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TOL: Armenia Comes Courting

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  • TOL: Armenia Comes Courting

    by Sergei Blagov

    Transitions Online
    March 31 2008
    Czech Republic

    Armenia's president-elect nudges closer to Moscow amid political
    uncertainty at home. From EurasiaNet.

    MOSCOW | Serzh Sarkisan, whose controversial election as president
    of Armenia precipitated political violence in Yerevan, is hoping
    closer ties with Russia can hasten a return of stability in the South
    Caucasus country.

    Sarkisian -- the current prime minister who is scheduled to be
    inaugurated as President Robert Kocharian's successor on 9 April --
    flew to Moscow last week for meetings with Russia's presidential
    tandem, President Vladimir Putin and President-elect Dmitry Medvedev.

    Already Russia's closest ally in the region, Sarkisian said he was
    committed to "deepening and expanding" Armenian-Russian ties. He also
    expressed gratitude for Moscow's support of the Armenian government's
    handling of the political crisis in Yerevan. "We always felt your
    assistance in the election process," Sarkisian said during a meeting
    with Putin. "To be honest, we never expected such clear-cut" support.

    Putin and Medvedev seemed happy to take the Armenian leader up on
    his offer of closer relations. "This is your first visit after the
    elections, and, of course, we see special symbolism in this fact,"
    Medvedev said.

    Putin, meanwhile, clearly indicated that Armenia's current domestic
    difficulties would not hamper the Kremlin's ability to do business
    with Sarkisian. "I know that political processes in Armenia are
    complicated," Putin acknowledged. The Russian leader then expressed
    confidence that "no matter how the internal political process in
    Armenia unfolds, what has been built in the past years in relations
    between the Russian Federation and Armenia will be maintained and
    will develop in the future."

    Sarkisian indicated that his incoming administration would seek to
    quickly restore a sense of stability in the country, pledging to
    create "an atmosphere of tolerance." The centerpiece of his emerging
    stabilization program is an initiative to boost social welfare and
    economic opportunity.

    The two countries have been doing a lot of business in recent years.

    Trade between Russia and Armenia reached $800 million in 2007,
    marking a 60 percent increase over the previous year, according to
    the Russian official statistics. Moscow voiced expectations that
    bilateral commerce would top $1 billion in the near future.

    Trade between Russia and Armenia has been hampered by transportation
    bottlenecks. For over a year, Sarkisian has been lobbying Russian
    officials to expedite the opening of ferry service connecting Russian
    Black Sea ports and the Georgian city of Poti, a move that would ease
    Armenia's transport woes. Moscow's recent decision to ease transport
    restriction with Georgia could revive hopes that ferry service could
    begin soon.


    One notable bilateral trade development occurred 6 February, when
    Atomredmetzoloto, a uranium mining subsidiary of Russia's nuclear
    monopoly Rosatom, created a joint venture in Armenia to develop
    uranium reserves estimated at 30,000 to 60,000 tons. The deal was
    clinched during a visit to Armenia of Prime Minister Viktor Zubkov,
    who was accompanied by Sergei Kiriyenko, head of Rosatom.

    In Yerevan, Kiriyenko pledged to participate in a tender to build a
    new nuclear power plant in Armenia. The initial estimated cost of the
    project is $1 billion. Zubkov and his Armenian counterpart Sarkisian
    also inked an agreement covering Armenia's participation in the
    International Enrichment Center in Angarsk, in Russia's Irkutsk region.

    One potential trouble spot in relations centers on energy supplies.

    Armenian officials have hoped to ensure, through their expressions of
    loyalty to Moscow, that the Kremlin-controlled energy conglomerate
    Gazprom would give Armenia a preferential price for gas. Armenia
    currently pays $110 per thousand cubic meters (tcm) and this contract
    price remains effective till 1 January 2009. That price is far lower
    than what some other former Soviet states pay Gazprom.

    Yet, even if Gazprom is inclined to maintain Armenia's favorable rate,
    events now seem to mandate that Yerevan will face a substantial
    price increase in 2009. Gazprom's recent pledge to pay "European
    market" prices to Central Asian producers means that the gas that
    it obtains from the region with cost the Russian company upwards of
    $300 per tcm. It will have no choice, then, but to pass costs on to
    its customers.