ARMENIA THIS WEEK

Monday, November 22, 2004

In this issue:

Congress passes key aid, trade legislation

Thanksgiving fundraising to benefit Karabakh

Armenia modifies communications regulation

U.S. CONGRESS PASSES KEY ARMENIA ASSISTANCE, TRADE LEGISLATION

Both branches of the U.S. Congress voted last Saturday to uphold equal
amounts of U.S. military aid to Armenia and Azerbaijan. Last Friday, the
Senate also adopted legislation making normal trade relations with
Armenia permanent.

Voting on Saturday, the U.S. Senate and House of Representatives
approved “not less than $75 million” in economic and $8.75 million in
military assistance to Armenia, as well as $3 million in humanitarian
aid to Nagorno Karabakh. The $8.75 million are due to be spent through
the Foreign Military Financing (FMF) and the International Military
Education and Training (IMET) programs, with equal assistance
appropriated to Azerbaijan. In addition to FMF and IMET aid, Azerbaijan
receives funds for Caspian Sea security programs.

The United States had maintained parity in security assistance to
Azerbaijan and Armenia, since the early 1990s, when the U.S. Congress
sanctioned Azerbaijan over its conduct of the war against Nagorno
Karabakh and Armenia (known as Section 907 of the FREEDOM Support Act).
The U.S. first began providing military aid to the two countries after a
2001 congressional vote, which satisfied the Administration request to
waive Section 907 to allow for a greater U.S. role in cracking down on
Islamic radicals within Azerbaijan and for counter-proliferation efforts
in the Caspian. The waiver mandates that none of the U.S. military aid
could be used against Armenia.

The Senate’s passage of the Permanent Normal Trade Relations (PNTR)
resolution on Armenia would no longer require an annual review and
presidential waiver of the Cold War-era provision known as the
Jackson-Vanick amendment that conditioned U.S.-Soviet trade on human
rights issues. Armenia joined the World Trade Organization (WTO) in
February 2003. And the U.S. State Department officials have backed the
removal of the amendment in relation to Armenia, as it fully complies
with religious freedom and emigration rules. The U.S. House of
Representatives had voted to drop the provision in November 2003 and
again last October. Adoption of PNTR now opens the way for additional
U.S.-Armenia trade agreements.

U.S.-Armenia trade turnover stood at about $140 million both in 2002 and
2003, a significant increase over earlier years. The U.S. Census Bureau
reported over $107 million in overall trade for three quarters of 2004.
Despite geographic distance, the U.S. is an increasingly attractive
market for Armenia’s producers. Armenian companies exported $33 million
worth of goods to the U.S. between January and September of this year,
an increase from $23 million over the first three quarters of 2004.
Armenia’s overall exports to the U.S. last year stood at $38 million.
(Sources: U.S. Census Bureau ; Armenia This Week
11-21-03, 2-6, 3-26, 7-19; U.S. State Department 11-19; Armenian
Assembly of America 11-19, 20)

NKR PRESIDENT IN U.S. TO RAISE ADDITIONAL FUNDS FOR KARABAKH HIGHWAY

Nagorno Karabakh’s President Arkady Ghoukasian is visiting the United
States to participate in the Hayastan All-Armenian Fund’s drive to raise
financial support for the completion of the 105-mile highway that will
connect the northern and southern parts of NKR. The highway, half of
which has already been built, is of major economic significance for
Karabakh. Ghoukasian’s delegation visited with Armenian communities in
America’s North-East and Mid-West and is currently in California. In
addition to the U.S., the Hayastan’s drive includes Armenian communities
in Europe, South America and the Middle East, as well as Armenia proper,
and hopes to raise over $12 million this year.

The Hayastan Fund, which has raised over $90 million since the time it
was set up in the mid-1990s, focuses on road construction in eastern
Armenia and post-earthquake reconstruction in the northern Shirak and
Lori provinces. (Sources: Arminfo 11-19, 22; Noyan Tapan 11-19; Los
Angeles Daily News 11-22)

GOVERNMENT MODIFIES AGREEMENT WITH COMMUNICATIONS MONOPOLY

Following months of negotiations and pledges to scrap the monopoly on
communications, the Armenian government settled for an out-of-court
compromise deal modifying its original 1997 agreement with the Hellenic
Telecommunications Organization (OTE), the Greek owner of Armentel.

In accordance with the new agreement, details of which were announced by
Justice Minister David Harutiunian in recent weeks, Armentel will allow
one competitor in cellular communications, while maintaining monopoly
rights over the rest of the network, including internet telephone
communications, until 2008 instead of 2012, as was originally agreed.
The government has already granted a second mobile phone license to
Karabakh-Telecom, a Lebanese-owned company which has been working in
Nagorno Karabakh since 2000.

Information technology associations and opposition parties have
criticized the deal as contrary to Armenia’s economic interests. But
Harutiunian argued that the government preferred an out of court
settlement to an expensive court battle. (Sources: Armenia This Week
8-23; Arminfo 11-22)

Note to Readers: Armenia Fund’s 2004 Telethon will air in LA all-day
Thursday on KSCI (Channel 18). It will also be Webcast at
Armenia This Week will not be issued next week. It
will resume publication on December 6. Happy Thanksgiving!

Visit the Armenia This Week archive dating back to 1997 at

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Miscellaneous Trade and Technical Corrections Act of 2004

Title II, Section 2001

Subtitle A – Miscellaneous Provisions

SEC. 2001. TERMINATION OF APPLICATION OF TITLE IV OF THE TRADE ACT OF
1974 TO ARMENIA.

(a) FINDINGS. – Congress makes the following findings:

(1) Armenia has been found to be in full compliance with the freedom of
emigration requirements under title IV of the Trade Act of 1974.

(2) Armenia acceded to the World Trade Organization on February 5, 2003.

(3) Since declaring its independence from the Soviet Union in 1991,
Armenia has made considerable progress in enacting free-market reforms.

(4) Armenia has demonstrated a strong desire to build a friendly and
cooperative relationship with the United States and has concluded many
bilateral treaties and agreements with the United States.

(5) Total United States-Armenia bilateral trade for 2002 amounted to
more than $134,200,000.

(b) PRESIDENTIAL DETERMINATIONS AND EXTENSIONS OF NONDISCRIMINATORY
TREATMENT.

Notwithstanding any provision of title IV of the Trade Act of 1974 (19
U.S.C. 2431 et seq.), the President may:

(1) determine that such title should no longer apply to Armenia; and

(2) after making a determination under paragraph (1) with respect to
Armenia, proclaim the extension of nondiscriminatory treatment (normal
trade relations treatment) to the products of that country.

(c) TERMINATION OF APPLICATION OF TITLE IV.

On and after the effective date of the extension under subsection (b)(2)
of nondiscriminatory treatment to the products of Armenia, title IV of
the Trade Act of 1974 shall cease to apply to that country.