IHS Global Insight Revises Armenian Sovereign Outlook To Negative As

IHS GLOBAL INSIGHT REVISES ARMENIAN SOVEREIGN OUTLOOK TO NEGATIVE AS LIQUIDITY PRESSURES KEEP INTENSIFYING
Venla Sipila

World Markets Research Centre
Global Insight
June 15, 2009

In our second-quarter sovereign risk review round, IHS Global Insight
has adjusted the outlook on our Armenian medium-term sovereign
rating to negative from stable. The rating itself is kept at 60 (B-
in the generic rating scale), signifying a very high payments risk
in lending to the sovereign. In addition, we downgraded Armenia’s
short-term sovereign rating by two notches to 30 from 40, as lower
foreign currency inflows have resulted in ever-tightening liquidity
pressure on the economy. Moreover, the outlook for the short-term
sovereign rating was also retained at negative. The rating revisions
follow a one-notch downgrade in our Armenian sovereign rating only
last round, when the rising risks to creditworthiness became evident
amid weakened supply of foreign currency (seeArmenia: 24 March 2009:).

Significance:The downward outlook revision highlights intensifying
financial pressures from the sovereign’s external financing gap, now
that the availability of foreign investment remittance inflows are
considerably suffering under the global economic downturn, leading to
rising challenges in financing the wide external gap and covering
the rising fiscal spending needs, and increasing needs to seek
external loans (seeArmenia 3 June 2009: ). Armenia is particularly
strongly dependent on workers’ remittances from Russia. According
to figures from the Central Bank of Armenia (CBA) quoted by ARKA
News, these have declined by nearly 36% in annual comparison for the
January-April period. With Russian remittances making up nearly 80%
of total non-commercial remittance inflows, this drop has a severe
negative impact on Armenian external finances. However, official data
on remittances received through the local banking system may somewhat
underestimate inflows.

In addition, another mitigating factor in assessing Armenian
sovereign risk is that, while external debt is rising, mostly it
has been extended by multilateral creditors, thus carrying very
soft terms. Thus, Armenia still is likely to be able to service its
external obligations.

"This Ludicrous Story Has No Precedent"

"THIS LUDICROUS STORY HAS NO PRECEDENT"

A1+
08:07 pm | June 15, 2009 | Politics

"This ludicrous story has no precedent," NA MP Miasnik Malkhasyan
charged under the last year’s post-election unrest said on June 15.

Miasnik Malkhasyan considers the case as groundless and preposterous
and says it is a mere a political order.

"All political prisoners are innocent and are illegally kept in
jail for 1.3 year. The criminal case is hence politicized. I am
prosecuted on alleged charges – attempts to upset the constitutional
order. During the whole trial the prosecutor acted illegally and
unlawfully,"announced the defendant.

Miasnik Malkhasyan refuted all alleged contacts with Alexander
Arzumanyan, Nikol Pashinyan, Hakob Hakobyan and Sasun Mikaelyanm
charged with calls for mass disorders.

"The most immoral charges are the ten assassinations ascribed to
us. This is the cruelest accusation bound upon us."

The defendant recalled his speech made from the NA rostrum: "I said
that we would be tried one day for our participation in the Artsakh
war. People laughed at me then but as you see the day has come."

Miasnik Malkhasyan concluded his speech with the following words:
"Anyway, I am not a pessimist and I believe that things will still
better and I shall be acquitted."

Today’s court sitting was attended by Heritage MPs Anahit Bakhshyan
and Stepan Safaryan. Mrs. Bakhshyan said she would willingly bear
testimony on the March 1 occurrences.

Miasnik Malkhasyan is scheduled to make a final speech on June 16.

Nalbandyan-Lavrov Meeting

NALBANDYAN-LAVROV MEETING

LRAGIR.AM
17:05:07 – 15/06/2009

On June 14, the Armenian Minister of Foreign Affairs Edward Nalbandyan,
who left for Moscow to take part in the session of the CSTO foreign
ministers, met with the Russian Minister of Foreign Affairs Sergey
Lavrov.

Nalbandyan and Lavrov discussed a number of issues relating to the
deepening of the Armenian and Russian links.

In the course of the meeting, the Armenian and Russian ministers
dwelt on a series of regional issues.

Armenia needs political dialogue for solving current problems

Armenia needs political dialogue for solving current problems
13.06.2009 18:52 GMT+04:00

/PanARMENIAN.Net/ There are 5 factors in modern world affecting
Armenians’ worldview, RA Prime Minister Tigran Sargsyan said during
the discussion titled `Relieving Ourselves from the Past’. The event
was organized within the frames of World Sociology Congress. `The
first factor is the rapid’, the Prime Minister said, `is the paces
which change life, and we don’t manage to catch up with them. The
second factor is that the world is really becoming a smaller place. In
the early 1990’s, for instance, Armenian Brazil was not so close to us
as it is now. The third factor is education. While in the past,
society’s main asset was industry and production, today we need a
knowledge-based society. The forth factor is the opportunity for
personal self-realization. And the fifth, fundamental problem is the
phenomenon of national culture. Every day, one language in the world
becomes `dead’.
The Prime Minister focused on two issues: NKR conflict and
Armenian-Turkish ties normalization. As important subjects responsible
for their solution, he emphasized the role of Armenia, NKR and entire
Armenian community.
The solution of such problems requires a political dialogue, something
Armenia lacks now, Sargsyan stressed.

Co-Reporteurs Of PACE Monitoring Committee To Arrive In Yerevan On T

CO-RPPORTEURS OF PACE MONITORING COMMITTEE TO ARRIVE IN YEREVAN ON THREE-DAY OFFICIAL VISIT

National Assembly of RA
June 12 2009
Armenia

On June 15 PACE Monitoring Committee Co-Rapporteurs Mr. John Prescott
and Mr. Georges Colombier will arrive in Yerevan on three-day visit.

During the visit RA President Mr. Serzh Sargsyan and RA NA President
Mr. Hovik Abrahamyan will receive the Co-Rapporteurs.

Meetings are scheduled with RA NA Vice President, Chairman of the
NA Ad-Hoc Inquiry Committee into the Events Occurred on 1-2 March
2008 in Yerevan and Their Reasons Mr. Samvel Nikoyan, members of RA
NA delegation to PACE, Chairman of NA Standing Committee on Science,
Education, Culture and Youth Mr. Artak Davyan, RA Prosecutor General
Mr. Aghvan Hovsepyan, Foreign Minister Mr. Edward Nalbandyan, RA
Human Rights Defender Mr. Armen Harutyunyan, ambassadors of CE member
countries and representatives of international organizations.

The Co-Rapoorteurs will meet Mr. Levon Ter-Petrosyan, representatives
of NGOs, former members of the Fact-finding group, lawyers and wives
of the some imprisoned persons in Yerevan.

In Fact, March 1 Revelation Closed Down

IN FACT, MARCH 1 REVELATION CLOSED DOWN

LRAGIR.AM
15:41:16 – 11/06/2009

On June 11, the oppositional members of the dissolved fact-finding
group presented their assessments in connection with the group as
well as some details. For example, Andranik Kocharyan explained
why the entrance to the National Assembly was prohibited for him
and Seda Safaryan for several days, stating that the group is in
holiday. According to Kocharyan, the reason for this incident, as it
was found out later, was the letter of the head of the fact-finding
group, the representative of the ombudsman Vahe Martirosyan to the
head of the staff of the president with which he informed that the
group was going to take a holiday of 9 days. Andranik Kocharyan stated
that Vahe Stepanyan did not have such a right to address such a letter
without informing the members of the group. When the members of the
group complained and asked for explanation, Vahe Stepanyan promised
to explain everything later, but he did not come to work any more,
after which the group has been dissolved.

Andranik Kocharyan stated that the group was formed to study and to
reveal the March 1 crimes, and regardless the situation formed in the
group, it had to continue its work up to the end, the end of which
would be the regular report to the NA temporary commission. He refuted
the accusation of the governmental member of the group as if Andranik
Kocharyan tensed the atmosphere. Instead, he highly assessed Avagyan’s
even if passive work, adding that he could not pretend the same form a
70-year-old person as from him or Seda Safaryan or Vahe Stepanyan. He
also stated that the work of the other governmental member of the
group as a former investigator was also of use for the group.

Seda Safaryan, who is the Heritage representative of the fact-finding
group, stated that Robert Avagyan defended the actions of the police
from the beginning. She stated that the clash of opinions was terrible
as one wanted to hide what the other wanted to reveal. Seda Safaryan
stated that in such atmosphere the tension was regular. According to
her, the public waited for the result of 5 mature people, while in
fact, the revelation of the March 1 events closed down.

Serzh Sargsyan: The Stronger Russia Is The Stronger Armenia Is

SERZH SARGSYAN: THE STRONGER RUSSIA IS THE STRONGER ARMENIA IS

NOYAN TAPAN
JUNE 10, 2009
YEREVAN

YEREVAN, JUNE 10, NOYAN TAPAN. On the occasion of the RF national
holiday, day of adoption of a declaration on State Sovereignty,
RA President Serzh Sargsyan visited the RF Embassy on June 10.

According to the RA President’s Press Office, in his congratulatory
speech S. Sargsyan said:

"I am very glad that our relations become better and better. Literally
a few days ago at the meeting with the Russian President we once more
emphasized that our relations become deeper and deeper every month
and every year.

I wish prosperity, further firmness to Russia. I have always considered
that the stronger Russia is the stronger Armenia is.

Georgian Nationalists Against Armenian-Turkish Border Opening

GEORGIAN NATIONALISTS AGAINST ARMENIAN-TURKISH BORDER OPENING

/PanARMENIAN.Net/
08.06.2009 20:32 GMT+04:00

/PanARMENIAN.Net/ Due to Americans’ great support, Armenia and
Turkey agreed upon opening interstate border, Georgian National
Front Chairman Nodar Natadze said. Such decision aroused Georgia’s
strong protest. Azerbaijan perceived Turkey’s step as betrayal by a
blood-related brother. Thereafter, Turkey reviewed its stance, and
now refuses to open border unless Armenia withdraws its troops from
Karabakh. But such option too, is beneficial to Russia. That’s first of
all because Americans are also interested in border opening. Secondly,
such opening will narrow the Caucasian corridor lying between East
and West, but Armenia will be in Russia’s limelight as before. And
thirdly, Armenian corridor to Black Sea is advantageous to Turkey,
as it will weaken Armenia’s desire to pave way to Sea and achieve
peace via Turkey" Akhali Taoba quotes Natadze as saying.

Council Of Yerevan Elders Calls Its First Session

COUNCIL OF YEREVAN ELDERS CALLS ITS FIRST SESSION

ARMENPRESS
JUNE 8, 2009
YEREVAN

The newly elected Council of Elders of Yerevan called today its first
session anchored by the eldest of the council – chairwoman of the
Armenian Journalists’ Union Astghik Gevorgyan. The anchor presented
the members of the council and publicized the name of the elected
mayor – Gagik Beglaryan.

At the session a temporary calculating commission has been set up. The
council also decided that the oath ceremony of the mayor will take
place June 11 at 11.00 o’clock and the council will summon its first
sitting June 23 at 11.00 o’clock.

The newly elected mayor had a short conversation with the members
of the council after the end of the session. A. Gevorgyan told
Armenpress that the mayor considered the ideology of the further
work of the council – reconciliation, joint work for the sake of
Yerevan. A. Gevorgyan expressed regret that the Armenian National
Congress did not participate in the works of the council as the
elected political force which received the vote of the people will not
participate in building of Yerevan. Representatives of the Congress
have not presented applications of putting aside their mandates, which,
A. Gevorgyan said, inspires hope that they will participate in the
works of the council. "If we are speaking of a serious opposition – the
more there are sharp eyes the better the work will be done. We are full
of determination, wish and devote. If I have a small participation,
if I make a small useful suggestion I will consider myself happy,"
Astghik Gevorgyan said.

It Is A Mistake To Pretend That Kosova Is Unique

IT IS A MISTAKE TO PRETEND THAT KOSOVA IS UNIQUE

Bosnian Institute News
ewsid=2597
June 8 2009

Article arguing that Kosova’s independence was recognised as the
result of ‘a confluence of multiple factors’; and that it is ‘not
only pointless, but actually counter-productive to pander to the
opponents of recognition by reassuring them that Kosova is a unique
case and will not become a precedent’.

Most of us can probably remember, at least once in our lives, asking
some apparatchik something along the lines of ‘Couldn’t you please,
please make an exception, just this once ?’ and getting the reply:
‘I can’t do that ! If I made an exception for you, I’d have to make
an exception for everybody. It’d be more than my job’s worth.’ You
and the apparatchik both know that he could perfectly well make an
exception for you if he wanted to. But you also both know that he is
right in saying that there is nothing special about you, and that
you are not uniquely worthy of being treated as an exception. The
question is: does he like you or doesn’t he ?

Similarly, trying to pretend that recognising Kosova’s unilateral
secession from Serbia is legitimate on the grounds that it is
wholly unique and without precedent in international relations is
unconvincing, firstly because it isn’t true, and secondly because it
begs the question: if it can happen once, can it not happen twice or
multiple times ? To which the only reasonable answer is: yes. There may
very well be occasions in the future when the Western alliance will
be forced to recognise an act of unilateral secession by a subject
people and territory from the state that rules them. Everybody knows
this is entirely possible, and pretending it isn’t simply destroys
the credibility of those who do.

Of course, the reason our officials and statesmen are pretending
that Kosova is a unique case is in order to avoid scaring away other
countries from recognising Kosova’s independence; countries they fear
might otherwise worry a precedent were being established that could be
applied to a secessionist region or nationality of their own. But this
calculation, too, is misguided, because a) it rests upon a fallacy,
and b) it represents a bad geopolitical tactic. We shall briefly
explain the fallacy, before focusing on the bigger question of why
the tactic is a bad one.

a) It is fallacy to point to Kosova as a precedent, because if a
precedent has been established, it was established long before Kosova’s
independence was recognised. It was certainly established by the early
1990s, when all the members of the former multinational federations of
the Soviet Union, Yugoslavia and Czechoslovakia who wanted independence
were granted it – except Kosova. This was despite the fact that in the
case of Yugoslavia, the federal members that declared independence
had done so unilaterally, without the consent of either the federal
centre, or of all other members of the federation. There is absolutely
no reason why the recognition of Kosova’s independence should not
be treated as essentially the same as that of Croatia, Slovenia,
Bosnia-Hercegovina and Macedonia. In contrast to Abkhazia and South
Ossetia, for example, which were not members of the Soviet Union but
simply autonomous entities within Georgia, Kosova was a full member of
the Yugoslav federation in its own right, independently of the fact
that it was also an entity within Serbia. As a member of the defunct
Yugoslav federation, Kosova was entitled to self-determination after
the dissolution of that federation had been internationally recognised,
and after other members of the federation had been accorded that right.

More generally, the former Yugoslav states are far from the first
unilaterally seceding entities to be accorded international recognition
– think of France’s recognition of the US in 1778 and Britain’s
recognition of Bangladesh in 1972.

b) There is no need to pretend that Kosova is a unique case to
avoid scaring other states away from recognising its independence,
for the simple reason that, when all is said and done, other states’
policies on whether or not to recognise Kosova are really are not
determined by fear of Kosova becoming a precedent – even if these
states are faced with separatist threats of their own. Turkey, faced
with a very real Kurdish separatist insurgency and bitterly opposed
to the secession of Nagorno Karabakh from its traditional ally,
Azerbaijan, was nevertheless one of the first states to recognise
Kosova’s independence. Turkey has also promoted the break-up of Cyprus,
via the unilateral secession of the self-proclaimed ‘Turkish Republic
of Northern Cyprus’. Russia, which vocally opposes the independence
of Kosova, which is faced with secessionist movements within its own
borders and which brutally crushed Chechnya’s bid for independence,
has nevertheless simultaneously promoted the unilateral secession of
Abkhazia and South Ossetia from Georgia. India, which likewise opposes
Kosova’s independence and likewise faces secessionist movements within
its own borders, was instrumental in achieving Bangladesh’s unilateral
secession from Pakistan. In other words, states which might be seen
as having as much reason as most to fear a ‘Kosovo precedent’ being
established are quite ready to support unilateral acts of secession
when they feel it is in their interests to do so.

It might be objected that the states in question are all powerful
enough to feel confident that they can crush any secessionist movement
they face. Yet fragile Macedonia, which fought an armed conflict
with Albanian separatists earlier this decade, and which might have
more reason than almost any state to fear a ‘Kosovo precedent’, has
recognised Kosova. Fear of the ‘Kosovo precedent’ is not, therefore,
a decisive factor in a state’s decision on whether or not to recognise
Kosova’s independence (we can make an exception here for states such
as Georgia, Azerbaijan and Moldova that are currently in a state of
territorial dismemberment, and that, were they to recognise Kosova,
might conceivably suffer retaliation in kind from Belgrade or Moscow)

It may be that, all things being equal, a state faced with a
secessionist movement of its own is more likely to sympathise with
Belgrade than with Pristina. In one or two cases, such as Spain’s,
this sympathy may be electorally significant enough to sway the course
of its foreign policy. But so far as almost all non-recognisers
are concerned, other factors count for more: a state is likely to
oppose Kosova’s independence if it is hostile to the West (Russia,
Iran, Venezuela); if it has traditionally enjoyed good relations with
Belgrade (Greece, Egypt, Indonesia); or if it simply sees no particular
interest in recognising it. All these factors are reasons why it is
not only pointless, but actually counter-productive to pander to the
opponents of recognition by reassuring them that Kosova is a unique
case and will not become a precedent.

As things stand, rogue states have no reason to fear that the
international community will ever grant independence to secessionist
territories. They therefore enjoy a virtual carte blanche to suppress
secessionist movements or other rebellions as brutally as they
wish. None of the forms of deterrent threatened against or exerted
on the Sudanese regime, from sanctions to international war-crimes
indictments, appears to have cooled its bloodlust with regard to
Darfur. But were Khartoum to fear that its genocidal actions might
potentially result in the loss of territory, it might be less inclined
to pursue them. The Western alliance would enjoy that much more leeway
in exerting pressure over a rogue state such as Sudan.

Conversely, a close ally such as Turkey, which faces a genuine
secessionist insurgency, knows very well that the Western states will
never make it the victim of such a precedent: everyone knows that
Turkish Kurdistan is not going to be liberated by NATO, as Kosova
was; a ‘Kosovo precedent’ will not frighten states like Turkey. But
this does not mean that such states can get away with indiscriminate
brutality with impunity. Turkey’s treatment of its Kurdish population
has dramatically improved over the last ten years, as Ankara’s goal of
EU membership has required it to improve its human rights record. Just
as NATO acted as the bad cop over Serbia and Kosova, so the EU has
acted as the good cop over Turkey and the Kurds. Western allies can
be guided toward ending repression and discrimination against national
minorities, reducing the appeal of violent separatist movements. Rogue
states, on the other hand, should have reason to fear that their
brutality may potentially result in a loss of territory. For all
states that abuse the human rights of their national minorities,
this is a healthy choice to be faced with.

This does not, of course, mean that the Western alliance should
indiscriminately threaten states that abuse human rights with
territorial penalties. Rather, the ‘Kosovo precedent’ could function
rather like the nuclear deterrent, i.e. deter more by its potential
than by its actual application, and by its occasional application
against only the worst offenders: as was Milosevic’s Serbia; as is
Bashir’s Sudan. Nor would a ‘Kosovo precedent’ mean a free-for-all
for all secessionist movements. There is a lot of space between
the untenable pretense that Kosova is ‘unique’ and the rather comic
nightmare-scenario threatened by Kosova’s enemies: of innumerable
separatist territories all over the world responding to Kosova’s
independence by trying to become Kosovas themselves. Kosova itself,
after all, was scarcely given red-carpet treatment by the Western
alliance in its move to independence: a decade elapsed between
Milosevic’s brutal suppression of its autonomy and its liberation
by NATO; almost another decade elapsed between liberation and the
recognition of its independence, during which time it was forced
to endure international administration and engage in exhaustive
negotiations with its former oppressor. Even now, Kosova is still
faced with a very real threat of permanent territorial partition,
as the Serbs maintain their hold on the north of the country. The
Kosova model may not prove as straightforwardly attractive for other
potential secessionists as the Cassandras claim.

Kosova’s independence was recognised as the result of a confluence of
multiple factors: its existence as an entity in its own right within
the Yugoslav federation; its overwhelmingly non-Serb, ethnic-Albanian
population; the brutality of Belgrade’s treatment of this population;
the unwillingness of the Milosevic regime to reach an accommodation
with the Western alliance over the issue, following on from his
years of trouble-making in Croatia and Bosnia; the unwillingness or
inability of post-Milosevic Serbia in the 2000s to reach agreement
with the Kosovars; and the simple lack of any workable alternative to
independence. These were an exceptional set of circumstances. The truth
is, that it is possible to envisage a similar set of circumstances
leading the Western alliance to recognise the independence of another
secessionist territory in the future. Sometimes it is better to tell
the truth.

Article published 31 May 2009 on the website of the Henry Jackson
Society.

http://www.bosnia.org.uk/news/news_body.cfm?n