ARMENIA COMMERCIAL NEWS UPDATE

Date: March 2007

Compiled by: Maren Veatch, BISNIS Washington, DC

NOTE: THIS COMMERCIAL UPDATE IS DRAWN FROM THE OPEN PRESS AND OTHER OPEN SOURCES AND SHOULD NOT BE INTERPRETED AS OFFICIAL U.S. GOVERNMENT INFORMATION

Armenian government to sell 10% in Armental to Russia’s VimpelCom. Armenia's government said Thursday it would sell its 10% stake in Armentel for 38 million euros ($48.9 million) to Russian mobile phone operator VimpelCom [RTS: VIMP], making it the sole owner of the Armenian telecommunications group. Last November, VimpelCom acquired 90% of Armentel's stock from Hellenic Telecommunications Organization SA (OTE) for 341.9 million euros ($440 million). The Armenian government first proposed selling the remainder to VimpelCom last year, on condition that the company does not try to monopolize the post-Soviet South Caucasus nation's telecoms market. Under the deal, VimpelCom will also take on Armentel's debt, totaling around 40 million euros ($51 million). Armentel is Armenia's landline phone monopoly, which also offers Internet connection to providers and end-users. In addition, it is one of the two Armenian mobile phone operators, with about 400,000 subscribers across the country.

Source: Ria Novosti, March 22, 2007

Armenia’s economic growth 9.4% in Jan-Feb 2007. Armenia's economic growth between January and February 2007 stood at 9.4%, while the country's GDP totaled 186,8 billion drams ($519.1 million), the national statistics service said Tuesday. For the period under review, consumer prices rose 5.1%, year-on-year. Armenia's industrial product prices were down 0.9%, its volume of industrial output was 99%, while its trade totaled 199 billion drams ($552.6 million), up 51.5% compared to the same period in 2006. Last year, the country's economic growth was 7%. In line with Armenia's 2007 budget, GDP growth is expected at 9%, compared with 13.4% in 2006, and inflation should be 4%.

Source: Ria Novosti, March 20, 2007

Iran-Armenia gas pipeline opened. The opening of the Iran-Armenia gas pipeline has taken place in Agarak, on the Armenian-Iranian border, with Presidents Robert Kocharyan of Armenia and Mahmud Ahmadinejad of Iran attending, Armenia's Channel 1 reported Monday. All construction operations have been completed, and the pipeline is being tested now. In a few months the Iranian gas pipeline will be connected to Armenia's gas distribution network. The cost of the Iran-Armenia gas pipeline, which is 141 km long and 700 mm in diameter, is estimated at $220 million to $250 million, and the Armenian part costs $120 million. At the first stage Armenia will annually receive about 400 million cubic meters of gas, a figure that is expected to grow to 2.3 billion. Under the contract, Iran should deliver to Armenia 36 billion cubic meters of natural gas. Experts believe the gas pipeline project is a step toward enhancing the safety of Armenia's energy sector, which will also provide the republic with an alternative energy source.

Source: Ria Novosti, March 19, 2007

No U.S. missiles on Armenian soil. Armenia's deputy foreign minister said Friday the Caucasus state was not considering the possibility of deploying elements of a U.S. missile defense system on its soil. A senior Pentagon official said March 1 that the United States would like to deploy a radar base in the post-Soviet Caucasus, without specifying in which country. The statement further strained relations with Moscow already unnerved by earlier reports of U.S. plans to deploy elements of a missile shield in Central Europe. Armenia is a member of a post-Soviet security group, the Collective Security Treaty Organization, which is dominated by Russia and believed to have been created as a way of preventing NATO's further eastward expansion. But in Armenia's territorial conflict with Azerbaijan over Nagorno-Karabakh, the alliance has tended to back the latter, saying that the region is under Armenian "military occupation." Conversely, Moscow is more supportive of Armenia on the issue. Source:

Ria Novosti, March 9, 2007

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