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AAA: Armenia This Week – 09/27/2004

ARMENIA THIS WEEK
Monday, September 27, 2004

NEW TURKISH LAW TO CRIMINALIZE GENOCIDE AFFIRMATION
The Turkish parliament last Sunday passed a new Criminal Code, including
articles that would severely restrict freedom of speech on matters seen as
“insulting national dignity,” Turkish media reported. The new Code has come
on the insistence of the European Union (EU), which Turkey seeks to join,
and EU officials have yet to comment on new restrictions that are due to
come into force next April.

Article 306 of the new Code would punish individual Turkish citizens or
groups that confirm the fact of the Armenian Genocide in Ottoman Turkey or
call for the end of the Turkish occupation of Northern Cyprus with up to
fifteen years in prison. Bekir Bozdag, a member of the Turkish Parliamentary
Committee on Legal Affairs from the ruling Justice and Development Party
(AKP), said the article was added on the insistence of the opposition
Republican People’s Party (CHP).

Turkey continues to deny the Genocide of some one and a half million
Armenians during World War I and pressures other countries to avoid the
issue. In addition, the Turkish government refuses to establish diplomatic
relations with Armenia or open its border for trade, unless Armenia
pressures its Diaspora, largely descended from Genocide survivors, not to
seek affirmation or reparations.

Turkey has largely ignored calls from the United States and EU officials to
lift its blockade of Armenia. Most recently, the EU Commission President
Romano Prodi suggested last week that the issue might become one of the
conditions for Turkey’s accession to EU. Armenian and Turkish officials have
held repeated talks on ways to move ahead in bilateral relations, with
Armenia ready to establish ties without preconditions. Turkey, after hinting
at a change of policy last year, has reverted to the old line. The two
countries’ foreign ministers are due to meet this week, although no imminent
progress is anticipated.

Citing “national security” concerns, Turkish courts have already prosecuted
citizens who have spoken in favor of recognizing Armenian Genocide or
against Ankara’s policies of denial. An ethnic Assyrian priest was charged
in October 2000 and seven high school teachers were prosecuted last year for
questioning the Turkish government’s demand that schoolchildren be
instructed on denial of Genocide. However, the new law would specifically
target what is known in Turkey as the “Armenian issue” while providing for
more severe punishments.

Despite continued Turkish hostility, Defense Minister Serge Sargsian last
week confirmed Armenia’s support for Turkey’s accession to the EU. Most
Armenian observers hope the accession process would help Turkey change its
intransigent attitude. There appears to be growing recognition in Turkey
that its policy towards Armenia has been unsuccessful. The blockade has
hampered Turkey’s own economic interests, while Armenia is developing
despite closed borders. (Sources: AP 12-21-00; AFP 7-1-03; Armenia This Week
1-16, 30, 5-21; Mediamax 9-20; Radikal 9-20; Arminfo 9-24; Anadolu 9-28;
9-27)

ARMENIA ISSUES FIRST LONG-TERM GOVERNMENT BONDS
The Armenian Finance Ministry issued the country’s first long-term bonds
last week. The first $3 million batch of bonds repayable in seven years was
met with great demand by local banks and financial organizations and sold in
less than a day. The move is seen as reflecting growing confidence in the
government’s fiscal policy and another milestone in Armenia’s economic
development.

Armenia first began issuing bonds with one-year maturity in 1995 as a way to
generate funds for the country’s cash-strapped treasury. Since 2000, the
government switched to treasury bills with one to five years maturity. These
short- to medium-term bonds had yields averaging as high as 60 percent in
the late 1990s, but decreased to under six percent in recent years.

At a press conference last week, Chairman of the Central Bank Tigran
Sargsian argued that Armenia was entering a “new cycle of economic
development.” Sargsian claimed that recent strengthening of the national
currency, the Dram, was a reflection of growing financial infusions through
direct investments and cash transfers, as well as ongoing economic growth.
The Dram traded at about 510 to $1, down from 570 at the beginning of 2004.
Sargsian said that the Bank so far plans no intervention into the national
currency’s rise, urging Armenia’s exporters to focus on improving the
quality of their products rather than expect government “subsidies” through
a weaker Dram.

The National Statistics Service reported last week that Armenia’s Gross
Domestic Product (GDP) was up 9.6 percent in the first eight months of the
year, with the country on track for the fourth consecutive year of
double-digit growth. Increases in construction, agriculture and electricity
output ranged between 12 and 18 percent so far this year. Industrial
production and exports were up three percentage points each. Western
Europe, Russia, the United States and Israel remain Armenia’s main trading
partners.

Over the same period, the population’s incomes and expenses have on average
increased by 17 percent, with an average monthly salary up more than 30
percent to about $80, without purchasing power factored in. (Sources:
Armenia This Week 8-3; Arminfo 9-20, 22, 23; Noyan Tapan 9-20, 23, 24;
RFE/RL Armenia Report 9-22, 23)

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