Agency WPS
What the Papers Say Part B (Russia)
March 24, 2006 Friday
WEAPONS ARE AN IRREFUTABLE ARGUMENT
by Ara Tatevosjan, Alexander Reutov
Russia and Armenia: cheap arms as compensation for expensive gas;
Russia and Armenia are supposed to sign a new gas payment arrangement
on April 1, but complete clarity of the issue has not been reached
yet. Moscow and Yerevan are frantically seeking a mutually acceptable
solution to the problem.
Russia and Armenia are supposed to sign a new gas payment arrangement
on April 1, but complete clarity of the issue has not been reached
yet. Moscow and Yerevan are frantically seeking a mutually acceptable
solution to the problem.
When Gazprom spokesman Alexander Medvedev said in late 2005 that the
price of gas for Armenia would be raised to $110 per thousand cubic
meters in 2006, official Moscow made it plain that its mind was made
up. Medvedev emphasized that political alliances have nothing to do
with gas delivery prices. Moscow only promised to consider
compensation options that would make the new price more bearable for
Armenian consumers.
Russia said for example that it could buy a sizeable chunk of
Armrosgazprom from Yerevan. What money Yerevan would have been paid
was more than adequate for maintaining low gas prices for domestic
users in Armenia. Another option proposed by Moscow was for Armenia
to give Russia the fifth bloc of the Razdan Thermal Power Plant and
all of Armenia’s gas transportation system. Russian specialists
valued these facilities at $140 million.
It was Iran, Russia’s “bitter partner,” that disrupted these plans.
It is Tehran that finances construction of the fifth bloc at Razdan
and Iran-Armenia gas pipeline. When the news of the Russian proposals
reached it, Iran vehemently objected and threatened to withdraw from
the projects altogether. Yerevan gave in with ill grace.
President Robert Kocharjan of Armenia visited Moscow in January, but
not even his talks directly with President Vladimir Putin resulted in
any considerable progress in the gas matter. The government of
Armenia was walking on thin ice and knew it. Defense Minister Serzh
Sarkisjan denied the idea of demanding payment from Moscow for its
military base in Armenia.
“I don’t know what the price of gas will be after April 1,” Kocharjan
said. He added that negotiations over “compensation mechanisms” were
under way. Absorbing the shock of new prices for Armenia, these
mechanisms “may function for two or three years only.”
The citizens of Armenia were informed of the solution finally found
on Wednesday night.
According to our sources, the idea was conceived and developed into
the mechanism of salvation in Moscow. Along with the gas, Yerevan
will receive a bonus that will be no less valuable than the main
product as such. The matter concerns Russian arms export to Armenia
at a discount. Some of the future contracts will even stipulate
permanent loans to the Armenians. This year, Armenia expects to get
1.7 billion cubic meters of gas from Russia. Since the new tariffs
are to come into effect on April 1, they will only apply to three
fourths of the volume. It means that Armenia’s actual losses will
amount to about $83 million. Armenia’s entire defense budget is $155
million. Judging by official reports, 15% of the budget or more than
$23 million are channelled into weapons acquisition. Actually,
countries usually spend nearly twice as much on new weapons as they
officially reveal. It means that the Russian bonus will enable
Yerevan to save up to $50 million on weapons. The generosity of the
Russian military-industrial complex knows no limits.
Source: Kommersant, March 24, 2006, p. 9
Translated by A. Ignatkin