month’s historic “big bang” enlargement, taking in eight east
European countries and Cyprus and Malta into a club of 25, has
extended the EU’s borders to the former Soviet Union and the Middle
East and north Africa.
The EU’s new neighbours range from Ukraine and Moldova to Tunisia and
Israel.
Later this year, the union will make a hugely significant and
controversial decision on whether to go ahead with long-awaited
membership talks with Turkey, whose 70 million people would make it
the largest member state after Germany.
The EU already has a formal “strategic partnership” with Russia, but
the new policy is also intended to apply to Ukraine, Belarus and
Moldova – as long as they meet standards on human rights and
democracy.
Mr Verheugen acknowledged that Belarus, often described as Europe’s
last dictatorship, was especially problematic. Relations between
Brussels and Minsk have been frozen for seven years.
The commission said it also wanted to forge links with Armenia,
Azerbaijan and Georgia in the Caucasus.
In the south, the policy will apply to Algeria, Egypt, Israel,
Jordan, Lebanon, Libya, Morocco, Syria, Tunisia and the Palestinian
Authority – all partners in the Barcelona process of
“Euro-Mediterranean dialogue”.
Participants will be offered tailor-made neighbourhood policy “action
plans” promoting good governance, human rights and economic and
social development. But the biggest carrot is likely to be the offer
of a stake in the EU’s internal market if local laws and regulations
are brought into line with Brussels’ requirements, as well as
participation in EU training and research programmes.
There would also be benefits from open borders for trade and free
movement for capital and people.
Migration, crime, terrorism and people-trafficking are other areas
where the EU wants to boost cooperation.
Romano Prodi, the commis sion president, has talked of a “ring of
friends” which could share everything but the EU’s institutions.
The new plan does not include countries that have applied to join the
EU or are already negotiating. Romania and Bulgaria are expected to
enter in 2007, with Croatia not far behind.
Other Balkan countries are expected to follow, raising the prospect
of an EU of 30 or more members and 500 million people by the end of
the decade.
The commission says it expects to make €255m (£172m) available to the
neighbourhood programmes in 2004-06, and will propose a substantial
rise for 2007-13.

The International Herald Tribune
May 7, 2004 Friday
Membership could cost Turkey its soul ;Joining the EU
by Sedat Sami
CARBONDALE, Illinois
A former prime minister of Turkey, Mesut Yilmaz, declared in 1999
that “Turkey’s road to the European Union goes through Diyarbakir,” a
mostly Kurdish city in southeastern Turkey. He was alluding to
European Union demands that Turkey grant more autonomy to its Kurdish
citizens as the price of an eventual membership in the EU.
But a detour to Diyarbakir is not the only one that Turkey will be
forced to take to win EU membership. The danger is that the journey
will lead Turkey away from itself — making membership not worth the
price, which is national sovereignty.
The demands on Turkey are many. Last January, Romano Prodi, the
president of the EU Commission, intimated that the reunification of
Cyprus would enhance Turkey’s EU chances. With the Greek Cypriot
electorate rejecting a reunification plan put forward by Kofi Annan,
the UN secretary-general, it is now apparent that Turkey will
continue to be pressured to offer more concessions to the Greek
Republic of Cyprus to change its mind. In short, Turkey’s road to the
EU will have to pass through Nicosia, too.
In addition, the United States wants Turkey to open its border with
Armenia before the NATO summit meeting in Istanbul in June. Turkey
closed the border more than a decade ago, when a war erupted between
Armenia and Ankara’s ally, Azerbaijan. Given the brittle nature of
its economy and its dependence on the International Monetary Fund and
World Bank, Turkey seems to have little choice but contemplate yet
another detour to the EU, this time through Yerevan.
Finally, a failure to reach an agreement this year with Greece over
territorial rights in the Aegean would lead to the World Court, as
stipulated in the 1999 communique that officially named Turkey a
candidate country. Thus Turkey’s road to the EU may have to snake
through The Hague too.
These issues all generate strong feelings among the Turks. They want
Kurds treated as first-class citizens, for instance, but are deeply
suspicious of any suggestion of autonomy. A strong urge for a fair
and just partnership between the Greek and Turkish communities in
Cyprus is tempered by memories of the terrorism by the Greek
nationalist movement EOKA. And they fear that opening the Armenian
border would be a betrayal of the Azeris who have been driven from
their homes by Armenian troops.
With the EU planning to reconsider its status in December, Turkey is
now faced with a historic decision: What price should the nation pay
for just the promise of negotiations aimed at a future EU membership?
Unfortunately, a rational debate in Turkey about the pros and cons of
EU membership has been clouded by a fog of disinformation. Big
business conglomerates that control the news media are feverishly
pushing for membership, while only a small handful of nationalist and
leftist publications are daring to point out the problems with
accession. Meanwhile, Turkey’s Islamist regime seems to draw its
legitimacy more from the praises of EU leaders, obsessed with the
unification of Cyprus, or of the State Department, eager to assign to
Turkey a major role in its new Greater Middle East project, than from
the people.
Why are the government and business so intent on membership? The
answer lies in Turkey’s economic ills, including high unemployment
and a monumental trade deficit attributable in part to a
disadvantageous customs union with the EU. The underlying problem,
however, is an unholy alliance between a corrupt political elite that
has sought to hang on to power by hook or crook and an equally
corrupt business elite that has robbed Turkey with the connivance of
a meek, underpaid and sometimes crooked bureaucracy. To get itself
out of this economic mess, the regime is banking on the generosity of
a rather skeptical Europe.
But again, at what price? A country cannot be great without a strong
sense of itself. Taking refuge in the bosom of the EU will not save
Turkey unless it rediscovers its moral compass and refuses to
surrender abjectly on matters of national interest. Turkey’s road to
the EU may well be its road to perdition. ** Sedat Sami is a
professor emeritus of engineering at Southern Illinois University.

ASBAREZ ONLINE
TOP STORIES
05/06/2004
TO ACCESS PREVIOUS ASBAREZ ONLINE EDITIONS PLEASE VISIT OUR
WEBSITE AT <;HTTP:// 1) Council of Europe Not the Politburo, Says Kocharian 2) Parliament and Opposition Leaders Meet 3) Hardliner Abashidze Flees Ajaria 4) Azerbaijan Not Ready for Risks or Responsibilities 5) ANC Praises Republicans for Advancing Genocide Reaffirmation 1) Council of Europe Not the Politburo, Says Kocharian YEREVAN (Armenpress/RFE/RL)--President Robert Kocharian said on Thursday said that while he finds the recommendations of last week's Parliamentary Assembly of the Council of Europe (PACE) resolution "normal," he disagrees with its assessment of the Armenian authorities' response to the street protests launched by the opposition one month ago. The April 28 resolution warns Armenian authorities that PACE will consider stripping the Armenian delegation's voting rights in the Assembly, unless it remedies, by September, abuses addressed in the resolution. "We are reviewing [the document]. I see no particularly big problems in its content," he told journalists. "But there are quite serious inaccuracies in the description and chronology of events." He said that a response to the descriptive segment of the resolution will come in a few days, while an official response will be submitted to the June session of PACE. He also said that a PACE monitoring delegation will arrive in Armenia soon to examine the situation first-hand. "The Council of Europe is an organization of which we are also a member. We have a right to vote and express our opinion there. We are there to defend our common interests, not to clear domestic matters," stressed Kocharian, adding that the Council of Europe should not be perceived as the Soviet Union's governing Communist Party Politburo. "You must not regard the Council of Europe as the former Politburo where they made and imposed decisions." Though important, the decisions of PACE are not binding for the Council of Europe leadership. Kocharian also downplayed fears that international focus on Armenia's political instability would affect foreign investment into the country. "Armenia's economy will suffer greater damage if investors begin to question the ability of authorities to establish order in the country." He admitted, however, that recent tensions will bear some negative impact. "Those people attempting to escalate tensions do not realize that negative repercussions will eventually be felt by all Armenian citizens." 2) Parliament and Opposition Leaders Meet YEREVAN--Opposition leaders and 13 senior representatives of all parliament factions met behind closed doors late Thursday to try to defuse political tensions sparked by the month-long opposition campaign against President Robert Kocharian. Initiated by parliament speaker Artur Baghdasarian, the talks began late in the afternoon and lasted for about five hours. A brief statement issued by the participants afterward said they agreed on the "necessity to create a new situation in the country" and that a 32-point agenda for further "consultations" was formulated. According to one of the negotiators for the Justice party Victor Dallakian, the agenda will be disclosed by Friday. 3) Hardliner Abashidze Flees Ajaria BATUMI (AFP)--Georgia's President Mikhail Saakashvili triumphantly arrived in the Black Sea region of Ajaria after the province's renegade leader resigned and flew into exile in dramatic scenes overnight. Georgian officials announced new elections to choose a replacement for ousted leader Aslan Abashidze and appointed an interim administration to run Ajaria--site of the region's biggest oil terminal--until a new leader is chosen. "I congratulate you all," a jubilant Saakashvili said as he arrived in Ajaria to chair a meeting of his ministers. "We have shown the world that we are a great people. Only we could have staged two bloodless revolutions in six months," he said. Abashidze's departure in the early hours of Thursday morning was the final act of last year's revolution, in which Saakashvili led weeks of protests which forced then President Eduard Shevardnadze to go into retirement. But the Ajarian chief, a member of Shevardnadze's old guard, stayed on, and until Thursday, had defied the authority of the capital, Tbilisi, and shown growing separatist tendencies. Russian news agencies reported that Abashidze had landed in Moscow, accompanied by Russia's Security Council Secretary Igor Ivanov, who had earlier flown to Ajaria to help mediate the conflict. His departure avoided what many feared would be a bloody separatist war, causing turmoil in Georgia just as Western oil companies are building a multi-billion-dollar pipeline through the country to export oil from the Caspian Sea to world markets. With Abashidze's 12-year rule over Ajaria suddenly over and his feared paramilitaries handing in their weapons, Saakashvili's administration set about filling in the power vacuum. Georgian Prime Minister Zurab Zhvania said on Ajarian television that new elections would be called and announced the creation of a commission, made up of Saakashvili aides and local figures, to run the region in the interim. But he said that Ajaria's autonomous status within Georgia, enshrined in law since the start of the last century, would be respected. "The new elections will be held with due account taken of Ajaria's special status, which will now be finally clarified by a special constitutional law," Zhvania said. On the streets of Ajaria's palm tree-lined capital Batumi Thursday, the last vestiges of Abashidze's rule were being swept away. Special forces troops from Tbilisi were in position outside government buildings, instead of the masked men in camouflage fatigues who had propped up Abashidze's regime. Drop-off points were set up around the city where civilians could hand in the weapons they were given by Abashidze's security forces to defend against an invasion from Tbilisi. Meanwhile some 2,000 Saakashvili supporters were holding a celebratory rally outside the local administration building chanting "Misha!, Misha!"--Saakashvili's affectionate nickname. It was a token of their new freedom. Previous opposition rallies in Batumi had been brutally dispersed by police loyal to Abashidze, with dozens of people arrested. Abashidze is a former Communist official who had ruled his corner of Georgia with a rod of iron and appointed his own relatives to key positions. His fate was sealed this week when thousands of his opponents took to the streets to demand his resignation, defying the police. At the same time Saakashvili, the 36-year-old who came to power in last year's "rose revolution" in the Georgian capital, introduced direct presidential rule and Georgian special forces were dropped in to Ajaria by helicopter. Abashidze appeared to have made use of an offer from the Georgian president of safe passage out of the country for him and his family if he agreed to go quietly. 4) Azerbaijan Not Ready for Risks or Responsibilities YEREVAN (Armenpress/Yerkir)--Karabagh leader Arkady Ghukasian reiterated that the Mountainous Karabagh conflict cannot be resolved unless Stepanakert becomes a full party to negotiations. "Sooner or later, Azeri leaders will have to agree to negotiate with Karabagh, and I am confident that the international community shares this very viewpoint," said Ghukasian, citing an OSCE Budapest summit resolution identifying Azerbaijan, Armenia, and Mountainous Karabagh as the parties to the conflict. Citing Azeri "distrust, enmity, and war rhetoric," Ghukasian said that the "package solution" must be sought, rather than the "step-by-step approach." While the first proposes settling key problems, including status, security guarantees, and troop withdrawal, with a single, comprehensive agreement, the latter calls for Armenia to surrender specific buffer zones to Azerbaijan, in exchange of deployment of international peacekeepers in Mountainous Karabagh. "We have the resources to resolve the conflict in one to two years, but we should also realize that resolution and peace contain certain risks; Azerbaijan's leaders do realize this, and are not ready today to take the risks and shoulder responsibilities." In a reversal of previous opinion on the effectiveness of the Minsk Group, which spearheads the Organization for Security and Co-Operation in Europe's (OSCE) efforts to find a political solution to this conflict, Azeri president Ilham Aliyev said earlier this week that the Group's activity is apparent, and that "the co-chairmen are determined to deal with the problem." 5) ANC Praises Republicans for Advancing Genocide Reaffirmation LOS ANGELES--The largest Armenian-American grassroots public affairs organization in the Western US praised a number of Republican legislators in the US Congress for their outstanding support on issues of concern to tens of thousands of Armenian-American voters throughout California, Nevada, and other western states. In a statement, the Armenian National Committee of America--Western Region also commended Republican Governors of Idaho, Montana, and Nebraska for officially acknowledging the Armenian Genocide. A record number of Governors issued proclamations this April acknowledging the Armenian Genocide and April 24 as a Day of Remembrance. The list includes Republican Governors Dirk Kempthorne of Idaho, Judy Martz of Montana, and Mike Johanns of Nebraska. The ANCA-WR also applauded California Governor Arnold Schwarzenegger's move designating April 24 a Day of Remembrance for the Genocide, as well as Republican State Senator Chuck Poochigian's powerful proclamation at the April 24 Commemoration in Montebello, California. "We appreciate the work of our Republican friends, particularly the Governors and members of Congress who support the ANC's initiatives to raise awareness about the Armenian Genocide and urge Congress to pass resolutions acknowledging this crime against humanity," said ANCA-WR Government Relations Director Armen Carapetian. Last week, the Nevada ANC honored Senator John Ensign (R-NV) as the "ANC Man of the Year" for his staunch support of Armenian-American issues. Senator Ensign introduced Senate Resolution 164, reaffirming US's commitment to preventing genocides and punishing perpetrators of genocide. The legislation also clearly identifies the mass murder of Armenians from 1915 to 1923 as a case of genocide. The bill is currently backed by 39 Senators, nine of whom are Republican. Several months ago, ANC-Orange County honored Congressman Ed Royce (R-Fullerton) with its Freedom Award for his consistent support of issues that concern Armenian-American constituents. Just last week, Royce, who serves on the influential International Relations Committee, reaffirmed his pledge to fight for official acknowledgment of the Armenian Genocide while addressing the ANCA Capitol Hill Armenian Genocide Observance. At its largest annual event, the ANCA-WR presented Congressman George Radanovich (R-Fresno) its "Man of the Year" honor several months ago for his dedication and commitment. Radanovich is the principal author and sponsor of H.R. 193, which acknowledges the Armenian Genocide. The legislation passed unanimously in the House Judiciary Committee on May 21, 2003 and awaits a vote on the House Floor. All subscription inquiries and changes must be made through the proper carrier and not Asbarez Online. ASBAREZ ONLINE does not transmit address changes and subscription requests. (c) 2004 ASBAREZ ONLINE. All Rights Reserved. ASBAREZ provides this news service to ARMENIAN NEWS NETWORK members for academic research or personal use only and may not be reproduced in or through mass media outlets.

Russian Duma deputy speaker Zhirinovskiy condemns Armenian genocide
Public Television of Armenia, Yerevan,
27 Apr 04
[Presenter] Deputy speaker of the lower house of the Russian
parliament, the State Duma, Vladimir Zhirinovskiy announced that
history is moving towards the international recognition of the
Armenian genocide. The deputy speaker of the State Duma said that
Turkey not only must recognize the Ottoman’s crime but also to
apologize before the Armenian people and to compensate for the killing
and loss of more than a million Armenians.
[Vladimir Zhirinovskiy, captioned, in Russian with Armenian voice
over] This was the first severe lesson for all the world. After 10
years we shall mark the 100th anniversary of this bloody events. Many
parliaments have already adopted the laws and condemned the Armenian
genocide. Our State Duma also has already adopted this and we are
always with Armenia.
I am sure that the time will come when all the parliaments of the
world, also the UN, NATO, the European Parliament will recognize this
barbaric act committed by the Turkish government against the Armenian
people. Germany is paying about 3bn dollars annually to the
Jews. Turkey’s turn will also come to pay for the killing of more than
million of Armenians and their loss. The world will condemn Turkey’s
action, will recognize it as a genocide and demand Turkey to pay
compensation to Armenia, which lost more than a million people in the
1915 genocide.

ARMENIA HOLDS MILITARY EXERCISES ON OCCUPIED TERRITORIES
Lider TV, Baku
29 Apr 04
Armenians today held military exercises on the occupied Azerbaijani
territories. Lider TV’s special correspondent in the Karabakh region
reports that shooting from cannons, tanks and heavy-caliber weapons
was heard this morning in the occupied area of Agdam
(District). Azerbaijani military confirmed that the Armenians were
holding the exercises. Truce violation was not registered during the
exercises.
According to the head of the Azerbaijani Defence Ministry press
service, Ramiz Malikov, these exercises have been monitored.

ARKA News Agency – Interview
April 26 2004
RUSSIA AS ARMENIA’S NUMBER ONE STRATEGIC PARTNER ABLE TO SECURE
DYNAMIC DEVELOPMENT OF ARMENIAN ECONOMY
Exclusive interview of the Chairman of Union of Manufacturers &
Businessmen (Employers) of Armenia Arsen Ghazaryan to ARKA News
Agency.
ARKA – Mr. Ghazaryan, what is the current state of the Armenian-
Russian economic relations?
A. Ghazaryan – I should say that after the collapse of the Soviet
Union Russia remained a key partner to Armenia. We import raw
materials and energetic carriers from Russia.. On the other hand, the
Russian market is the largest and the most available for the Armenian
goods. During the recent 3-4 years the volume of bilateral
trade-economic relations has considerably grown as compared with the
previous period. This was achieved due to the fact that the Armenian
companies adjust the quality of their products to the international
standards, which Russia, naturally, adheres. Besides, our companies
gain experience of being involved in the Russian market. In case of
existing of normal transport communication between our countries, the
bilateral turnover of goods would have surpassed today’s indicator
three-, four-fold as a minimum. For instance, at present, there are
many imported construction materials from Ukraine in Armenia, if the
railway would have functioned normally, such goods could have been
purchased from Russia as well. Bilateral economic co-operation
received new dynamics after the mutual visits of the President of RF
and RA Vladimir Putin and Robert Kocharian in 2001. So called ethnic
capital was moved to the first view; Russian businessmen with
Armenian background became more active. Today they make rather
considerable investments in their motherland, particularly, in
construction sector, banking system and other spheres. As one of the
best examples of the kind I can name the International Business
Centre, which, in fact, rescued one of our leading banks,
particularly Ardshinbank, as well as several industrial plants such
as Syrius, Arax, Basalt, Almast. As far as I know, IBC, headed by
Karen Safaryan, a famous Moscow businessman, is going to make new
investments in Armenia, which I can only welcome. The activities of
Ara Abrahamyan, Chairman of Union the Armenians of Russia, must be
highly appreciated, who except social initiatives, unfolds
considerable business activities. We count on the fact that our
compatriots having effective business in Russia, will join the
Property for Debts joint program and will attract new Armenian
businessmen in the program. Recently the Russian side displays
interests in the Armenian plants, which were a part of a single
powerful military-industrial complex. We are preparing a detailed
database on these companies and are going to present it to our
Russian partners by the late February. It is of utmost importance to
receive new offers for them, especially if they have preserved their
productive and sci- tech potential, professional specialists that can
and wish to work. I should especially mention the steps taken by RAO
UES. A number of leading energetic objects of Armenia were
transferred under the management or became the property of this
powerful company. New and very good possibilities for exporting
energy to the third countries are opening for the Russian power
engineers. At the same time, the issue of import of the fuel for the
Armenian NPP, which guarantees its normal functioning, was solved.
The Russian capital enlivens ALSO the Armenian construction sector.
For instance, due to it was possible to begin the construction of
Northern Avenue in Yerevan, construction of which was planned already
in 1930 by the great Armenian architect Alexander Tamanyan. The
Russian investors, being confident in perspectives of Armenia’s
economic development, decided to make investments in the real estate
sector as well. By the way, it isn’t accidental that the prices of
apartments on the Northern Avenue increased very quickly reaching
almost the prices of Moscow (today 1 sq. meter of the elite
apartments under construction cost $1000, while the ready ones cost
$1600 and more. Lately, promising results were recorded in the
engineering tools and mechanical engineering sectors. I would like to
mention Mshak CJSC, headed by Levon Poghosyan, who recently became
Deputy Director of Stankoimport Russian company on scientific issues.
At present joint projects on Armenian companies participation in
technical renovation of Russian Tool engineering and machinery
engineering industry are being developed. ABM Soft company attracted
Russian capital for purchasing the control packet of shares of
Yerevan’s Armstanok plant and it is going to implement Digital
Program Installments projects, which are expected to be exported to
Russia. We can bring many such examples. It’s worth mentioning that
they witness an important constructive step forward. Russia doesn’t
treat Armenia as a `junior brother’, who needs assistance
permanently. Armenia is the equal partner for Russia. Armenian market
becomes more attractive for the Russian investors, as a convenient
transit point and a gateway to Iran, countries of the Middle East and
the Persian Gulf too. All these activities contribute to the
formation of joint economic space. That’s why it’s a good example for
the other CIS member countries, as the level of the economic
integration within the framework of CIS, notwithstanding numerous
declarations on that occasion, is still is not satisfactory.
ARKA – Thus, considerable growth of the Russian investments in
Armenia is evident now. But is there any opposite process?
A. Ghazaryan – Yes, there is. Today the volume of the investments
made by the Armenians in Russia is increasing as well. This is
connected with the traditional labour migration. The matter is, that
if we objectively evaluate the given phenomenon, it should be
considered as the least evil, as, in fact, it is an investment too, a
technical, financial, intellectual , etc. On the other hand, our
compatriots leaving for Russia to work, aren’t separated from their
families and don’t lose the sense of obligations to their country.
The new migration regime, regulating the communication between our
countries, helps to be confident about receiving Russian citizenship
or the permanent residence right. They can peacefully work. That is
why it is very important that the Armenian businessmen began
establishing joint companies in Russia. Kasnodar and Stavropol,
Rostov and other regions of the Southern Russia can be examples. The
number of our compatriots living compactly here is traditionally
enormous. The businessmen living here are our `agents’ in Russain
market in the best meaning of the word. I wouldn’t like to be
trivial, but the successful advancement of the Armenian brandy can be
explained not only by the investments and professionalism, but also
by the skilful management of French company `Piernod Ricard’, which
is today’s Yerevan Brandy Company, but also by Russian market. At
present, both YBC and Great Valley, Yerevan Wine-Vodka Factory Ararat
and many other companies are effectively working there. The problem
is not the realisation but the production in the necessary volume:
more and more offers are being received. The same thing concerns the
production of Armenian canned fruits and concentrates, over 50 % of
which is exported to RF.
Thus, Russia is our strategic partner # 1, which can secure logical
continuation and dynamic development for the Armenian economy.
Armenian businessmen working there never face communicative and
psychological problems there.
ARKA – Then what’s the matter?
A. Ghazaryan – The matter is, that we have to define the spheres in
which the realisation of the joint projects is the most optimal and
prospective, where Armenia is a very convenient transi corridor and a
market for Russia. The researches should be madin this very
direction. The UIEA, as NGO, in which many leading Armenian
businessmen are included, also the entrepreneurs working with the
Russian partners, try to do their best to strenghten these relations.
Naturally, we will continue the cooperation with our Russian
partners. First of all with the Russian Union of Industrialists and
Entrepreneurs, led by A. I. Wolsky. We regularly hold joint forums,
`round tables’, conferences. We are meeting each year. Th e regular
dialogue took place in end February in Moscow, within the framework
of the meeting of Yuri Lugzkov and Yervand Zakharyan, Mayors of
Moscow and Yerevan. Anopther our big partner is the International
Congress of the Industriallsits’ and Entrepeniours’ Unions, led by W.
K. Glukhikh. This congress unites the businesmen from the 22
countries of the former Soviet Union and Western Europe. The
cooperation with such authority organizations help operatively
exchange valuable information and find partners for our businessmen.
ARKA – But the transportation problems still make the work more
difficult, don’t they?
A. Ghazaryan – Unfortunately, they really do. The lack of land
borders with Russia makes the matter more difficult. But, it doesn’t
hinder to organize exporting goods and row materials. Armenia isn’t
in transport blockade, as it was in the early 1990-es. But today the
expenditures for the transportations are extremely high, which
increases the first cost of the goods. It is a paradoxes, but today
to sent a container to Moscow will be more expensive that to send it
to Rotterdam or Marseille. As it is cheaper to send it by the sea
directly, than to do it by the railroad or by tracking.
ARKA – What can you say about the legal field?
A. Ghazaryan – There are no problems here. The agreement- legal base,
regulating the bilateral economic relations, has been elaborated,
discussed and signed long ago.
We merely shouldn’t forget that in CIS Armenia and Russia are
different countries. And today, our managing objects increase the
advalorem tax not here but, when exporting them to Russia, in Russia.
The import is built according to the same principle. At the same
time, Armenia can have preferences when importing some row materials,
based on the deals signed within the framework of CIS. I think, if
Armenia joins the Custom’s Union, it will make export to Russia
easier. Many things will be specified also after the RF’s statement
in the World Trade Organization. Armenia joined the WTO in the
September of 2003, and in this respect, the normative base was rather
improved. Wee have become quite experienced here.
ARKA – Does it seem that this experience could be useful for Russia?
A. Ghazaryan – In current job Russia, of course, follows the
experience of the governments wich are friendly to it, also including
Armenia. Really, we have something to tell and explain.
ARKA – What do the Russian-Armenian economic links think about
three-sided co-operation between Armenia, Russia and Iran?
A. Ghazaryan – Great importance is given to this co-operation like
before. Iranian businessmen are very interested in establishing
contacts with Russian colleagues, and here they don’t frequently see
any trusty `lighthouses’ among the Armenian entrepreneurs for gaining
that aim. The Russians are also interested in Iranian market. From
our side we assure the business circle of Russia and Iran that
Armenia is able to serve as a real transit corridor. For example, for
solving lots of problems it is convenient the rout of
Meghri-Yerevan-Poti-Novorosisk, because such kind of cargo
transportation for West Russian is not usually cheaper than ferry
announcements on Caspian Sea between Iranian port Enzeli and Russian
Astrakhan. –0–

The Washington Post
April 25, 2004 Sunday
Final Edition
An Expanding Europe, in Decline;
The EU Is an Economic Laggard. If You Want Growth, Kazakhstan’s the
Ticket
by Anders Aslund
Next Saturday, the European Union (EU) will admit 10 states, eight of
them former communist countries. This is a moment to celebrate: In
the 12 years since the fall of the Soviet Union, these countries have
become fully democratic and are now, to varying degrees, integrated
into the West.
But it is also a moment of economic concern. For the past five years,
the new Central European members — Poland, the Czech Republic,
Slovakia and Hungary — have had a mediocre economic growth rate of 3
percent a year. Those four countries constitute almost 90 percent of
the population of the entering states. (The other six — Estonia,
Latvia, Lithuania, Slovenia, Malta and Cyprus — are mini-states,
with only 10 million people among them.)
The EU has many advantages, but economic dynamism is no longer one of
them. In order to qualify, the applicant countries had to adopt all
the bureaucratic EU regulations, including the most moribund of them,
known as the Common Agricultural Policy — a system of subsidies paid
to EU farmers. As a result, the Central Europeans should expect their
growth to slow: This year, the 15 preexpansion EU members were
expected to post an economic growth rate of less than 2 percent. By
contrast, the U.S. economy and that of the world as a whole are set
to expand by 4.5 percent.
Admittedly, the new Central European members have benefited from
generous access to EU markets. The entering states already trade more
with the EU than the old members did with one another. But the
Central Europeans have achieved everything they can gain from EU
membership, and they will stagnate if they do not liberate themselves
from the petrifying EU model.
Meanwhile, in a development that has gotten little notice amid the EU
expansion hoopla, the post-Soviet countries further to the east have
been booming since 1999. The nine market economies in the former
Soviet Union (Russia, Ukraine, Kazakhstan, Moldova, Georgia, Armenia,
Azerbaijan, Kyrgyzstan and Tajikistan) have on average grown annually
by no less than 7 percent for the last five years. The new tigers are
Kazakhstan, Russia and Ukraine — far more so than Poland, Hungary or
the Czech Republic. The three Baltic countries are doing
significantly better than the Central Europeans, but not as well as
their eastern neighbors.
This is a dramatic turnaround.
During the first decade of economic transformation after communism,
Poland, Hungary and the Czech Republic seemed to do everything right
— swiftly building normal market economies, privatizing state
enterprises and establishing proper democracies — and sound economic
growth ensued. Most of the former Soviet Union, by contrast,
undertook only gradual reform, privatized slowly and did little to
develop democracy or the rule of law. Output slumped until 1998, when
the Russian financial crash passed a severe judgment on partial
reforms.
To be sure, Russia has benefited from high oil prices and
devaluation. Yet growth in the post-Soviet region is accelerating,
while only Russia, Kazakhstan and Azerbaijan are oil exporters.
Clearly, something else is going on. The post-Soviet countries have
returned to growth because their market reforms are finally
succeeding. They have privatized most state enterprises and put their
public finances in order.
Why are the post-Soviet market economies doing so much better than
the Central European ones? Part of the explanation is that the
post-Soviet countries were poorer and far less developed in the first
place, and poorer countries tend to grow faster than rich ones if all
else is equal. But this explains only a small part of the difference.
The truth, which may shock you, is that the post-Soviet countries
have a more efficient economic model than the Central European ones
because they are free from the harmful influences of the EU. This is
most evident in public finances.
In Central Europe, public expenditures amount to no less than 46
percent of GDP, as in Western Europe. Consequently, taxes are high
and social transfers excessive. The Hungarian economist Janos Kornai
has labeled the Central European countries “premature welfare
states.” Worse still, the Central European countries have maintained
an unsustainable average budget deficit of 7 percent of GDP for the
last three years. They seem reassured that the EU will bail them out.
By contrast, the Russian financial crash forced the former Soviet
republics to cut public expenditures sharply, to no more than 26
percent of GDP — that is, just over half the level in Central
Europe. Taxes also have been slashed. Russia and Ukraine have adopted
a 13 percent flat personal income tax. Kazakhstan has undertaken a
Chilean-style pension reform, privatizing its social security system.
Even so, these countries have nearly balanced budgets.
Low public expenditures and high growth go together in most former
communist countries. Communism bred corruption, and the longer it
lasted, the worse the corruption, so the post-Soviet countries were
and are more corrupt than the Central European states. The best cure
for a pervasively corrupt state is naturally to cut public
expenditures and revenues.
Another major difference between the Central European and former
Soviet countries is that the Central Europeans have much more
regulated labor markets and higher taxes on labor, because Central
Europe has adopted Western Europe’s strict regulations. As a result,
Poland has an unemployment rate of more than 20 percent compared with
Russia’s 8 percent. Regulations might be intimidating also in the
former Soviet countries as well, but most are circumvented.
Thus, the economic dynamism in Kazakhstan, Russia and Ukraine is in
no way sheer luck. Their new economic model is reminiscent of East
Asia’s. Japan took off after World War II, and it was imitated by
four East Asian tigers: Taiwan, Hong Kong, Singapore and South Korea.
China, Thailand, Malaysia and Indonesia followed suit two decades
ago. India has risen in the last decade, and now the nine former
Soviet economies mentioned above have benefited from the same model
of open markets and limited state intervention. Kazakhstan’s
President Nursultan Nazarbayev and Russia’s President Vladimir Putin
seem to see Singapore or South Korea as their economic ideals. The
post-Soviet countries are facing stiff protectionism in Europe, so
they export the steel and chemicals that the EU does not want to East
Asia instead, notably to China’s insatiable market.
Nor is the poor economic performance of Central Europe an accident.
Slovakia’s Minister of Finance Ivan Miklos put it bluntly: “Europe is
hindered by labor market inflexibility, heavy tax burdens, bloated
public sectors and other competitive constraints, and the gap between
the United States and Europe continues to widen rather than shrink.”
This is not to whitewash the post-Soviet countries. They are both
corrupt and authoritarian, while Central Europe is eminently
democratic and richer. Some draw the dubious conclusion that
democracy is bad for economic development, but this holds true for
Central Europe as much as it does for the rest of the world, which is
to say not at all.
The point, rather, is that the EU model generates stable democracy
but little economic growth. Today, Russian economists no longer look
to Poland for a desirable model but to the thriving free markets of
Kazakhstan, Singapore, South Korea and Chile. To them, Europe is both
inhospitable and stagnant.
Democracy advocates face the new challenge of clarifying that Central
Europe’s sluggish growth is an effect not of democracy but of EU
regulations. The EU needs to liberalize its economy and reduce its
fiscal profligacy, not only for its own benefit, but also for the
reputation of democracy. Countries such as Ukraine should not have to
choose between democracy and growth.
Rather than requiring its new members to adopt every regulation in
its 80,000 pages of common economic legislation, the EU should have
used this opportunity to do away with its most harmful regulations,
such as the Common Agricultural Policy. With 25 members and no
effective political institutions, the new EU appears set to be stuck
in economic stagnation for the foreseeable future.
Author’s e-mail: mailto:[email protected]
Anders Aslund is director of the Carnegie Endowment for
International Peace’s Russian and Eurasian program, and author of
“Building Capitalism: The Transformation of the Former Soviet Bloc”
(Cambridge University Press).