MGM Considers Special Dividend

March 16, 2004

MGM Considers Special Dividend

Move Would Mean Windfall
Of $1 Billion to $1.6 Billion
For Investor Kirk Kerkorian

Billionaire investor Kirk Kerkorian would reap a windfall of between $1
billion and $1.6 billion if the film studio he controls,
Metro-Goldwyn-Mayer Inc., issues a one-time special dividend of $6 to $9
a share that the company is currently considering.

MGM has been talking about ways to “share the wealth” with shareholders
since last summer, when the company tried and failed to acquire Vivendi
Universal SA’s entertainment assets. MGM recently has eliminated all of
its debt and increased its annual cash flow to nearly $200 million in
2003. The idea of a dividend was floated as a possibility when the
company was in the early stages of considering its options.

In September, MGM Chairman and Chief Executive Alex Yemenidjian said
that the management had at the time decided against recommending any
kind of extraordinary dividend. Later, MGM bought back about 10 million
shares, at about $17 a share, through a Dutch auction that was completed
earlier this year.

‘Committed to Sharing’

Late Monday, however, MGM disclosed that it is contemplating a
“significant” one-time dividend payment, which people familiar with the
matter put at between $6 and $9 a share. “Our management remains
committed to sharing the company’s wealth with our shareholders,” Mr.
Yemenidjian said in a statement. He emphasized that neither the decision
nor its possible timing was yet final.

Of course, while all shareholders would benefit equally on a per-share
basis, the move would most clearly be a boon for the 86-year-old Mr.
Kerkorian, who controls about 74% of the company’s 235 million shares
outstanding. MGM would borrow money at low interest rates to pay the
possible dividend, which would probably be payable in about a month if
the company decides to proceed. The borrowing would then be quickly
repaid; MGM is expected to generate a total of $600 million to $900
million in cash flow over the four years from 2003 to 2006.

Mr. Kerkorian in recent years has at times seemed eager for a sale of
MGM, and the company has in fact said numerous times that it was
pursuing strategic alternatives. In 2001, the company held unsuccessful
talks to merge with Sony Corp.’s Sony Pictures Entertainment. Later, the
company approached possible partners including Walt Disney Co. and
DreamWorks SKG. In 2003, Vivendi made an aggressive bid for the Vivendi
Universal entertainment assets, such as Universal Pictures, but didn’t
prevail. As recently as late last year, MGM held preliminary talks with
Time Warner Inc. that didn’t pan out.

As a rule, it is assumed that Mr. Kerkorian has been seeking a stock
transaction of some kind because of the preferable tax consequences. Yet
even as he has failed to sell the company, Mr. Kerkorian has at times
raised his stake in it. Harris Nesbitt Gerard analyst Jeffrey Logsdon
estimates that Mr. Kerkorian has put about $3 billion into MGM over the

Now, the possible one-time dividend represents a way for Mr. Kerkorian
to realize some return on his investment in MGM, the legendary studio
that he purchased for the third time in 1996, at a low tax rate. The
one-time dividend also wouldn’t rule out the possibility of a sale. Once
such a payout is made, MGM’s stock would be expected to decline by about
the same amount as the dividend, though going forward, it would have
higher debt because of the proposed dividend plan.

Tax Consequences

The tax consequences of such a move for MGM shareholders are now more
appealing than they once were. A 2003 tax-relief law cut the personal
tax rate on corporate dividends from a maximum of 39.1% to 15%,
inspiring a wave of companies to raise their dividends. A portion of
MGM’s dividend could be ruled tax-free if it is judged to be a “return
of capital,” owing to the fact that MGM has generated net losses instead
of earnings in recent years.

MGM, with a 4,000-title film library, has generated greater operating
cash flows recently as a result of several factors, one of which has
been the explosion of DVD movie sales in the U.S. The company has also
done a better job of managing its feature-film business, betting less on
risky big-budget movies and more on modest titles such as “Legally
Blonde” and “Barbershop,” which can be enormously profitable if they
become hits.

Write to Bruce Orwall at [email protected]

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Chess: Petrosian Remembered

The Times
March 16, 2004

Raymond Keene

Petrosian Remembered

With the Petrosian Memorial tournament in full swing I propose to give this
week a selection of games demonstrating the unique talent of the Armenian
world champion.

White: Boris Spassky
Black: Tigran Petrosian
World Championship
Moscow 1969
Queen’s Indian Defence

1 d4 Nf6 c4 e6 3 Nf3 b6 4 a3 Bb7 5 Nc3 d5 6 e3 Nbd7 7 cxd5 exd5 8 Be2 Bd6 9
b4 0-0 10 0-0 a6 11 Qb3 Qe7 12 Rbl Ne4

Petrosian has handled the opening skilfully and WHite has been prevented from
taking the initiative.

13 a4 Ndf6 14 b5 Nxc3 15 Qxc3 Ne4 16 Qc2 Rfc8 17 Bb2 c6 18 bxc6 19 Qb3 Qd7 20
Ra1 b5 21 a5

This move is a mistake, depriving Spassky of any meaningful strategic play.

21 … Bb7 22 Ne5 Qd8 23 Rfdl Qh4 24 g3 Qe7 25 f3 Ng5 26 h4

These clumsy pawn advances merely serve to weaken the white kingside.

26 … Ne6 27 f4 f6 28 Nf3 Nd8 29 Kf2 Nf7 30 Nd2 Rc4

If White ever captures this rook, the resultant opening of the long diagonal
(after … dxc4) will be fatal.

31 Qd3 Re8 32 Bf3 Bb4 33 Ba3 Bxa3 34 Rxa3 Nd6 35 Re1 f5 36 Raa1 Ne4+ 37 Bxe4
fxe4 38 Qbl Qd7 39 Ra2 Rec8 40 Nxc4

Spassky cannot resist the temptation any longer. However, the black bishop
and pawns now overwhelm White. Better chances for survival were offered by 40

40 … dxc4 41 d5 bxd5 42 Rd1

This position is extremely difficult for White. Black threatens to invade on
the kindside with his queen and also to advance the queenside pawns. Coping
with all these threats proves to be an impossible job.

42 … c3 43 Rc2 Qh3 44 Rg1 Qg4 45 Kg2 Qf3+ 46 Kh2 Qxc3 47 f5 Qc5 48 Rfl b4
49 f6 b3 50 rcf2 c2 51 Qcl e3 52 f7+ Kf8 53 Rf5 b2 54 Qxb2 clQ 55 Qxg7+ Kxg7
56 Rg5+ White resigns.

Chess: Double Jeopardy

The Times
March 17, 2004

Raymond Keene

Double Jeopardy

Continuing my series to accompany the Petrosian Memorial event currently in
progress, here are two devastating victories from the Armenian champion’s
early career.

White: Tigran Petrosian
Black: Victor Korchnoi
Leningrad 1946
Dutch Defense

1 d4 e6 2 Nf3 f5 3 g3 Nf6 4 Bg2 d5 5 0-0 Bd6 6 c4 c6 7 b3 0-0 8 Ba3

This move removes a key defender of the vulnerable e5-square. After the
recapture by the knight on a3, this piece is well placed to transfer to d3,
where it eyes this weak square.

8 … Bxa3 9 Nxa3 Qe8 10 Nc2 Qh5 11 Qc1

An excellent move, covering a number of important dark squares. White also
has the long term idea to target c7.

11 … Ne4 12 Nce1 g5 13 Nd3 Nd7 14 Nfe5 Kh8 15 f3 Nd6 16 e4

White has already won the positional battle and now opens the game decisively
with this thematic advance. Black is now in big trouble as can be seen from
the variation 16 … dxe4 17 fxe4 fxe4 18 Rxf8+ Nxf8 19 Qa3 exd3 20 Qxd6 Kg8
21 Rfl and the black position caves in.

16 … Nf7 17 cxd5 18 exd5 exd5 20 f4

Petrosian has comprehensively outplayed the future World Championship
challenger and Black is now quite lost.

20 … Rd8 21 Qc7 b6 22 fxg5 Ba6 23 Nf4 Black resigns.

White: Tigran Petrosian
Black: Alexander Tolush
Moscow 1950
Queen’s Gambit Declined

1 Nf3 Nf6 2 c4 e6 3 Nc3 d5 4 d4 c6 5 cxd5 exd5 6 Qc2 Bd6 7 Bg5 0-0 8 e3 Bg4 9
Ne5 Bh5 10 f4 Qa5 11 Bd3 h6

This is a blunder allowing White an overwhelming attach. Much better is 11
… Ne4.

12 Bxf6 gxf5 13 g4 fxe5 14 fxe5 Be7 15 0-0-0 Bg5 16 gxh5 Kh8 17 Qf2 f5 18 h4
Be7 19 Qf4 Black resigns.

A Biological Dig for the Roots of Language

March 16, 2004

A Biological Dig for the Roots of Language

Once upon a time, there were very few human languages and perhaps only one,
and if so, all of the 6,000 or so languages spoken round the world today
must be descended from it.

If that family tree of human language could be reconstructed and its
branching points dated, a wonderful new window would be opened onto the
human past.

Yet in the view of many historical linguists, the chances of drawing up such
a tree are virtually nil and those who suppose otherwise are chasing a
tiresome delusion.

Languages change so fast, the linguists point out, that their genealogies
can be traced back only a few thousand years at best before the signal
dissolves completely into noise: witness how hard Chaucer is to read just
600 years later.

But the linguists’ problem has recently attracted a new group of researchers
who are more hopeful of success. They are biologists who have developed
sophisticated mathematical tools for drawing up family trees of genes and
species. Because the same problems crop up in both gene trees and language
trees, the biologists are confident that their tools will work with
languages, too.

The biologists’ latest foray onto the linguists’ turf is a reconstruction of
the Indo-European family of languages by Dr. Russell D. Gray, an
evolutionary biologist at the University of Auckland in New Zealand.

The family includes extinct languages like Hittite of ancient Turkey, and
Tokharian, once spoken in Central Asia, as well as the Indian languages and
Iranian in one major branch and all European languages except Basque in

Dr. Gray’s results, published in November in Nature with his colleague
Quentin Atkinson, have major implications, if correct, for archaeology as
well as for linguistics. The shape of his tree is unsurprising < it arranges
the Indo-European languages in much the same way as linguists do, using
conventional methods of comparison. But the dates he puts on the tree are
radically older.

Dr. Gray’s calculations show that the ancestral tongue known as
proto-Indo-European existed some 8,700 years ago (give or take 1,200 years),
making it considerably older than linguists have assumed is likely.

The age of proto-Indo-European bears on a longstanding archaeological
dispute. Some researchers, following the lead of Dr. Marija Gimbutas, who
died in 1994, believe that the Indo-European languages were spread by
warriors moving from their homeland in the Russian steppes, north of the
Black and Caspian Seas, some time after 6,000 years ago.

A rival theory, proposed by Dr. Colin Renfrew of the University of
Cambridge, holds that the Indo-Europeans were the first farmers who lived in
ancient Turkey and that their language expanded not by conquest but with the
spread of agriculture some 10,000 to 8,000 years ago.

Dr. Gray’s date, if accepted, would support the Renfrew position.

Several linguists said Dr. Gray’s tree was the right shape, but added that
it told them nothing fresh, and that his dates were way off. “This method is
not giving anything new,” said Dr. Jay Jasanoff, a Harvard expert on
Indo-European. As for the dates, Dr. Jasanoff said, “The numbers they have
got seem extremely wrong to me.”

Dr. Don Ringe, a linguist at the University of Pennsylvania who has taken a
particular interest in computer modeling of language, said that Dr. Gray’s
approach was worth pursuing but that glottochronology, the traditional
method of dating languages, had “failed to live up to its promise so often
that convincing linguists there is anything there is an uphill battle.”

In the biologists’ camp, however, there is a feeling that the linguists do
not yet fully understand how well the new techniques sidestep the pitfalls
of the older method. The lack of novelty in Dr. Gray’s tree of Indo-European
languages is its best feature, biologists say, because it validates the
method he used to construct it.

Most historical linguists know a few languages very well but less often
consider the pattern of change affecting many languages, said Dr. Mark
Pagel, an evolutionary biologist at the University of Reading.

“The field is being driven by people who are not confronted with the broad
sweep of linguistic evolution and is being invaded by people like me who are
only interested in the broad sweep,” Dr. Pagel said.

Glottochronology was invented by the linguist Morris Swadesh in 1952. It is
based on the compiling of a core list of 100 or 200 words that Swadesh
believed were particularly resistant to change. Languages could then be
compared on the basis of how many cognate words on a Swadesh list they
shared in common.

Cognates are verbal cousins, like the Greek podos and the English foot, both
descended from a common ancestor. The more cognates two languages share, the
more recently they split apart. Swadesh and others then tried to quantify
the method, deriving the date that two languages split from their percentage
of shared cognates.

The method gave striking results, considering its simplicity, but not all of
the findings were right. Glottochronology suffered from several problems. It
assumed that languages changed at a constant rate, and it was vulnerable to
unrecognized borrowings of words by one language from another, making them
seem closer than they really were.

Because of these and other problems, many linguists have given up on
glottochronology, showing more interest in an ingenious dating method known
as linguistic paleontology.

The idea is to infer words for items in the material culture of an early
language, and to correlate them with the appearance of such items in the
archaeological record. Cognates for the word wheel exist in many branches of
the Indo-European family tree, and linguists are confident that they can
reconstruct the ancestral word in proto-Indo-European. It is, they say,
“k’ek’los,” the presumed forebear of words like “chakras,” meaning wheel or
circle in Sanskrit, “kuklos,” meaning wheel or circle in Greek, as well as
the English word “wheel.”

The earliest wheels appear in the archaeological record around 5,500 years
ago. So the proto-Indo-European language could not have started to split
into its daughter tongues much before that date, some linguists argue. If
the wheel was invented after the split, each language would have a different
or borrowed word for it.

The dates on the earliest branches of Dr. Gray’s tree are some 2,000 years
earlier than the dates arrived at by linguistic paleontology.

“Since `wheel’ is shared by Tocharian, Greek, Sanskrit and Germanic,” said
Bill Darden, an expert on Indo-European linguistic history at the University
of Chicago, “and there is no evidence for wheels before the fourth
millennium B.C., then having Tokharian split off 7,900 years ago and
Balto-Slavic at 6,500 years ago are way out of line.”

Dr. Gray, however, defends his dates, and points out a flaw in the wheel
argument. What the daughter languages of proto-Indo-European inherited, he
says, was not necessarily the word for wheel but the word “k’el,” meaning
“to rotate,” from which each language may independently have derived its
word for wheel. If so, the speakers of proto-Indo-European could have lived
long before the invention of the wheel.

His tree, Dr. Gray said, was derived with the methods used by biologists to
avoid problems identical to those in glottochronology. Genes, like
languages, do not mutate at a constant rate. And organisms, particularly
bacteria, often borrow genes rather than inheriting them from a common
ancestor. Biologists have also learned that trees of any great complexity
cannot be drawn up by subjective methods. Mathematical methods are required,
like having a computer generate all possible trees < a number that quickly
runs way beyond the trillions < and then deciding statistically which class
of trees is more probable than the rest.

Dr. Gray based his tree on the Dyen list, a set of Indo-European words
judged by linguists to be cognates, and he anchored the tree to 14 known
historical dates for splits between Indo-European languages.

Many of the Dyen list cognates are marked uncertain, so Dr. Gray was able to
test whether omission of the doubtful cognates made any difference (it did
not). He also tested many other possible assumptions, but none of them
produced an age for proto-Indo-European anywhere near the date of 6,000
years ago favored by linguists.

“This is why our results should be taken seriously by both linguists and
anyone else interested in the origin of the Indo-European languages,” he
wrote, in a recent reply to his critics.

“We haven’t repeated the errors of glottochronology,” Dr. Gray said in an
interview. “What we are doing is adding value, since we can make inferences
about time depths which can’t be made reliably in other ways.”

Dr. Gray said he had formed collaborations with linguists and hoped they
would give his tree a warmer reception once his critics understood that he
had not made the errors they cited.

Some linguists are interested in the biologists’ approach.

“I think these methods are extremely promising,” said Dr. April McMahon of
the University of Sheffield and the president of the Linguistics Association
of Great Britain, though she expressed concern about Dr. Gray’s emphasis on
dating language splits.

If the biologists’ methods can date languages that existed 9,000 years ago,
how much further back can they probe?

“Words exist that can in principle resolve 20,000-year-old linguistic
relationships,” Dr. Pagel of Reading wrote in a recent symposium volume,
“Time Depth in Historical Linguistics,” adding that “words that can resolve
even deeper linguistic relationships are not out of the question.”

Many linguists believe that once two languages have drifted so far apart
that they share only 5 percent or so of their vocabulary, chance
resemblances will overwhelm the true ones, setting a firm limit on how far
back their ancestry can be traced.

“That’s a mistaken reasoning which shows the linguists are relying on a
model of evolution they trash when they see it written down,” Dr. Pagel

He added that their argument assumed a constant rate of language change, the
very point they know is wrong in glottochronology.

Geneticists believe modern humans may have left Africa as recently as 50,000
years ago, perhaps in a single migration with very small numbers.
Reconstructing language of 20,000 years ago would be a big stride toward
whatever tongue those first emigrants spoke. But Dr. Gray has no plans in
that direction.

“It’s hard enough to work out what happened 10,000 years ago, let alone
30,000 years ago,” he said.

Copyright 2004 The New York Times Company

Armenia and Latvia set to boost ties

Armenia and Latvia set to boost ties

15 Mar 04


Armenian Deputy Foreign Minister Ruben Shugaryan held a meeting today
with his Latvian counterpart Andris Teikmanis. The meeting was held
within the framework of bilateral consultations.

The press service of the Armenian Foreign Ministry told Arminfo news
agency that they discussed ways of stepping up bilateral relations and
the possibility of Latvia helping Armenia in the process of its
integration into European structures. The sides stressed the need for
closer cooperation between Armenia and Latvia in international

Armenian Deputy Foreign Minister Ruben Shugaryan expressed the hope
that through its membership of the European Union (EU), Latvia will be
able to help Armenia’s active participation in this structure. In
particular, they expressed the hope that Latvia will do its best for
the South Caucasus to be included in the EU initiative – “New
neighbours”. The Armenian deputy foreign minister talked about the
situation in the region at the guest’s request, and also prospects for
cooperation with the South Caucasus.

The Latvian delegation also held meetings with Armenian Deputy Speaker
Tigran Torosyan and representatives of the presidential administration
and the Armenian Defence Ministry.

Submitted by Janoyan Ana

EU to help Armenia with democratic reforms

EU to help Armenia with democratic reforms

15 Mar 04


The sixth session of the Armenia-European Union commission for
interparliamentary cooperation started in Yerevan today.

The speaker of the Armenian National Assembly, Artur Bagdasaryan,
stated at the opening of the session that Armenia’s membership of the
European Union (EU) is one of the priorities of the republic’s foreign
policy. He said that the main step of the republic’s integration in
the EU is its participation in the “Expanded Europe: new neighbours”

Artur Bagdasaryan noted that Armenia has already completed the process
of honouring its commitments to the Council of Europe. He stressed
that constitutional changes and reforms in the legal system should
also be carried out in the republic.

The head of the Armenia-European Union commission for
interparliamentary cooperation, Torben Holtze, stated that the last
few years have seen progress in Armenia’s fulfilment of its
commitments to the CE. He said that the republic has ratified all
international conventions and adopted almost all the laws required by
the CE. At the same time, he stressed that it is necessary to reform
the state’s electoral system in order to rule out violations during
elections in the future, as it was the case in the 2003 presidential
and parliamentary elections.

[Passage omitted: The EU is to allocate 20m euros to Armenia for
democratic reforms and for the settlement of the Nagornyy Karabakh

Submitted by Janoyan Ana

Presidents discuss problems of Georgia’s Armenian community

Presidents discuss problems of Georgia’s Armenian community

12 Mar 04


Georgian Armenians should be full citizens of our country with equal
opportunities, Georgian President Mikheil Saakashvili told a news
conference in Yerevan today.

At the same time, the Georgian president noted the need for concrete
work in regions. For example, he said that a Russian military base is
the only employer in Akhalkalaki [Georgian region populated by ethnic
Armenians]. “This is not a normal situation,” he said, adding that one
could not survive without a well-developed economy. Moreover, he
mentioned tough climatic conditions in the region. This circumstance,
as well as the fact that the region is located on the border, became
obstacles to the development of the region back during the Soviet era.

As for the demands that the political status of the Georgian region be
changed, Saakashvili said that this kind of issues could be resolved
exclusively within Georgia.

I am thankful to the Armenian president for his strict position on
territorial integrity and stability in Georgia and in the region as a
whole. This is in the interests of Armenia, Georgia and of the future
of the South Caucasus,” Saakashvili said.

At the same time, he noted that “any attempt to artificially disrupt
stability is doomed to failure, as Armenia has a president who
understands very well the significance of stability and peace and
second, understands that this intention can lead to tragedy, which I
would not advise anybody even to think about”.

He noted that he even did not welcome debates on this issue. He said
that sometimes people think about this. Those are the people who have
no idea about the region and its problems but are engaged in
theoretical alterations to maps, Saakashvili said.

Armenian President Robert Kocharyan also underlined the similarity of
the positions of the Armenian and Georgian authorities, which called
for more harmonic and deeper integration of the Armenian diaspora into
Georgia’s economic, political and cultural life.

“This is the core on the basis of which concrete actions should be
taken. These include a road linking Tbilisi with the region of
Javakheti, a road which will create conditions for selling produce
from the region on Tbilisi’s markets and also economic programmes.

“We could work on this together,” Kocharyan noted. He said that the
main goal was proper integration of the Armenian community into
Georgian communities of these regions. “This is Armenia’s official
position,” the Armenian president said.

USA wants speedy reforms in Azerbaijan

USA wants speedy reforms in Azerbaijan

Zerkalo, Baku
12 Mar 04

The key goal of US officials’ recent visits to Baku was to persuade
the Azerbaijani leadership to carry out radical economic and political
reforms, Azerbaijani daily Zerkalo has said. Washington wants
Azerbaijan and other South Caucasus countries to share its values and
pursue its policy. To that end, the USA is trying to attract
Azerbaijan to NATO and has promised Baku assistance in reorganizing
its army, Zerkalo said. However, the paper said, Washington’s military
aid is linked to the settlement of the Armenian-Azerbaijani conflict
over Nagornyy Karabakh. Azerbaijan will have to make some compromises
in the peace talks, and US officials seem to have partly convinced the
Baku government, the daily said. The following is an excerpt from Rauf
Mirqadirov’s report by Azerbaijani newspaper Zerkalo on 12 March
headlined “Washington insists on speedy reforms in Azerbaijan” and
subheaded “The White House will wait for another three months”;
subheadings inserted editorially:

Americans dominate Baku

Americans dominated Baku this week. Never has the capital of
Azerbaijan seen so many high level delegations during the course of
one week. Moreover, one cannot help but notice that predominant among
the Americans landing in Baku were State Department emissaries and
military officials.

Judge for yourselves. At the beginning of the week there was a
delegation from the US airforce college together with US Deputy
Assistant Secretary for European and Eurasian Affairs Lynn
Pascoe. Staying in the capital yesterday was a delegation headed by
the US State Department deputy director for European security and
political affairs, Eric Schultz, and the deputy political adviser at
the US mission in NATO, Bruce Rogers.

And arriving today in Baku from Washington is yet another very
impressive delegation comprised exclusively of military and diplomatic
officials. This time it is a mission of the supreme advisory council
to the US European Command (EUCOM), headed by the deputy commander of
the US European Command, Gen Charles Wald. Also part of the delegation
are Commander-in-Chief Allied Forces Southern Europe Adm Gregory
Johnson and many ambassadors of various ranks.

In a word, Azerbaijan is keeping diplomats and military officials
busy, while economic questions have moved down to the second order of
importance. It is clear why. The most important geopolitical task of
the USA in the region involving economic aspects has already been
resolved. The building of the Baku-Tbilisi-Ceyhan pipeline is already
under way, and all the problems connected with the financing of this
project have been resolved.

Need for radical reforms

Today, the Americans are trying to accomplish several tasks at the
same time.

First, to talk the Azerbaijani leadership into some radical economic
and political reforms. As we have already learned from well-informed
diplomatic sources, this theme was key to questions discussed between
Lynn Pascoe and Azerbaijani President Ilham Aliyev.

Once again Pascoe brought to Baku’s attention the White House’s
position, concluding that relations between the two countries could be
raised to a qualitatively higher level only through assurance that
both governments share the same values, i.e. adhere to the principles
of democracy, respect and uphold human rights and liberal democracy.

If we put all the abovementioned from the diplomatic language into
plain language, Pascoe’s statements imply that Azerbaijan should share
the values recognized by the USA.

Pascoe, however, noted that the White House did not rule out the
possibility of inviting Ilham Aliyev to Washington on an official
visit before the US presidential elections. But, the same diplomatic
sources say that Pascoe stated that such an invitation could take
place only if Baku did not confine itself to verbal promises but took
real steps towards putting reforms into practice.

Washington gives Baku another three months

Delegation members did not hide the fact that Washington was
disappointed with the developments in Azerbaijan and with Baku’s
activities since 15 October [presidential elections]. Azerbaijani
officials were informed about this in a private conversation with a
member of the American delegation. At the same time, he [the
delegation member] said that Washington would wait for another three
months. If, by this time, serious steps towards reforms have not been
taken, then Washington will totally lose its faith in the ability of
the current Azerbaijani leadership to lead the country on the path of
integration into the Euro-Atlantic structures, with all ensuing

Second, the USA will try not to lose the initiative in the South
Caucasus to other players in the geopolitical game, above all, to the
European Union and Russia. Pascoe said this with typical American
straightforwardness at a meeting with Aliyev. Pointing out the growing
interest of the European Union in Azerbaijan and other countries of
the region, Pascoe said that the USA was making every effort “not to
stay behind” this competition.

USA wants “great changes”

The US diplomat said that he intended to discuss a number of issues
with Aliyev and to hold an exchange of views on “great changes” in the
region. In fact, Pascoe hinted that Washington was worried about an
undisguised increase in the activity of the European Union in the
South Caucasus, where up until recently the USA has regarded its
position as unshaken. However, now that “a democratically-elected
president” came to power in Georgia, the European Union is ready to
include the South Caucasus countries into its Wider Europe – New
Neighbourhood policy. This means that the EU sees the region within
its ranks in the near future. It is no coincidence that in Baku,
[Georgian President Mikheil] Saakashvili proposed creating a
mini-European Union of Azerbaijan and Georgia. Having left the
Azerbaijani capital, he included Armenia and then Russia in this list.

Things are clear with Russia – the EU does not want to see it as its
member for good reasons, at least in the near future. But the EU views
the South Caucasus as a single geopolitical and economic space. It is
no coincidence that the EU’s special representative for the South
Caucasus, Heikki Talvitie, has more than once said that this
organization treated equally all the three countries of the region.

USA wants South Caucasus to pursue its policy

The USA, in principle, is not against this prospect but would like to
see the South Caucasus countries as countries pursuing Washington’s
policy, like Spain, Poland and some other countries in the Eastern
Europe. Therefore, the USA is trying to attract the countries of the
South Caucasus, above all Azerbaijan and Georgia, to NATO where
Washington still has the final say. The USA thinks that this process
should be completed over the next two or three years.

However, except for the aforesaid, the armed forces of the regional
countries have to be reorganized to meet NATO standards and also the
Armenian-Azerbaijani conflict has to be resolved. Strange as it may
seem, but these two problems interrelate.

It is no coincidence that at a meeting with Azerbaijani Defence
Minister Safar Abiyev, Eric Schultz and Bruce Rogers discussed
strategic partnership between Azerbaijan, the USA and NATO. US
ambassador to Azerbaijan Reno Harnish noted at the meeting that
US-NATO cooperation with Azerbaijan and other countries of the South
Caucasus was aimed at eliminating instability in the region. He said
that the USA intended to continue cooperation with Azerbaijan to
ensure security. Harnish noted that the USA was expecting Safar
Abiyev’s visit to the USA where aspects of military cooperation
between the countries would be discussed.

[Passage omitted: at a meeting with the US delegation, Safar Abiyev
said the liberation of Karabakh was priority]

USA promises military assistance

The matter is that without a settlement to the Karabakh conflict, the
USA cannot render proper assistance to Azerbaijan to reorganize and
upgrade the army in compliance with NATO standards.

Suffice it to say that the Armenian group of the Congress took
painfully the US decision to allocate to Azerbaijan in military
assistance several million dollars more than to Armenia.

We have learned from diplomatic sources that during the negotiations
in Baku, Washington’s emissaries promised assistance to Azerbaijan in
reorganizing the army and in creating a large unit under NATO
standards within two or three years.

Need for compromises

However, Azerbaijan will have to make certain compromises in the
Karabakh peace talks.

It seems that the emissaries have managed to partly convince Baku’s
officials. Not long ago, the Azerbaijani leadership did not rule out
that the negotiations had to be started from scratch. However, Ilham
Aliyev recently expressed his surprise at a pessimistic statement made
by the Russian deputy foreign minister over the situation in the
negotiations to settle the Karabakh conflict.

Aside from this, against the background of the US week in Baku, a
surprising report has emerged saying that Aliyev will pay a visit to
Bratislava (Slovakia) on 18-19 March to attend an international
conference “Towards a Wider Europe: The new Agenda”.

[Passage omitted: list of countries which are to attend the

Hydrogen as an alternative energy to petrolium

Innovations-Report, Germany
March 15 2004

Hydrogen as an alternative energy to petrolium

The key aspect of the project is the obtaining of metal hydrides with
the capacity to “store” the hydrogen used in automotive vehicle fuel

Under the auspices of the Strategic Plan for Materials and Energy
being carried out by INASMET, the Armenian Institute of Chemistry &
Physics of the National Academy of Sciences has signed a joint
working agreement on order to make progress in one of the future
energy sources such as fuel cells based on using hydrogen.

This alternative energy source to fossil fuels (petroleum and its
derivatives) has, amongst other advantages, that of being
non-contaminant, given that the only by-product is water due to the
combustion of hydrogen. Energy user sectors such as automotive one
and aeronautic are the most likely beneficiaries of this alternative

On the occasion of the signing of the joint co-operation contract and
in order to continue work started in 1999 between both bodies,
professor S. Kharatyan, the sub-director of the Armenian Institute,
accompanied by researcher, doctor A. Sargyan, have visited Inasmet
Technological Centre.

The agreement involves the development of SHS (Self-propagating
High-temperature Synthesis) technology that has relevant applications
in the industrial sector (energy and metallurgy), in obtaining
enhanced-specification materials at competitive prices. The technical
team at INASMET already has ten years of experience in this
speciality and applications widely accepted industrially have been
obtained, such as powders for special coatings or high-specification
porous materials.

One aspect of the new agreement – more directly related to hydrogen
energy – will be the development of new production methods for metal
hydrides as raw material for fuel cells, given that they are an
efficient form of `storing’ hydrogen through SHS technology.

The Armenian Institute of Chemistry & Physics, founded in 1975, is
developing new lines of technological research, initiated in Moscow,
amongst the advantages of which are those involving simplicity,
rapidity and low energy consumption throughout the whole process.

In 1999 the first steps were taken for the joint enterprise between
INASMET and the Armenian institution in order to obtain cermets,
materials composed of ceramic and metal for applications in extreme
operating conditions. The first relevant steps in that two different
research teams and professionals from two distinct cultures have come
together and, apart from overcoming language barriers, the Armenians
in particular have had to go through work permit procedures under
very difficult conditions. With the signing of this agreement, many
of these difficulties have been overcome and there are very positive
expectations for both partners for advancement in these technologies.

Contact :
Cristina Alberdi
[email protected]
(+34) 943 003668

The Young Face of Georgia

Noyan Tapan Highlights #10(512)
15 March 2004

The Young Face of Georgia

By Haroutiun Khachatrian

The series of impressions we had got of Mikhail Saakashvili, has been
extended by what we saw during his visit to Armenia. The rather extensive
dialogue of the two presidents has brought a sizable set of additional
information about the new Georgian leader. In short, the positive
expectations we had from fragments seen on TV screens earlier have largely
been confirmed.

The most important element was, of course, the attitude of the President of
Georgia about the regional problems, the unresolved ethnic conflicts being
the most important ones among them. He displayed a sober and pragmatic
stance, carefully avoiding any expressions and words, which could increase
tension and suspicions of whoever concerned. He gave optimistic promises,
extending as far as the promise to re-open the rail link in Abkhazia in a
year period (the official report quotes him as saying this during his
meeting with Artur Baghdasarian, the Chairman of the National Assembly of
Armenia). Similarly, he pronounced many correct and optimistic words about
the regional cooperation and the relations between this region and its
powerful neighbors.

Of course, much of what Saakashvili declared in Yerevan was said by his
predecessor as well. What was different between Saakashvili and
Shevardnadze, was, in my view, that the new 36-year-old president really
meant what he said. It was evident that this is his style: he spoke very
openly, often saying things that few other politicians would. And hence he
looked quite sincere in expressing his goals: settling problems with Russia,
regulate conflicts, stimulate cooperation in the region.

Georgia has been, for a number of reasons, the central element of the South
Caucasus. If its new leader succeeds in implementing his policy, the
situation in the whole region may improve greatly. Good luck!!!