Sept 2 2008

MOSCOW, September 2 (Itar-Tass) - Presidents Dmitry Medvedev of Russia
and Serzh Sargsyan of Armenia meet in the Black Sea resort city of
Sochi later Tuesday to discuss the current situation in the Caucasus
and new large-scale bilateral cooperation projects.

"The sides will consider joint projects in the processing industry and
transport that will facilitate a doubling of Russian capital investment
in Armenia over the next few years," a Kremlin source told Itar-Tass.

Medvedev and Sargsyan took the offices of president in their respective
country this year with an interval of a month from each other.

Sargsyan made trips to Moscow March 24 and June 24 and a trip to St
Petersburg June 6 where he attended an informal summit of the CIS.

"This meeting will become yet another event in the meaty and
trustworthy dialogue between the two countries that aim develop their
versatile strategic partnership," the source said.

"The sides will exchange opinions on the situation in the Caucasus and
on some pressing issues of the Russian-Armenian agenda, and Medvedev
will also tell Sargsyan about Russia's assessment of the situation
that has taken shape in the wake of Georgia's aggressive actions,
which brought about the only possible decision to recognize the state
sovereignty and territorial integrity of South Ossetia and Abkhazia,"
he said.

"Russia has a definitive leading position among Armenia's foreign trade
partners," the source said adding that bilateral trade had grown 40%
in 2005 and 70% in 2006.

The tendency was fortified by a further 66% increase of trade to 821
million U.S. dollars in 2007.

>From January through July this year, trade grew almost 20% versus
the same period of 2007 and stood at 400 million U.S. dollars.

"Russian companies become the largest foreign investors in Armenian
economy, as their accumulated investment has exceeded 1.3 billion
U.S. dollars," the source said. "The bulk of this investment streams
to the energy sector, the banking business, mining and metallurgy,
the construction industry, telecommunications, and information

"However, the energy sector remains the focal point for investors,"
he said. "Work is underway to draft a medium-term agreement on Russian
natural gas supplies to Armenia from 2009 through 2011, and efforts
continue to set up a united economic facility on the basis of the
operating and new units of the Razdan hydro power plant."

"Russian lending institutions show interest towards greater presence in
Armenia's banking system, and their share in the aggregate registered
capital of Armenian banks has gotten over a 25% mark," the source said.

"In August 2007, the Russian diamond corporation ALROSA and the
Armenian government signed an agreement on cooperation in diamond
cutting and jewelry making, and special steps will be made this year
to develop cooperation in that area," he said.

"Cooperation in the nuclear power industry is moving to a quality
new stage," the source said. "Along with assistance to ensure safe
operations of the Armenian nuclear plant, Russian companies are
ready to take part in the supplementary prospecting and development
of uranium ore deposits and construction of a new power unit at
the plant."

"Our cooperation in the humanitarian sphere is developing dynamically,
too, as cultural festivals in the format of the Year of Armenia in
Russia and the Year of Russia in Armenia have turned into feasts of
communication between the two peoples," the source said.

He added that Armenia is taking part in the programs of diversified
humanitarian cooperation in the CIS format.