Armenia. The year began with a cold winter and gas supply
problems. A couple of explosions occurred on the Russian gas
pipeline to Armenia and Georgia. No sabotage was excluded.
While Ukraine was pressed very hard by Russian demands for
gas tariff increases, Gazprom's Russian state government
demanded a doubling of Armenia's fees. The country receives
all its gas from Russia, which also controls most of
Armenia's electricity grid, a control that was strengthened
during the year. Armenia is Russia's foremost ally in the
Caucasus, with a so-called strategic partnership, and had
expected to be exempt from the demands for higher gas prices
in the region. But the price was raised from US $ 56 to US $
110 for 1,000 m 3gas. This led to increased
energy prices for Armenian consumers, who conducted protest
demonstrations. Political analysts felt that the Russian
demands were related to Armenia's plans to become
independent of Russian gas through a new leadership from
neighboring Iran. However, Russian pressure to gain
influence over the gas pipeline did not appear to produce
results. On the other hand, the Armenian government agreed
to hand over control of a large heat plant to Gazprom in
exchange for certain gas deliveries without payment and
promised a fixed gas price for three years. The opposition
accused the government of increasing Armenia's dependence on
Russia. However, President Robert Kotjarjan, who visited
Moscow several times during the year, seemed to respond to
some of that criticism by strengthening relations with Iran.
When the Christian dominated Armenian President Kotjarjan
visited his disputed Muslim colleague Mahmoud Ahmadinejad in
Tehran in July, far-reaching energy cooperation was agreed.
In exchange for the new gas pipeline, which is expected to
be commissioned in 2007, Armenia will supply Iran with
electricity through newly built pipelines. The countries
will also jointly build a new hydroelectric plant in the
Aras border and Armenia will build a new highway to the
Iranian border in anticipation of increased trade. Iran's
interest in Armenia was seen as a challenge to Russia's and
Turkey's influence in the southern Caucasus.
CountryAAH, Armenia gained international political success when the
French National Assembly in October decided to criminalize
the denial of Turkish genocide against Armenians in 1915.
The decision provoked strong negative reactions in Armenia's
powerful neighbor Turkey.
Armenia's economy seemed to grow by over 10% for the
sixth consecutive year. According to government statistics,
the proportion of residents below the official poverty line
of six years had fallen from 56 to just over 36%.