EU RELUCTANT TO THINK ARMENIAN ELECTION WILL BE UNFAIR
Lragir.am
24 July 06
Peter Semneby, EU special representative to the South Caucasus, who
is visiting Yerevan, was rather rough with regard to the upcoming
Armenian parliamentary election in a news conference on July 24.
Semneby said a free and fair election will determine the quality of
relations between Armenia and the EU. The special representative of
the European Union announced that the Armenian individual partnership
program of the New Neighborhood Policy and the parliamentary election
are interdependent. The parliamentary election was one of the four
questions Semneby discussed with the Armenian leadership. The first
three are the Individual Partnership Program, Karabakh and Armenia’s
relations with its neighbors. However, during the news conference
Semneby dwelled on the individual partnership and the parliamentary
election.
Meanwhile, Vardan Oskanyan announced in the news conference that
the IPP is almost complete, and Finland chairing the EU will soon
decide the time of signing this document. Vardan Oskanyan assures
that Finland plans to sign the IPPs with the three South Caucasian
states until the end of its chairmanship. Peter Semneby who spoke
after Vardan Oskanyan immediately announced that he wants to connect
dividual partnership and the Armenian parliamentary election because
the IPP assumes fair and free elections compliant with the European
standards as a prime goal of Armenia.
Peter Semneby said the upcoming election will have vital importance
for EU-Armenia relations and emphasized that every election must be
compliant with their standards. By the way, in speaking about Armenia
he said the upcoming Azerbaijani election, but then he apologized
and added that elections must be fair and free in all the countries
of the South Caucasus.
Peter Semneby declined to say what consequences an incompliant election
would have for Armenia. He said he expected free and fair elections,
therefore he declined to make hypothetical speeches about sanctions
in case the elections are not free and fair. After all, Peter
Semneby said, Armenia assumed an obligation to conduct elections
in compliance with European standards. It is notable that after
Vardan Oskanyan answered a question about a different topic Semneby
carried on the topic of elections and said that the European Union
will be following the evaluation of international observers to the
parliamentary election. Semneby said after the election the EU will
build up relations with Armenia on the basis of evaluation given by
the observers.

ARMENIA EXPECTS BRYZA TO…
Lragir.am
24 July 06
Official Yerevan does not expect anything from Mathew Bryza’s visit to
the region, or whatever it expects, it expects for Azerbaijan. In a
press conference July 24 in Yerevan Foreign Minister Vardan Oskanyan
announced that official Yerevan expects a change of the standpoint
of Azerbaijan from Bryza’s visit.
“Our expectation from Mathew Bryza’s visit is that he will persuade the
Azerbaijani side to return to the table of negotiations to continue
the talks on the basis of a document. As you know, Armenia expressed
its standpoint on this document clearly. Simply Azerbaijan is having
problems, if Azerbaijan agrees to return to these principles, it will
be an opportunity to start a new stage of negotiations and achieve
progress,” says Vardan Oskanyan.
“I think and I have stated for a number of times that it’s a pity to
miss such an opportunity because this will be the third after the
common state and Key West. Because, you know, these documents are
not born in a week, these are the result of lasting negotiations;
if Azerbaijan refuses again, I think the situation will become highly
complicated,” announced the foreign minister of Armenia.
He mentions that at best Bryza can come up with proposals on “minor
changes” into the existing proposal. Vardan Oskanyan thinks it is
possible. Meanwhile, the Armenian side considers proposals on new
approaches towards the proposal impossible.

MILLENNIUM CHALLENGE: OPEN PROJECT WITH SECRET CANDIDATES
Lragir.am
24 July 06
The Stakeholders Committee of the Millennium Challenge Armenia met
July 24 to present current developments of public involvement in the
Millennium Challenge Account to the society. However, there was little
to tell.
The most interesting thing about this meeting. Although the members
of the Stakeholders Committee Levon Barseghyan and Nazelee Vardanyan
announced that the meetings of the committee are open for everyone,
they declined to give the names of the three candidates of chief
executive of the committee chosen out of 5 and out of 48 nominees,
whose data were extended to the MCC in the United States. According to
Levon Barseghyan, publication of names would create additional risks
of corruption. In other words, the candidates have already resorted
to or tried to resort to nepotism.
The speakers announced that they work openly, however the project does
not provide funds for dissemination, therefore there are shortcomings
in this sphere. The Institute of Open Society promises to help and
organize discussions in the regions, especially that according to
the members of the MCA Stakeholders Committee awareness is especially
low in rural areas.
The other components of the project are not perfect. The bylaws of
the Stakeholders Committee were not adopted, the local councils were
not set up. Only the managing board of the MCA project was set up,
which will be accountable to the Stakeholders Committee. By the way,
the 5 representatives of the civil society included in the managing
board can veto every decision. “Hence, the importance of cooperation
between NGOs is emphasized once again,” said Nazelee Vardanyan,
who is a member of the stakeholders committee and the managing board.
And Levon Barseghyan says it is not right that the project will be
monitored by the deputy director. About 5 million dollars was allocated
for the monitoring. Levon Barseghyan believes that there must be
independent and competent monitoring, and is worried that otherwise
over 180 million dollars foreseen for building will be dissipated.

ALREADY ORCHARDS BURN IN KARABAKH
Lragir.am
24 July 06
They have not seen such fires in Karabakh for ages. Wheat fields burn
or are set to fire every year, but this year’s rates are too high. The
reporter of the Lragir in Karabakh says wheat fields are burnt every
day. Experts say the reasons are both objective and subjective. First,
this summer is extremely hot and dry. They say, however, that this
summer they failed to make sufficient efforts to prevent fires.
Perhaps, the most realistic observation was made by the OSCE monitoring
group. Despite the claims of Azerbaijan, the observers said there
are no cases of arson. However, they said a more dangerous thing –
the Armenian side including the Karabakh side fail to make sufficient
efforts to prevent and extinguish fires. It means someone failed to
carry out their duties and save the country from fire. The damage is
great. Besides the wheat fields, orchards burnt as well. The reporter
of the Lragir saw the burnt orchards. If one fails to fulfill their
duties, they are punished, but not in our country where an official
is assessed by connections rather than performance.

EUROWAGEN COMPANY PLANS TO INCREASE VOLKSWAGEN SALES IN ARMENIA
Yerevan, July 24. ArmInfo. Volkswagen’s dealer in Armenia, Eurowagen,
is planning to increase Volkswagen sales in Armenia this year,
says the head of the communication cooperation department Mikayel
Minassyan. He did not give specific figures.
He said that last year the sales exceeded plans – 100 cars. 60-70% of
them were Premium, Touareg, Passat, Golf – all with 2-year guarantee.
At the same time, the “Armenian mentality” prefers second-hand
luxurious Mersedes E, BMW 5 or 7, TOYOTA to new smaller economy cars
for the same $12,000-17,000.
This year Eurowagen has delivered just 10 second-hand 6-month guarantee
cars worth $6,000-15,000. In cooperation with Armeconom and Anelik
banks the company provides cars on an instalment basis. In Anelik Bank
the prepayment is 20%, the interest 15% a year, the credit period 4
years. Minassyan says that because of climatic conditions the company
imports into Armenia only 20-22 of 87 possible Volkswagen models.
He says that today Eurowagen is building a new office. 80% of
exterior and 20% of interior is ready. The company has spent $1.6
mln on the project from its profits. The building will be opened by
Mar 5 2007. Besides, the company has built its own wharehouse for
storing 14,000 original spare parts and accessories. Now there are
5,000 spare parts stored there.
Minassyan says that in the future Eurowagen will start producing
spare parts and cars on its own.
Minassyan says that cars in Armenia are gradually becoming not only
a means of transportation but a cult and lifestyle which is proved
by the abundance of tuning companies.
Eurowagen has been working in Armenia since Mar 2004. It was selected
by Volkswagen from among 10 applicants. According to the contract,
Volkswagen should provide cars ad German now-how, Eurowagen –
maintenance building and show-room.
The National Statistical Service of Armenia reports that in Jan-May
2006 car trade in Armenia totalled 27 bln AMD ($60 mln) out of the
total trade worth 349.8 bln AMD ($779.9 mln).
From: Emil Lazarian | Ararat NewsPress

ARMENIAN GIRL AMONG 10 MOST BEAUTIFUL GIRLS OF UNIVERSE
Moscow, July 24. ArmInfo. 18-year-oil girl from Puerto Rico Zuleyka
Rivera Mendoza has been proclaimed Miss Universe 2006 during a contest
in Los Angeles, reports Yerkramas, the Armenian newspaper of Southern
Russia.
86 girls took part in the contest. There was an Armenian among the
10 finalists – Alice Panikian from Canada. Armenia did not take part
in the contest.

In Istanbul, a Writer Awaits Her Day in Court
Buzzle, CA
July 25, 2006
Bestselling novelist Elif Shafak is the latest writer to face trial
for “insulting Turkishness”. She tells Richard Lea about her work,
the charges that have been brought against her, and how the Turkish
language has become a battleground. “Nobody was expecting this,” says
bestselling Turkish novelist Elif Shafak. A decision in Istanbul’s
seventh high criminal court earlier this month reopened her prosecution
on charges of “insulting Turkishness”. She faces a maximum jail term
of three years if convicted.
Shafak joins a roster of more than 60 writers and journalists to
be charged under Article 301 of the Turkish criminal code since
its introduction last year. University professors, journalists and
novelists such as Perihan Magden, Orhan Pamuk and now Shafak have
been charged under legislation drawn so broadly as to criminalise a
wide range of critical opinions. Writers not only face the prospect
of a three-year jail term, but the prosecutions also lay them open to
a campaign of intimidation and harassment waged by rightwing agitators.
“The protests are maybe even more unnerving than the actual trial,”
Shafak told the Guardian today from her home in Istanbul. “Although
their number is very limited they are very aggressive, very
provocative.” She describes crowds of protesters slapping and jostling
defendants both inside and outside the courtroom, shouting and throwing
coins and pens.
The charges against Shafak open up new ground. She is not accused of
“insulting Turkishness” because of her campaigning journalism or her
academic work, but for remarks made by a fictional character in her
latest novel, The Bastard of Istanbul.
The novel, which was originally written in English, was published in
a Turkish translation in March 2006 and quickly became a bestseller.
The novel follows four generations of women, moving between Turkey and
the US to tell the story of an Armenian family and the descendants
of a son left behind during the deportations, who converts to Islam
and lives as a Turk. It is perhaps the first Turkish novel to deal
directly with the massacres, atrocities and deportations that decimated
the country’s Armenian population in the last years of Ottoman rule.
Initial reactions to the book were mostly positive, and it went on
to sell over 50,000 copies in less than four months. “I gave numerous
readings, talks and book signings all over Turkey,” explains Shafak.
“Although the novel was difficult to digest for some people, in
general the reception has been very positive.”
But in June a nationalist lawyer called Kemal Kerincsiz filed a
complaint in Istanbul’s Beyoglu district court against Shafak, her
publisher, Semi Sokmen, and her translator, Asli Bican. Shafak and
her publisher argued during interrogation that the book was a work
of literature and that comments made by fictional characters could
not be used to press charges against an author.
“The interrogation went on for some time and eventually the prosecutor
decided there was no element of insult and he dropped the case,”
says Shafak. But her relief was short-lived. Earlier this month the
same lawyer took the case to a higher court, and ultimately managed
to have the decision overturned. She is now confronted with a long
and daunting legal process. A trial, with all the unwelcome attention
from rightwing groups which that entails, is now inevitable.
It could not have come at a worse moment – she is six months
pregnant. “From now on it is a long legal battle,” she says. “The
later stages of the pregnancy will probably coincide with the first
stages of the trial.”
Peter Ayrton, founder of Serpent’s Tail, a publisher deeply committed
to literature in translation, was unsurprised by the news of Shafak’s
prosecution. “Most writers that are any good would get into trouble
with the Turkish authorities,” he explains. “She’s a very acerbic
voice. Her novels are lively, episodic and innovative. She’s obviously
a feminist, and her work is obviously rooted in contemporary social
conditions in Turkey.”
Perhaps the time she spent abroad has given her a different perspective
on Turkish life. She was born in Strasbourg, France in 1971 and spent
her teenage years in Spain, before returning to Turkey to study social
sciences. Four years ago she moved to the US, spending a year at the
University of Michigan before her appointment as assistant professor
at the University of Arizona. She now divides her time between the
US and Turkey, where she has been touring the country to promote her
new novel.
Shafak herself believes the charges were brought for two reasons:
“The overt reason is my latest novel and the critical tone of the
book. The latent reason is deeper and more complex. I have been active
and outspoken on various ‘taboo’ issues, critical of ultranationalism
and all sorts of rigid ideologies, including those coming from the
Kemalist elite, and I have maintained a public presence on minority
rights, especially on the Armenian question. It is a whole package.”
Indeed, her fiction has always focused on social issues which Turks
prefer to keep hidden, explains sociologist Muge Gocek, who translated
the first of Shafak’s novels to appear in the UK, The Flea Palace. “But
she does so with humour, with grace, and without ever letting her
characters lose their nobility of spirit,” she adds.
The way Shafak deals with Turkey’s past is also unique, continues
Gocek, “both in terms of her knowledge of religious heterodoxy as well
as her use of Ottoman words – these elements add layers of depth to
her novels.”
According to Shafak, language has been at the heart of the process of
creating a new nation state, with words of Persian, Arabic or Sufi
origin being purged from the language in an attempt to break away
from the Ottoman past. “In the name of modernisation our language
shrunk tremendously,” she says.
“As a writer who happens to be a woman and attached to Islamic, as well
as Jewish and Christian heterodox mysticism, I reject the rationalised,
disenchanted, centralised, Turkified modern language put in front
of me,” she declares. “Today in Turkey, language is polarised and
politicised. Depending on the ideological camp you are attached to,
for example Kemalists versus Islamists, you can use either an ‘old’
or a ‘new’ set of words.”
It is a choice she refuses to make, filling her writing with both “old”
and “new” words. She says her fiction is like “walking on a pile of
rubble left behind after a catastrophe. I walk slowly so that I can
hear if there is still someone or something breathing underneath. I
listen attentively to the sounds coming from below to see if anyone,
any story or cultural legacy from the past, is still alive under the
rubble. If and when I come across signs of life, I dig deep and pull
it up, above the ground, shake its dust, and put it in my novels so
that it can survive.”
Catheryn Kilgarriff, co-director of her British publisher Marion
Boyars, was also drawn to her use of old Turkish language, as well
as her use of allegory and fable. “She’s an extraordinary writer,”
she says, and an extremely exciting prospect for the future. “She’s
only 35 now and she’s already mastered one or two different voices
in her fiction. There’s more to come.”
It’s a body of work which is building her a formidable reputation
overseas. “She’s doing astoundingly well,” adds Kilgarriff, pointing
out that Shafak’s books have been taken up by the large chains and
offered in three for two promotions – unusual treatment indeed for
literature in translation.
Shafak has been published in Turkey, the US and Britain, though only
two of her six novels are available in the UK at the moment. Since
writing The Flea Palace, which was shortlisted for the Independent
Foreign Fiction prize in 2005, she has begun writing in English –
an act which has been seen by Turkish nationalists as a “cultural
betrayal”.
It was a choice motivated more by her passion for language, by the
search for new modes of expression. “There are certain things I’d
rather write in English, certain others I’d rather write in Turkish,”
she explains. “English, to me, is a more mathematical language, it
is the language of precision. It embodies an amazing vocabulary and
if you are looking for the ‘precise word’, it is right out there.
Turkish, to me, is more sentimental, more emotional.” English seems
more suited for philosophy, analytical writing or humour, “but if I
am writing on sorrow I’d rather use Turkish.”
This is something that nationalists fail to understand, she says. “It
is always us versus them, this or that. Nationalists cannot understand
that one can be multilingual, multicultural, cosmopolitan … without
feeling obliged to make a choice between them once and for all.”
It is perhaps this instinct which lies at the heart of the wider
conflicts taking place in contemporary Turkish society. An increasingly
urban Turkey has seen a broad cultural renaissance over the last three
decades, which has been consistently under-reported in the west. Voices
in literature, academia and the arts have begun to examine subjects
which have long been taboo, to raise questions about uncomfortable
issues such as the role of women or the history of Turkey’s Armenian
minority.
But as this cultural resurgence has gained strength it has been met
by a nationalist reaction.
“On the one hand there are the ones who want Turkey to join the EU,
democratise further and become an open society,” says Shafak, but
on the other “are the ones who want to keep Turkey as an insular,
xenophobic, nationalistic, enclosed society. And precisely because
things are changing in the opposite direction, the panic and backlash
produced by the latter group is becoming more visible and audible.”
There are those who think that the prosecutions of leading writers
under Article 301 are a sign that nothing is changing in Turkey, but
Shafak thinks it is just the opposite: “Article 301 is being used
more and more against critical minds precisely because things have
been changing very rapidly in Turkey. The bigger and deeper the social
transformation, the more visible the discomfort of those who want to
preserve the status quo and the louder the backlash coming from them.”
It’s a reaction which has already cast doubt on to Turkey’s accession
into the EU. Earlier this month the European commissioner in charge
of negotiations with Turkey urged the Turkish authorities to amend
Article 301, reminding them that freedom of expression “constitutes
the core of democracy” and is a “key principle” in determining a
state’s eligibility to join the EU.
It is too early to say what effect the trial will have on Shafak. She
is determined that it will not influence her writing. “Next time I
start a novel, I do not want to have qualms, fearing this or that
topic might cause me yet another trouble,” she says, adding that
she is “much more daring” in her fiction than in her daily life:
“While I am writing the urge to go on with the story outweighs any
other concern that might cross my mind.”
A date for her trial has not yet been fixed. For the moment all she
can do is wait.
The Bastard of Istanbul will be published in the US by Viking/Penguin
in 2007
Elif Shafak’s The Gaze was published in the UK earlier this month by
Marion Boyars at £9.99
–Boundary_(ID_NHUsYT3zbQsQt7EsgMDFPw) —

FOCUS: Russian operators find expansion success in CIS
Cellular-News, UK
July 25, 2006
MOSCOW, July 24 (Prime-Tass) — Nearly five years have passed since
Russian mobile operators began to expand beyond the domestic market and
operators have made great strides in the countries of the Commonwealth
of Independent States (CIS). In the meantime they all failed to have
made any non-CIS acquisitions.
Russia’s first and second largest mobile operators, MTS and VimpelCom
have made very successful acquisitions across the CIS but are still
not present in Armenia, Azerbaijan, Moldova and Tajikistan. MTS is
also not present in Georgia and Kazakhstan while VimpelCom has no
presence in Belarus and Turkmenistan. Russia’s third largest operator
MegaFon is present only in one country outside Russia, Tajikistan,
the poorest in the CIS. And its presence there is largely due to the
fact that Russian troops are stationed in the country.
A few days ago VimpelCom entered Georgia through the purchase for
$12.6 million of a 51% stake in Georgian mobile operator Mobitel,
which holds a license but does not have a network. Yevgeny Golossnoi
at Troika Dialog said that this acquisition was “very cheap.” “It is a
very interesting acquisition, whether you look at it from a price per
potential subscribers or price for the GSM license,” he said adding
that VimpelCom will probably have 800,000 users in Georgia in 2-3
years compared to almost zero now.
VimpelCom or MTS may also soon enter the Armenian market if either
company wins a tender for Armenia’s incumbent fixed-line operator
ArmenTel, which also has a mobile arm.
“All (Russian) operators are interested in entering mobile markets in
CIS countries not only because these markets develop rather rapidly,
but also because the Big Three operators will get an opportunity to
increase their subscriber bases, revenues and they will be able to
offer cheaper roaming tariffs to Russian subscribers,” said Irina
Astafieva, analyst with J’son&Partners.
Ukrainian mobile operator Ukrainian Radiosystems, or URS which
was recently acquired by VimpelCom reported this month that its
revenue soared to 52.646 million hryvnas in January-June from 19.289
million hryvnas in the same period last year. In June, URS expanded
its network to cover territory where 50% of Ukraine’s population
resides and plans to increase it further to cover territory where 80%
of the population resides by the end of the year, the company said.
VimpelCom’s success in attracting clients in Ukraine shows that its
goal to achieve 10% of Ukraine’s market is “hard, but can be done,”
Uralsib commented. “Expansion into former Soviet Union will give
Russian mobile phone operators additional growth opportunities,”
Uralsib said.
The revenue of Ukraine’s second largest mobile operator Ukrainian
Mobile Communications (UMC) controlled by MTS rose 21.1% on the year
to 3.864 billion hryvnas in January-June, the company said this
month. In 2005, the company’s revenue increased 44.4% on the year
to U.S. $1.2 billion. UMC had 15.112 million users as of June 30,
according to Advanced Communications & Media.
VimpelCom, as well as MTS, is on the short list of four companies that
are bidding for a 90% stake in ArmenTel, put for tender by Greece’s
telecommunications company Hellenic Telecommunications Organization
SA, or OTE.
The remaining 10% stake in the operator is held by the Armenian
government. OTE did not say why it decided to sell the company, but
the decision was rumored to have been taken due to the fact that the
Greek company did not manage to reach an agreement with the government
on the development of the incumbent operator.
ArmenTel is a fixed-line and long-distance monopoly in Armenia. As of
April, ArmenTel’s fixed-line subscriber base stood at about 595,000
users and its mobile subscriber base at about 320,000 users.
The two Russian operators are competing for ArmenTel with a consortium
of Emirates Telecommunications Corp., or Etisalat, Istithmar PJSC,
Emergent Telecom Ventures and a consortium of VTEL Holdings and
Knightsbridge Associates.
The Russian companies have a good chance to win the tender as they are
more likely to find a common language with the local authorities and
they are more aware of peculiarities of the market, Anton Pogrebinsky,
senior analyst at Advanced Communications & Media (AC&M), said.
However, it is more difficult to say whether VimpelCom or MTS has
the upper hand in the tender, Astafieva with J’son&Partners said.
“It is hard to project which (Russian) company has a better chance,
as the tender results are influenced by lots of factors, both formal
and informal,” she said.
The Greek company did not specify the amount it wanted to sell ArmenTel
for, but analysts estimated the Armenian operator to be worth about
U.S. $150 million.
MTS looks to be more interested in ArmenTel, as it may share the
fixed-line business with Russian telecommunications operator Comstar
United Telesystems, or Comstar UTS. Both MTS and Comstar UTS are
owned by major Russian holding AFK Sistema.
MTS and VimpelCom’s owners also seem to continue fighting for the
Kyrgyz GSM mobile market.
MTS and a little-known Russian company Rezervspetsmet are currently
in a legal dispute over ownership rights to Kyrgyz largest mobile
operator Bitel, which controls about 90% of the cellular market in the
country. The remaining market share is controlled by a CDMA operator,
Aktel, and a DAMPS operator, Katel.
However, even if MTS wins the legal battle for Bitel, it may get only
a shell company, as Bitel in early July publicly offered to sell
all its assets to Sky Mobile, which was bought by Russia’s Altimo,
the telecommunications arm of Alfa Group, on June 29.
Rezervspetsmet is widely believed to be linked with Alfa Group. A
spokesperson with Altimo said that the company was considering the
offer but no decision had been made.
Some analysts suggested that Altimo may eventually sell Bitel to
VimpelCom if it gets control over the Kyrgyz company through Sky
Mobile. In January, Altimo sold its stake in Uzbek mobile operator
Buztel to VimpelCom. Altimo holds a 32.9% stake in VimpelCom.
“Kyrgyzstan is of interest to Russian players not only as a way
to expand their CIS geography, but also because Bitel is, in fact,
a monopoly on the market and such companies have, as a rule, a good
outlook,” Astafieva from J’son&Partners said. Russian troops are also
stationed in Kyrgyzstan.
Bitel, which used to be the only GSM operator in the country, has
already faced competition from BiMoCom, created by Cyprus-registered
investment fund Eventis Telecom. The fund is rumored to be controlled
by a group of Russian and foreign individual investors, including
Vladimir Androsik and Dmitry Ivanter, reportedly close to the so-called
St. Petersburg telecom group.
BiMoCom started providing its services under the MegaCom brand
in late April with both the brand and the logo being similar to
MegaFon’s, which is also affiliated with the St. Petersburg group.
BiMoCom’s General Director Oleg Primak said that MegaFon provided only
consultations and technical support to the newly-established operator.
Meanwhile, Altimo also has indirect exposure to mobile markets of
four CIS countries through its 13% stake in Turkish mobile operator
Turkcell. Turkcell holds a 41.55% stake in Fintur Holdings B.V. (the
rest is owned by TeliaSonera), which has controlling stakes in Azeri
mobile operator Azercell, Georgian mobile operator Geocell, Kazakh
mobile operator Kazakhstan GSM and Moldovan mobile operator Moldcell.
While Russian mobile operators have made progress in expanding
throughout the CIS, none of the operators has yet managed to enter
a non-CIS country.
On several occasions MegaFon officials said that the expansion on
foreign markets was not the key company’s focus. But its competitors
have always been looking for opportunities beyond Russian borders.
VimpelCom indicated that it was interested in some Asian countries,
including Vietnam and Afghanistan, but has not made any direct steps
towards acquisitions there. MTS is the only one of the Big Three
that has undertaken expansion attempts outside the CIS. The company
planned to participate in a tender for a 70% stake in Serbian mobile
operator Mobi 63, but has later opted out of the tender. MTS also
bid for a GSM license in Egypt this year, but failed. The company
had grandiose plans for Indian and Turkish expansion but failed to
make acquisitions there as well.
Analysts said that it would be difficult for Russian operators to
expand beyond the CIS because they were not very well-known there
and had no international experience.
While the Russian Big Three operators focus on CIS expansion, they face
increasing competition on the domestic market from foreign players.
Sweden’s mobile operator Tele2 last week purchased four Russian
regional operators with a total consolidated subscriber base of
about 270,000 users and with exposure to 3.8 million people. The deal
includes a 100% shareholding in Arkhangelsk Mobile Networks, a 100%
holding in Novgorod Telecommunications, a 75% holding in Murmansk
Mobile Network, and a 75% holding in Parma Mobile based in the Komi
republic. Tele2 also acquired the remaining minorities of Murmansk
Mobile Network as well as Parma Mobile and consequently increased
its stakes to 100% in all four companies.
Tele2’s license portfolio now covers more than 38 million people
worldwide. In addition, Tele2, which is the fourth largest operator
in Russia in terms of subscriber base with 4.64 million people as
of June 30, is rumored to be negotiating the purchase of Russian
regional mobile operator SMARTS, which had about 3.3 million users as
of June 30. The possible acquisition may boost the Swedish operator’s
subscriber base further up and expand its coverage to about one-third
of Russia.
Though Tele2 is unlikely to become the fourth federal player on the
Russian mobile market, it may become a force that the Big Three would
have to take into account, analysts said.
“If Tele2 buys SMARTS it will become more noticeable (on the market).
It will cover more than 30 regions, but it is (still) few compared
with about 80 regions that are covered by each of the federal
operators. Tele2 does not have a license for Moscow but it will become
a strong regional player,” Pogrebinsky of AC&M said, adding that it
would be easier for Tele2 to negotiate interconnection tariffs with
the Big Three and it would have economies of scale when purchasing
telecommunications equipment.
Nadezhda Golubeva, telecoms analysts at Aton Capital, doubts that Tele2
will become a federal operator, as it would not be able to get federal
coverage because there are no free frequencies in most Russian regions.
“In the case Tele2 consolidates its subscriber base with SMARTS and
reproduces its recently successful marketing policy in regions where
SMARTS operates, the new consolidated operator will be able to offer
competition to the Big Three. However, it is a risk for Tele2, at
the same time, as until now its development was supported by the fact
that major operators did not view it as a competitor on the federal
level and did not create any specific strategy to resist (Tele2),”
Astafieva from J’son&Partners said, adding that Tele2 and SMARTS
together accounted for 16% of net subscriber additions in Russia
in January-June.
In the meantime, Troika Dialog said that Tele2’s acquisition of
MCT Corp.’s assets in Russia and plans of further consolidation is
positive for MTS and VimpelCom “as it reduces the risk of pricing
wars being launched by the smaller companies.?

AN INFORMAL FAREWELL TO THE DYSFUNCTIONAL COMMONWEALTH
Eurasia Daily Monitor, DC
July 24, 2006
By Pavel K. Baev
There were plenty of good reasons to organize an informal top-level
meeting of the Commonwealth of Independent States (CIS) in Moscow last
weekend. Old conflicts and new tensions dividing its 12 member-states,
from the deadlocked antagonism between Armenia and Azerbaijan to
the ongoing spy scandal between Tajikistan and Uzbekistan, require
the urgent attention of their leaders and good-neighborly mediation
between the parties. The broad theme of “energy security” needs to
be collectively elaborated by producers and consumers in order to
harmonize their interests and prevent new “gas wars.” Yet none of
these real issues was actually put on the agenda of the summit, which
started with a long dinner at a restaurant on the shore of Moscow River
on Friday evening and ended with horse racing on Saturday afternoon
(Izvestiya, July 24).
When inviting his “junior allies” to spend some quality time together,
Russian President Vladimir Putin did not have in mind discussing
conflict management or gas prices; his main topic was the success he
had achieved at the G-8 summit the previous weekend. He had played
host to the leaders of the most influential countries in the world
and not only provided an excellent venue but proved his status as
a rightful member of the most elitist of political clubs, brushing
aside questions about the quality of democracy in Russia (Kreml.org,
July 20; Moskovskie novosti, July 21). By all accounts, Putin scored a
big victory and was eager to translate that result into a more usable
position of power in the CIS.
Such a prospect was not exactly enthralling for the invitees, and
four presidents opted to skip the occasion at the last minute, giving
various excuses (EDM, July 21; Kommersant, July 22). Turkmenistan’s
President Saparmurat Niyazov has never been a fan of the CIS and,
after reducing his status to an “associate member” last year, he
refused to interrupt his vacation this year. Armenia’s President
Robert Kocharian caught a cold, which was probably unfortunate, but
of no great import, since Moscow was not planning to launch any fresh
initiative on Karabakh and is generally inclined to take Yerevan for
granted. Ukraine’s President Viktor Yushchenko decided that he had
nothing to discuss with Moscow until a government is formed in Kyiv,
since Putin’s opinion of Viktor Yanukovych, who hopes to claim to the
position of prime minister, is known only too well. Georgia’s President
Mikheil Saakashvili needed and even asked for a face-to-face meeting
with Putin, but when the request was diplomatically turned down,
he cancelled the trip at the last moment.
The Georgian case is perhaps the most burning one in the entire
CIS zone, and Putin’s clearly conveyed refusal to give it due
attention is even more worrisome than the shootouts and explosions
in Tskhinvali. Saakashvili paid a visit to Washington two weeks prior
to the G-8 summit, and he had expected that President George W. Bush,
together with his European allies, would raise the issue of Russia’s
support to secessionists in Abkhazia and South Ossetia at an opportune
moment. It did not happen, perhaps because Lebanon demanded priority
attention (Prognosis.ru, July 19). Putin now feels emboldened to
experiment with direct pressure on Georgia, such as staging military
exercises, while in the Russian mainstream media the campaign against
“war mongers” in Tbilisi has reached new highs (Nezavisimaya gazeta,
July 24). The din drowns out rare voices, like Yulia Latynina’s, that
warn about the risk of being drawn into a full-scale interstate war
by the force of Moscow’s own propaganda and the parochial interests
of a few “peacekeeping” colonels who control the smuggling business
in South Ossetia (Ekho Moskvy, July 22).
The “frozen” conflict in Transnistria has also recently shown dangerous
spasms, so Moldova’s President Vladimir Voronin decided to come to
Moscow in an attempt to cut some ice in bilateral relations, which
have stayed on a very low plateau since he declined Putin’s peace
plan in December 2003. Having no illusions about the prospects of
integration, Voronin was generous with his praise of the value of
CIS, hoping at least to get some relaxation of the Russian ban on
imports of Moldavian wine (Ekho Moskvy, July 21). President Ilham
Aliyev from Azerbaijan probably enjoyed the races, where his horse
finished nose-to-nose with the Russian favorite, but it was hard to
detect any interest in the CIS on his part (Kommersant, July 24). The
Baku-Tbilisi-Ceyhan pipeline, which was joyfully inaugurated on the
eve of the G-8 summit, is a project hugely more important to him than
anything in the Babylonian tower of paperwork produced during the 15
years of the Commonwealth’s fruitless existence.
Only one diehard enthusiast of deepening cooperation (as he was
of preserving the USSR in 1991) attempted to make a difference at
the summit. Kazakhstan’s President Nursultan Nazarbayev presented a
well-developed draft for reforming the CIS centered on a proposal to
adopt decisions strictly by consensus on the few matters that were of
importance for all members and to guarantee that such decisions would
be mandatory to implement (Polit.ru, July 21). By no means an idealist,
Nazarbayev appealed to the common political sense of his colleagues,
suggesting a drastic streamlining of the bureaucratic procedures and,
taking a clue from the G-8 method, appointing “sherpas” for hammering
out the details (Vedomosti, July 24). His sound ideas could have
reinvigorated the Commonwealth a few years back, but now they are
demonstratively out of place.
The problem is not that Ukraine has lost interest in the CIS and
is considering an “exit strategy”; neither is it Georgia’s desire
to join NATO nor Turkmenistan’s self-isolation. The main problem
for Nazarbayev’s plan is that it does not fit Putin’s vision of
a Russia-centered, tightly controlled organization that has few
“horizontal” links between its members. Insisting on adopting a
binding “common position” on international issues around the Russian
line, Putin is challenging the malcontents to quit the CIS. By the
official summit later this year, some of them might indeed do it;
but that hardly would make it possible to transform the curtailed
Commonwealth into a functional structure.
From: Emil Lazarian | Ararat NewsPress

SUMMIT PRESCRIBES CIS LITE; PUTIN BLINKS BEFORE SAAKASHVILI;
VORONIN STANDS UP TO PUTIN
Eurasia Daily Monitor, DC
July 24, 2006
By Vladimir Socor
Devalued by an unusually low attendance — only eight out of twelve
presidents — the CIS informal summit in Moscow on July 21-22 marks
the official transition of this organization to a “lite” version of
its former self. With Russian President Vladimir Putin’s acquiescence,
Kazakh President Nursultan Nazarbayev presented a set of proposals
to reduce the CIS to a few functions, mainly in the sphere of
social projects. Moreover, Putin blinked before the absent Georgian
President, Mikheil Saakashvili, by eschewing a discussion on Russian
“peacekeeping” in Abkhazia, even though the Kremlin itself and all
of Russia’s officialdom insisted all along that this issue belongs
to the CIS competency.
The summit’s agenda included a CIS “assessment of world
developments” — the usual exercise to line up the presidents behind
a Kremlin-drafted statement on international issues — as well as CIS
reform. In view of the low attendance, however, the Kremlin decided to
drop the joint statement at the last moment on July 21. The following
day, Putin asked Nazarbayev to present proposals for CIS reform that
Nazarbayev had been authorized to prepare in his capacity as chairman
of the CIS Council of Heads of State.
Nazarbayev’s report acknowledges that the CIS does not meet the
requirements of an integration organization, having failed to create
even a free-trade zone, let alone a customs or monetary union or a
common security policy. He proposes that the CIS henceforth focus
on harmonizing member states’ policies on five issues: a) regulating
migration; b) developing transport links; c) promoting exchanges in
the sphere of education; d) dealing with cultural and humanitarian
issues [often a euphemism for maintaining a Russian-language cultural
environment]; and e) tackling trans-border criminality.
Moreover, Nazarbayev proposes continuing cuts in the personnel of
Moscow-based CIS structures and transferring their functions to
“national coordinators” who would reside in the member countries’
capitals. Reducing the budget and personnel of CIS offices in
Moscow is a trademark Nazarbayev idea, and it is partly thanks
to his insistence that those structures have been cut radically in
recent years. Any further cut would almost certainly bring their final
demise. The proposed institution of nationally based coordinators seems
inspired by the GUAM model used by Georgia, Ukraine, Azerbaijan,
and Moldova. Although GUAM is not yet functional, its national
coordinators at least provide a flexible and cost-effective mechanism
for development and implementation of policy decisions.
The report has on the whole been accepted as a basis for further
discussion, but could not be seriously discussed because the document
was belatedly circulated on the summit’s opening day. The presidents
are to submit their suggestions to Nazarbayev for further development
of the proposals. Nazarbayev will retain his chairmanship of the
presidents’ conclave (temporarily suspending the rotation in that
chair) in order to finalize his report. He concluded, “Everyone knows
that the CIS states are unhappy about the work of this organization,
and some are very unhappy . . . The CIS has actually turned into a
club for the presidents’ meetings” (NTV Mir, July 22).
The club function is supposed to enable the presidents to hold
bilateral or small-format meetings on the summit’s sidelines. However,
even the club function is questionable with only eight presidents
in attendance, and Putin declining to meet bilaterally with the two
presidents who had wanted such meetings: Georgia’s Saakashvili, who
was refused one day before the summit, and Moldova’s Vladimir Voronin
who was denied a bilateral meeting with Putin while the summit was
in progress.
The gist of what Voronin might have told Putin can be gauged from the
Moldovan president’s interview with the liberal Ekho Moskvy radio
— one of the few Moscow media outlets still open to him — on the
summit’s opening day, when he was still hoping for a bilateral meeting
with the Russian president. Voronin pointed to Russia’s recruitment
of Transnistria’s leaders “in the Siberian Taiga and [Soviet] Riga
special police [reference to these leaders’ actual backgrounds];
called for replacement of Russia’s “peacekeeping” operations with
an international mission of observers, both military and civilian;
ridiculed Moscow’s claim that Transnistria’s authorities “do not
permit” Russia to remove its arsenals and troops from the area (a
claim repeated on July 20 by Russian Minister of Foreign Affairs
Sergei Lavrov); protested against Russia’s politically motivated
embargo on Moldovan wines (50% market share in Russia prior to the
ban); and deplored Russia’s “destruction” of what Voronin described as
centuries-old Moldovan good will toward Russia (Ekho Moskvy, July 21).
Putin pointedly expressed his “thanks to those who found it possible
to come to Moscow.” Among those who did not find it possible, Turkmen
President Saparmurat Niyazov is often absent from CIS summits; this
time, however, he is openly in conflict with Moscow over the price
of Turkmen gas deliveries to Gazprom.
Ukrainian President Viktor Yushchenko canceled his attendance with
less than 24 hours’ advance notice, citing the complicated political
situation in the country. A presidential communique went out of
its way to assure Russia and Putin personally of the “sincerity of
Ukraine’s relations with Russia as well as of the fact that Russia is
a strategic partner of Ukraine” and invited Putin to visit Ukraine. A
further invitation will follow by official letter from Yushchenko, his
office announced (Interfax-Ukraine, July 21). This marks at least the
fifth public and somewhat supplicating invitation from Yushchenko to
Putin to visit Ukraine. Yushchenko previously issued such invitations
in August, November, and December 2005 and January 2006 publicly,
and was also hoping to receive Putin in Ukraine ahead of the March
26 parliamentary elections.
Armenian President Robert Kocharian was set to attend and likely to
meet with Azerbaijan’s President Ilham Aliyev in Putin’s presence
at this summit. However, Kocharian canceled his attendance at the
summit only hours before its opening on July 21, citing a viral
respiratory problem. In any case, he faces an internal political
problem, as Defense Minister Serge Sarkisian seems set to launch a
bid for supreme power.
(Interfax, Khabar, Mediamax, Arminfo, July 21, 22)