Preliminary Draft Document To Be Signed On Construction Of Armenia-I

PRELIMINARY DRAFT DOCUMENT TO BE SIGNED ON CONSTRUCTION OF ARMENIA-IRAN RAILROAD IN YEREVAN

ARKA
Apr 3, 2009

YEREVAN, April 3. /ARKA/..After the two-day meeting of the joint
Armenian-Iranian commission on cooperation in transport sector held
in Yerevan, a preliminary draft memorandum of understanding is to be
signed on construction of a railroad connecting Armenia with Iran,
Press Secretary of Armenian Ministry of Transport and Communication
Susanna Tonoyan told ARKA Agency Thursday.

According to the report, Iranian delegation headed by the country’s
Minister of Roads and Communications Hamid Bihbahani arrived in Armenia
on April 2 on a two-day visit. Armenian Minister of Transport and
Communications Gurgen Sargsyan and other officials met the delegation
and had a brief meeting in Zvartnots airport.

Later the same day, the sides discussed issues of mutual concern,
including possible participation of the Iranian side in the
construction of Iran-Armenia railroad.

The Iranian side expressed readiness to assist Armenia in the
construction.

A target group involving two representatives from each side is to
be set up to deal with the railroad construction matters in the
near future.

Iran also confirmed its willingness to provide transit for Armenia
goods transported to southern and northern ports of Iran, as well as
via Iranian territory to other countries and back.

The countries also confirmed their readiness for further cooperation
in const ruction of North-South highway.

Earlier, Armenian Premier Tigran Sargsyan said that the schedule of
the project on construction of Iran-Armenia railroad will depend on
the final calculations to be made by Armenian together with the Asian
Development Bank and on the financial load.

The railroad will to allow Armenia using an alternate route out for
transportation of energy resources and other goods.

The existing railways connect Armenia with other countries only
through Georgian territory.

Obama Hopes To Bring Turkey Westward

OBAMA HOPES TO BRING TURKEY WESTWARD

Middle East Times
April 3 2009

WASHINGTON, April 3 (UPI) — U.S. President Barack Obama should court
Turkey on issues ranging from energy to regional cooperation to bring
Ankara closer to the west, an analysis says.

Obama plans to visit Turkey next week on the heels of a meeting with
NATO officials marking the 60th anniversary of the alliance. Turkish
public opinions on the United States, however, hovered at historical
lows since the 2003 invasion of Iraq.

Turkey boasts one of the largest military commitments to NATO, serves
as a regional energy hub and sits at the crossroads of east-west
relations.

By scheduling the visit to Turkey in the wake of the NATO meeting,
Obama has shown his administration considers Ankara a player in the
European and regional community, notes a review by The Washington
Institute for Near East Policy.

Ankara and Washington share a common vision on many issues in Iraq
and the greater region. A visit by U.S. Secretary of State Hillary
Clinton earlier this year brought the two nations closer together;
however, Obama may upset that balance if he takes the position that
atrocities against the Armenian population by the Ottoman Empire
constitute genocide.

Nevertheless, Obama should bring to Ankara a sweeping platform that
includes economic cooperation, accession to the European Union and
matters pertaining to European energy security.

The Obama administration "should take an active interest in Turkey and
formulate a broad-based policy coordinated across various government
agencies," the WINEP report concludes.

Armenian Business Confidence Waning In Q1

ARMENIAN BUSINESS CONFIDENCE WANING IN Q1
BYLINE: Venla Sipila

World Markets Research Centre
Global Insight
April 3, 2009

The latest confidence survey published by the Central Bank of
Armenia (CBA) testifies to increasing pessimism among Armenian
companies. Indeed, the business environment index in the first
quarter of 2009 plummeted by a third in annual comparison and by
around 19% from the previous quarter, ARKA News reports. Moreover,
at 33.5 on a 100-point scale, the latest reading of the index shows
that overall confidence remains considerably below the 50-point mark
that separates negative and positive sentiment, reflecting that firms’
views on development of general economic conditions and risks are
gloomy. Meanwhile, the consumer confidence index, gauging households’
expectations on income, expenditures and employment and their views
on the current economic situation, slid by some 15% year-on-year
(y/y) and by some 7% quarter on quarter (q/q), standing at 45.3 in
the first quarter. Further, the economic activity index fell by more
than a fourth y/y, whereas the first-quarter value of 48.1 presents
an increase from the fourth-quarter 2008 reading of 40.7. Falling
below 50, the reading in any case signals that respondent firms’
views and expectations on output, orders and stocks are bleak. Over
800 companies in the industrial, construction and service sectors,
and nearly 1,900 households were surveyed.

Significance:The weakening sentiment among Armenian consumers and
producers fits the weakness of latest data and our projections. While
the business activity index managed an increase from the previous
quarter, also this indicator sill displays a falling trend, as do the
other two components of the survey. Indeed, while the direct impact
from the international financial crisis on the Armenian banking sector
has remained modest, the current global recession does have important
negative implications for Armenia as well, and the effects of sharp
falls in availability of FDI and remittance inflows are becoming
increasingly clear. Indeed, notably via a dramatic slowdown in the
construction sector, the economy as a whole has contracted over recent
months, and this weakness is likely to persist for some time.

NKR Minister Urges OSCE To Punish Azerbaijan For "Ceasfire Breach"

NKR MINISTER URGES OSCE TO PUNISH AZERBAIJAN FOR "CEASFIRE BREACH"

Mediamax
April 1 2009
Armenia

Yerevan, 1 April: The foreign minister of the Nagornyy Karabakh
republic (NKR), Georgiy Petrosyan, has sent a letter to the OSCE
chairman-in-office, [Greek Foreign Minister] Dora Bakoyannis,
expressing his concern about frequent ceasefire violations by
Azerbaijan.

Petrosyan drew attention of the OSCE chairman-in-office to incidents
that take place during the monitoring of the [contact line between the
Azerbaijani and Armenian troops] when the OSCE Minsk Group co-chairs
arrive in the region, the press service of the NKR foreign ministry
has told Mediamax.

In particular, a shooting incident took place in the immediate vicinity
of the contact line during the OSCE monitoring on 26 February 2009
and the monitoring subsequently failed. The letter of the NKR foreign
minister noted the importance of submitting written information on
the results of an investigation into the incident in question.

The NKR foreign ministry is sure that the provision of all parts
to the conflict with timely and truthful information about the real
culprit responsible for such violations will have a positive impact
on the preservation of ceasefire and will contribute to the efficient
work of the personal representative of the OSCE chairman-in-office.

Israel Unlikely To Strike Iran This Year

ISRAEL UNLIKELY TO STRIKE IRAN THIS YEAR

PanARMENIAN.Net
03.04.2009 10:59 GMT+04:00

/PanARMENIAN.Net/ Robert Gates, U.S. Defense Secretary, has said
Israel is unlikely to attack Iran this year to prevent Tehran from
developing a nuclear weapon.

In an interview with the Financial Times, Mr Gates said there was still
enough time to persuade Iran to abandon what is widely perceived to
be a nuclear weapons program.

Mr Gates said he does not expect Israel – which believes the
U.S. estimate for when Iran could develop a nuclear weapon is too
sanguine – to take military action this year.

"I guess I would say I would be surprised…if they did act this year,"
he said.

As he was sworn in as the new Israeli prime minister this week,
Benjamin Netanyahu warned that the greatest danger to Israel was
Iran’s attempt to develop nuclear weapons. But asked whether Iran
would cross a nuclear "red line" this year, Mr Gates said: "I don’t
know, I would guess probably not".

"I think we have more time than that. How much more time I don’t know,"
said Mr Gates. "It is a year, two years, three years. It is somewhere
in that window."

Israel raised the specter of war last year by conducting a large scale
military exercise that some experts saw as a practice run for an attack
on Iran. Admiral Mike Mullen, the chairman of the U.S. joint chiefs,
later delivered an unusual public warning following a visit to Israel,
saying "this is a very unstable part of the world, and I don’t need
it to be more unstable".

Speaking before U.S. President Barack Obama meets NATO leaders in
France and Germany this weekend, Mr Gates urged Europe to boost its
commitment to Afghanistan in the wake of the new US strategy.

Mr Gates, who has made multiple frustrated trips to Europe to get
more combat troops, said the U.S. would request resources that were
more politically palatable to the European public. He urged Europe to
provide money for the expansion of the Afghan army, civilian experts
in areas such as agriculture, health and clean water, and trainers
for the Afghan police.

Extrapolating from analyst assessments that the most advanced Jerichos
carry 1,650-lb conventional warheads, Abdullah Toukan of the Center for
Strategic and International Studies said 42 missiles would be enough
to "severely damage or demolish" Iran’s core nuclear sites at Natanz,
Esfahan and Arak.

ANKARA: Why Should Turkey Normalize Her Relations With Armenia?

WHY SHOULD TURKEY NORMALIZE HER RELATIONS WITH ARMENIA?
Birsen Goksu

Journal of Turkish Weekly
d-turkey-normalize-her-relations-with-armenia-.htm l
April 1 2009

Armenian and Turkish press has been recently talking about the
rapprochement and possibility of the normalization of relations between
the two countries. In spite of fifteen-year severed diplomatic ties,
closed border and tense relations, the winds of change have begun
blowing between Ankara and Yerevan with the visit paid by Turkish
President Abdullah Gul to Armenia, upon the invitation of Armenian
President Serzh Sarkisian, on the occasion of a soccer match. This
historic visit was followed by a series of gatherings held on several
occasions, such as the BSEC or Davos meetings, where the parties
voiced their willingness with respect to the settlement of existing
disputes between Turkey and Armenia. Considering the lack of dialogue
between the two states since early 1990s, it is obvious that Turkey
and Armenia have entered an unprecedented period in their history
as two independent and sovereign states. It is currently a serious
point of concern in Turkey and Armenia whether or not these steps
will enable the parties to come out of the fifteen-year deadlock in
their relations. However, instead of asking whether parties will be
able to normalize their relations, a more important point that has
to be discussed is why parties should normalize their relations.

The conflicts between Turkey and Armenia gradually emerged when
newly-independent Armenia attempted to define Eastern Anatolia as
"Western Armenia" and not to officially recognize the borders it
has with Turkey. Following this, genocide allegations poisoned the
relations between the two as they began to be voiced more loudly by the
Armenian government and as the diaspora intensified its initiatives to
have the 1915 events recognized as genocide in national parliaments
all around the world. Nevertheless, the landmark event causing
Turkey to close her doors completely to Armenia was the conflict
over Nagorno-Karabakh breaking out between Armenia and Azerbaijan as
a territorial and administrative dispute from 1988 to 1992 and as a
full-fledged war from 1992 to 1994. Moreover, even though the term of
Levon Ter-Petrosian can be considered as more moderate with respect
to the genocide allegations in particular, the hawkish discourse
of Robert Kocharian, a Karabakh native and the region’s former
president, sharpened the tone utilized by Armenia from late 1990s
onwards. Finally, resolution of the disputes, reopening of the borders
and establishment of diplomatic ties with Armenia have been linked to
the resolution of the conflict between Azerbaijan and Armenia over
Nagorno-Karabakh, bringing about nothing but turning the situation
into a "mutually hurting stalemate"[1] for both Turkey and Armenia.

The nature of the conflicts between Turkey and Armenia is a perfect
example of hurting stalemate inasmuch as that both sides are damaged
by the continuation of conflicts to a certain extent. From the Turkish
side, stalemated conflicts with Armenia means facing the gradually
increasing international pressure with respect to the recognition of
genocide allegations, waiting the remarks of US Presidents with a bated
breath every 24 April and perceiving the threat of being obliged to
pay compensation and give some parts of Eastern Anatolia to Armenia,
causing Turkey to suffer from Sèvres Syndrome even 90 years after
the signing of the treaty, which feeds the "foreign enemies" discourse
of ultra-nationalists in Turkey.

>From the Armenian side, on the other hand, insistence on the
continuation of conflict points with Turkey costs the embargo imposed
by Turkey and Azerbaijan on this state, including exclusion from
energy transit routes passing through the region, limited diplomatic
relations with neighbours and dependence on the money poured into
the country by the diaspora because of lacking trade relations with
neighbouring countries, inefficient investments and young population
leaving the state, which turns Armenia into an old people’s home.

It is unequivocally true to say that associating the conflicts between
Turkey and Armenia with the Nagorno-Karabakh conflict and pushing the
resolution of this conflict as a prerequisite for the normalization
of relations between the two states only increase the severity of
stalemate both parties suffer from. Given the fact that Azerbaijan
has lost ground regarding the Nagorno-Karabakh issue and support
of the third parties has tilted towards Armenia since early 1990s,
the support extended by Turkey to the Azerbaijani side is beyond
price and intensely needed. However, for a number of reasons, Turkey
should normalize her relations with Armenia not despite Azerbaijan,
but for also Azerbaijan.

First and foremost, there is no doubt that, in contrast to Turkey’s
expectations, thinking the conflict points with Armenia in the same
basket with Nagorno-Karabakh issue and confining this state to economic
and political isolation in the region did not drive her into a corner
but, instead, caused the hawks to come to power in 1998 and led the
diaspora to sharpen its tone through intensifying genocide allegations
and accelerating pro-Armenian campaign regarding the Nagorno-Karabakh
issue. It is true that Robert Kocharian pursued a totally different
policy from Ter-Petrosian in that he tried to turn the isolation
imposed by Turkey and Azerbaijan on his state into an advantage
through attracting the attention of diaspora to send more financial
aid to Armenia and through depending on Russia and Iran further and,
thereby, constituting a second axis in regional equation vis-a-vis
the axis consisting of Turkey, Azerbaijan and Georgia.

Moreover, with a view that it is the diaspora underscoring the
genocide allegations much more and taking an irreconcilable stance
regarding the resolution of existing disputes, Turkey must make a
clear-cut differentiation between the diaspora Armenians and Armenian
residents. The main motive pushing the diaspora to put emphasis on
genocide allegations so intensely is the need for an argument which
will bring Armenians all over the world together and maintain their
identity and integrity through serving as cement. What is more,
compared with the initial years of newly independent Armenia, the
influence of diaspora on the Armenian state and her foreign policy as a
whole has become much more decisive from late 1990s onwards. From this
point of view, it is undoubtedly true to argue that the shared policy
pursued by Turkey and Azerbaijan to isolate Armenia in the region
was one of the basic reasons for the hardening of the tone used by
the diaspora and its increased impact on Armenia. As a result, given
the fact that it seems impossible to establish an immediate dialogue
with the diaspora due to its irreconcilable stance and decentralized
character, normalization of relations with Armenia is in the interests
of Turkey in that it can find a counterpart to defend her point of
view and to come to a common point with respect to the disputed issues.

To put it another way, considering that, in our period, public
diplomacy does not matter only at the margins any more, Turkey must
give weight to shaping the lenses through which Armenian people see
Turkey. Today, public opinion matters in the conduct of foreign policy
more than ever. For that reason, even if an immediate establishment
of diplomatic relations cannot be expected in the short and mid-run,
opening borders with Armenia, increasing the number of direct flights
to Yerevan and establishing more trade links between the two countries
would make a substantial increase in the interaction channels between
two societies and this would have a crucial impact on the point of
views through which both nations see each other. At the end, this
would make further dialogue possible between them, making it more
costly for Armenia to sustain her irreconcilable attitude and leading
a way to the settlement of conflicts between Turkey and Armenia.

Furthermore, as of today, the Nagorno-Karabakh issue seems to meet the
criteria for being called as an intractable conflict, i.e. long-lasting
conflicts that are protracted in nature and failed to be accommodated
despite the efforts exerted both by the adversaries themselves and
by the third parties[2]. What is more, it is difficult to deny that
Nagorno-Karabakh conflict is full of failed third party mediation
attempts, which comprise the attempts of Russia, Iran, Kazakhstan
and the Minsk Group under the auspices of OSCE (then-CSCE). Needless
to say that, failure to settle the conflict mostly derives from the
nature of the conflict itself -inability to integrate the principles
of self-determination and territorial integrity in a way that both
parties would accept, identity considerations attributed to the
conflict by both adversaries and reluctance of the party having
military advantage to give concessions-[3]. Nevertheless, the role
of third parties plays an important part in turning Nagorno-Karabakh
conflict into a protracted one. Here, the most significant point
which has to be stressed is the conflict of interest between Russia
and the West in asserting their impact in the region. Given the fact
that a weak Azerbaijan would enable Russia to maintain her role in
energy markets and a weak Armenia means a loyal supporter of Russian
interests in the region, Russia, from its very beginning, has been
quite reluctant to accept Western-sponsored roadmaps for peace, which
was evident, for example, in Russian objection to the deployment of
an OSCE-led international peace-keeping force in the region, instead
of a Russian or CIS force.

When all these conditions under which the Nagorno-Karabakh issue
has evolved are taken into consideration, it would be pure optimism
for Turkey to wait for the settlement of Nagorno-Karabakh conflict
in order to normalize her relations with Armenia. Therefore, the
best thing that should be done on the way to the normalization
of relations with Armenia is to increase the dialogue with this
state through turning every occasion, including both official and
non-official ones, into advantage. Accordingly, the historic visit
paid by President Abdullah Gul to Armenia and other meetings held
by some lower-ranking government officials on several occasions,
like BSEC and Davos meetings, can all be thought as landmark steps
towards re-establishing relations with Armenia.

In effect, it should not be forgotten that Russian-Georgian war of
August 2008 played a part in paving the way for the rapprochement
between Turkey and Armenia. Indeed, considering severed diplomatic
and commercial relations with Turkey and Azerbaijan, Armenia sustains
her commercial relations with the world via Georgia’s Black Sea
ports, which were paralyzed during the war. This short period of
deprivation might have made obvious the catastrophic repercussions of
being depended on only one state and might have urged Armenia not to
mortgage her future on a controversial part of history, especially
in a period when the poor Armenian economy began facing the impact
of global financial crisis.

Moreover, the Russo-Georgian war was a wake-up call to the states
in Caucasus inasmuch as that it unveiled the extent to which frozen
ethnic conflicts in the region and Russian willingness to reassert her
influence over the region can pose a threat to the peace, security and
stability in Caucasus when there is no cooperation and coordination
among the neighbouring states of the region. For that reason, it
is clear that, since the war in August, Turkey and Armenia have not
been in a position to turn down the dialogue appeals any more, not
only for their own sake but also for the maintenance of peace and
stability in the region.

Maybe a more important thing, following Russia’s war in Georgia, is
the increasing contacts between Azerbaijan and Armenia. To be more
precise, Azerbaijan, Armenia and Turkey came together in tripartite
meetings held in New York in September and, then, in Helsinki in
December and voiced their willingness for a solution. Moreover,
Azerbaijan and Armenia signed Moscow Declaration in November 2008,
following the talks hosted by Russia and under the auspices of Minsk
Group, OSCE. Although the Declaration was downplayed because of not
leading to any important result with respect to the resolution of
Nagorno-Karabakh conflict, it should be labelled as crucial when it
is considered in conjunction with other recent developments.

As conclusion, whether Turkey and Armenia will be able to turn these
steps into an advantage towards normalizing their relations depends on
the answer of the question to what extent parties are ready and eager
to move the relations ahead. If these steps are not to be followed by
additional demarches, then it means that they will be confined to the
dustbin of history like other steps remaining inconclusive. However,
if parties sustain their willingness to take the relations further
ahead and if they feed this willingness with concrete initiatives,
then, a warming in Turkish-Armenian relations will be righteously
anticipated in the mid-run.

Birsen Goksu, Marmara University

[email protected]

[1] The concept of "mutually hurting stalemate" was firstly used
by William Zartman to define a situation in which both sides of
a conflict end up in such a costly deadlock that there is no use
escalating the conflict to escape from it. I.W. Zartman, "Ripeness:
the Hurting Stalemate and Beyond," In Conflict Resolution After the
Cold War, ed. P.C. Stern and D. Druckman, (Washington, DC: National
Academy Press), pp. 225-250.

[2] Louis Kriesberg, "Nature of Intractability," Beyond
Intractability, eds. Guy Burgess and Heidi Burgess, Conflict
Research Consortium, University of Colorado, Boulder, posted: October
2003. ntractability/

[3] David D. Laitin and Ronald Grogor Suny, "Armenia and Azerbaijan:
Thinking a way out of Karabakh," Middle East Policy, vol.7, no.1,
October 1999, p.158.

Wednesday, 1 April 2009

"Statements of facts or opinions appearing in the pages of Journal
of Turkish Weekly (JTW) are not necessarily by the editors of JTW nor
do they necessarily reflect the opinions of JTW or ISRO. The opinions
published here are held by the authors themselves and not necessarily
those of JTW or ISRO.

http://www.turkishweekly.net/op-ed/2499/why-shoul
http://www.beyondintractability.org/essay/nature_i

Andrzej Kasprzyk Strongly Concerned With The Growing Number Of Cease

ANDRZEJ KASPRZYK STRONGLY CONCERNED WITH THE GROWING NUMBER OF CEASE-FIRE VIOLATIONS

ArmInfo
2009-04-01 09:57:00

ArmInfo. After the March 31 monitoring on the contact line
Armenian and Azeri armed forces, Personal Representative of the
OSCE Chairman-in-Office, Ambassador Andrzej Kasprzyk said that he is
strongly concerned with the growing number of cease-fire violations
on the border between Armenia and Azerbaijan. Moreover, it affects the
peaceful population, he added. To recall, the monitoring was preceded
by a meeting in the administration of Tavush region of Armenia where
the data on the cease- fire violations by Azerbaijan were presented.

Asked about the reasons of the growth in cease-fire violations, the
ambassador pointed out that there are various reasons but failed to
specify them. According to him, the situation on the contact line of
Nagorno- Karabakh and Azerbaijani armed forces in 2009 is approximately
the same as in 2008.

Commenting on the Azeri party’s refusal to hold a meeting between the
commanders of the section monitored, Kasprzyk pointed out that the
proposal was made on the spot and the Azeri party was not ready for
it. Nevertheless, the ambassador said such a meeting is needed and
expressed an intention to contribute to organization of this meeting.

To note, during the March 31 monitoring near the village of Berkaber
on the Ijevan- Ghazakh section of the contact line the commander of
the Azeri party tried to accuse the Armenian party of regular fire
attacks on peaceful population, and the Armenian commander suggested
that his Azeri counterpart shouldn’t speak over the radio set but
meet him personally and discuss all the issues of mutual interest.

However, the Azeri commander refused and said that such a decision
should be taken by the top leadership.

Council Of Europe Parliamentary Assembly To Be Content Of Armenia

COUNCIL OF EUROPE PARLIAMENTARY ASSEMBLY TO BE CONTENT OF ARMENIA

Panorama.am
15:46 31/03/2009

The Council of Europe Parliamentary Assembly discussed yesterday
the implementation processes of the PACE Resolution 1643 by Armenian
Authorities. The legislative reforms conducted in Armenia have been
greeted by the Assembly, Davit Harutyunyan the Chairman of the Armenian
Delegation to PACE told radio "Liberty".

"The legislative changes have been greeted and the resolution by
Venice Committee has been taken into account.

At the same time the implementation of the law has been stressed
out to be significant and the Monitoring Commission will pay much
attention on the implementation of the law," said Davit Harutyunyan.

It is important to remind that it was highly recommended to suspend
Armenian Delegation’s voting right on 17 December PACE session. Later,
on 27 January, third resolution on Armenia was adopted and it was
defined not to suspend Armenian Delegation’s voting right.

PACE Monitoring Session is attended by the members of Armenian
Delegation to PACE Chairman Davit HArutyunyan, Armen Roustamyan,
Avet Adontc and Raffi Hovhannisyan.

China Isn’t Quite Ready To Take On The World

CHINA ISN’T QUITE READY TO TAKE ON THE WORLD
By John Foley

Daily Telegraph
4:45PM BST 30 Mar 2009

China is on the warpath – in rhetoric. Its usually anodyne politicians
have lately delivered a slew of acid criticisms of the way the West
runs its house.

Premier Wen Jiabao questioned profligate US spending habits, and warned
America not to scramble his $2 trillion nest-egg. Zhou Xiaochuan,
governor of China’s central bank, suggested the dollar should be
replaced as the lingua franca of global finance. As President Hu
Jintao jets into London’s G20 meeting to duke it out with other heads
of state, China may seem readier than ever to take on the world.

There are good reasons for the newfound confidence. China was
last into the financial crisis, and should be first out. Growth
is still positive. Banks are well capitalised and light on toxic
derivatives. Electricity production, manufacturers’ sentiment and
heavy industrial orders are already ticking up as Beijing firmly
guides the economy. Consumption, while relatively small, has held
up, and there are signs the "wealth effect" is returning, notably in
enhanced stock market performance.

Babaji: Making journalists’ and politicians’ lives that bit more
predictableBut don’t be deceived. While China has avoided some of
problems that beset wealthier nations, it isn’t ready to lead the way
into a new world order. At home, battles remain, unemployment being
the most worrisome.

Officials have said 20m migrant workers are out of work as falling
global trade asphyxiates China’s exports.

The true figure is probably higher. Urban unemployment is nudging 10pc,
according to the Chinese Academy of Social Sciences. Some idle hands
present a risk to civil stability – especially since inequality between
city and rural communities has been replaced by inequality within them.

The putative solution, a fiscal stimulus of Rmb4 trillion ($585bn),
poses its own threats. Bad debts are likely to pile up on bank
balance sheets, as the government mandates increased lending. Some
Rmb2.7 trillion ($395bn) of new loans were doled out in January and
February. Industries such as aluminium and microchips are already
dealing with overcapacity.

The stimulus may help the underemployed for a while, but when it ends,
domestic consumption, the main pillar of a stable economy, won’t take
up all the slack right away.

China’s athletic growth rates were probably due for some moderation,
global crisis or not. The country has undergone three previous
bursts of energy since its 1978 experiment with capitalism began,
each fuelled by a different steroid – first rural reform, then the
introduction of market economics, and latterly accession to the World
Trade Organisation. After each sprint, a slump followed. In 1989, GDP
growth fell from 11pc to 4pc. Another deus ex machina is not in sight.

Still, China has a case for rejecting some complaints from G20
countries.

China is getting rich fast, but GDP per capita still lags Armenia
and El Salvador. Yet the US and Europe demand it behave like a fully
developed nation. Developing economies might need different rules
when it comes to protecting nascent industries or the environment. Or
foreign exchange rates – a big bone of contention.

Acting tough on the global stage – especially when there is a good
case – could be the most effective way to play to the crowds back
home and smooth over the domestic tensions that could threaten China’s
considerable 30-year achievements.

The urban and rural, state-owned and private, developed and developing,
autonomous and federal sit uncomfortably together. Regional politics
create another fault line, as local governments, tasked with deploying
stimulus capital, fight to preserve jobs and factories in their own
regions first. A divided China is still in no position to dictate
terms to its global peers.

One day, the China century may begin in earnest. The country could
eventually unseat the US as the world’s foremost consumer. But how
will it get there? The financial crisis has probably put paid to most
hopes that China would follow the path America laid down.

Instead, it’s likely to pick and choose – pairing market economics with
national protectionism, for example, or Western corporate governance
structures with state control. Even more than the US, China may want to
supply most of its own needs, be they compact cars or luxury handbags.

When that happens, other nations will have to adjust accordingly. Even
if there is throw-down at the G20, that day hasn’t yet arrived.

Turkey, Armenia Going To Sign Protocol On Establishment Of Diplomati

TURKEY, ARMENIA GOING TO SIGN PROTOCOL ON ESTABLISHMENT OF DIPLOMATIC RELATIONS

PanARMENIAN.Net
31.03.2009 11:06 GMT+04:00

/PanARMENIAN.Net/ Turkey and Armenia are readying a protocol that
marks commitment by both sides to establish diplomatic relations and
set up committees on issues ranging from border management, customs,
history and more, Hurriyet Daily News reported.

The remaining dilemma for Ankara is the proper timing of the
announcement: before, during or after President Obama’s visit.

The agreement envisages establishment of diplomatic outposts both in
Yerevan and Ankara.

It’s not clear yet, however, if the ruling Justice and Development
Party (AKP) would stick to a Cabinet decision only to start to
establish diplomatic relations with Armenia or bring the issue to
Parliament. Another option is to pen an agreement to restore diplomatic
ties with Armenia which would have to be ratified by Parliament. The
reasons behind consideration for parliamentary approval are to
minimize repercussions that may be triggered by opposition parties
and to share the burden of this critical move, the source says.