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Institute for War and Peace Reporting, UK
Nov 10 2006
Armenia: Russia Tightens Economic Grip
Opposition angered by sale of yet another Armenian asset to a Russian
company.
By Naira Melkumian in Yerevan (CRS No. 365 09-Nov-06)
The acquisition by the Russian company Vympelkom of a majority stake
in the Armenian telecoms firm ArmenTel has further strengthened
Russia's economic hold on Armenia.
Vympelkom last week bought Greek firm OTE's 90 per cent stake in
ArmenTel, which has a monopoly over the fixed-line and internet
market in Armenia and partly owns the mobile network. The remaining
ten per cent of shares are currently owned by the government.
Vympelkom, which trades under the name BeeLine in Russia, won the
tender on November 3 against two competitors, Russia's MTS and an
Arab consortium called ETISALAT.
The Russian company may now be on the brink of taking full control of
ArmenTel, as the government has indicated that it might be prepared
to sell its shares on condition that Vympelkom agrees not to hold a
monopoly position in the telecoms industry.
The decision on the sale was made immediately after an official visit
by Armenian president Robert Kocharian to Moscow where his Russian
counterpart Vladimir Putin said that Russia's position as only the
third largest investor in Armenia after Germany and Greece was
"shameful."
The sale is the latest in a series of Russian takeovers in key areas
of the Armenian economy, just as public attitudes towards Moscow are
cooling because of the effect of its blockade of Georgia on Armenia
and a rise of xenophobic attacks in Russia towards Caucasians,
including Armenians.
At present, Russian companies own the Sevan-Razdan group of
hydroelectric plants, the Razdan thermoelectric plant and manage the
Armenian nuclear power station at Metsamor, which produces 75 per
cent of the country's energy. Russian Railways is planning to take a
long-term lease of the railway system, while ArmRosgazprom, the joint
Armenian-Russian company, owns a large share of the Armenian gas
network.
The opposition claims that the sale of key assets to Russian
companies is undermining Armenia.
"Just take a look," said Aram Manukian, a leading member of Armenia's
former governing party, the Armenian National Movement. `The energy
sector, communications, and the railway system have all been given to
Russia. All this essentially weakens Armenia's independence.'
Defence Minister Serzh Sarkisian, the second most powerful figure in
the country, has rejected opposition claims, telling journalists,
"You won't find to this day any examples of how Russian capital in
Armenia has been used as a tool for political pressure."
Armenian prime minister Andranik Markarian said briefly, "Russia is
not our enemy."
OTE had owned ArmenTel since 1997 when it bought it for 142.5 million
US dollars, later investing up to 300 million dollars more in the
company.
If the Armenian government approves the Vympelkom acquisition, the
Russian company will pay 342 million euro for ArmenTel and take on
its debts of over 40 million euro.
Vympelkom's general director Alexander Izosimov said, `Owning 40 per
cent of the cellular market in Armenia, ArmenTel is in a strong
position, which we intend to strengthen even further."
According to the Armenian trade ministry, 2005 was the first year
that Russia was not the leading investor in Armenia, having had that
role every year since 1991.
"Russia's desire to become established in Armenia as the most stable
country in the South Caucasus is understandable, as the attitude
toward Russian business is better here than in Georgia," said
political analyst Anna Harutyunian.
However, Aram Sarkisian, head of the opposition Democratic Party,
said the government should not have ceded control so easily. "All
power generating operations are effectively in Russia's hands,' he
told IWPR. `There are no problems with Russia. That country is our
ally and I am in favour of deepening cooperation with it. But the
government should control our strategic facilities.'
There is also criticism of the way the government has entrusted
management of its ten per cent stake in ArmenTel to the
transport and communications minister Andranik Manukian.
Grigor Konjeian, a parliamentary deputy from the pro-government
United Labour Party, told IWPR that this was a purely technical move.
"There is nothing strange in this, as collective management will lead
to excessive circumlocution,' he said. ` It was for the sake of
simplicity and transparency that it was decided to delegate the
government's powers to an official."
But the leader of the opposition National Democrat bloc Arshak
Sadoyan remains sceptical, "The fact that the shares were transferred
to the transport and communications minister can have only one
meaning. He has been given the right to sell the ten per cent of the
shares that belong to the state. If this takes place, that will be an
act of high treason."
Many ordinary Armenians, who have often been very critical of
ArmenTel over the last few years, are only interested in how the sale
will affect their telephone service.
"It doesn't matter to me who the operator will be,' said Yerevan
resident Suren Minasian. `Ordinary consumers just need easy
high-quality communications.'
Naira Melkumian is a freelance journalist in Yerevan.
Nov 10 2006
Armenia: Russia Tightens Economic Grip
Opposition angered by sale of yet another Armenian asset to a Russian
company.
By Naira Melkumian in Yerevan (CRS No. 365 09-Nov-06)
The acquisition by the Russian company Vympelkom of a majority stake
in the Armenian telecoms firm ArmenTel has further strengthened
Russia's economic hold on Armenia.
Vympelkom last week bought Greek firm OTE's 90 per cent stake in
ArmenTel, which has a monopoly over the fixed-line and internet
market in Armenia and partly owns the mobile network. The remaining
ten per cent of shares are currently owned by the government.
Vympelkom, which trades under the name BeeLine in Russia, won the
tender on November 3 against two competitors, Russia's MTS and an
Arab consortium called ETISALAT.
The Russian company may now be on the brink of taking full control of
ArmenTel, as the government has indicated that it might be prepared
to sell its shares on condition that Vympelkom agrees not to hold a
monopoly position in the telecoms industry.
The decision on the sale was made immediately after an official visit
by Armenian president Robert Kocharian to Moscow where his Russian
counterpart Vladimir Putin said that Russia's position as only the
third largest investor in Armenia after Germany and Greece was
"shameful."
The sale is the latest in a series of Russian takeovers in key areas
of the Armenian economy, just as public attitudes towards Moscow are
cooling because of the effect of its blockade of Georgia on Armenia
and a rise of xenophobic attacks in Russia towards Caucasians,
including Armenians.
At present, Russian companies own the Sevan-Razdan group of
hydroelectric plants, the Razdan thermoelectric plant and manage the
Armenian nuclear power station at Metsamor, which produces 75 per
cent of the country's energy. Russian Railways is planning to take a
long-term lease of the railway system, while ArmRosgazprom, the joint
Armenian-Russian company, owns a large share of the Armenian gas
network.
The opposition claims that the sale of key assets to Russian
companies is undermining Armenia.
"Just take a look," said Aram Manukian, a leading member of Armenia's
former governing party, the Armenian National Movement. `The energy
sector, communications, and the railway system have all been given to
Russia. All this essentially weakens Armenia's independence.'
Defence Minister Serzh Sarkisian, the second most powerful figure in
the country, has rejected opposition claims, telling journalists,
"You won't find to this day any examples of how Russian capital in
Armenia has been used as a tool for political pressure."
Armenian prime minister Andranik Markarian said briefly, "Russia is
not our enemy."
OTE had owned ArmenTel since 1997 when it bought it for 142.5 million
US dollars, later investing up to 300 million dollars more in the
company.
If the Armenian government approves the Vympelkom acquisition, the
Russian company will pay 342 million euro for ArmenTel and take on
its debts of over 40 million euro.
Vympelkom's general director Alexander Izosimov said, `Owning 40 per
cent of the cellular market in Armenia, ArmenTel is in a strong
position, which we intend to strengthen even further."
According to the Armenian trade ministry, 2005 was the first year
that Russia was not the leading investor in Armenia, having had that
role every year since 1991.
"Russia's desire to become established in Armenia as the most stable
country in the South Caucasus is understandable, as the attitude
toward Russian business is better here than in Georgia," said
political analyst Anna Harutyunian.
However, Aram Sarkisian, head of the opposition Democratic Party,
said the government should not have ceded control so easily. "All
power generating operations are effectively in Russia's hands,' he
told IWPR. `There are no problems with Russia. That country is our
ally and I am in favour of deepening cooperation with it. But the
government should control our strategic facilities.'
There is also criticism of the way the government has entrusted
management of its ten per cent stake in ArmenTel to the
transport and communications minister Andranik Manukian.
Grigor Konjeian, a parliamentary deputy from the pro-government
United Labour Party, told IWPR that this was a purely technical move.
"There is nothing strange in this, as collective management will lead
to excessive circumlocution,' he said. ` It was for the sake of
simplicity and transparency that it was decided to delegate the
government's powers to an official."
But the leader of the opposition National Democrat bloc Arshak
Sadoyan remains sceptical, "The fact that the shares were transferred
to the transport and communications minister can have only one
meaning. He has been given the right to sell the ten per cent of the
shares that belong to the state. If this takes place, that will be an
act of high treason."
Many ordinary Armenians, who have often been very critical of
ArmenTel over the last few years, are only interested in how the sale
will affect their telephone service.
"It doesn't matter to me who the operator will be,' said Yerevan
resident Suren Minasian. `Ordinary consumers just need easy
high-quality communications.'
Naira Melkumian is a freelance journalist in Yerevan.