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. A reform of Yerevan's status, to that of a community as required by the 2005 constitutional referendum, is currently underway and expected to occur in 2008. Once the parliament enacts legislation to change the capital's status, the mayor will no longer be appointed by the president but instead be chosen by elected city councilors.
Political parties represented in the National Assembly: Republican Party of Armenia, Prosperous Armenia, Armenian Revolutionary Federation (ARF) Dashnaktsutyun, Country of Law (Orinats Yerkir), and the Heritage Party. Other parties include: People's Party of Armenia, National Accord Party, Republic Party, New Times Party, United Labor Party, Dashink Party, National Democratic Union, and the Armenian National Movement. In addition, there are dozens of other registered parties, many of which become active only during national campaigns, if at all.
Suffrage: Universal at 18.

Economy (2007)
GDP: $9.18 billion.
GDP growth rate: 13.8%.
Per capita GDP (2006): $1,989.
Inflation: 6.6%.
Natural resources: Copper, molybdenum, zinc, gold, silver, lead, marble, granite, mineral spring water.
Agriculture: Products--fruits and vegetables, wines, dairy, some livestock.
Industry: Types--mining, information technology (IT), processed food, chemicals, synthetic rubber, textiles.
Trade: Exports--$1,218.5 million: precious and semi-precious stones and metals, mining products, foodstuffs, brandy. Export partners (2006)--Germany 14.7%, Netherlands 12.6%, Russia 12.1%, Israel 10.6%, Switzerland 7.2%, U.S. 6.5%. Imports--$3,281.8 million: natural gas, petroleum, precious stones and metals, tobacco products, foodstuffs, textiles. Import partners (2006)--Russia 13.9%, Ukraine 7.5%, Turkmenistan 7.7%, Germany 6.6%, Belgium 5.5%, Iran 5.2%.

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, which is considered to be the national church of Armenia. Languages are Armenian (96%), Russian, and others.

Armenia first emerged 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 it was 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 became an independent republic. In late 1920, local communists came to power following an invasion of Armenia by the Soviet Red Army, and in 1922, Armenia became part of the Trans-Caucasian 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 re-elected in 1996 in a disputed election. Following public demonstrations against Ter-Petrossian's policies on the predominantly ethnic Armenian enclave of Nagorno-Karabakh that is located within Azerbaijan, the President resigned under pressure in January 1998 and was replaced by Prime Minister Robert Kocharian, who was subsequently 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. Riding out the unrest, Kocharian was later 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 have fallen short of international standards.

As a result of the May 2007 parliamentary elections, 103 seats out of the 131 in the National Assembly (90 are elected on a proportional basis and 41 on a district-by-district majoritarian basis) are members of pro-government parties. The Republican Party and Prosperous Armenia formed a coalition with which the ARF Dashnaksutyun Party signed a cooperation agreement. The Heritage and Country of Law parties remain opposition parties. While in the past opposition parties tended to vote together on key legislative issues despite their philosophical differences, there has been no formal agreement among the opposition parties to date to do so.

Armenia is set to elect a new president on February 19, 2008, who will assume office in April 2008. After serving two consecutive 5-year terms, President Kocharian is constitutionally barred from seeking office a third term, and is stepping down. His hand-picked successor, Prime Minister Serge Sargsyan of the Republican Party, is widely viewed as the frontrunner in the presidential race. Former president Levon Ter-Petrossian is also a candidate. During the presidential election campaign, some opposition parties and presidential candidates have accused the government of harassing their supporters and denying them equal access to TV media.

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 2007 parliamentary elections, however, demonstrated an improvement over previous elections, though shortcoming remained in the procedural conduct of the elections campaign and the performance of election commissions during the vote count and tabulation. The new constitution in 2005 increased the power of the legislative branch and allows for more independence of the judiciary; in practice, however, both branches remain subject to political pressure from the executive branch, which retains considerably greater power than its counterparts in most European countries.

The government's human rights record remained poor in 2007; while there were some improvements in a few areas, serious problems remained. Security forces beat pretrial detainees. Impunity and corruption remained a problem. There were reports of arbitrary arrest and detention, and incarceration of individuals for political reasons. Lengthy pretrial detention remained a problem. There were limits on press freedom, as well as incidents of violence, intimidation, and self-censorship in the press. The law places some restrictions on religious freedom. Societal violence against women continued to be a problem. Trafficking of persons was a problem, which the government took only limited measures to address.

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. In recent years, the construction sector has taken off, fueled by an ambitious government-backed construction project in the capital, and remittances to relatives by ethnic Armenians living in Russia and the United States.

Like other New Independent States of the former Soviet Union, Armenia's economy still suffers from the legacy of a centrally planned economy and the breakdown of former Soviet trading networks. While investment from these states in support of Armenian industry has virtually disappeared, and few major enterprises are still able to function, Russian entities have nevertheless increased their exposure in the mining, energy, telecommunications, and transportation sectors. In addition, the effects of the 1988 earthquake, which killed more than 25,000 people and made 500,000 homeless, are still being felt, though international donors and diaspora Armenian groups continue to fund reconstruction efforts in the earthquake zone. Although a cease-fire has held since 1994, the 20-year-old conflict with Azerbaijan over Nagorno-Karabakh has not been resolved, in spite of intensive efforts by the OSCE Minsk group to reach a settlement. The consequent closure of both the Azerbaijani and Turkish borders resulting from the war has prevented Armenian from realizing its economic potential, because of Armenia's dependence on outside supplies of energy and most raw materials. Land routes through Azerbaijan and Turkey are closed, though air connections to Turkey exist; land 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. Since 2005, however, the dram has continued to appreciate versus the dollar, going from an annual average of 458 drams in 2005 to 342 in 2007. The currency's appreciation stems largely from growing remittances by diaspora Armenians in Russia and the United States, a weakening dollar, and gradual increase in the productivity of Armenian industry.

In spite of the Nagorno-Karabakh conflict, where a cease-fire has been in effect since 1994, the Government of Armenia has been able to carry out wide-ranging economic reforms that have paid off in dramatically lower inflation and steady growth. Armenia has registered strong economic growth since 1995, with double-digit growth rates in the past 6 years.

The structure of Armenia's economy has changed substantially since 1991, with sectors such as construction and services replacing agriculture and industry as the main contributors to the economic growth. The diamond processing industry, which was one of the leading export sectors in 2000-2004 and also a major recipient of foreign investment, faced a dramatic decrease in output since 2005 due to raw material supply problems with Russia and overall decline in international diamond markets. Other industrial sectors driving industrial growth include energy, metallurgy, and food processing.

Armenia maintains a floating exchange rate regime with no explicit exchange rate target. The nominal exchange rate of the Armenian dram with major currencies was fairly stable between 1998 and 2003; however, it has strengthened sharply starting in 2004, recording around 46% nominal appreciation against the U.S. dollar compared to January 2004. The main causes of the appreciation of the dram are the global weakening of the U.S. dollar, a large inflow of foreign currency to Armenia from remittances, as well as increases in domestic productivity and incomes. The sharp appreciation of the dram has already affected negatively the external competitiveness of the Armenian products.

Armenia is highly dependent on import of energy fuel, mainly from Russia. The Armenia Nuclear Power Plant (ANPP) provides around 40% of electricity generation for the country, and hydro and thermal plants provide roughly 30% each.

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. 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. In December 2005, the U.S. Millennium Challenge Corporation approved a 5-year $235 million Compact with the Government of Armenia, which focuses on rehabilitation of irrigation networks and upgrading of rural transport infrastructure.

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.