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[CENN] CENN - June 1, 20004 Daily Digest - Armenia {01}

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  • [CENN] CENN - June 1, 20004 Daily Digest - Armenia {01}

    CENN - JUNE 1, 20004 DAILY DIGEST - ARMENIA

    Table of Contents:
    1. The Death of Green Spaces
    2. The Windfall from Cutting Trees
    3. Russians Take Over Armenian Chemical Plant
    4. 120 Million Drams Provided ILLION To Shirak Region for Work Against
    Money Project
    5. Germany to Allocate 6m Euro to Armenia for Reconstruction of Power
    Stations
    6. UN Millennium Development Goals to be implemented in Armenia
    7. Medicine registration fees to be leveled



    1. THE DEATH OF GREEN SPACES

    Source: Transitions Online, Czech Republic, May 28 2004

    In 1988, the large, leafy public square next to the Opera House in
    Yerevan was renamed Freedom Square, in honor of the movement that
    eventually led the country to independence from the Soviet Union in
    1991.

    With its benches, open spaces, and trees, the square has long been a
    popular place for people to come and relax.

    But situation is changing at alarming speed, however, as the square's
    green spaces are paved over to make room for cafes, restaurants, and
    dance clubs. So many of these places have sprung up that in some corners
    of the square it is impossible to tell where one establishment stops and
    another begins - the outdoor tables and chairs all run together, and the
    music from competing loudspeakers merges.

    Every time a caf? is built, another bit of public space is lost. Here,
    dozens of trees have been felled, benches have been ripped up, and grass
    has been replaced by cement patios. It's a phenomenon that can be seen
    across the city. According to the Social Ecological Association, more
    than 700 hectares of trees have been chopped down over the past decade
    in Yerevan's construction boom.

    By law, it shouldn't be happening this way. According to government
    records, the building permits for most of the cafes violate the cities
    own ecological and planning standards. The rules say that before
    construction can begin on a new establishment, an owner must submit a
    design that meets the approval of ecologists. According to 2002 data
    from the Ecology Ministry, only one of the 12 cafes in Opera Square, the
    Astral, followed that procedure.

    Yerevan's chief architect, Narek Sargisian, defends the onslaught of
    development as a market response to public demand. "If so many cafes are
    being built, it means that there is a demand for them," he said.
    Sargisian admits that the park's planners didn't anticipate the
    displacement effect that the retail establishments would have on people
    who are looking for a public green space to relax in. On the other hand,
    he said, "the cafes are always full."

    But they're not making much money, or so believes Srbuhi Harutiunian,
    head of the Social Ecological Association. Harutiunian said the group
    had undertaken an unofficial survey of the park's caf? and restaurant
    owners and came up with surprising results.

    "We found that 40 percent of these establishments are unprofitable,"
    Harutiunian said. "Among the rest, 40 percent don't worry about profit
    at all [and are more interested in the prestige of their location], and
    the remaining 20 percent secure a profit only by not paying their
    taxes."

    Yet the building continues. To understand why, it's necessary to look at
    who's behind the chattering crowds, loud music, and frothy cappuccinos.


    2. THE WINDFALL FROM CUTTING TREES

    Ordinary Armenian businesspeople patronize the restaurants and cafes
    around Opera Park, but they certainly don't own them. So far, at least,
    it seems that ownership is a privilege reserved for the political elite
    - members of parliament, ministers, influential bureaucrats, and their
    cronies. A loophole has enabled the concreting over of Yerevan's green
    spaces in the city's law on allocation of land that has allowed the city
    to chop up and sell small caf?-size plots that it owns. Any plot larger
    than 20 square meters must be sold at public auction; anything less can
    be quietly sold to any buyer, for any price. Former Mayor Robert
    Nazarian, a man appointed by the president, was a champion of the
    loophole.

    Although he is no longer in office, Nazarian's legacy of political
    favoritism continues to deprive the city treasury of public funds and to
    line the pockets of government officials who "bought" parcels of land. A
    case in point: recently, according to reliable sources, a caf? in
    Freedom Park that was owned by a senior government official sold for
    $250,000. The official had spent $15,000 on the land on which the caf?
    has constructed. His final take after including construction costs? More
    than $220,000.

    Some estimates of the total losses to the state treasury from corrupt
    land sales near the Opera, where 15 companies have built cafes, exceed
    $1 million.

    Typically, the new owner begins to expand his cafe. After the event, the
    Mayor's Office "legalizes" the expansion of the caf? rather than taking
    action against the owners - who are high-level public officials.

    Whatever the procedure, the results can be gargantuan. In early 2002,
    Nazarian "sold" a 20-square-meter plot of parkland to a company
    (inappropriately) named Magnolia. The area of the plot has continued to
    expand until today. According to the city's Architecture and Planning
    Department, the Magnolia Caf? occupies a staggering 2,615 square meters,
    making it the largest establishment in the park. The businessman who
    managed to take over so much land? Grigor "Bellagio Grish" Margarian, a
    member of parliament from the Orinats Yerkir Party.

    Nazarian has explicitly intervened in some developments. In January
    2002, a company named Only Merriment requested permission to buy a plot
    of land and build a video arcade next to Freedom Square. Permission was
    granted, and approval from the city planning department awarded. One
    month later, Only Merriment was allowed to acquire an additional
    312-square-meter plot of land adjacent to the arcade site, to build an
    outdoor caf?.

    Then, one month after that, Nazarian abruptly amended both decisions and
    issued blanket permission to Only Merriment to build a combined
    arcade-caf?, although this hybrid had never been approved by the city's
    architecture department. Only Merriment was re-registered as Atlantic
    Garden and, according to official documents, was authorized to occupy
    332 square meters in a public tender. Today, it's hard to tell how much
    of the park Atlantic Garden occupies - much more than 332 square meters,
    though, since, during construction the building was considerably
    expanded by its owner. The owner? Anush Ghazaryan (better known as
    Kamvolny Anush, or Pretty Anush), a man widely thought to enjoy the
    protection of National Security Minister Karlos Petrosian.

    Levon Khachatrian, a member of parliament, has also benefited from the
    generosity of the Mayor's Office. Just as with Only Merriment and
    Magnolia, the major expansion of his caf? was within the law:
    Khachatrian first received a 20-square-meter plot and then permission to
    expand the plot. Khachatrian's caf? today obscures part of the Opera
    House from Sayat-Nova Street.

    Asked recently if any establishment in Freedom Square of the area near
    the Opera House was built according to city-approved plans, chief
    architect Sargisian replied with one word: "No."

    KEEPING PUBLIC RECORDS PRIVATE

    Official corruption in Armenia is a problem recognized by a host of
    international organizations. The Office for Security and Cooperation n
    Europe has been at the forefront of international efforts to bring
    attention to the problem and help the government tackle it, in part with
    the help of a joint OSCE-Armenian task force. President Robert Kocharian
    has even appointed a special adviser to coordinate the fight.

    So why hasn't anything been done to stop the corrupt practices that are
    doing obvious damage to public life in the capital? "Unfortunately, the
    people with power in this city are above the law," says biologist
    Oganezova, voicing a common public sentiment. "But they don't realize
    that they, too, lose. We lose our city's environment, literally and
    figuratively."

    He may have final approval over all new construction and land sales in
    the capital, but chief architect Sargisian says he can do nothing. "I
    try to do everything in my power, but there are too many senior
    officials in our government. They build these structures and consider
    themselves to be above the law," he said. But, as someone who has kept
    his post through three mayors, Sargisian has become vulnerable to
    accusations by some nongovernmental organizations that he allows the
    situation to continue.

    In November 2003, two months before he was dismissed from office, Mayor
    Nazarian admitted to reporters that he had come under pressure by
    government authorities to approve the land sales. Ninety-nine percent of
    the cafes near the Opera House were illegal structures, he acknowledged,
    adding, "We did not approve these designs." But none of the structures
    was torn down. In fact, since he made those remarks, new ones have gone
    up.

    According to City Deputy Kamo Areyan, current Mayor Yervand Zakharian
    has given his staff a "strict order" to examine how building licenses
    and land sales are approved.

    Armenia's Association of Investigative Journalists has tried several
    times to gain access to mayoral decisions on land allocations during the
    period from 1997 to 2003, without success. Zakharian has refused to
    provide the group with this public information and has not given an
    explanation for his refusal. President Kocharian has refused to
    intervene. The matter is now with the courts.


    3. RUSSIANS TAKE OVER ARMENIAN CHEMICAL PLANT

    By Tigran Avetisian in Yerevan and IWPR in London (CRS No. 235,
    27-May-04)

    Armenia's giant chemical factory, Nairit, the object of ownership
    battles over the last few years, has acquired a new and little-known
    Russian owner, in a sale welcomed by both government and workers.

    The takeover of one of Armenia's prize assets follows the acrimonious
    departure last year of Ransat, the British-based company that tried to
    turn around the factory, but ended up quarrelling with the Armenian
    government.

    A provisional deal was struck on April 16, 2004 by Armenia's central
    bank, which was in de facto control of the company, to sell Nairit to
    the Volgaburmash Company, based in the Russian city of Samara.

    The final details of the deal are still pending as currently an audit is
    being carried out to determine the worth of the factory. Its results
    will be announced in August.

    Nairit produces chloroprene rubber. In Soviet times it had a monopoly
    and was the only factory in the USSR making the product. It is still one
    of only five factories around the world turning out the synthetic rubber
    and has customers in 20 countries. Anil Kumar, general director of
    former owner Ransat, told IWPR last year that if the plant operated
    well, it would be worth 50 million US dollars."

    Ransat pulled out last May after a row over who was responsible for the
    factory's energy debts. Kumar said he had "spent ten million dollars
    before a single ton of rubber was produced" and blamed the Armenian
    government for not supporting his plans to turn around the company. (See
    "Armenian Chemical Deal Ends in Tears, CRS 177, May 1 2003
    http://www.iwpr.net/index.pl?archive/cau/cau_200305_177_2_eng.txt)

    Kumar said Ransat had promised to invest 25 million US dollars in the
    factory over a five-year period and progressively settle its debts,
    estimated variously at between 30 and 35 million dollars.

    After Ransat pulled out of Armenia, the factory's shares passed to
    Haykapbank and, as the bank did not have enough assets and was therefore
    taken under administration by the central bank, effectively placing it
    under Armenian government control.

    The Armenian government then handed management of Nairit to the Russian
    bank Runabank, one of whose major shareholders is the Volgaburmash
    holding company. Volgaburmash is owned by Samara businessman Andrei
    Ishchuk who is also a member of Russia's upper house of parliament, the
    Federation Council.

    The holding company has several factories in Ukraine and Russia that
    produce drilling equipment and several factories producing heating
    equipment, 11 construction companies and two banks. The Russian news
    agency Interfax reported that Volgaburmash had an annual turnover of 200
    million dollars.

    However as Volgaburmash has not previously dealt in chemicals, questions
    are being asked about how and why it acquired Nairit.

    "The Yerevan chemical factory is not a prestige project for
    Volgaburmash," Gleb Stolyarov, Samara correspondent of the Russian
    business newspaper Vedomosti told IWPR.

    Volgaburmash declined to answer IWPR's questions, but Stolyarov pointed
    out that the company's vice-president Yury Trakhtenberg had told a press
    conference that, "the personal connections of the president of the
    holding, Andrei Ishchuk, played a role."

    The acquisition of Nairit follows a pattern where major plants in
    Armenia have been acquired by Russian companies, while western companies
    have experienced significant difficulties in the Armenian market. The
    Razdan hydroelectric power station and the Metsamor nuclear power
    station are managed by Russian companies.

    The Armenian government is enthusiastic about Nairit's new owner. Karen
    Chshmaritian, minister of trade and economic development said that,
    "Four or five years ago, no one believed that Nairit would ever be
    privatized - first of all, because of its size, and secondly because of
    all the problems that had accumulated. But today that has become a
    reality."

    Political analyst Aghasi Enokian commented that a big business like
    Nairit could not succeed in Armenia without support from top levels of
    governmen.

    Whatever the politics of the deal are, there is general agreement that
    Nairit is now undergoing a revival.

    Mikhail Zavetyayev, who represents Volgaburmash, said that 3.5 million
    dollars had already been invested in the factory over the past ten
    months and that it was already bringing in a profit.

    Ruben Saghatelian, the new executive director of the factory, told IWPR
    that Nairit was now working at full capacity and that "we have no more
    problems with putting out the product".

    Chshmaritian said that thanks to its new owner Nairit had not acquired
    any new debts over the past ten months, that the almost 2,000 workers on
    the payroll were receiving their wages regularly and that 350,000
    dollars worth of back wages had been paid out. Factory director
    Saghatelian said that they had worked out a schedule for paying off
    debts.

    The workers are also pleased with the new management. "We are happy that
    finally we've started to receive our salaries on time," Hrachik
    Tadevosian, chairman of the trade union representing the factory's
    workers, told IWPR.

    But he added, "We are still owed a lot of money. Not only from the
    Ransat period but from much earlier."

    "I have no interest at all who owns Nairit or where our rubber gets
    sold," said Sarkis, a 43-year-old worker at the factory."I am content
    now, thank God. "If only they could pay us the money we're owed from
    before."

    Tigran Jrbashian, an economic analyst, said that the situation at Nairit
    was now "very promising". But he said that a lot of the previous
    problems plaguing the factory remained. "The problem of transporting the
    product still remains very serious and that directly puts up costs."

    Tigran Avetisian is a journalist for Aravot newspaper in Yerevan.


    4. 120 MILLION DRAMS PROVIDED TO SHIRAK REGION FOR WORK AGAINST MONEY
    PROJECT

    ArmenPress, May 27, 2004

    About 25 percent of the 500 million drams provided by the Armenian
    government for "Work Against Money" project is given to Shirak taking
    into consideration the level of unemployment in the region and the
    previous effectiveness of the project.

    According to the data provided by regional employment center from the
    total 120 million provided to the region 82 million is given to Akhurian
    and Gyumri, 20 million to Artik and its neighboring territories, 10
    million to Maralik city and its neighboring communities and 4 million
    each for Amasia and Maralik communities.

    As different from the previous years, this year instead of cleaning the
    streets people will renovate green zones and forest areas. At the same
    time reconstruction of secondary and cultural establishment and streets
    will be conducted.

    Shortly registration of citizens eager to participate will start. Last
    year such an initiation provided work to 1500 unemployed.


    5. GERMANY TO ALLOCATE 6M EURO TO ARMENIA FOR RECONSTRUCTION OF POWER
    STATIONS

    Source: Public Television of Armenia, Yerevan, May 26, 2004

    [Presenter] As a result of the two-day (25-26 May) working session of
    the Armenian-German financial and technical cooperation it was confirmed
    that Germany would allocate Armenia a grant of 6m euros in July. This
    financial aid will be channelled to the reconstruction of small
    hydroelectric power stations. During the 11 months of the
    Armenian-German cooperation programmes the Germans assisted Armenia with
    more than 150m euros.

    [Correspondent over video of meeting] A protocol adopted during the
    two-day inter-parliamentary session of the Armenian-German financial and
    technical cooperation, confirmed and signed over some champagne, was
    headed by Armenian Finance and Economy Minister Vardan Khachatryan and
    the head of Transcaucasus and Middle Asia Department of Germany Ministry
    of Economic Cooperation and Development, Wolfgang Armbruster.

    [Wolfgang Armbruster, captioned, in Germany with Armenian voice over]
    The Armenian government within the framework of the economic reforms
    achieves our cooperation. These are water supply, reconstruction of
    small hydroelectric power stations, assistance to the communities,
    health programmes, etc.

    [Correspondent] The finance and economy minister said that all the
    programmes have been discussed one by one. There is a problem in the
    water supply system which is being resolved in Armavir town and also 10
    communities. Noragung company is implementing the programme.

    Similar programmes will be implemented in Lori and Shirak Regions. Among
    the republic's regions, Armavir is the first which will have a 24-hour
    quality water supply system. Lori and Shirak will follow after Armavir
    this year.

    An additional programme on the reconstruction of small hydroelectric
    power stations will be confirmed in Bonn in July.

    The next interparliamentary negotiations will be held in Bonn, in the
    spring of 2005.

    Armenian president and ecology minister discuss Lake Sevan, environment
    Public Television of Armenia, Yerevan 26 May 04 [Presenter] President
    Robert Kocharyan held a working meeting today with Ecology Minister
    Vardan Ayvazyan where they discussed protection of Lake Sevan, forests
    and other environmental issues. The ecology minister assured the head of
    state that the efforts directed to the restoration of the green areas
    all over the republic would be felt this year. [Correspondent] During
    the discussion of the environmental issues with the president, Ecology
    Minister Vardan Ayvazyan outlined the issue of Lake Sevan. Already in
    1998, President Robert Kocharyan urged to stop the use of Lake Sevan's
    water for energetic aims. As a result of some years' works, the water
    level in Lake Sevan has risen by 98cm, which means that now the lake
    contains 1.18bn cu.m. more water. The minister announced that now they
    are concerned about the rising water level in Sevan. The Ecology
    Ministry is implementing the programmes on protection of the ecosystem
    of Lake Sevan and development of the surrounding environment, with the
    assistance of the international organizations. [Armenian Ecology
    Minister, Vardan Ayvazyan, captioned] We discussed the issues connected
    with the protection of the ecological system of Lake Sevan, and
    especially the Ecology Ministry, which is implementing an 8m-dollar
    programme in the area of Lake Sevan. We are trying to implement various
    programmes in the villages too, starting with protection and restoration
    of the green areas and development and implementation of small
    businesses. [Correspondent over video of Lake Sevan] The president
    focused attention on the issues of building a National Park around Lake
    Sevan. The forests' issues are also always in the president's centre of
    attention. The minister assured him that cultivation of 360,000 hectare
    of forests in Gegargunik and Tavush Regions will yield a positive
    result. The president also stressed the importance of adopting a law on
    ecology, which according to the ecology minister it is already ready.
    The government will submit it to parliament for discussion soon.


    6. UN MILLENNIUM DEVELOPMENT GOALS TO BE IMPLEMENTED IN ARMENIA

    Source: Public Television of Armenia, Yerevan, 26 May 2004

    [Presenter] According to the UN experts' assessments, the successes
    achieved in Armenia by the implementation of the UN Millennium
    Development Goals are impressive. The regional representative of the UN
    Millennium Development Goals, Yeji Osiatynski noted that apart from the
    successes that have been achieved, there are a lot of works to be done
    in education, health care and other spheres. Osiatynski said that if we
    are speaking about the reduction of poverty it is necessary to increase
    the level of higher education. When people are educated it is easier for
    them to find a job, and more jobs means less poor people.

    [Correspondent] Armenia has joined the UN new programme four years ago,
    which is called the Millennium Development Goals, with 190 other
    countries. The programme encompasses the following eight areas of human
    challenge.

    These are: To reduce poverty and starvation, to achieve primary
    education, gender equality, to reduce child mortality, maternal health,
    to struggle against HIV/AIDS, malaria and other diseases, to ensure
    environmental protection and to create a global partnership for
    development.

    Among these eight goals, the first, poverty reduction is the most
    important for Armenia. The regional representative of the UN Millennium
    Development Goals, Yeji Osiatynski noted that the time has come when the
    economic growth registered in Armenia will be directed to the reduction
    of poverty.

    [Yeji Osiatynski, captioned in his office, in English with Armenian
    voice over] It is not important that poverty will be reduced in 2005,
    2010 or 2015. It is a necessary political and social aim and we are
    moving forward in this direction. The democratic system, a free economy
    and creative and talented people will help you in this work.

    [Correspondent] The Polish official who visited Armenia for the first
    time, who was finance minister in his home country, considers that the
    time is right to clear the county of corruption and to reduce the number
    of poor people in the country. Osiatynski thinks that the young hold
    great potential for the newly developing countries and also for Armenia.
    The future of the country is in their hands. Armenian Prime Minister
    Andranik Markaryan also agreed with Osiatynski's opinion.

    [Yeji Osiatynski] Today during the meeting with the prime minister I
    understood that there is a readiness and intention to implement the
    Millennium Development Goals for the sake of the country and their
    people. With all your efforts you must build a democratic state, have a
    free economy and you will succeed.

    [Correspondent] The representatives of the government and political
    organizations discussed the UN Millennium Development Goals.


    7. MEDICINE REGISTRATION FEES TO BE LEVELED

    Source: ArmenPress, May 26,2 004

    According to a health ministry-affiliated agency for medications and
    medical technologies, foreign pharmaceutical companies seeking
    registration of their products in Armenia will pay as much fee for
    expert examination of their medicines as local companies. Until now
    overseas companies have paid $1,500 for conducting expert examination of
    their medicines and local companies-$400. The lower price for domestic
    companies was to help boost home pharmaceutical production.

    Under the new scheme, both local and foreign companies, will have to pay
    $1,200. Leveling of fees is one of the requirements Armenia assumed when
    joining the World Trade Organization. According to the agency, around
    4,000 medicines are registered in Armenia, of which 7.4 percent are
    domestically produced. Armenia brings medicines mainly from US, Great
    Britain, France, the Czech Republic, Hungary and CIS countries.

    Two of 11 Armenian companies, licensed to manufacture medicines,
    Pharmatech and Arpimed have brought their products in compliance with
    GMP requirements.

    --
    *******************************************
    CENN INFO
    Caucasus Environmental NGO Network (CENN)

    Tel: ++995 32 92 39 46
    Fax: ++995 32 92 39 47
    E-mail: [email protected]
    URL: www.cenn.org
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