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  • Will Sanctions on Russia Hurt Armenia?

    EurasiaNet.org
    July 30 2014

    Will Sanctions on Russia Hurt Armenia?

    July 30, 2014 - 9:52am, by Giorgi Lomsadze


    As international sanctions pile up against Russia, Armenia, a country
    literally powered by the Russian economy, expects to get hit, too.

    Armenian officials and economy-wonks are not certain about the size
    and scope of the impact, but they are positive there is going to be
    one. Russia is Armenia's single largest investor, export-outlet and
    energy supplier, so the lateral effects of the sanctions could be
    potentially felt in all those directions. "At this stage it is hard
    to make expert conclusions. Even the Russian experts do not yet have
    precise calculations," Economy Minister Karen Chshmatirian was quoted
    as saying by Regnum news agency.

    The latest round of US sanctions targeted, among others, Russia's VTB
    Bank, which happens to be the largest private lender in Armenia. "The
    measures taken by the US Government to restrict VTB's access to the
    capital market do not impact the bank's operational performance and
    creditworthiness," asserted VTB, which is majority-owned by the
    Russian government. Bloomberg, however, reported that major
    international lenders to the VTB Group already have put on hold a
    $1.5-billion loan to the bank.

    Another target of the sanctions, Gazprombank, also has a presence in
    Armenia. It is owned by Russia's state energy giant Gazprom, which
    essentially is the sole supplier of natural gas to Armenia.

    Armenia was also pinning investment hopes on the Russian state oil
    corporation Rosneft, another sanctions-target which had plans to
    purchase Armenia's Nairit, a large rubber-manufacturer. Armenian Prime
    Minister Hovik Abrahamian did not rule out that these plans may fall
    through, though, since the sanctions may put Rosneft out of the
    investment mood.

    Vaagn Khachatrian, an expert on the Armenian economy and member of the
    opposition Armenian National Congress, said in comments to 1in.am news
    service that he expects Russian investment to become scarce and
    lending more expensive.

    The assessments vary about the depth of the impact, but, for now, no
    official word on cold feet about the Customs Union; a membership-move
    that would further tie Armenia to Russia's economy.


    http://www.eurasianet.org/node/69276


    From: Baghdasarian
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