Bureau of European and Eurasian Affairs December 2006

Background Note: Armenia

PROFILE
OFFICIAL NAME: Republic of Armenia Geography Area: 29,800 sq. km. (11,500 sq. mi.); slightly larger than Maryland. Cities: Capital--Yerevan. Terrain: High plateau with mountains, little forest land. Climate: Highland continental, hot summers, cold winters. People Nationality: Noun--Armenian(s). Adjective--Armenian. Population (official est.): 3,213,011 de jure ( 3,002,594 de facto). These figures represent the final results of the October 2001 census, as announced in January 2003. Ethnic groups: Armenian 98%; Yezidi 1.2%; Russian, Greek, and other 0.8%. Religion: Armenian Apostolic Church (more than 90% nominally affiliated). Languages: Armenian (96%), Russian, other. Education: Literacy--99%. Health: Infant mortality rate--20/1,000. Life expectancy--66.6 years. Work force (1.24 million -- 10.5% unemployed): Industry and construction--24.5%; agriculture and forestry--24.6%; trade--17.3%; education--13.4%; other--22.2%. Government Type: Republic. Constitution: Approved in November 2005 referendum. Independence: 1918 (First Armenian Republic); 1991 (from Soviet Union). Branches: Executive--president (head of state) with wider powers relative to other branches, prime minister (head of cabinet), Council of Ministers (cabinet). Legislative--unicameral National Assembly (parliament). Judicial--Constitutional Court. Administrative subdivisions: 10 marzes (provinces) in addition to the city of Yerevan, which has the status of a province. Political parties represented in the National Assembly: Republican Party of Armenia, Armenian Revolutionary Federation (ARF) Dashnaktsutyun, Country of Law (Orinats Yerkir), People's Party of Armenia, National Accord Party, Republic Party, and United Labor Party. Other significant parties include: National Democratic Union, Constitutional Rights Union, Social Democratic Hnchakian Party, Armenian National Movement, Liberal Democratic Ramkavar Party, Self Determination Union, Communist Party, and the Christian Democratic Party. In addition, there are dozens of other registered parties, many of which become active only during national campaigns. Suffrage: Universal at 18. Economy (2005) GDP: $4.867 billion. GDP growth rate: 13.9%. Per capita GDP: $1,514. Inflation: 0.06%. Natural resources: Copper, zinc, gold, and lead; hydroelectric power; small amounts of gas and petroleum. Agriculture: Products--fruits and vegetables, wines, dairy, some livestock. Industry: Types--chemicals, electronic products, machinery, processed food, synthetic rubber, and textiles. Trade: Exports--$950.4 million: diamonds, scrap metal, machinery and equipment, brandy, copper ore. Export partners (2004)--Belgium 18%, Israel 15.3%, Russia 12.5%, U.S. 8.1%, Netherlands 7.2%, Iran 5.5%, Georgia 4.3%. Imports

(2004)--$1.767.9 billion: natural gas, petroleum, tobacco products, foodstuffs, and diamonds. Import partners--Russia 11.3%, Belgium 10.1%, Israel 8.4%, Iran 7.1%, U.S. 7.6%. PEOPLE AND HISTORICAL HIGHLIGHTS Ethnic groups in Armenia include Armenians (95%), Kurds, Russians, Greeks, and others. More than 90% of the population is nominally affiliated with the Armenian Apostolic Church. Languages are Armenian (96%), Russian, and others. Armenia first emerged into history around 800 BC as part of the Kingdom of Urartu or Van, which flourished in the Caucasus and eastern Asia Minor until 600 BC. After the destruction of the Seleucid Empire, the first Armenian state was founded in 190 BC. At its zenith, from 95 to 65 BC, Armenia extended its rule over the entire Caucasus and the area that is now eastern Turkey, Syria, and Lebanon. For a time, Armenia was the strongest state in the Roman East. It became part of the Roman Empire in 64 BC and adopted a Western political, philosophical, and religious orientation. In 301 AD, Armenia became the first nation to adopt Christianity as a state religion, establishing a church that still exists independently of both the Roman Catholic and the Eastern Orthodox churches. During its later political eclipses, Armenia depended on the church to preserve and protect its unique identity. From around 1100 to 1350, the focus of Armenian nationalism moved south, as the Armenian Kingdom of Cilicia, which had close ties to European Crusader states, flourished in southeastern Asia Minor until conquered by Muslim states. Between the 4th and 19th centuries, Armenia was conquered and ruled by, among others, Persians, Byzantines, Arabs, Mongols, and Turks. For a brief period from 1918 to 1920, it was an independent republic. In late 1920, the communists came to power following an invasion of Armenia by the Red Army, and in 1922, Armenia became part of the TransCaucasian Soviet Socialist Republic. In 1936, it became the Armenian Soviet Socialist Republic. Armenia declared its independence from the Soviet Union on September 21, 1991. GOVERNMENT AND POLITICAL CONDITIONS Armenians voted overwhelmingly for independence in a September 1991 referendum, followed by a presidential election in October 1991 that gave 83% of the vote to Levon Ter-Petrossian. Ter-Petrossian had been elected head of government in 1990, when the Armenian National Movement defeated the Communist Party. Ter-Petrossian was reelected in 1996. Following public demonstrations against Ter-Petrossian's policies on Nagorno-Karabakh, the President resigned in January 1998 and was replaced by Prime Minister Robert Kocharian, who was elected President in March 1998. Following the October 27, 1999 assassination in Parliament of Prime Minister Vazgen Sargsian, Parliament Speaker Karen Demirchian, and six other officials, a period of political instability ensued during which an opposition headed by elements of the former Armenian National Movement government attempted unsuccessfully to force Kocharian to resign. Kocharian was successful in riding out the unrest. Kocharian was reelected in March 2003 in a contentious election that the Organization for Security and Cooperation in Europe (OSCE) and the U.S. Government deemed to fall short of international standards. As a result of the May 2003 parliamentary elections, 95 seats of the 131 in the National Assembly (75 elected on a proportional basis and 56 on a district-by-district majoritarian basis) went to generally pro-government parties or deputies. The Republican Party, ARF Dashnaksutyun Party, and Orinats Yerkir formed a coalition government. However, Orinats Yerkir pulled out of the loose governing coalition in May 2006, leaving a coalition consisting of the Republican and the ARF Dashnaksutyun parties, plus several unaffiliated deputies who vote with the government bloc. The former Speaker of the National Assembly, Artur Baghdassaryan (Orinats Yerkir), resigned his position on May 22, 2006. On June 1, 2006, the National Assembly elected Tigran Torosian to succeed Baghdassarvan. Opposition parties secured 26 seats during the 2003 election. There are philosophical tensions within the opposition, but these parties tend to vote together on key legislative issues. The opposition includes both the Justice Bloc (organized by the People's Party of Armenia Chairman Stepan Demirchian) and the rival National Accord Party (headed by Artashes Geghamian). The Government of Armenia's stated aim is to build a Western-style parliamentary democracy as the basis of its form of government. However, international observers have questioned the inherent fairness of parliamentary and presidential elections during each of the previous nationwide elections (1995, 1999, and 2003) as well as during the 2005 constitutional referendum, citing polling deficiencies, lack of cooperation by the electoral commission, poor maintenance of electoral lists, and access to polling places. The new constitution in 2005 increased the power of the legislative branch and allows for more independence of the judiciary; the executive branch nevertheless retains more power than most European countries. The Government's human rights record remained poor in 2005; while there were some improvements in a few areas, serious problems remained. International and domestic observers noted the constitutional referendum was well below international standards, with serious irregularities. Serious irregularities also occurred during previous presidential and parliamentary elections. Security forces beat pretrial detainees. Impunity remained a problem. There were reports of arbitrary arrest and detention. Lengthy pretrial detention remained a problem. There were some limits on press freedom, due in part to self-censorship and denial of television broadcast licenses. The law places some restrictions on religious freedom. Societal violence against women was a problem. Trafficking of women and children was a problem, which the government took some steps to address.

Principal Government Officials President--Robert Kocharian Prime Minister--Andranik Margaryan Foreign Minister--Vartan Oskanian Defense Minister--Serge Sargsian Ambassador to the U.S.--Tatoul Markarian Ambassador to the UN--Armen Martirossian Armenia's embassy in the U.S. is at 2225 R Street, NW, Washington, DC, 20008; tel: 202-319-1976; fax: 202-319-2984. ECONOMY Armenia is the second most densely populated of the former Soviet republics. It is a landlocked country between the Black and the Caspian Seas, bordered on the north by Georgia, to the east by Azerbaijan, on the south by Iran, and to the west by Turkey. Up until independence, Armenia's economy was based largely on industry--chemicals, electronic products, machinery, processed food, synthetic rubber, and textiles--and highly dependent on outside resources. Agriculture accounted for only 20% of net material product and 10% of employment before the breakup of the Soviet Union in 1991. Armenian mines produce copper, zinc, gold, and lead. The vast majority of energy is produced with imported fuel, including gas and nuclear fuel (for its one nuclear power plant) from Russia; the main domestic energy source is hydroelectric. Small amounts of coal, gas, and petroleum have not yet been developed. Like other New Independent States of the former Soviet Union, Armenia's economy suffers from the legacy of a centrally planned economy and the breakdown of former Soviet trading patterns. Soviet investment in and support of Armenian industry has virtually disappeared, so that few major enterprises are still able to function. In addition, the effects of the 1988 earthquake, which killed more than 25,000 people and made 500,000 homeless, are still being felt. Although a cease-fire has held since 1994, the conflict with Azerbaijan over Nagorno-Karabakh has not been resolved. The consequent closure of both the Azerbaijani and Turkish borders has devastated the economy, because of Armenia's dependence on outside supplies of energy and most raw materials. Land routes through Azerbaijan and Turkey are closed; routes through Georgia and Iran are inadequate or unreliable. In 1992-93, GDP fell nearly 60% from its 1989 level. The national currency, the dram, suffered hyperinflation for the first few years after its introduction in 1993. Nevertheless, the Government of Armenia, helped by the cease-fire that has been in effect in Nagorno-Karabakh since 1994, has been able to carry out wide-ranging economic reforms that paid off in dramatically lower inflation and steady growth. Armenia has registered strong economic growth since 1995, building on the turnaround that began the previous year, and inflation has been negligible for the past several years. New sectors, such as precious stone processing and jewelry making, information and communication technology, and even tourism are beginning to supplement more traditional sectors such as agriculture in the economy. This steady economic progress has earned Armenia increasing support from international institutions. The International Monetary Fund (IMF), World Bank, European Bank for Reconstruction and Development (EBRD), as well as other international financial institutions (IFIs) and foreign countries are extending considerable grants and loans. Total loans extended to Armenia since 1993 exceed $1.1 billion. These loans are targeted at reducing the budget deficit, stabilizing the local currency; developing private businesses; energy; the agriculture, food processing, transportation, and health and education sectors; and ongoing rehabilitation work in the earthquake zone. Continued progress will depend on the ability of the government to strengthen its macroeconomic management, including increasing revenue collection, improving the investment climate, and making strides against corruption. A liberal foreign investment law was approved in June 1994, and a Law on Privatization was adopted in 1997, as well as a program on state property privatization. The government joined the World Trade Organization on February 5, 2003. Environmental Issues Armenia is trying to address its environmental problems. It has established a Ministry of Nature Protection and has introduced a pollution fee system by which taxes are levied on air and water emissions and solid waste disposal, with the resulting revenues used for environmental protection activities. Armenia is interested in cooperating with other members of the Commonwealth of Independent States (CIS--a group of 12 former Soviet republics) and with members of the international community on environmental issues. The Armenian Government has committed to decommissioning the Armenian Nuclear Power Plant as soon as alternate energy sources can be identified. DEFENSE AND MILITARY ISSUES Armenia established a Ministry of Defense in 1992. Border guards subject to the National Security Service patrol Armenia's borders with Georgia and Azerbaijan, while Russian Border Guards continue to monitor its borders with Iran and Turkey. The Conventional Armed Forces in Europe (CFE) Treaty was ratified by the Armenian parliament in July 1992. The treaty establishes comprehensive limits on key categories of military equipment, such as tanks, artillery, armored combat vehicles, combat aircraft, and combat helicopters, and provides for the destruction of weaponry in excess of those limits. Armenian officials have consistently expressed determination to comply with its provisions. Armenia has provided data on armaments as required under the CFE Treaty. There are indications that Armenia is trying to establish mechanisms to

ensure fulfillment of its arms control obligations. Armenia is not a significant exporter of conventional weapons, but it has provided substantial support, including materiel, to separatists in Nagorno-Karabakh. In March 1993, Armenia signed the multilateral Chemical Weapons Convention, which calls for the eventual elimination of chemical weapons. Armenia acceded to the nuclear Non-Proliferation Treaty as a non-nuclear weapons state in July 1993. The U.S. and other Western governments have discussed efforts to establish effective nuclear export control systems with Armenia. FOREIGN RELATIONS Armenia is a member of the United Nations, the Council of Europe, the Organization for Security and Cooperation in Europe (OSCE), the Commonwealth of Independent States, NATO's Partnership for Peace, the Euro-Atlantic Partnership Council, the International Monetary Fund, the International Bank for Reconstruction and Development, and the World Trade Organization. Nagorno-Karabakh In 1988, the territory of Nagorno-Karabakh, a predominantly ethnic Armenian enclave within Azerbaijan, voted to secede and join Armenia. This eventually developed into a full-scale armed conflict. Armenian support for the separatists led to an economic embargo by Azerbaijan, which has had a negative impact on Armenia's foreign trade and made imports of food and fuel more expensive, three-quarters of which previously transited Azerbaijan under Soviet rule. Peace talks in early 1993 were disrupted by the seizure of Azerbaijan's Kelbajar district by Nagorno-Karabakh Armenian forces and the forced evacuation of thousands of ethnic Azeris. Turkey in protest then followed with an embargo of its own against Armenia. A cease-fire was declared between Azeri and Armenian/Nagorno-Karabakh forces in 1994 and has been maintained by both sides since then in spite of occasional shooting along the line of contact. All Armenian governments have thus far resisted domestic pressure to recognize the self-proclaimed independence of the "NagornoKarabakh Republic," while at the same time announcing they would not accept any peace accords that returned the enclave to Azerbaijani rule. Approximately 526,000 of the estimated 800,000 ethnic Azeris who fled during the Karabakhi offensives still live as internally displaced persons in Azerbaijan, while roughly 235,000 of 360,000 ethnic Armenians who fled Azerbaijan since 1988 remain refugees. Negotiations to peacefully resolve the conflict have been ongoing since 1992 under the aegis of the Minsk Group of the OSCE. The Minsk Group is currently co-chaired by the U.S., France, and Russia. Negotiations have intensified since 2004. According to Armenia's Office of the Geographer, Karabakhi Armenians, supported by the Republic of Armenia, now hold about 11% of Azerbaijan and have refused to withdraw from occupied territories until an agreement on the status of Nagorno-Karabakh is reached. Armenia and Azerbaijan continue to observe the cease-fire that has been in effect since May 1994, and in late 1995 both also agreed to OSCE field representatives being based in Tbilisi, Georgia, to monitor the cease-fire and facilitate the peace process. U.S.-ARMENIAN RELATIONS The dissolution of the Soviet Union in December 1991 brought an end to the Cold War and created the opportunity to build bilateral relations with the New Independent States (NIS) as they began a political and economic transformation. The U.S. recognized the independence of Armenia on December 25, 1991, and opened an Embassy in Yerevan in February 1992. The United States has made a concerted effort to help Armenia and the other NIS during their difficult transition from totalitarianism and a command economy to democracy and open markets. The cornerstone of this continuing partnership has been the Freedom for Russia and Emerging Eurasian Democracies and Open Markets (FREEDOM) Support Act, enacted in October 1992. Under this and other programs, the U.S. to date has provided nearly $1.5 billion in humanitarian and technical assistance for Armenia. U.S. assistance programs in Armenia are described in depth on Embassy Yerevans website at: http://yerevan.usembassy.gov/assistance/. On March 27, 2006 Armenia signed a Millennium Challenge Compact with the United States; the agreement entered into force on September 29, 2006. The agreement will provide $235 million to Armenia over five years to reduce rural poverty through the improvement of rural roads and irrigation networks. U.S.-Armenian Economic Relations In 1992 Armenia signed three agreements with the U.S. affecting trade between the two countries. The agreements were ratified by the Armenian parliament in September 1995 and entered into force in the beginning of 1996. They include an "Agreement on Trade Relations," an "Investment Incentive Agreement," and a treaty on the "Reciprocal Encouragement and Protection of Investment" (generally referred to as the Bilateral Investment Treaty, or BIT). Armenia does not have a bilateral taxation treaty with the U.S. The 1994 Law on Foreign Investment governs all direct investments in Armenia, including those from the U.S.

Approximately 70 U.S.-owned firms currently do business in Armenia, including such multinationals as Procter & Gamble, M&M-Mars, Xerox, Dell, Microsoft, and IBM. Recent major U.S. investment projects include the Hotel Armenia; the Hotel Ani Plaza; Tufenkian Holdings (carpet and furnishing production, hotels, and construction); several subsidiaries of U.S.-based information technology firms, including Viasphere Technopark, an IT incubator; a Greek-owned Coca-Cola bottling plant; petroleum exploration by the American-Armenian Exploration Company; jewelry and textile production facilities; a large perlite mining and processing plant; and Jermuk Mother Plant, which produces one of the more popular brands of mineral water in Armenia. U.S. Support To Build A Market Economy The U.S. continues to work closely with international financial institutions like the International Monetary Fund and the World Bank to help Armenia in its transition to a free-market economy. Armenia has embarked upon an ambitious reform program, which has allowed a gradual transition from humanitarian aid toward more developmental assistance. U.S. economic assistance programs, primarily under the administration of the U.S. Agency for International Development (USAID), have three objectives: to help create a legal, regulatory, and policy framework for competition and economic growth in energy, agriculture, housing, and other sectors; to promote fiscal reform; and to develop a competitive and efficient private financial sector. Other agencies, including the Departments of State, Agriculture, Treasury, Defense, Commerce, Energy, Justice, and the Peace Corps sponsor various assistance projects. The U.S.-Armenia Task Force, established in 2000, is a bilateral commission that meets every 6 months to review the progress and objectives of U.S. assistance to Armenia. Specific USAID programs focus on the development of a private sector and small and medium-size enterprises, including microcredit programs; energy sector reform, focusing on efficient management of Armenia's physical resources; democracy and good governance programs, including the promotion of a well-informed and active civil society; social sector reform, including benefits administration for vulnerable populations and targeted vocational training; health sector reform, including improvement of management and delivery of primary healthcare services with an emphasis on preventive medicine; and earthquake zone assistance, which provides housing and economic reactivation for victims of the 1988 earthquake. Under this program, more than 4,000 families who lost their homes have participated in a housing certificate program allowing them to secure permanent and adequate housing. The U.S. Department of Agriculture's (USDA) Caucasus Agricultural Development Initiative provides targeted and sustained technical, financial and marketing assistance to small and medium-sized agribusinesses and farmer-marketing associations. The U.S. Department of Agriculture's Cochran Fellowship Program provides training to Armenian agriculturists. USDA and USAID also have launched efforts to revive production and export of Armenian vegetables, fruits, and other agricultural products. U.S. Humanitarian Assistance Over the past decade the U.S. has provided over $1.5 billion in assistance to Armenia, the highest per capita amount in the NIS. Humanitarian aid originally accounted for up to 85% of this total, reflecting the economic effects caused by closed borders with Turkey and Azerbaijan related to the Nagorno-Karabakh conflict, destruction in northern Armenia left from the devastating 1988 earthquake, and the virtual paralysis of most of the country's factories. As conditions in Armenia have improved, with the stabilization of the economy and increased energy production-including the restarting of the Armenian Nuclear Power Plant at Metsamor--U.S. assistance programs have moved away from humanitarian goals to longer-term development ones. U.S. Support To Achieve Democracy Technical assistance and training programs have been provided in municipal administration, intergovernmental relations, public affairs, foreign policy, diplomatic training, rule of law, and development of a constitution. Specific programs are targeted at promoting elections that meet international standards, strengthening political parties, and promoting the establishment of an independent judiciary and independent media. This includes financing for programs that support civil society organizations, local non-governmental organizations (NGO) capacity building, National Assembly professional development, and local and community-level governance. State Department and USAID educational exchange programs play an important role in supporting democratic and freemarket reforms. Assistance in the translation and publication of printed information also has been provided. Exchange programs in the U.S. for Armenian lawyers, judges, political party members, business people, government officials, NGO activists, journalists, and other public figures focus on a range of topics, including the American judicial and political system, privatization, specific business sectors, the media, and civil society. The State Department has funded an ongoing project to provide Internet connectivity to schools at various levels throughout the country; these centers provide both educational and community-building opportunities. USAID has funded international and domestic groups to monitor national elections. USAID also has funded programs to educate voters and to strengthen the role of an array of civic organizations in the democratic process. [Also see fact sheet on FY 2006 U.S. Assistance to Armenia.]

Principal U.S. Embassy Officials Ambassador--vacant Charge d'Affairs a.i.--Anthony Godfrey Political/Economic Chief--Cynthia Doell Assistance Coordinator--vacant Consular Officer--Mary Stickles Management Officer--Lawrence Hess Regional Security Officer--Peter Ford USDA Marketing Assistance Project Director--Jeffrey Engels USAID Director--Robin Phillips Public Affairs Officer--Kim Hargan The U.S. Embassy in Yerevan, Armenia is at 1 American Avenue; tel: 374-10-46-47-00; fax: 374-10-46-47-42. TRAVEL AND BUSINESS INFORMATION The U.S. Department of State's Consular Information Program provides Consular Information Sheets, Travel Warnings, and Public Announcements. Consular Information Sheets exist for all countries and include information on entry requirements, currency regulations, health conditions, areas of instability, crime and security, political disturbances, and the addresses of the U.S. posts in the country. Travel Warnings are issued when the State Department recommends that Americans avoid travel to a certain country. Public Announcements are issued as a means to disseminate information quickly about terrorist threats and other relatively short-term conditions overseas that pose significant risks to the security of American travelers. Free copies of this information are available by calling the Bureau of Consular Affairs at 202-647-5225 or via the fax-on-demand system: 202-647-3000. Consular Information Sheets and Travel Warnings also are available on the Consular Affairs Internet home page: http://travel.state.gov. Consular Affairs Tips for Travelers publication series, which contain information on obtaining passports and planning a safe trip abroad, are available on the Internet and hard copies can be purchased from the Superintendent of Documents, U.S. Government Printing Office, telephone: 202-512-1800; fax 202-512-2250. Emergency information concerning Americans traveling abroad may be obtained from the Office of Overseas Citizens Services at (202) 647-5225. For after-hours emergencies, Sundays and holidays, call 202-647-4000. The National Passport Information Center (NPIC) is the U.S. Department of State's single, centralized public contact center for U.S. passport information. Telephone: 1-877-4USA-PPT (1-877-487-2778). Customer service representatives and operators for TDD/TTY are available Monday-Friday, 8:00 a.m. to 8:00 p.m., Eastern Time, excluding federal holidays. Travelers can check the latest health information with the U.S. Centers for Disease Control and Prevention in Atlanta, Georgia. A hotline at 877-FYI-TRIP (877-394-8747) and a web site at http://www.cdc.gov/travel/index.htm give the most recent health advisories, immunization recommendations or requirements, and advice on food and drinking water safety for regions and countries. A booklet entitled Health Information for International Travel (HHS publication number CDC95-8280) is available from the U.S. Government Printing Office, Washington, DC 20402, tel. (202) 512-1800. Information on travel conditions, visa requirements, currency and customs regulations, legal holidays, and other items of interest to travelers also may be obtained before your departure from a country's embassy and/or consulates in the U.S. (for this country, see "Principal Government Officials" listing in this publication). U.S. citizens who are long-term visitors or traveling in dangerous areas are encouraged to register their travel via the State Department's travel registration web site at https://travelregistration.state.gov or at the Consular section of the U.S. embassy upon arrival in a country by filling out a short form and sending in a copy of their passports. This may help family members contact you in case of an emergency. Further Electronic Information Department of State Web Site. Available on the Internet at http://www.state.gov, the Department of State web site provides timely, global access to official U.S. foreign policy information, including Background Notes and daily press briefings along with the directory of key officers of Foreign Service posts and more. Export.gov provides a portal to all export-related assistance and market information offered by the federal government and provides trade leads, free export counseling, help with the export process, and more. STAT-USA/Internet, a service of the U.S. Department of Commerce, provides authoritative economic, business, and international trade information from the Federal government. The site includes current and historical trade-related releases, international market research, trade opportunities, and country analysis and provides access to the National Trade Data Bank.