Author: Kanayan Tamar

Caucasus Business Forecast Report
July 30, 2014 Wednesday

Shift Towards Russia To Stoke Nagorno-Karabakh Tensions

BMI View: T he intensification of violence between Armenia and
Azerbaijan over the disputed Nagorno-Karabakh region is not likely to
escalate into a ground war in 2014 or 2015 , and our core scenario
remains that of a prolonged ‘ frozen conflict ‘ . However, Armenia’s
accession to the Eurasian Economic Union in 2015 could lead to more
support for Yerevan’s claim from Moscow, stoking tensions further.

We expect Armenia to continue its progress towards becoming a member
of the Russian-led Eurasian Economic Union (EEU) in 2014, before
joining in January 2015. However, the ongoing ‘frozen conflict’ with
Azerbaijan over the disputed Nagorno-Karabakh region will remain a
source of extreme tension between Yerevan and Baku, as well as a
potential stumbling block for Russia in its attempt to expand the EEU.

Armenia has been at odds with Azerbaijan over which country has the
legitimate claim to Nagorno-Karabakh (which lies inside Azerbaijan but
is majority ethnic Armenian) since a ground war between the two states
ended in a ceasefire in 1994. Nagorno-Karabakh, as well as surrounding
Azerbaijani territories, remain under the control of Armenian armed
forces, with the borders between these regions and the rest of
Azerbaijan heavily militarised. While skirmishes and even deaths are
not uncommon on the borders of Nagorno-Karabakh, the frequency of
clashes and number of casualties has risen in recent months, in a
situation which threatens to shatter the fragile truce.

Little Chance Of A Mediated Resolution
South Caucasus – Map of Nagorno-Karabakh and Surrounding Regions

Media reports from both Armenia and Azerbaijan consistently blame the
other side for violating the ceasefire, with each country accusing the
other of attempting to provoke military action. In June, alone the
Armenian defence ministry stated that five of its troops had been
killed by Azerbaijani gunfire, while in the same month its Azerbaijani
counterpart alleges Armenian soldiers fired on civilians, injuring
three. Both sides continue to deny the other’s claims.

Our core scenario remains one of a prolonged frozen conflict in the
next five years at least that does not develop into an all-out ground
war. Neither of the primary military powers in the region (Russia,
which by-and-large backs the Armenians, and Turkey, which due to
ethnic links and long-standing animosity towards Armenia provides
support for Azerbaijan) have a strategic interest in seeing a
widespread conflict erupt in the South Caucasus. In addition,
Azerbaijan will be deterred from launching a military attack to
reclaim Nagorno-Karabakh by the Russian military presence in Armenia.
However, the recent escalation in violence undoubtedly increases the
risk of a breakdown in the fragile truce between the two states, and
given that international diplomatic efforts remain focused on other
conflicts in Eastern Europe and the Middle East, we cannot rule out an
outbreak of violence in the South Caucasus in the months or years
ahead.

Nagorno-Karabakh Tensions Ensure Low Security Score
Armenia – Short-Term Political Risk Rating and Sub-Components, Out of 100

Moscow’s Attitude Towards Conflict Key To Any Resolution

Russia remains one of the key actors in the Minsk Group of the
Organisation for Security and Co-operation in Europe (OSCE) alongside
the US and France, tasked with facilitating a peaceful resolution to
the conflict. The fact that Armenia is on course to join the EEU in
2015 could lead to an increase in overt support from Moscow (in the
form of financial assistance or discounted arms shipments).
Alternatively, the Kremlin could reduce co-operation with Azerbaijan
(which is not on course to join the EEU, and continues to tread a fine
line between closer integration with Moscow or Brussels), which has
picked up over the past two years on the back of increased Russian
arms exports to Azerbaijan. Both of these scenarios would be a net
positive for the Armenian side, as either its armed forces become
better equipped (currently the Azerbaijani forces are much more
technically advanced than their Armenian counterparts) or its
adversary loses a key arms supplier and a potential mediator in the
dispute. Moreover, following Armenia’s accession to the EEU it will
likely have a formal say or veto of future expansion of the group. As
such, we cannot rule out a scenario in the future where Armenia
attempts to block Azerbaijani accession, a move that would undoubtedly
raise tensions further between the two states.

Risks To Outlook

In a prolonged and bitter dispute where both sides are heavily armed,
such as Nagorno-Karabakh, there is always the risk that sporadic
violence could escalate into a widespread conflict due to
miscalculation. The elevated tensions on the border make this scenario
more likely as troops on both sides remain in a heightened state of
readiness. If a ground war were to erupt ( see ‘Armenia-Azerbaijan
Tension: Conflict Scenarios Assessed’, April 8 2011) we would expect
to see Armenian forces pushed back to the border given the greater
numbers of Azerbaijani troops and the newer, more advanced equipment
the Azerbaijani forces posses.

Political scientist: Statement of US embassy in Armenia is blackmail

Thursday,July 31

Any independent state is competent to decide with whom to cooperate
and at what level, political scientist Hrant Melik-Shahnazaryan told
journalists today when speaking about the warning that the U.S.
embassy in Armenia addressed to Armenia’s businessmen and government.

“It is blackmail and is beyond the scope of the diplomatic mission,”
Melik-Shahnazaryan said, adding that the Armenian side should deliver
a note of protest. The political scientist reminded those present that
no country can give Armenia such assistance that Russia provides from
a security viewpoint.

It should be noted that the U.S. embassy in Armenia informed the
Armenian government and domestic business organizations about risks
related to cooperation with the Russian companies and natural persons
included in the Unites States’ list of sanctions over the Ukrainian
crisis.

In response to an inquiry of Regnum news agency, the U.S. embassy said
that it urges all states and their residents to consider the risk
related to their good reputation that may arise during cooperation
with those Russian companies and natural persons and also to suspend
all transactions that contradict the sanctions imposed by the U.S. and
others. Like U.S. embassies in other states, the U.S. embassy in
Yerevan conveyed the information about the latest sanctions to
Armenian government representatives and companies, the embassy said in
a statement.

Bako Sahakyan: We Do Not Want War

By MassisPost
Updated: July 31, 2014

STEPANAKERT. – OSCE Minsk Group, from our point of view, is one of the
most effectively working international structures, Karabakh president
Bako Sahakyan said during his meeting with students from Yerevan State
University.

He is convinced that for many years hostilities have been avoided
thanks to the OSCE Minsk Group efforts, Artsakh press reported.

“But, this does not mean that our fate depends on Minsk Group, and we
are not capable of ensuring security of our country,” Sahakyan noted.

President Sahakyan noted that the parties should be grateful to the
international community in the face of the OSCE Minsk Group for their
work.

“Azerbaijani criticism against Minsk Group, arguments that it is
necessary to revise the format, are attempts to cheat. The success of
Azerbaijan, the current well-being, developing economy is directly
related to the work of this group. But they lack the ability to give
human assessments,” he emphasized.

NKR President assured that he will continue to work with colleagues as
he did before.

“I am grateful to my colleagues at least for the fact that we live in
relative peace. The country passed war, and we do not want it to
repeat. We do not want resumption of hostilities,” Sahakyan added.

Highlighting the importance of the students’ visit to Artsakh, the
president said that it is a good opportunity for them to get better
familiarized with the second Armenian republic and to establish new
friendly ties.

Azerbaijan incites provocations, Armenian President says

Thursday 31 July 2014 09:41
Photo: Press service of the Armenian President

Herbert Salber and Serzh Sargsyan

Yerevan /Mediamax/. Armenian President Serzh Sargsyan said that
Azerbaijan not only incites provocations and increases tension on the
contact line but also repeatedly refuses measures aimed at building
trust.

Serzh Sargsyan stated it receiving EU Special Representative for the
South Caucasus and the crisis in Georgia Herbert Salber on July 30.

The Armenian President said that the OSCE Minsk Group proposed
principles which might serve as an axis around which the conflict
might be resolved; however, Azerbaijan does not accept those
principles although it states the opposite.

The Armenian President stressed that Armenia, Azerbaijan and Nagorno
Karabakh should resolve the conflict while the Minsk Group is just an
intermediary sparing no effort within its authority.

Serzh Sargsyan highlighted that the Group has gained significant
practice and institutional memory over the past two decades.

“If the pressure from the West is strong, “Vorotan” HHP complex will
be sold, but if Russia’s pressure is strong, it won’t be sold.”

July 31 2014

To the question of Aravot.am whether it does not mean that the selling
of “Vorotan” will be cancelled if the Prime Minister, Hovik
Abrahamyan, is already openly talking about cancellation of the deal
on selling “Vorotan” HHP complex, the economic topics-related writer
and journalist, Hayk Gevorgyan, said, “We have information that the
government is too close to declaring the deal on selling “Vorotan” HHP
cancelled. The question here is which of the two sides exerting
pressure would be strong. The deal depends on it. If the pressure from
the West is strong, the HHP would be sold, if the Russian pressure
would be stronger than that of the Western, it would not be sold and
the deal would not take place.” Note that after assuming the office of
the Prime Minister, Hovik Abrahamyan, on various occasions, was making
hints on declaring the selling of “Vorotan” HHP complex cancelled. But
last Friday, during his working visit to Dilijan, the Prime Minister,
Hovik Abrahamyan, referring to the sale of “Vorotan” HHP, stated “the
sale of Vorotan HHP should be for the benefit of our state.” The Prime
Minister assured that they have no intention to sell Vorotan HHP,
however, if the American “Global Contour” company, whom HHP complex
was sold, does not agree with the recommendations of newly appointed
Cabinet, and does not amend the clauses unacceptable for the
government, also the drawbacks found in the terms of the deal, then
the deal on selling “Vorotan” Cascade will be canceled. According to
Hayk Gevorgyan, the strange thing is not that the bid on sale of
“Vorotan” Cascade may be cancelled, but the deal in itself is strange,
because one of Armenia’s best energy facilities is tried to be bought
not by Russian, but American company. “Our energy system, as it is
known, is completely under Russian control, in other words, from the
very first moment it became clear that the government wants to sell
“Vorotan” Cascade to Americans. The deal in itself seemed suspicious.
Sooner or later, it is likely that the deal will take place, but I
think that the matter here is not economic, but the so-called external
political”. To our question of whether it is possible for the
government to pay penalty and fines in the event of cancellation of
almost completed deal, Hayk Gevorgyan said that he is not aware of the
details of the deal, because it is not so public, but he did not rule
out that some problems might arise.

Lusine BUDAGHYAN
Read more at:

Armenia: Citizens urged to write Wikipedia entry each

31 July 2014 Last updated at 16:00

By News from Elsewhere… …media reports from around the world,
found by BBC Monitoring
National heritage is getting a boost via a flurry of articles on
Armenian Wikipedia

Armenians are being urged to do their patriotic duty – by each writing
an article on Wikipedia, it seems.

The campaign – One Armenian, One Article, dreamed up by the government
– hopes to increase the number and quality of articles in the Armenian
language and script, promote Armenian culture, and perhaps compete
with neighbouring Georgia and Azerbaijan in the Wikipedia stakes,
according to an advertisement running on EU Armenia TV.

The ad started out as a YouTube clip, but it’s recently been given a
new lease of life running on satellite TV to Armenians all over the
world. The Armenian diaspora – thought to number some eight million
people – far outnumbers the country’s resident population of about 3
million.

High profile artists, musicians and politicians are getting in on the
act. Education minister Armen Ashotyan says in the clip: “One
Armenian, one article – I will definitely do that and believe you will
too.” The Defence Minister, Seyran Ohanyan, says he’s already added an
article about the Armenian army. Articles by celebrities and ordinary
citizens are equally valued, the ad says. A young person is shown
writing an article about radishes.

There may be a competitive edge in the promotion. Reporting the number
of Wikipedia articles has been on the agenda of Armenian TV and news
agencies since the campaign began in March, and it seems Armenian
Wikipedia is currently outstripping its neighbours in page numbers,
racking up more than 125,000 articles compared to around 102,000 in
Azerbaijan and almost 84,000 in Georgia.

Use #NewsfromElsewhere to stay up-to-date with our reports via Twitter.

Armenia has not bettered its position: PM gives instructions to ministers

12:57 | July 31,2014 | Politics

Before starting today’s government sitting, Prime Minister Hovik
Abrahamyan referred to the 2014 Human Development Index published by
the UNDP, noting that Armenia has not bettered its position.

“Armenia continues to remain 87th in UN Human Development Index,” he said.

The prime minister said he expects great changes and progress in the
education system. Hovik Abrahamyan instructed the Minister of
Education and Science to follow and monitor developments and see to it
that the updated statistics be included in the 2015 report.

The Prime Minister also instructed the cabinet to sum up the 100 days
in office and present to media representatives the government’s
programs and activities.

Armenia’s cognac production drops in first half of 2014

YEREVAN, July 31. /ARKA/. Armenia’s cognac production dropped 18.2% to
a total of 6,649,700 liters in the first half of this year 2014,
compared to the same period the year before, ArmStat reported.

Wine production declined by 5.8% to 2,330,900 liters in the reporting period.

Vodka production rose by 4.9% to 4,448,400 liters in January-June.

A total of 145,400 litres of champagne was produced in the period, a
24.4% increase against January-June 2013.

Beer production totaled 11,333,500 litres, which is a 77.8% increase.

A total of about 30,172,900 litres of non-alcoholic beverages was
manufactured in the period, an increase of 44.5% compared to
January-June 2013. -0–

– See more at:

Economie
Les banques russes en Arménie minisent les sanctions occidentales

Les filiales arméniennes de deux grandes banques commerciales russes
sanctionnées par l’Union européenne et les États-Unis dans le cadre de
la crise en Ukraine n’auront pas d’incidence grave sur leurs
activités.

Les Etats membres de l’UE ont annoncé mardi de nouvelles sanctions
imposées à la Russie en raison de son soutien continu aux rebelles
pro-russes en Ukraine orientale largement blmé pour avoir abattu le
17 juillet un avion de ligne malaisien.

Deux des banques sanctionnées, Gazprombank et VTB, ont des filiales en
Arménie jouant un rôle majeur dans le secteur bancaire local.

Gazprombank a été inscrit sur la liste au début du mois. La banque,
qui est la troisième par ses actifs en Russie, a insisté par la suite
pour affirmer que les sanctions n’affecteront pas la stabilité de ses
opérations et ses finances.

Areksimbank, entièrement détenue par Gazprombank, a fait des
assurances similaires hier. Yelena Markova, une porte-parole
d’Areksimbank, a dit que les sanctions à l’encontre de sa société mère
n’auront pas un impact sérieux sur la banque parce qu’elle est une
entité juridique distincte.

La banque VTB a également minimisé l’importance des sanctions
américaines, disant qu’elles “ne seront en aucun infléchi sur nos
clients.” “La banque continuera à fournir la gamme complète de
services et obligations, sans aucune restriction et dans l’ensemble
des devises “, a indiqué la banque dans un communiqué. Cela comprend
les opérations via les systèmes de paiement internationaux Visa et
MasterCard.

La déclaration ne fait aucune mention des sanctions de l’UE, dont les
détails devraient être publiés aujourd’hui.

jeudi 31 juillet 2014,
Claire (c)armenews.com

New York Daily News
July 28 2014

Erdogan’s odious anti-Semitic slander

Turkey denies its own genocide and accuses Israel

NEW YORK DAILY NEWS

Recep Tayyip Erdogan’s anti-Semitism is getting the better of him.
Once again, the Turkish prime minister has trotted out the Hitler
analogy in relation to Israel and what it has done in Gaza. “They
curse Hitler morning and night,” he said of the Israelis. “However,
now their barbarism has surpassed even Hitler’s.”

Erdogan’s Hitler fetish is both revolting and inaccurate. Hitler
murdered an estimated 6 million Jews, not to mention millions of
Poles, Russians, Gypsies and, as a group, homosexuals; the Israelis
have killed in the current Gaza operation more than 1,000
Palestinians. The difference between murdered and killed — the former
on purpose, the latter mostly what’s called “collateral damage” —
ought to be clear to anyone whose mind is not addled by anti-Semitism.

Israel has gone out of its way to try to avoid civilian deaths. It has
often — maybe too often — not succeeded. But it has warned civilians
with telephone calls and text messages and even dummy bombs hitting
the roof. This, I point out, is far more than President Obama has done
when American drones kill terrorists in Pakistan or wherever. Hamas
militants are also terrorists and they hide, as every guerrilla army
has ever done, among the people.

The loss of civilian life is awful, but it is no Holocaust. It is,
though, an opportunity for anti-Semites, latent or otherwise, to
express their bigotry. Their implied statement is that the Jews had it
coming — see how they act now! Their bigotry overpowers their logic
and they deliriously lose all sense of proportion — 6 million versus
1,000 or so in Gaza — and they conflate the killer with the killed. It
is repugnant.

For Erdogan, the handier and closer to home reference would have been
what the Turks did to the Armenians. This genocide — the very word was
coined by Raphael Lemkin to encompass what happened to 1.5 million
Armenians during and after World War I — has been roundly denied by
the Turkish government. In a dizzying feat of irrationality, the head
of that government brushes past the crimes of his own nation to point
an accusatory finger at the victims of another nation.

Erdogan’s remarks are merely the reductio ad absurdum of the
anti-Israel argument. Some accuse Israel of a hideous lack of
proportionality without pausing to say what the proper proportion of
death and destruction should be. Would Hamas have ceased firing
rockets into Israel if Israel had bombed less? Somehow, I think not.
Would Hamas have blown up its own tunnels if Israel had ceased its
attack after, say, a week? Again, no.

After the attacks of Sept. 11, 2001, did the U.S. go into Afghanistan
to kill exactly 2,977 Al Qaeda and Taliban, an eye for every eye
extinguished on that infamous day? Israel is a small nation of only
about 8 million people, more than a fifth of them Arabs.
Proportionality is a luxury beyond its reach.

It is clear that much of the world has grown weary of Israel. Its
persistent settlement of the West Bank is surely cause for
indignation. Yet there is an edge to the outrage that is elsewhere
lacking. When did thousands gather in Europe to protest the Syrian
slaughter — not just the government’s abhorrent bombing, use of gas
and repression, but the torture and murder of about 10,000 activists
and dissidents? It was a mass murder that the Syrian government
studiously archived — photos and such — which surely deserves the Nazi
analogy that comes so easily to the tongue of Erdogan and others. No
matter. Silence.

I take psychiatric theories with a grain of salt, but the effort of
Erdogan to make the victim worse than the victimizer is not only false
and tasteless, it is psychologically intriguing. It does more than
blame the victim. It tends to exonerate the criminal. History is
repeating itself — not, as Marx said, as either tragedy or farce, but
in Erdogan’s telling as pornography.