LIFE REGULATING IN THE UNRECOGNIZED COUNTRY

Azat Artsakh–Nagorno Karabakh Republic (NKR)
14-04-2004

In the past four years more than 40 million dollars of foreign
investments were made in the Republic of Nagorni Karabakh. NKR and its
economy are considered a risk zone because the international community
has not and in the near future is not going to recognize the right for
self-determination of the people of NKR, and the conflict has not been
settled yet. Prime minister Anoushavan Danielian agrees that NKR was
and remains a risk zone for foreign investors. Therefore, the prime
minister of NKR considers it necessary to find an intermediate
solution to attract investors. “In 2000 the government worked out an
economic program which works today. Tax rates were reduced. Today the
profit tax and the income tax total 5 percent,” said Anoushavan
Danielian. The economic reforms and simplification of the tax system
have produced the first results; businessmen from the USA, Russia,
Lebanon and other countries make investments in NKR. “I am opposed to
the opinion that before the settlement of the conflict Karabakh will
remain a risk zone. A certain intermediate solution should be sought
for. If NKR is considered a risk zone, then we have to compensate this
by providing so attractive conditions as to overbalance the risk,”
says Danielian. The flow of foreign investments started in 2000 and
as a result the rate of the industrial growth totaled 17 percent, in
2001 it increased to 22, in 2002 36 and in 2003 about 44
percent. These are not mere numbers, every year salaries and pensions
are increased. The investments of the provider of telephone
communication in Karabakh the Lebanon company “Karabakh Telecom” have
exceeded 10 million dollars already. Today the cellular communication
tariffs in NKR are lower and the quality of service is higher than in
Armenia. Of big investments it is worth to mention “Artsakhbank”, the
sphere of hotel building is developing at high rates. The hotel
“Nairi” was built on Australian investments, the hotel of Shoushi was
built on American investments. The hotel “Karabakh” is
reconstructed. Within a year and a half the metallurgic factory of
Drmbon was projected, built and operated. Even in Soviet years it was
impossible to build a factory in such a short period of time. Today
700 people are employed in Drmbon, 150 were invited from Armenia,
there is need for labour force. In the past 1 or 2 years the
businessmen of Armenia also make investments in NKR. Two wineries were
rebuilt in Martouni and Karmir Shouka. In total 5 million dollars were
invested in the production of alcoholic drinks in NKR. In cooperation
with the American “Lebanon Corporation” and the Russian “Armenian
Cognac” the company “Artsakhalco” realizes its production (vodka, wine
and brandy) in the USA, Russia, the CIS countries. 100 thousand
bottles are imported to Russia annually. “Last year the paltry farm of
Lousakert produced 900 tons of paltry, this year it is planned to
produce 1300 tons,” said Anoushavan Danielian. In the past two years
Karabakh had a good harvest of grain. The grain produced in 2003 is
enough to supply the NKR population during 3 years. The NKR prime
minister considers the sphere of water resources promising. “17-18
technical programs are ready, and we expect that in the coming years
investments will be made in this sphere. After the construction of the
first hydroelectric station we will manage to supply the whole
republic. In 2003 we used 150 million kilowatt energy of which 130
million was produced in Karabakh (water reservoir of Sarsang). Soon
we will be able to export electric energy. We are in the same system
with Armenia and the Republic of Armenia has exit to Georgia and
Azerbaijan,” said Anoushavan Danielian. In 2003 the budget of
expenditure totaled 12 billion 592 million drams of which receipts
totaled 3 billion 92 million, budget deficit totaled 9.5 billion drams
which is provided by Armenia (the interstate loan). It seems that
Armenia is the chief taxpayer of the NKR budget. But on the other
hand, there is no customs on the NKR-RA border and the customs of
products exported from or imported to Karabakh are paid to
Armenia. These sums are almost equal to the interstate loan provided
by Armenia to Karabakh.

TATUL HAKOBIAN.
14-04-2004