Pan Armenian News
TAJIK PRESIDENT CONGRATULATED KOCHARIAN ON INDEPENDENCE DAY
20.09.2005 02:42
/PanARMENIAN.Net/ Tuesday Tajik President Emomali Rahmonov sent a
congratulation telegram to Armenian President Robert Kocharian on the
occasion of celebration of Armenia’s holiday – the Independence Day. Having
congratulated and wished prosperity to the Armenian people, E. Rahmonov said
he was sure that cooperation between the two countries will develop
dynamically6 owing to joint efforts. «We intend to do everything necessary
for progressive and dynamic expansion of the cooperation between the two
countries,» the telegram of the Tajik President says, reported RIA Novosti.

Pan Armenian News
SUCCESS OF ARMENIAN GENOCIDE RESOLUTIONS – RESULT OF US ARMENIAN COMMUNITY
EFFORTS
20.09.2005 03:51
/PanARMENIAN.Net/ The success of the Armenian Genocide resolutions at the US
House panel was the result of the great efforts by Armenian National
Committees, Armenian American community and all the Armenian organizations.
Elizabeth Chouldjian, the coordinator of the Armenian National Committee of
America (ANCA) Washington Office, stated it in an interview with the Azdak
Beirut newspaper. When presenting the two documents, Ms. Chouldjian noted
that the first one urges the US President `to properly acknowledge the
Armenian Genocide and use that term, which should be reflected in the US
foreign policy.’ She explained that on the eve of the vote, 140 House
members endorsed the Res. 316, and about 85 members endorsed the Res. 195.
She also noted that Armenian organizations throughout the US lobbied for the
resolutions by letters, phone calls and personal meetings with Congress
members. The second resolution urges Turkey to give up its denialist policy
of the crime and start a dialogue to Armenia to decide the issue in a fair
way. Touching upon the latest reports on Turkish Embassy in the US and
Turkish organizations bribing House Speaker Dennis Hastert (R-IL) in 2000 in
order for the latter prevent the passage of resolutions favorable for
Armenians, E. Chouldjian said, `There are countries that secretly try to
affect the American legislative process. This makes convincing the society
in not transparency of political processes in America necessary.» `We are
sure that in case resolutions are submitted to the House, these will be
adopted. We will further present our approached to the MPs. We are
optimistic,» she assured, reported the Yerkir newspaper.

Pan Armenian News
ARMENIAN SPEAKER CONGRATULATED PEOPLE ON INDEPENDENCE DAY
20.09.2005 05:00
/PanARMENIAN.Net/ Chairman of the National Assembly of Armenia Artur
Baghdassaryan today congratulation Armenian people on a national holiday –
the Independence Day, reported the Armenian NA Press Service. The message
specifically says, «Dear compatriots, I wholeheartedly congratulate you on
the Independence Day of Armenia. There are many holidays marked in calendars
of all countries, and one of these is the most important. The Independence
Day is such for Armenians. It confirmed the right for free and independence
existence in the Fatherland. The past 14 years of independence were hard for
us. We experience the ordeals of war and peace and proved to ourselves and
the world that we deserve independence. Today Armenia is at an important
phase of its development: we prepare to changes in our Organic Law, which
will secure our further progress in building a jural and democratic state.
Dear compatriots, I again congratulate you and with you peace, happiness and
productive work for the sake of the Fatherland’s prosperity.»

Copyright © 2005 Tax Analysts
Tax Notes International Magazine
September 5, 2005
WORLDWIDE TAX OVERVIEW
by Cathy Phillips, editor of Tax Notes International
The voluntary tax systems of the United States and many other countries
aren’t perfect, but they sure beat the heck out of the alternative.
Consider, for example, life under a regime where tax rates aren’t made
public, assessments are arrived at in secret, and failure-to-comply
penalties include banishment to forced labor camps.

This week we present a fascinating article by DAVID JOULFAIAN on a
wealth tax adopted by Turkey in 1942 that included all of the above
unpleasantries. In the midst of World War II, Turkish citizens also were
victims of a monstrous tax system that they were powerless to change.
Joulfaian describes the discriminatory nature of the wealth tax, a
lopsided levy shouldered by the minority Christian and Jewish
populations in the predominately Muslim nation, and the misguided fiscal
policies that allowed the tax to take root in the first place (p. 915).
…
THE ULTIMATE DEATH TAX (page 915)
Wealth taxes are common in many countries, and represent one of the
oldest forms of taxation. Local governments in the United States, for
instance, levy annual property taxes. Annual wealth taxes are levied in
several European countries as well. The estate tax is the only wealth
tax levied by the U.S. government and applies to wealth held at death.
The wealthy are at times also taxed at progressive tax rates on their
earnings in addition to being exposed to wealth taxes. Governments levy
those taxes to diversify their sources of revenues, augment and protect
the income tax base, and regulate the distribution of income and the
concentration of wealth. Governments may resort to additional taxes in
times of national emergency.

A general guiding principle for any tax system is that it should be
sufficiently transparent to enable a taxpayer to construct the size of
wealth or income subject to tax, as well as the ensuing tax liability.
For local property taxes, for instance, cities inform property owners of
the assessed value of their real estate and the amount of tax they owe.
For income and estate taxes, taxpayers report the amount of income
received and the size of terminal wealth to the government. Once the
taxable amount is established, a tax rate schedule is applied to
determine the tax liability. Taxpayers are able to appeal assessments
and are given adequate time to prepare their documents and make
provisions for paying the amounts owed.

A student of taxation may encounter many fascinating features of the
various taxes levied throughout history, dating back to ancient Egypt
and the Roman Empire. Yet no tax system rivals the peculiarities of a
tax employed in the middle of the 20th century. On the morning of
November 12, 1942, the citizens of Turkey woke up to the most draconian
wealth tax ever envisaged. While the tax in theory applied to the entire
predominantly Muslim nation, in practice much of its burden rested with
the minority Christian and Jewish communities who primarily resided in
Istanbul, formerly known as Constantinople. Neither the rate of taxation
nor the taxable base and its derivation were made public. Tax
assessments were arrived at in secret, and individuals were directed to
settle their government assessed liabilities within two weeks, without
any appeal provisions in place. The penalty for Christians and Jews who
failed to do so within a month was deportation to forced labor camps in
eastern Turkey in addition to having their property confiscated. The tax
was initially also extended to Christian and Jewish schools, as well as
to churches and synagogues, but not to Muslim institutions, because they
were owned or funded by the government. As documented by Faik Okte, the
Turkish Ministry of Finance official in charge of implementing the tax,
assessments were determined arbitrarily because the authorities lacked
information on the income and properties of the minority groups./1/
Table 1: Statutory Tax Rates

Provision Applied to Applied to
Rate on wartime profit Muslim Turks Non-Muslims
12.5 percent 50.0 percent
Additional tax zero Up to 50 percent of personal wealth
Source: Faik Okte, The Tragedy of the Turkish Capital Tax.
Description of the Tax
The Turkish National Assembly passed the tax on November 11, 1942
(Law 4305/12.11.1942), and its decision to levy the tax was published
the next day in the government official newspaper, Resmi Gazete. The
details of the structure and inner workings of the tax were kept secret
by the government. The details, however, were revealed and made public
some five years after its enactment in a book authored in 1947 by Okte.
In that book Okte also traced the architects of the tax and named all
the governmental agencies and personnel engaged in administering the
tax.

In an otherwise officially secular state, taxpayers were classified
as Muslim and non-Muslim, denoted with the letters M and G,
respectively./2/ The latter included Jews and Christians, including
Armenians and Greeks. Assyrian Orthodox Christians also fell in that
class. An additional class of taxpayers were the Donme, denoted by D.
The Donme were Jews whose ancestors had converted to Islam in the 17th
century./3/ Like the Jews and Christians, the Donme were taxed at rates
higher than those that applied to Muslims. Foreigners were taxed at the
same rate as Muslim Turks.

During that period, Greeks were the largest minority group in Turkey,
and represented the heirs to Byzantium with Constantinople as its
capital. The Armenians originated from western Armenia or the eastern
half of Turkey, and represented the descendants of the first Christian
nation. The presence of the Jews also predates that of the Turks, whose
ranks had been augmented by Ladino Jews from Spain during the
Inquisition. The Assyrians are originally from southern Turkey and
modern-day Syria and Iraq; their presence also predates the arrival of
the Turks from central Asia. Combined, those non-Muslim groups made up
less than 1 percent of Turkey’s population of 18 million in 1942.

The tax was initially envisaged as a tax on capital or wealth. It was
to apply to businesses and real estate (immovable property). By the time
it was enacted, it had expanded to include a tax on wages as well that
effectively applied only to non-Muslims in Istanbul. Taxpayers were
classified according to business type and property earnings. Within the
Ministry of Finance, once the size of income, wealth, and type of
enterprise were established internally, local assessment boards secretly
determined the amount owed by the taxpayer.

The Finance Ministry was responsible for setting the tax rates to be
used in computing tax assessments. Minorities were generally to be taxed
at 5 to 10 times the amount applied to Muslims with similar wealth.
Specifically, Muslims were to be taxed at the rate of 12.5 percent of
profits or earnings. In contrast, non-Muslims were to be statutorily
taxed at the rate of 50 percent of earnings plus an additional tax of up
to 50 percent of their wealth (Table 1)./4/ The reach of the tax also
extended to hospitals and educational institutions. The tax did not
extend to Muslim institutions, because they were owned or funded by the
government.

While internal “guidelines” set minimum and maximum limits, the local
boards at the Finance Ministry were free to choose any amount in
between. Indeed, they had complete discretion in setting assessments.
Information on income and wealth were obtained from Turkish national
banks, the Republican People’s Party, and the Security Directorate,
which is equivalent to the U.S. FBI. Despite the lack of information on
the sources of wealth and income, taxpayer records were not requested or
considered when setting assessments.
Table 2: Initial Assessments in Istanbul (Constantinople)

Group Number of Taxpayers Amount (TRL millions)
Extraordinary Rich
Muslims 460 17.3
Non-Muslims 2,563 190.0
Those With Earnings Statements
Muslims 924 3.1
Non-Muslims 1,259 10.4
Profit Tax on Gross Earnings
Muslims 2,589 4.0
Non-Muslims 24,151 72.8
Wage Earners
Muslims — —
Non-Muslims 10,991 6.9
Subtotal 42,937 304.5
Muslims 3,973 24.4
Non-Muslims 38,964 280.1

Source: Faik Okte, The Tragedy of the Turkish Capital Tax.
The assessed tax was due in cash within 15 days from its published
date of December 17, 1942. Payments could be postponed for another 15
days, but would face a charge of up to 2 percent interest. If the tax
due was not fully settled within 30 days of assessment, the taxpayer’s
property was to be confiscated. Furthermore, the taxpayer was to be sent
to a labor camp until his debt was discharged, under Regulation 21/19288
approved on January 12, 1943.
The Taxpayers
By August 1943 the tax assessments stood at some TRL 335 million in
Istanbul alone, or about one-half the entire currency in circulation.
Indeed, those assessments represented as much as the entire budget
revenues of TRL 394.3 million for 1942 before enactment of the tax.
Table 2 provides a summary of the number of taxpayers assessed and the
amount of assessments in Istanbul. Some 42,937 taxpayers were assessed a
total of TRL 305 million, as shown in Table 2./5/ Of those, only 3,973
were Muslims, who were assessed a total of TRL 24.4 million. In other
words, minorities who made up less than 1 percent of the population were
assessed 93 percent of the liability. Table 3 further provides
assessments for churches, synagogues, and schools./6/

In a survey of foreign chambers of commerce at the time, C.L.
Sulzberger, writing for The New York Times in 1943, documented the
discriminatory nature of the tax./7/ As illustrated in Table 4, the
effective rates of assessments that merchants faced varied considerably
from a low of under 5 percent for Muslims to over 150 percent for
Christian Greeks and Jews, to well over 200 percent for Christian
Armenians. Similarly, in one large enterprise, only 1.2 percent of the
Muslim employees were assessed compared with 96.1 percent for minority
citizens.

As illustrated by the head of the Finance Ministry and the person in
charge of implementing the tax, Faik Okte, assessments were determined
in arbitrary manners because the authorities lacked information on the
income and properties of the minority groups./8/ The arbitrary nature of
the tax is best illustrated in the treatment of the “extraordinary
rich.” According to Okte, Mr. Bezmenler, whose ancestors converted from
Judaism to Islam in the 17th century and who was classified as a Donme,
was assessed TRL 1 million. In contrast, Dr. Cudi Birtek, an
extraordinarily wealthy Muslim, was assessed only TRL 25,000, a mere
fraction of the amount applied to the Donme./9/ In yet another example,
Osman Sakar, K.S. was originally assessed TRL 120,000. When Mr. Sakar
proved that he was a “pure Turk” or a Muslim, his tax liability was
adjusted downward to TRL 12,000 — just 10 percent of the originally
published amount./10/ Those mistakes were not uncommon because all
citizens were forced to adopt Turkish-sounding surnames in 1935 and
because Turks have come to resemble more the Caucasians they conquered
and less their Asiatic ancestors from central Asia.
Table 3: Tax Assessments of Minority Institutions

Christian and Jewish Institutions/*/ Number Assessment (TRL)
Schools 88 227,550
Churches and Synagogues 27 119,200
Hospitals 7 86,750

/*/ Zero assessment for Muslim institutions, which numbered in the thousands.
Source: Faik Okte, The Tragedy of the Turkish Capital Tax.
The discriminatory and confiscatory nature of this tax is also
evident in the treatment of non-Muslim institutions. According to
Sulzberger, a poorly equipped Armenian hospital in Istanbul, for
instance, was assessed TRL 39,000 compared with an assessment of TRL
2,500 for a modern and thriving American hospital. Muslim institutions
avoided taxation altogether./11/

Tax assessments were seriously flawed in particular because they
failed to consider any documents from the taxpayer. The tax due from a
Christian Armenian timber merchant, for instance, was three times his
entire fortune. The tax administrator informed him that his deportation
to the labor camp could not be prevented, even after all his wealth had
been confiscated./12/ At times the tax burden widely diverged in its
arbitrariness. A Jewish taxpayer had his tax assessment increased simply
because he argued with an assessor. In another example, a Christian
Armenian “was taxed excessively at the rate of TRL 400,000,” reflecting
“the false allegation that he was the leader of the Armenian Tashnag
Society, an old member of the Union and Progress Party,” better known in
the West as the Young Turk regime that governed Ottoman Turkey from 1909
through the end of World War I./13/ At the other extreme, another
Armenian was exempted from the labor camp because he had written
“favorable articles promoting Turkish interests in the French
press.”/14/

The punitive nature of the tax was at times also extended to
foreigners. While foreigners were supposed to be taxed at the same low
rate as Muslims, many in fact were taxed at the higher rates that
applied to minority citizens. According to Faik Okte, the principal
administrator of the tax, that treatment was deliberate. He reports that
tax administrators were instructed to deny the foreigners’ “privilege”
to Jews from the Axis states./15/ In addition, and under “the pretext of
the poor registration system,” the property of Greeks and Armenians who
had acquired foreign citizenship was immediately auctioned off./16/

Of the first 45 deportees to labor camps, 21 were Jews, 13 were
Greeks, and 11 were Armenian. After the first deportation, it was
decided that the “elderly, women, the sick, foreign residents . . .
would not be exempted from the forced labor obligations.”/17/ However,
there are no records of any women or foreigners ever sent to labor
camps.
Table 4: Effective Tax Rates by Religious and Ethnic Affiliations

Merchants by Affiliation Tax Rates (percent)
Muslim 4.94
Greek Orthodox 156.00
Jewish 179.00
Christian Armenian 232.00

Source: C.L. Sulzberger, “Turkish Tax Kills Foreign Business,”
The New York Times, Sept. 11, 1943.
Concluding Comment
Shortly after the government published its declaration to levy the
wealth tax, a Turkish professor contacted the Finance Ministry to
inquire about the details of the new tax. “Have you all gone mad?” was
his response after confirming that the new law did not provide for
appeals nor did it indicate rate of taxation./18/ Despite its insanity,
the tax shook the economy to its foundations.

Many Muslims were enriched by acquiring non-Muslim property at
bargain prices. However, those fire sales, or outright “confiscation” by
state-owned enterprises, often hindered economic growth and
entrepreneurship. Consider the case of the Banzilar and Benjamen
Company, a shipping company owned by two Jews that was forced to turn
over all of its five ships to the state-owned Maritime Lines in lieu of
taxes totaling TRL 1.6 million. Despite the rising value of ships and
Turkey’s vast needs, those ships, which were productively employed by
their previous owners, remained idle at port./19/ In another example,
the majority of textile factory owners at the time were either Jewish or
Donme converts from Judaism. Yet, after World War II and repeal of the
tax, non-Muslim textile start-ups came to a screeching halt./20/

The Turkish wealth tax was advanced as part of a strategy to control
prices during the inflationary early years of World War II. The thinking
was that the forced sale of property and inventory within a fortnight of
the assessments would depress prices. Yet not only did that misguided
strategy fail to depress prices, the discriminatory nature of the tax
and the taxation of an entrepreneurial group to certain bankruptcy led
to a serious loss of confidence in the state and rattled financial
markets for years to come.
FOOTNOTES
/1/ Faik Okte, The Tragedy of the Turkish Capital Tax, translated
from the Turkish Varlik Vergisi Faciasi by Geoffrey Cox, Croom Helm,
1987.

/2/ G denotes Gayrimuslim, or “other than Muslim” in Turkish,
borrowed from the Arabic ghayr Muslim.

/3/ The Donme, which means “apostates” in Turkish, are the followers
of the mystic Shabbetai Tzvi who converted to Islam on September 16,
1666. Tzvi was arrested in Constantinople on December 30, 1665, after he
announced that he would seize the crown of the Ottoman sultan and
reestablish the kingdom of Israel.

/4/ Okte, supra note 1, at 43. The wage tax was set at TRL 500 for
those with monthly wages under TRL 100, TRL 750 for those with wages of
TRL 101 to TRL 500, and so on.

/5/ Plus another TRL 30 million when taxpayers with omitted
affiliation are considered. See Okte, supra note 1, at 48.

/6/ Okte, supra note 1, at 60.

/7/ C.L. Sulzberger, “Turkish Tax Kills Foreign Business,” The New
York Times, Sept. 11, 1943, p. 7, column 1.

/8/ Okte, supra note 1, at 33.

/9/ Id. at 47.

/10/ Id. at 62.

/11/ Sulzberger, supra note 7.

/12/ Okte, supra note 1, at 69.

/13/ Id. at 47.

/14/ Id. at 74.

/15/ Id. at 37.

/16/ Id. at 57.

/17/ Id. at 72.

/18/ Id. at 29.

/19/ Id. at 95.

/20/ See Edward C. Clark, “The Emergence of Textile Manufacturing
Entrepreneurs in Turkey: 1804-1968” (Ph.D. dissertation, Princeton
University, 1969).

Sunday, September 18, 2005
***********************************
Armenians are smart, progressive, civilized, compassionate, peace-loving, creative, brilliant…as long as you agree with their own assessment of themselves. Disagree with them and out pops the yataghan.
*
When as a boy I read Baronian and Odian, I thought they were writing about Armenians of the Ottoman period – Armenians with fezes, mustaches, and shalvars. It was much later that I realized they might as well be our contemporaries. Flattery, subservience, double-talk, and worship of money are as much with us today as they were under the sultans. Even the final lines of letters from organizations presided over and subsidized by our multimillionaires echo Comrade Panchoonie’s celebrated punch line – “Mi kich pogh oughargetsek” (Send us a little money). As the French are fond of saying, “Plus ca change plus c’est la meme merde.”
*
What have we learned from the Genocide except to publish memoirs by survivors and anti-Turkish commentaries by our dime-a-dozen pundits?
*
We sometimes confuse perseverance in error with principle, and success in the market place with statesmanship. Perseverance in error is arrogant obstinacy (“I am right because I say so and anyone who says otherwise is an enemy of the people”); and success in the market place is cunning. To see more in them is a symptom of ignorance compounded by subservience: subservience to anyone with more money or power (even when he happens to be a moral moron).
#
Monday, September 19, 2005
*************************************
Our lives are long lists of blunders and it makes no difference whether you are the leader of a mighty empire or an ordinary Joe who can’t make ends meet. The only difference is that if you have power or money on your side, you can afford to hire PR men, lawyers, and pundits, who will make your blunders look like an integral part of a vision whose sole aim is to further the interests of the people. If, on the other hand, you are like myself, an ordinary Joe, even idiots will call you an idiot.
*
But as the invasion of Iraq and more recently Katrina have shown, even the President of the mighty U.S. cannot always be successful in misrepresenting his failures as triumphs of statesmanship.
*
What have been some of the major blunders of our own leaders? When this issue was raised in reference to the Genocide, I once heard one of our so-called pundits say: “What we have here is an extremely complex concatenation of events and conditions, and none of us is in a position to know what happened behind the scenes.” Of course, no one will ever know everything there is to know about any historic event. We do know however that a million and a half innocent civilians were slaughtered in 1915, and more recently about the same number emigrated from the Homeland in search of minimum-wage employment in foreign countries, including Turkey; and as I write, more millions are being alienated and assimilated.
*
Where does the buck stop? The politically correct answer recycled ad nauseam by our dime-a-dozen pundits: all our misfortunes and tragedies must be ascribed to Turkish barbarism, and geographical, historic, cultural, and social conditions beyond our control. But if you were to ask our writers (from Khorenatsi in the 5th Century to Zarian in our own days) they would give you an entirely different answer. They would say the buck stops within us, beginning with our lack of solidarity; and solidarity is a responsibility not of the people but of its leadership.
*
Could solidarity have prevented the Genocide? I will let facts speak for themselves. At the turn of the last century our leaders in the Ottoman Empire were divided between those who said revolution was a necessity imposed on us by history, and those who said any revolutionary activity would result in the wholesale massacre of defenseless and innocent civilians. There was no dialogue, compromise, and consensus. Both sides adopted a dogmatic stance; and when that happens, those who are right become powerless, and those who are wrong prevail.
*
As for the people, they had no say in the matter. No one asked for their opinion. Throughout our millennial history the voice of the people has been an absent factor in the decision-making process. The only time we hear about them is when they are slaughtered, drowned, or buried beneath the rubble of badly constructed buildings.
#
Tuesday, September 20, 2005
***************************************
Let conflicting interests escalate and even Abel will behave like Cain.
*
To Blacks “white man is the devil.” Gandhi once called the British “a satanic force.” Jews have their anti-Semites and Palestinians their Jews. Tutsis have their Hutus, and we have our Turks. And the merchants in the temple had Jesus.
*
The evening news. An angry mob of merchants around the TV camera all shouting at the same time, anxious for their 15 seconds of fame:
-I was minding my own business when this madman barges in with a whip screaming profanities!
-A lunatic, that’s what he is.
-An anarchist.
-An enemy of free enterprise.
-Gave me a bloody nose!
-Blinded me in one eye.
-He should be arrested and fried.
-I say crucify him.
-I am a law-abiding, respectable entrepreneur. I have never done any harm to anyone. I pay my taxes. What the hell does he want from me anyway?
-That wild-eyed fanatic is still running amok vandalizing the place.
-He broke my cell phone. Has anyone called the cops?
-He pushed me, I fell and broke two teeth.
-For all I know he could be a terrorist.
-Maybe even Al Qaida.
-Blinded me in one eye.
-Broke my arm, he did.
-Has anyone called the cops?
-I have no insurance. My inventory flew the coop . I am bankrupt.
-Does anyone know who he is?
-I think he’s Joe’s son.
-Which Joe?
-Joseph the carpenter.
-Can’t be. I know Joe. He is a quiet fellow, a law-abiding citizen like the rest of us here.
-I have heard it said that his real father is a Roman soldier.
-That figures.
-Where the hell is the police?
-I called 911 ten minutes ago.
-They are never around when you need them.
-This town is going to hell. No law and order.
-I pay my taxes like everyone else. I am entitled to some protection.
-Blinded me in one eye he did…
-Broke my nose and at least two ribs.
-I am ruined.
-I say, crucify him!
#
Wednesday, September 21, 2005
****************************************
Not guilty by reason of insanity is a plea reserved for individuals with diminished capacity. It does not apply to political leaders with an unlimited capacity to kill millions. Which may suggest that man may be successful in dealing with minor and isolated aberrations but faced with major scandals he is helpless by reason of cobra fascination.
*
Men of faith and brainwashed dupes in general have an unlimited capacity to rewrite history and make the guilty look innocent and vice versa.
*
There may come a time when politics or the exercise of power will be seen as an unmistakable symptom of mental instability and anyone harboring political ambitions will be too ashamed to admit it in public.
*
Do we need politicians? As long as they have the power, they will be successful in convincing us that we can’t live without them.
*
You may have noticed that the heads of the most efficiently run states are almost anonymous. And the more headlines a political leader makes the more damage he inflicts on his fellow countrymen and the world.
*
It has been suggested that the U.S. would be better off if Swiss hotel managers ran it.
*
It is worth remembering that once upon a time barbers were also surgeons, and to whisper or suggest that kings and queens were not need was a capital offense punishable by decapitation.
#

Upcoming AmCham Conference in Armenia
BISNIS Events
September 19, 2005
Event announcements included in this broadcast:
1.) AmCham in Armenia: “A Common Future” in Yerevan, Armenia, October
15-16, 2005
Additional events are available in the searchable BISNIS events
database,
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
AmCham in Armenia: “A Common Future”
October 15-16, 2005
Yerevan, Armenia
Organized by: AmCham in Armenia.
For further information on this event, please visit:
– the BISNIS website at:
– the event website at:
Note: This notice is provided solely as a courtesy and does not
constitute a U.S. Department of Commerce endorsement of the event or of
the organizer(s)/sponsor(s). For a complete trade events listing, visit
BISNIS Online at
++++++++++++++++++++++Forwarded by:++++++++++++++++++++++++
Katie Kane
Trade Program Assistant
BISNIS- U.S. Department of Commerce
Email: [email protected]
Tel: 202-482-3100
++++++++++++++++++++++++++++++++++++++++++++++++++++++++
NEED TO FINANCE YOUR SALE IN EURASIA?
If you have an identified Eurasian buyer but are lacking the financing
necessary to complete the sale, the BISNIS FinanceLink program
( ) may be able to help. BISNIS
FinanceLink notifies financial service providers of trade projects
seeking financing.
NEED TO CERTIFY YOUR PRODUCT IN EURASIA?
Even for seasoned U.S. exporters, Eurasian product certification
procedures may seem intimidating. BISNIS overviews of certification
processes in eight Eurasian countries
() AND a list of U.S.-based
certification companies specializing in these procedures are available
at
HAVE YOU USED MYBISNIS? ( )
– Update your contact information
– Select or change the type of information you receive from BISNIS
– Refer a friend to BISNIS products and services
– Transfer your subscription to a colleague
– Unsubscribe from BISNIS services
FOR MORE INFORMATION ON COMMERCIAL OPPORTUNITIES & DEVELOPMENTS
throughout Eurasia, visit BISNIS at . For other
markets, visit
IF YOU DID NOT RECEIVE THIS MESSAGE DIRECTLY FROM BISNIS
and would like to receive future BISNIS reports on commercial
developments in Eurasia, visit the subscription page of BISNIS Online,

Georgia: Country outlook
COUNTRY VIEW
ECONOMIST INTELLIGENCE UNIT
PUBLICATION DATE: August 01, 2005
OVERVIEW: The political scene will be dominated by the president,
Mikhail Saakashvili, particularly as a result of the sudden death of the
prime minister, Zhurab Zhvania, in February 2005. We forecast annual
average real GDP growth of 9% in 2005-06. The current-account deficit is
expected to remain high, particularly as import expenditure will rise
substantially as a consequence of pipeline construction.
DOMESTIC POLITICS: The political scene will be dominated by the
president, Mikhail Saakashvili, as a result of the death of the prime
minister, Zhurab Zhvania, in February 2005. Mr Saakashvili will
consolidate his authority in coming months and ensure that his allies
control the main levers of power. When Mr Zhvania was in power,
competition between the two politicians resulted in the government being
split into two distinct groups, with Mr Saakashvili and his supporters
controlling the security and military apparatus, and Mr Zhvania and his
allies retaining overall control of the economy. The late Mr Zhvania’s
associates are likely to become marginalised when it comes to
decision-making and power-sharing, given Mr Saakashvili’s political
ambitions and the fact that they lack Mr Zhvania’s political influence
and experience.
INTERNATIONAL RELATIONS: Georgia’s problematic relationship with Russia
will dominate international relations. Ties between the two countries
have been strained, owing to Georgia’s actions in South Ossetia, which
Russia considers to be its sphere of influence. Russia also alleges that
there is still a terrorist presence in Georgia’s Pankisi Gorge, which
has long been considered to be a refuge for Chechen rebels. Russia often
reiterates that it has the right to launch pre-emptive strikes on
terrorist bases outside its territory, raising the risk of an attack on
the Pankisi Gorge.
POLICY TRENDS: Reform efforts will include legislative, financial and
energy sector reform; privatisation; and further fiscal consolidation.
The government has made strides towards strengthening revenue
performance and implemented a new tax code in January 2005, but still
needs to make inroads into eradicating corruption and reducing
smuggling. However, the government’s progress in addressing these areas
is likely to be sluggish, owing to the weak enforcement of legislation,
including the inconsistent application of laws and bankruptcy procedures.
INTERNATIONAL ASSUMPTIONS: The global economy is experiencing a
slowdown. After an impressive performance in 2004, when demand rose at
its fastest pace for a quarter of a century, growth is softening in a
number of markets. The outlook for 2005-06 is still good, and the annual
rate of growth will be similar to that experienced in some of the best
years of the 1990s, but, in comparison with the heady performance of
2004, it will still represent a significant deceleration. We forecast
that world GDP growth, on a purchasing power parity basis, will slow
from a rapid 5.1% in 2004 to 4.2% in 2005, and to 4% in 2006.
ECONOMIC GROWTH: Growth in 2005 will be held back by a poor agricultural
harvest, following floods earlier in the year which destroyed much of
the 2005 crop. Since the agricultural sector traditionally accounts for
over 20% of total GDP, its performance has a significant impact on
growth. We have therefore revised downwards our forecast for real GDP
growth in 2005 to 8%. Better weather conditions in 2006 should result in
an acceleration of growth to 10% year on year.
INFLATION: High oil prices will exert inflationary pressures in 2005, as
will rising food prices, owing to a poor agricultural harvest, although
a decline in household energy demand in the second and third quarters
should partly offset this effect. The nominal strengthening of the lari
in 2005-06 will also reduce imported inflation. Year-on-year consumer
price inflation will therefore fall in the course of 2005 and remain at
similar levels in 2006, owing to solid economic growth, which will boost
employment and domestic demand. We anticipate annual average consumer
price inflation of 8% in 2005 and 7.8% in 2006.
EXCHANGE RATES: Foreign-currency inflows, in the form of workers’
remittances and external aid, are likely to remain high in 2005-06. The
lari will therefore continue to strengthen against the US dollar in both
nominal and real terms. The central bank will attempt to sterilise these
foreign-currency inflows, but, given the limited tools at its disposal,
it will only partly succeed. We forecast an average annual exchange rate
of rate Lari1.82:US$1 this year, followed by a rate of Lari 1.79:US$1 in
2006.
EXTERNAL ACCOUNT: Export revenue growth will be reasonably solid in
2005, owing to rising metals prices, but will temper in 2006 as
commodity prices fall. From the middle of 2005 the services balance will
benefit from a surge in crude oil transiting Georgia, when the
Baku-Tbilisi-Ceyhan oil pipeline becomes operational. Services credits
will rise further in 2006, when the South Caucasus Pipeline begins to
send gas to external markets. Rising transit revenue and workers’
remittances will help to keep the current-account deficit below 10% of
GDP in 2005-06.
SOURCE: Country outlook

September 20, 2005
$1b Israel-Turkey oil pipeline planned
Oil will flow from Turkey to Ashkelon, from there to Eilat, to be shipped to
India and China.
Gal Nissim 20 Sep 05 17:47
Sources inform “Globes” that an oil pipeline will be laid between Israel and
Turkey at a cost of $1 billion. An Israeli delegation will discuss the
project with the Turkish government next month. Under the initial plan, the
pipeline will reach Ashkelon. The oil will flow from there to Eilat, and
will then be shipped to the Far East, mostly India and China.
The project will provide an alternative to the Suez Canal, which is unable
to handle large ships. The pipeline is expected to make Israel a strategic
country in the Middle East a transit country for huge quantities of oil. The
Ministry of National Infrastructures supports the venture, and sources
estimate that the project could generate huge revenue for the Israeli
economy.
The Indian government has announced that it intends to use the pipeline. The
Indian oil minister announced that his government was interested in using
the Ashkelon-Eilat oil pipeline to transport oil from the Mediterranean Sea
to the Dead Sea, from where it will be shipped to India in large tankers.
Turkey gets its oil from CIS countries.
The Ministry of National Infrastructures explained that the pipeline would
cut transportation costs for all parties in the deal.
Up until now, this oil has been exported solely to Western countries by way
of Georgia, due to lack of means to transport it to Asian countries.
The first shipment of 600,000 tons of oil will reach Indian oil refining
company Bharat Petroleum Corp. Ltd. in January. The oil will be sent through
from Azerbaijan to Georgia. From there, it will be shipped via the Suez
Canal to India.

Azerbaijan: Country outlook
COUNTRY VIEW
ECONOMIST INTELLIGENCE UNIT
PUBLICATION DATE: September 07, 2005
OVERVIEW: Although the Economist Intelligence Unit’s baseline forecast
assumes that the president, Ilham Aliyev, will continue to consolidate
his authority and remain in power over the forecast period, there is
still a small risk that an aggressive attempt to restructure the
political scene could antagonise members of the ruling elite, leading
them to challenge his authority. There is also likely to be unrest
surrounding the forthcoming parliamentary election. The economy is
expected to continue to grow rapidly, owing to external investment in
the energy sector and rising energy production. Real GDP growth is
forecast to reach 20% in 2005, owing to a substantial increase in oil
output, and will accelerate to 25% year on year in 2006, as gas
production begins to rise in tandem with oil volumes. As there are only
limited sterilisation tools available, the authorities will allow a
slight nominal appreciation of the currency against the US dollar, which
will keep inflation in check. The current-account deficit is forecast to
swing into substantial surplus in 2006, as oil production is ramped up.
Domestic politics: The political scene will be dominated in the short
term by the approach of the parliamentary election, which will be held
on November 6th 2005. Although Mr Aliyev is likely to survive
politically the tensions that will build as the election approaches, he
will probably emerge weakened from the process. Largely thanks to a
changed international context, the opposition is thus expected to be
stronger and more influential after the election. It has become
increasingly clear that the government’s long-standing strategy of
manipulating elections and excluding the opposition from power is less
viable than before. International pressure for increased political
liberalisation, particularly from Azerbaijan’s most important ally, the
US, has increased considerably in recent months, and the government is
now more likely to shy away from the sort of blatant electoral
manipulation seen in the past.
International relations: One development that is increasingly affecting
Azerbaijan’s foreign policy is the greater stress by the US government
on the promotion of democracy. In the past the US was willing to work
with the semi-authoritarian leadership in Azerbaijan, since it was
preferable to the chaos that dominated the country in the years
immediately following independence. Although this policy has now
changed, the difficulty for the US will be to judge the amount of
pressure that it will be able to exert on Azerbaijan’s leadership
without triggering an upheaval. The new US policy will also create
problems for Mr Aliyev. He will find it harder now to fulfil one of the
main objectives of Azerbaijan’s foreign policy–namely, promoting closer
ties with the US, with the goal of fending off interference from its
larger neighbours, Russia and Iran, and avoiding the animosity of
smaller countries in the region, such as Armenia and Turkmenistan.
Policy trends: Economic policy will focus on the challenge of
maintaining macroeconomic stability during a period of rapid economic
growth. The fiscal stance will be loosened slightly, so that spending
increases on welfare projects to alleviate poverty and to stave off
potential social unrest. A tightening of monetary policy is therefore
likely to be required. The level of official debt, both domestic and
foreign, will remain low, but the issuance of domestic debt will
increase as a way of mopping up any excess liquidity linked to by
hard-currency inflows. However, inflation is still likely to be higher
than in recent years, because of the limited number of policy tools at
the disposal of the Azerbaijan National Bank (ANB, the central bank),
and because the bank will be reluctant to let the exchange rate
appreciate significantly. In the event that the authority of Mr Aliyev,
comes under serious challenge, this would result in a bout of political
instability, and even limited reforms would be put on hold. However,
every effort would be made to ensure that the operating environment for
oil companies remained favourable.
International assumptions: As a result of the ongoing strength of oil
demand and our long-standing forecast for a slowdown in the growth of
supplies from both Russia and other non-OPEC producers, we expect prices
for dated Brent Blend to average US$55.5/barrel in 2005. This price
projection includes a risk premium to reflect the growing concerns over
global spare capacity in crude oil and tight refined capacity. As OPEC
production gradually rises, global stocks will continue to build
(particularly once the US driving season ends), and we expect prices to
ease slowly from current highs. However, prices will be subject to
occasional sharp increases. Geopolitical concerns and price expectations
will encourage consumers to continue to make forward purchases, as well
as to stock up in anticipation of uncertainties and perceived tightness
ahead. By 2006 we expect an annual average price of US$53.5/b for Brent.
Economic growth: A surge in oil production at the Azeri-Chirag-Guneshli
(ACG) oilfields, which began in February, pushed up real GDP growth to
18.9% year on year in the first seven months of 2005, compared with 9.4%
in the year-earlier period. We expect the economy to expand by 20% year
on year in 2005, reflecting strong growth in oil production and
extremely high oil prices. Growth will accelerate to 25% year on year in
2006, owing to the completion of the first phase of development of the
Shah Deniz gasfield and further rises in oil output. Economic expansion
will also be supported by continued large-scale inflows of foreign
direct investment (FDI) into the oil and gas sector, which is undergoing
a rapid and intensive phase of development. Capital investment in
January-July 2005 reached Manat14.8trn (US$3.1bn), up by nearly 10% year
on year. Capital investment now accounts for about 50% of GDP.
Hydrocarbons development and production will drive economic growth over
the forecast period. However, strong growth will be limited to oil and
related sectors, such as communications, and hotels and catering, with
the contribution to GDP of the broader non-oil economy set to decline
gradually.
Inflation: High FDI inflows related to hydrocarbons development pushed
up consumer price inflation to 15.7% year on year in April, but the
ANB’s decision to raise interest rates in subsequent months slowed
inflation to 12.8% year on year by July. Hard-currency inflows, combined
with additional inflows related to the rapid growth in oil exports (not
all of which will be sterilised by channelling them in the overseas oil
fund), will continue to exert inflationary pressures, although seasonal
declines in food prices will temper month-on-month consumer price
inflation. Average annual consumer price inflation is expected to be 12%
in 2005, and will fall to 8.5% in 2006 as monetary policy tightens
further. Decelerating inflation will be helped from the second half of
2006 by a decrease in FDI as hydrocarbons activity enters a less
intensive phase of development, and as some export earnings are diverted
into the SOFAZ oil fund.
Exchange rates: Although the government sterilises part of the oil
windfall by depositing foreign currency in its overseas oil fund,
hard-currency inflows are still affecting the economy and boosting the
money supply. The ANB will allow the manat to appreciate slightly in
nominal terms over the forecast period, in order to restrain the
expansion of the money supply and contain consumer price inflation. The
recent rise in interest rates will not help to prevent further real
appreciation, although the amount of speculative capital that is likely
to be attracted into domestic assets will be very small, given that
there are few attractive assets on offer. Some of the products of the
non-oil sector will be priced out of their export markets by the
stronger manat.
External sector: With the hydrocarbons sector at an intensive stage of
development until the middle of 2006, import spending will be extremely
high over this period. Foreign investment projects in Azerbaijan’s
hydrocarbons sector require substantial imports of capital goods and
services, since Azerbaijan’s industrial base is insufficiently developed
to service oil and gas investors. High oil prices in 2005 will ensure
that the current-account deficit decreases significantly, and it will
swing into substantial surplus 2006, when exports of crude oil and gas
surge. The first tanker of oil from Azerbaijan’s ACG oilfields will be
shipped to Western markets towards the end of 2005, while the export of
gas from the Shah Deniz field will begin from mid-2006. The external
deficit in 2005 will be entirely covered by FDI.
SOURCE: Country outlook

Thursday, September 15, 2005
press/2005/09-15-05.htm
Knollenberg: Legislation to Recognize Armenian Genocide clears first hurdle
WASHINGTON , D.C. – Congressman Joe Knollenberg (R/MI-09) announced
today that legislation to officially recognize the Armenian Genocide
was passed by the U.S. House International Relations Committee. The
legislation, co-sponsored by Rep. Knollenberg, will now move for
approval by the full U.S. House.
This year marks the 90th Anniversary of the Genocide. It is estimated
that over one and a half million Armenians were systematically and
deliberately killed in this historic atrocity. By affirming the
Genocide and commemorating those who lost their lives, this
legislation is intended to finally start the healing
process. Thirty-seven U.S. States and the District of Columbia have
already passed similar legislation or formally recognized the
Genocide.
`The Genocide happened. It’s time the United States admitted
thisfact,’ said Rep. Knollenberg. `The only way to prevent future
atrocities is to affirm the ones of the past and take a united vow
that they never happen again.
We can’t afford to be apathetic or unsure. The United States has a
responsibility to lead the world and admit the truth of the Armenian
Genocide.’ The legislation calls upon the President of the United
States to ensure that the foreign policy of the United States reflects
appropriate understanding and sensitivity concerning issues related to
human rights, ethnic cleansing, and genocide documented in the United
States record relating to the Armenian Genocide. Also, it acknowledges
the proud history of the U.S. interventionin opposition to the
Armenian Genocide.
`Most importantly, this legislation will show the world that America
is not going to forget this horrible crime.’ Congressman Knollenberg
said. `The victims of the Genocide and their families deserve to have
the crime recognized for the atrocity that it was. The committee’s
action today – and hopefully the approval of the full House soon –
will help make sure that this terrible offense is never forgotten.’
###