Armenia

ARMENIA

LOCATION, SIZE, AND EXTENT
TOPOGRAPHY
CLIMATE
FLORA AND FAUNA
ENVIRONMENT
POPULATION
MIGRATION
ETHNIC GROUPS
LANGUAGES
RELIGIONS
TRANSPORTATION
HISTORY
GOVERNMENT
POLITICAL PARTIES
LOCAL GOVERNMENT
JUDICIAL SYSTEM
ARMED FORCES
INTERNATIONAL COOPERATION
ECONOMY
INCOME
LABOR
AGRICULTURE
ANIMAL HUSBANDRY
FISHING
FORESTRY
MINING
ENERGY AND POWER
INDUSTRY
SCIENCE AND TECHNOLOGY
DOMESTIC TRADE
FOREIGN TRADE
BALANCE OF PAYMENTS
BANKING AND SECURITIES
INSURANCE
PUBLIC FINANCE
TAXATION
CUSTOMS AND DUTIES
FOREIGN INVESTMENT
ECONOMIC DEVELOPMENT
SOCIAL DEVELOPMENT
HEALTH
HOUSING
EDUCATION
LIBRARIES AND MUSEUMS
MEDIA
ORGANIZATIONS
TOURISM, TRAVEL, AND RECREATION
FAMOUS ARMENIANS
DEPENDENCIES
BIBLIOGRAPHY

Republic of Armenia

Hayastani Hanrapetut 'Yun

CAPITAL: Yerevan

FLAG: Three horizontal bands of red (top), blue, and gold.

ANTHEM: Mer Hayrenik.

MONETARY UNIT: The dram (introduced 22 November 1993) is a paper currency in denominations of 10, 25, 50, 100, 200, and 500 drams. The dram (d) replaced the Armenian ruble and the Russian ruble (r). Currently d1 =$0.00225 (or $1 = d445) as of 2005.

WEIGHTS AND MEASURES: The metric system is in force.

HOLIDAYS: New Year's Day, 1–2 January; Christmas, 6 January; Day of Remembrance of the Victims of the Genocide, 24 April; Peace Day, 9 May; Anniversary of Declaration of First Armenian Republic (1918), 28 May; Public Holiday, 21 September; Day of Remembrance of the Victims of the Earthquake, 7 December; New Year's Eve, 31 December.

TIME: 4 pm = noon GMT.

LOCATION, SIZE, AND EXTENT

Armenia is a landlocked nation located in southeastern Europe/southwestern Asia. Comparatively, the area occupied by Armenia is slightly smaller than the state of Maryland with a total area of 29,800 sq km (11,506 sq mi). Armenia shares boundaries with Georgia on the n, Azerbaijan on the e and s, Iran on the s, and Turkey on the w and has a total boundary length of 1,254 km (778 mi). Armenia's capital city, Yerevan, is located in the west-central portion of the country on the Hrazdan River.

TOPOGRAPHY

The topography of Armenia features the high Armenian Plateau and three primary mountain ranges, the Lesser Caucasus Mountains in the north, the Vardenis Range in central Armenia, and the Zangezur Range in the southeast. There is little forest land and a few fast flowing rivers. The Aras River Valley contains good soil. Mount Aragats, an extinct volcano in the plateau region, is the highest point in Armenia at 13,425 ft (4,095 m). The nation occasionally suffers from severe earthquakes. In December 1988, a massive earthquake struck near the city of Kumayri, killing over 25,000 people.

CLIMATE

Armenia's climate ranges from subtropical to alpine-like in the mountains. The mean temperature in midsummer is 25°c (77°f). In midwinter, the mean temperature is 0°c (32°f). Rainfall is infrequent. The capital city receives 33 cm of rain annually (13 in), though more rainfall occurs in the mountains.

FLORA AND FAUNA

Armenia is located in what geographers call the Aral Caspian Lowland. The country has broad sandy deserts and low grassy plateaus. The region is home to European bison, snow leopards, cheetahs, and porcupines.

ENVIRONMENT

In 2000, Armenia's chief environmental problems resulted from natural disasters, pollution, and warfare. A strong earthquake in 1988 resulted in 55,000 casualties. Radiation from the meltdown of the nuclear reactor facility at Chernobyl in the former Soviet Union also polluted the environment. The nation's soil has also been polluted by chemicals including DDT and the Hrazdan and Ares rivers have also been polluted. The war between Armenia and Azerbaijan has strained the country's economy, limiting the resources that can be devoted to environmental preservation. It has also led to an energy blockade that has caused deforestation as trees are cut for firewood. Yet another environmental hazard is the restarting of the Metsamor nuclear power plant, which has been brought online without the safety systems recommended by the IAEA.

From 1990–1995, deforestation occurred at an average annual rate of 2.69%. However, some reforestation projects have been initiated. As of 2003, 7.6% of the total land area in Armenia is protected, including two sites protected as Ramsar wetlands: Lake Sevan and Lake Arpi. As of 2002, 11 of the nation's 84 species of mammal were threatened, as were 4 species of bird and 1 higher plant species. Endangered species include the Barbel sturgeon, Dahl's jird, and the field adder.

POPULATION

The population of Armenia in 2005 was estimated by the United Nations (UN) at 3,033,000, which placed it at number 133 in population among the 193 nations of the world. In 2005, approximately 11% of the population was over 65 years of age, with another 22% of the population under 15 years of age. There were 87 males for every 100 females in the country. According to the UN, the annual population rate of change for 2005–10 was expected to be 0.3%; this low rate, attributed to a decline in fertility rates and migration, was considered too low by the government. The projected population for the year 2025 was 3,258,000. The population density was 102 per sq km (264 per sq mi).

The UN estimated that 65% of the population lived in urban areas in 2005, and that population in urban areas was changing at an annual rate of -0.43%. The capital city, Yerevan, had a population of 1,079,000 in that year. Other urban centers and their estimated populations include Kumayri (206,600) and Kirovakan (170,200). Most of the cities and towns are located along the river valleys in the north and west.

MIGRATION

Independent Armenia is only a portion of historic Armenia, which at its greatest extent also included lands now in Turkey, Iran, and Azerbaijan. There are Armenian communities in these countries and also in Russia, Georgia, Lebanon, Syria, and the United States. Between 1988 and 1993 around 360,000 ethnic Armenians arrived in Armenia from Azerbaijan as a result of the conflict over the disputed territory of Nagorno-Karabakh. In 1995 a citizenship law, which included special provisions making naturalization much easier for refugees from Azerbaijan, was enacted. By the end of January 2004, the number of refugees from Azerbaijan obtaining Armenian citizenship topped 65,000. One of the largest naturalizations of refugees in recent decades, United Nations High Commissioner for Refugees (UNHCR) supported the process with financial and material assistance. In 2003, there were 50,000 internally displaced persons (IDP) within the country. The UNHCR reported that at the end of 2004 there were 235,235 refugees in Armenia and 68 asylum seekers, of which over 50,000 refugees were assisted by UNHCR. From 1998 to 2003, except for 2000, remittance flows to Armenia grew by 20% per year.

Armenia has a net migration rate of -6.1 migrants per 1,000 population as of 2005. The government views both the immigration and emigration levels as too high.

ETHNIC GROUPS

A 2004 report indicates that Armenians comprise an estimated 98% of the population. Minority groups include the Azeri, Russians, Ukrainians, Belarussians, Jews, Assyrians, Georgians, Greeks, and Yezidi Kurds. As of 1993, most of the Azeris had emigrated from Armenia.

LANGUAGES

Armenian is spoken by about 97% of the population. Armenian belongs to an independent branch of the Indo-European linguistic family. It is a highly inflective language, with a complicated system of declensions. It is agglutinative, rich in consonants, and has no grammatical gender. The vocabulary includes many Persian loan words. There are two main dialects: East Armenian, the official language of Armenia, and West, or Turkish, Armenian. The alphabet, patterned after Persian and Greek letters, has 38 characters. Armenian literature dates from the early 5th century ad. Yezidi is spoken by about 1% of the population; Russian and other various languages are spoken by the remaining 2%.

RELIGIONS

In 2005, about 90% of the population were nominally members of the Armenian Apostolic Church. Catholic churches, both Roman and Mekhitaris (Armenian Uniate), had an estimated 180,000 adherents. The next largest group was the Yezidi, a Kurdish ethnic and religious group that practice a mixture of beliefs from Islam, Zoroastrianism, and animism; they had an estimated 30,000 to 40,000 members. Other Christian denominations include Pentecostals, Greek Orthodox, Jehovah's Witnesses, the Armenian Evangelical Church, Baptists, Seventh-Day Adventists, the Church of Jesus Christ of the Latter-day Saints (Mormons). Most Jews, Muslims, and Baha'is are located in Yerevan.

Armenia became a Christian country in the 4th century ad. In 1991, the Law on Freedom of Conscience established the separation of church and state but granted the Armenian Apostolic Church status as the national church. All religious denominations and organizations outside of the Armenian Apostolic Church must be registered in order to operate. Those that are not registered are prohibited from publishing newspapers or magazines, sponsoring television or radio broadcasts, and renting meeting space. In 1997 amendments tightened registration requirements by raising the minimum number of adult members to qualify for registration from 50 to 200. The laws also indicate that a petitioning organization must adhere to a doctrine that is based on "historically recognized Holy Scriptures." Registration and monitoring of religious groups was originally under the jurisdiction of a government-based Council of Religious Affairs. In 2002 the president abolished the council and announced that a new office, under the prime minister, would handle matters of religion. The National Minorities and Religious Affairs Department was also established by the government.

The Armenian Apostolic Church is a member of the World Council of Churches.

TRANSPORTATION

As of 2004, there were 825 km (513 mi) of 1.520-m (broad) gauge railroad, not including industrial lines. An estimated 828 km (515 mi) are electrified. Supplies that arrive from Turkey by rail must be reloaded, due to a difference in rail gauges. Goods that cross Georgia or Azerbaijan are subject to travel delay from strikes and blockages and may be interdicted.

As of 2003, the highway system included 7,633 km (4,748 mi) of roads, all of which are paved. Of that total, 1,561 km (971 mi) are expressways.

There were an estimated 16 airports as of 2004, 11 of which had paved runways (as of 2005). The Zvartnots airport at Yerevan is fairly well maintained and receives scheduled flights from Moscow, Paris, New York, London, Amsterdam, Athens, Beirut, Dubai (UAE), Frankfurt, Istanbul, Prague, Tehrān, Vienna, Zürich, and Sofia. In 2003, 367,000 passengers were carried on scheduled domestic and international flights.

Cargo shipments to landlocked Armenia are routed through ports in Georgia and Turkey.

HISTORY

Armenian territories were first united into an empire under Tigranes the Great (95–55 bc), whose extensive lands included parts of Syria and Iraq. Defeated by the Roman general Pompey, Armenia became a client state of the Roman Empire. Rome and Sasanian Persia partitioned Armenia, and after them Byzantium and the Ummayed and Abbasid caliphates controlled parts of Armenia. Armenia adopted Christianity at the beginning of the 4th century ad. The Seljuk Turks invaded Armenia in the 11th century, followed by Genghis Khan and Timur, leading to mass emigrations. Persia and Ottoman Turkey divided Armenia into eastern and western portions in the 16th–18th centuries. Russia took over Persia's holdings in 1828, and during the latter part of the 19th century both Russia and Turkey carried out harsh repression against nationalist activities among Armenians under their sway, leading to many deaths and mass emigrations. During World War I, Ottoman Turkey carried out forced resettlement and other harsh policies against Armenians, which Armenians term their national genocide. The historical experience remains a contentious issue in Armenian-Turkish relations.

After the Bolshevik revolution in Russia in 1917, Armenia declared independence in May 1918. Armenia's population of 750,000 included as many as 300,000 who had survived flight from Turkey, and the heavy burden of independence among hostile neighbors (it clashed with Turkey, Georgia, and Azerbaijan) and an inhospitable climate may have led to as many as 150,000 deaths from famine and disease. Although the August 1920 Treaty of Sevres accorded international recognition of Armenian independence, the Russian Red Army conquered Armenia in November 1920. In 1922, Armenia was named part of a Transcaucasian Soviet Federated Socialist Republic, which encompassed lands now in Armenia, Azerbaijan, and Georgia, but it became a separate union republic in 1936. During the 1920s, Moscow drew internal borders in the Caucasus, which resulted in Nagorno-Karabakh (NK), then a mostly ethnic Armenian region, being incorporated into Azerbaijan, separated from the rest of Soviet Armenia by a few miles of Azerbaijani territory. NK was given the status of an "autonomous republic."

Following a February 1988 call by the Nagorno-Karabakh (NK) legislature for unification with Armenia, the Armenian Supreme Soviet in December 1989 declared that NK, a largely ethnically Armenian-populated enclave within Azerbaijan, was part of Armenia. It also proclaimed Armenia's sovereignty over its land and resources. A popular referendum on independence was held in Armenia on 21 September 1991, in which 94% of the eligible population reportedly participated and which was approved by 99%. The Armenian legislature declared Armenia's independence two days later. Armenia received worldwide diplomatic recognition upon the collapse of the Soviet Union in December 1991.

Beginning in 1988, conflict engulfed NK, with Azerbaijan resisting the secession or independence of its enclave. Casualties were estimated at over 5,000. Emigration of 350,000 Armenians residing in Azerbaijan and over one million Azerbaijani residing in Armenia or NK followed pogroms in both states and conflict in NK and surrounding areas. In December 1991, a referendum in NK (boycotted by local Azerbaijani) approved NK's independence and a Supreme Soviet was elected, which on 6 January 1992, declared NK's independence and futilely appealed for world recognition. In 1993, Armenian forces gained control over NK and surrounding areas, occupying over 20% of Azerbaijani territory, which they continued to hold despite an Azerbaijani offensive in 1993–1994 that reportedly cost 6,000 Azeri casualties. A ceasefire has held fitfully since May 1994, but talks on a political settlement remain inconclusive. In the six-year period of conflict from 1988 to 1994, more than 35,000 people were killed and nearly one million have been left homeless.

In November 1989, Levon Ter-Petrosyan became a leader of the Armenian National Movement (ANM), which grew out of the Karabakh Committee to push for Armenia's independence, and its chairman in March 1990. ANM and other nationalist deputies cooperated to elect him chairman of the Armenian Supreme Soviet in August 1990, inflicting a serious blow on the Armenian Communist Party. Following Armenia's declaration of independence, presidential elections were held on 16 October 1991. Ter-Petrosyan was supported by the ANM, winning 83% of the vote against six other candidates, including internationally famous dissident Paruir Hairikian of the Association for National Self-Determination and Sos Sarkisyan of the Armenian Revolutionary Federation (ARF; called Dashnaktsutyun in Armenian, meaning "federation"). Ter-Petrosyan was sworn into office on 11 November 1991, for a five-year term. His suspension of the activities of Armenian Revolutionary Federation party in December 1994 and a trial of its leaders raised concerns among some observers about possible setbacks to democratization.

Elections to Armenia's unicameral 190-member National Assembly (legislature) were held in June 1995, at the same time as a referendum in which Armenian voters adopted the country's first post-Communist new constitution. International observers reported many campaign and voting irregularities. Observers from the Organization for Security and Cooperation in Europe (OSCE) judged the elections "free but not fair," in part because the main opposition party, the ARF, was banned from participation, the government dominated campaigning, the CEC appeared heavily pro-government in its decisions, and security officers constituted a chilling presence in many voting places. Voting irregularities reported on election day by the international observers included the violation of secret voting and pressure in voting places to cast a ballot for certain parties or candidates. In all, the Republic Bloc and other pro-government parties won 166 out of 190 seats, while the opposition won only 18 and independents four (two seats were undecided).

Ter-Petrosyan won reelection as president on 22 September 1996, by garnering 51.75% of the vote, a far smaller majority than in 1991, barely avoiding runoff balloting. Ter-Petrosyan's main opponent in the presidential race was Vazgen Manukian, head of the National Democratic Union (NDU) party. He garnered 41.3% of the presidential vote. Manukian had worked closely with Ter-Petrosyan in the Karabakh Committee. Following the presidential election, followers of Manukian's electoral coalition demonstrated against what they and many international observers termed irregular voting procedures. On 25 September 1996, tens of thousands of protesters stormed the legislative building in Yerevan and assaulted the legislative speaker and deputy speaker, both belonging to the ANM. The crowd was dispersed by police with few injuries or deaths.

In March 1997, in an attempt to garner greater public support for his regime, Ter-Petrosyan appointed a highly popular war hero of the NK conflict, Robert Kocharian, to the post of prime minister of Armenia. Ter-Petrosyan and others viewed Kocharian as having the leadership abilities necessary to help revive the slumping economy and to increase tax collection. In accepting the prime ministership, Kocharian resigned as president of NK.

Ter-Petrosyan announced in September 1997 that he had accepted an Organization for Security and Cooperation in Europe (OSCE) peace plan as a basis for resolving the NK conflict that would require "compromises" from Armenia. The two-stage plan called for NK Armenians to withdraw from most territories they had occupied outside of NK and for international peacekeepers to be deployed, followed by discussion of NK's status. The announcement brought open criticism from Kocharian and other Armenian and NK officials. On 1 February 1998, Yerkrapah, a legislative faction and militia group composed of veterans of the NK conflict, and headed by the country's defense minister, called for Ter-Petrosyan to resign. Many members of Ter-Petrosyan's ANM legislative faction defected, leading to the resignation of the parliamentary speaker. Heated debate in the legislature culminated with Ter-Petrosyan's resignation on 3 February 1998. Ter-Petrosyan denounced the "bodies of power" for demanding his resignation, referring obliquely to Kocharian, Defense Minister Vazgen Sarkisyan, and Minister of the Interior and National Security Serzh Sarkisyan. Although the constitution called for the legislative speaker to assume the duties of acting president pending an election, the resignation of the speaker caused these duties to devolve upon Prime Minister Kocharian. A special presidential election was scheduled for 16 March 1998.

Twelve candidates succeeded in registering for the March presidential election. The main contenders were Kocharian, Vazgen Manukyan (who had run against Ter-Petrosyan in 1996 and was head of the National Democratic Union), and Karen Demirchyan (head of the Armenian Communist Party from 1974 to 1988). Since none of the candidates won the required "50% plus one" of the 1.46 million votes cast (in a 64% turnout), a runoff election was held on 30 March. In the runoff, acting President and Prime Minister Kocharian received 59.5% of 1.57 million votes cast (in a 68.5% turnout). The OSCE concluded that "this election showed improvement in some respects over the 1996 election," but did "not meet OSCE standards to which Armenia has committed itself." Observers alleged ballot box stuffing, discrepancies in vote counting, and fraud perpetrated by local authorities that inflated the number of votes for Kocharian. Nevertheless, he was inaugurated on 9 April 1998. The legislature selected Demirchyan as its speaker on 10 June.

On 27 October 1999, gunmen entered the legislature and opened fire on deputies and officials, killing Prime Minister Vazgen Sarkisyan and Speaker Karen Demirchyan, two deputy speakers, and four others. The purported leader of the gunmen claimed they were targeting the prime minister and were launching a coup to "restore democracy" and end poverty, and took dozens hostage. President Robert Kocharian rushed to the legislature and helped negotiate the release of the hostages, promising the gunmen a fair trial. The killings appeared the product of personal and clan grievances. Abiding by the constitution, the legislature met on 2 November and appointed Armen Khachatryan (a member of the majority Unity bloc) as speaker, and Kocharian named Sarkisyan's brother Aram the new prime minister the next day, seeking to preserve political balances. Political infighting intensified. The military prosecutor investigating the assassinations detained a presidential aide, appearing to implicate Kocharian in the assassinations. The Unity and Stability factions in the legislature also threatened to impeach Kocharian in April 2000. Seeking to counter challenges to his power, Kocharian in May 2000 fired his prime minister and defense minister. In October 2001, on the second anniversary of the shootings in parliament, thousands of protesters staged demonstrations in Yerevan to demand Kocharian's resignation. In December 2003, six individuals were sentenced to life imprisonment for their roles in the 1999 assassinations. The death penalty in Armenia had been abolished that August. Protests against Kocharian's presidency continued in 2004, despite his reelection in 2003.

Although Armenia has the highest economic growth rate of any country in the former Soviet Union, more than 50% of the population lives in poverty. Unemployment and emigration remain problems, and Armenia is under a trade blockade from Turkey and Azerbaijan over the dispute in Nagorno-Karabakh—goods are transported only through Georgia. However, US and European companies interested in tapping oil and gas reserves in the Caspian Sea have been planning the construction of a pipeline through the Caucasus to Turkey. In September 2001, Russian President Vladimir Putin visited Armenia, the first Russian president to do so since independence. Armenia and Russia negotiated a 10-year economic cooperation package, and an agreement was reached on expanding a Russian military base in Armenia.

Presidential elections were held on 19 February 2003, with no candidate receiving 50% of the votes; a runoff election was scheduled for 5 March. Kocharian took 48.3% of the first-round vote, with Stepan Demirchyan—son of Karen Demirchyan, the former parliamentary speaker assassinated in 1999—taking 27.4% of the vote. Artashes Geghamian came in third with 16.9%. The opposition called the election fraudulent and said it would not recognize the vote, and observers from the Organization for Security and Cooperation in Europe (OSCE) declared the election "flawed." Stuffing of ballot boxes allegedly took place, although many ballots were cast in transparent boxes, in an attempt to have a fair vote. Also, Kocharian received five times as much television coverage as all of his opponents combined. In the runoff election held on 5 March, Kocharian was reelected president with 67.5% of the vote; Demirchyan received 32.5%.

GOVERNMENT

Armenia adopted its post-Soviet constitution by public referendum on 5 July 1995 by 68% of the voters. A commission headed by Ter-Petrosyan had drawn up the draft constitution. It provides for a strong presidential system of government with a weak legislative system, granting the president power to appoint and remove the prime minister, judges, and prosecutors. It also gives him liberal grounds for dissolving the legislature, declaring martial law, and limiting human rights by declaring a state of emergency. The president serves a five-year term. The prime minister is nominated by the president and is subject to legislative approval. The prime minister with presidential and legislative approval appoints the Cabinet of Ministers. The unicameral National Assembly has 131 members, who serve four-year terms; 75 members are elected by party list, and 56 by direct vote.

POLITICAL PARTIES

Armenia held elections to a new single-chamber 131-seat legislature on 30 May 1999, with 75 deputies elected by party list and 56 elected by direct vote. Twenty-one parties and blocs fielded candidates on the party list vote, but only six passed a 5% vote hurdle. The Unity bloc garnered 42% of over two million votes cast, gaining 29 seats, followed by the Communist Party of Armenia with about 12% of the vote. In constituency balloting, the Unity Bloc (which included the country's two largest parties, the People's Party and the Republican Party) garnered the most seats (35), followed by nonparty-affiliated candidates (29). Other major parties that received at least 7% of the party list vote in the 1999 legislative race include the National Democratic Union, Armenian Revolutionary Federation-Dashnaktsutyun, Law-Governed Country Party, Communist Party of Armenia, the Armenian Pan-National Movement, Law and Unity bloc, and the Mission Party. The other registered parties included both those newly created for the legislative race and more traditional parties. They were the Mighty Motherland, Homeland bloc, Ramkavar Azatakan Party (Liberal Democratic Party), Freedom Party, Democratic Party of Armenia, Union of Socialist Forces and Intelligentsia bloc, Union of Communist and Socialist Parties, Youth Party of Armenia, Decent Future, National State Party, Free Hayk Mission Party, Shamiram Party, and ONS+ bloc (the National Self-Determination and Homeland-Diaspora).

Legislative elections were held on 25 May 2003. The Republican Party won 23.5% of the vote (23 seats) for deputies elected by party list, followed by Justice Bloc, 13.6% (14 seats); Rule of Law, 12.3% (12 seats); ARF (Dashnak), 11.4% (11 seats); National Unity, 8.8% (9 seats); United Labor Party, 5.7% (6 seats). However, seats by party change frequently as deputies switch parties or declare themselves independent.

LOCAL GOVERNMENT

The regional governmental structure is closely modeled after the national structure. The president appoints governors to Armenia's 11 provinces (marzer ), including the mayor of the capital of Yerevan, which has the status of a marz. Each province has both executive and legislative bodies that control the provincial budget and businesses within the region. Regional governments do not have authority to pass laws independent of national legislation. Marzer are divided into rural and urban communities (hamainkner ), and Yerevan is divided into 12 districts. The communities and Yerevan districts are governed by community chiefs and legislative bodies called councils of elders (avakani ). In the cities, community chiefs hold the title of mayor. In 1997 a law on self-government was passed calling for decentralization in some areas and some fiscal independence for local governments. Elections for mayors, community chiefs, and local councils in 654 constituencies were held 20 October 2002, with a 46% voter turnout rate (an increase of close to 20% from the turnout in 1999). Local elections are held every three years. There were fewer complaints of electoral irregularities than in previous elections. The ruling Republican Party fielded the most candidates, and 18 other parties, in addition to independents, participated. The Law-Governed Country Party came in second, and the Armenian Revolutionary Federation was third. Local elections were held once again in October 2005, and voters decided not to return many incumbents to office.

JUDICIAL SYSTEM

The constitution provides for an independent judiciary, but in practice courts are vulnerable to pressure from the government, though legal reforms are resulting in some changes. The court system consists of district courts of first instance, an Appeals Court, and a Court of Cassation. Judges for the local courts of first instance and the Court of Appeals began operating under a new judicial system in January 1999. Judges were selected for their posts based on examinations and interviews by the Minister of Justice, approval of a list of nominees by the Council of Justice, and approval by the president. Unless they are removed for malfeasance, they serve for life. About one-half of Sovietera judges have been replaced. Prosecutors and defense attorneys also began retraining and recertification. A military bureaucracy continues to follow Sovietera practices.

A Constitutional Court has the power to review the constitutionality of legislation, approves international agreements, and settles electoral disputes. Its effectiveness is limited. It only accepts cases referred by the president, two-thirds of the members of the legislature, or election-related cases brought by candidates in legislative or presidential races. The president appoints four of the nine judges of the Constitutional Court.

The constitution establishes a Council of Justice, headed by the president and including the prosecutor general, the minister of justice, and 14 other members appointed by the president. The Council appoints and disciplines judges in courts of first instance and the Court of Appeals. A Council of Court Chairs has been created to reduce the power of the Ministry of Justice and increase the independence of the judicial system. It is responsible for financial and budgetary issues involving the courts, and consists of 21 senior judges.

A criminal procedure code entered into force in January 1999 specifies that a suspect may be detained for no more than 12 months pending trial, has the right to an attorney, right to a public trial and to confront witnesses, and the right to appeal.

ARMED FORCES

The active armed forces numbered 48,160 in 2005. There were 45,000 personnel in the Army, organized into five corps that would include a mix of motorized and standard rifle regiments, armored and other support units. Equipment in 2005 included 110 main battle tanks, 104 armored infantry fighting vehicles, 140 armored personnel carriers, and 229 artillery pieces. The Air and Defense Aviation Forces numbered 3,160 personnel with 16 combat capable aircraft (one fighter and 15 fighter ground attack aircraft) and 12 attack helicopters. Paramilitary forces numbered 1,000 and were made up of border troops and Ministry of Internal Affairs personnel. The military budget in 2005 totaled $135 million.

INTERNATIONAL COOPERATION

Armenia was admitted to the United Nations on 2 March 1992. The country serves as a member of several specialized agencies within the United Nations, such as FAO, IAEA, ICAO, IDA, IFC, IFAD, ILO, IMF, UNCTAD, UNESCO, UNIDO, WIPO, and WHO. Armenia is a member of the CIS and the Council of Europe. The country was admitted to the OSCE on 30 January 1992 and serves as an observer in the OAS. It became a full member of the WTO on 5 February 2003. Armenia is one of 12 members of the Black Sea Economic Cooperation Zone, which was established in 1992. It is also a part of the Euro-Atlantic Partnership Council and the EBRD. Armenia is a member of the Organization for the Prohibition of Chemical Weapons and the NATO Partnership for Peace. The country ratified the Conventional Armed Forces in Europe (CFE) Treaty in July 1992. The Armenia government supports the cause of the ethnic Armenian secessionists in the Nagorno-Karabakh region of Azerbaijan. The OSCE is serving as a mediator in what has been a sometimes violent struggle.

In environmental cooperation, Armenia is part of the Basel Convention, the Conventions on Biological Diversity and Long Range Transboundary Air Pollution, Ramsar, the Kyoto Protocol, the Montréal Protocol, the Nuclear Test Ban Treaty, and the UN Conventions on the Law of the Sea, Climate Change, and Desertification.

ECONOMY

As part of the Soviet Union, the Armenian economy featured largescale agro-industrial enterprises and a substantial industrial sector that supplied machine tools, textiles, and other manufactured goods to other parts of the USSR in exchange for raw materials. Trade with its neighbors, on which resource-poor Armenia relies heavily, was jeopardized by the outbreak of conflict over the Nagorno-Karabakh enclave in 1988, and by political instability in Georgia and Azerbaijan. Also, in December 1988, a severe earthquake did considerable damage to Armenia's productive capacity, aggravating its regional trade deficit. The physical damage had not been repaired when the economy suffered the implosion that accompanied the breakup of the Soviet Union in 1991.

With independence, as real GDP fell 60% from 1992–93, small-scale agriculture came to dominate in place of the former agro-industrial complexes, with crops of grain, sugar beets, potatoes, and other vegetables, as well as grapes and other fruit. Growth was not registered until 1994, at 5%, when, in July, a ceasefire was signed by Armenia, Azerbaijan and Nagorno-Karabakh, and, in December, the government embarked on a comprehensive IMF-monitored program of macroeconomic stabilization and structural reform. By 1996, growth was in double digits and inflation in single digits, although setbacks, which began in late 1996, reduced real GDP growth to 3% in 1997, while inflation surged to 27%. In 1998, real growth reached 7.3% while inflation fell to a single digit 8.7%, despite the negative impacts of the Russian financial crisis and a continuing Azerbaijanled economic blockade over the unresolved Nagorno-Karabakh issue.

Growth in the first nine months of 1999 was at an annual rate of 6%, but this was reduced to 3% for the year in the disruptions following the hostage-takings and assassinations of the prime minister and parliamentary speaker in October, a stated motive for which was the large proportion of Armenians living in poverty (at 55% in 2001 by CIA estimates). Inflation was held to 0.7% in the crisis, due to policy changes that have continued to keep inflation at a low level. Moderate GDP growth of 6% was achieved in 2000 while prices, as measured by the consumer price index, actually declined an estimated 0.8%.

In 2001, targeted real growth under the IMF-guided program was 6% but actual growth was about 10% (CIA est.) as the effects of economic reforms, the privatization of small and medium-sized enterprises, and increased foreign investment began to impact performance. IMF and CIA estimates for 2002 were for real growth between 12.5% and 12.9%, with stable price levels. Barring major disruptions (only too likely as the war in Iraq, launched 19 March 2003, added another source of instability to the region), Armenia was expected to attain its pre-independence level of percapita income by 2005. Growth sectors include telecommunications, assembly of electric and electronic appliances, agriculture and food processing, energy generation and distribution, construction, coal and gold mining, and international air communications.

The IMF-sponsored economic liberalization program encouraged remarkable GDP growth rates: 13.9% in 2003, 10.1% in 2004, and a predicted 8.0% in 2005. Rising investment levels, exports, and real incomes also contributed to this growth. Inflation, tamed in 2002, was on the rise in 2003 and 2004, at 4.7% and 7.0% respectively. For the most part however, the government has done a good job of keeping the inflation in check, and stabilizing the local currency. Despite encouraging economic figures though, unemployment remains fairly high (at around 14%) and poverty is a critical issue that needs to be dealt with immediately.

INCOME

The US Central Intelligence Agency (CIA) reports that in 2005 Armenia's gross domestic product (GDP) was estimated at $15.3 billion. The CIA defines GDP as the value of all final goods and services produced within a nation in a given year and computed on the basis of purchasing power parity (PPP) rather than value as measured on the basis of the rate of exchange based on current dollars. The per capita GDP was estimated at $5,100. The annual growth rate of GDP was estimated at 8%. The average inflation rate in 2005 was 2.4%. It was estimated that agriculture accounted for 24.9% of GDP, industry 34.6%, and services 40.5%.

According to the World Bank, in 2003 remittances from citizens working abroad totaled $168 million or about $55 per capita and accounted for approximately 6.0% of GDP. Foreign aid receipts amounted to $247 million or about $81 per capita and accounted for approximately 8.5% of the gross national income (GNI).

The World Bank reports that in 2003 household consumption in Armenia totaled $2.35 billion or about $768 per capita based on a GDP of $2.8 billion, measured in current dollars rather than PPP. Household consumption includes expenditures of individuals, households, and nongovernmental organizations on goods and services, excluding purchases of dwellings. It was estimated that for the period 1990 to 2003 household consumption grew at an average annual rate of 1.8%. In 2001 it was estimated that approximately 52% of household consumption was spent on food, 18% on fuel, 3% on health care, and 15% on education. It was estimated that in 2003 about 43% of the population had incomes below the poverty line.

LABOR

As of 2004, Armenia's labor force numbered 1.2 million. In 2002, an estimated 25% were involved in industry, 45% in agriculture, and 30% in services. The unemployment rate was estimated at 30% in 2003.

Legislation passed in 1992 guarantees workers the right to bargain and organize collectively. An independent labor federation was created in 1997. However, organized labor remained weak as of 2005, because of high unemployment and a slow economy. Collective bargaining does not occur because most large employers are still under state control. Labor disputes are generally settled in economic or regular courts of law. According to the Confederation of Labor Unions (CLU) an estimated 290,000 workers belonged to 25 labor unions in 2005.

Armenians are guaranteed a monthly minimum wage which was set at around $26.00 as of 2005. The standard legal workweek was 40 hours, with mandatory overtime and rest periods. Children under the age of 16 are prohibited by law from full-time labor, although children at age 14 can be employed if permission is given by the child's parents and from the labor union. Due to the dire economic situation, none of these legal standards are relevant. Although the government is required to promulgate minimum occupational health and safety standards, as of end 2005, such standards have yet to be implemented. In addition, a lack of government resources and general worker insecurity prevent any effective enforcement of the nation's labor laws.

AGRICULTURE

Before the collapse of the Soviet Union, about 16% of Armenia's land was cultivated. As of 2002, there were an estimated 560,000 hectares (1,384,000 acres) of arable cropland (20% of the total land area), of which 65,000 hectares (160,600 acres) were planted with permanent crops. Agriculture engaged about 45% of the economically active population in 2003. That year, agricultural production was 13% higher than what it had been during 1999–2001.

Production for 2004 included tomatoes, 222,047 tons; potatoes, 575,942 tons; wheat, 296,000 tons; and grapes, 148,892 tons. In 2002, there were some 18,300 tractors and 4,000 harvester-threshers in service.

ANIMAL HUSBANDRY

Over one-fifth of the total land area is permanent pastureland. In 2004, the livestock population included: sheep, 580,000; cattle, 565,800; pigs, 85,300; goats, 48,300; and horses, 12,500. There were also some 3.6 million chickens. In 2004, some 54,000 tons of meat were produced, including 33,400 tons of beef and veal, 7,200 tons of mutton and lamb, 4,300 tons of poultry, and 8,500 tons of pork. In 2004, 535,800 tons of milk, 31,500 tons of eggs, 4,500 tons of cheese, and 1,200 tons of greasy wool were also produced. Meat, milk, and butter are the chief agricultural imports.

FISHING

Fishing is limited to the Arpa River and Lake Sevan. Commercial fishing is not a significant part of the economy. The total catch in 2003 was 1,633 tons. Trout and carp are the principal species.

FORESTRY

Forests cover an estimated 12.4% of Armenia. Soviet mismanagement, the 1988 earthquake, hostilities with Azerbaijan, and fuel shortages have impaired development. Available timber is used for firewood during the harsh winters. Imports of forestry products totaled $12.2 million in 2003.

MINING

Mineral resources in Armenia are concentrated in the southern region, where several operating copper and molybdenum mines were located. Armenia had been mining one-third of the former Soviet Union's (FSU) output of molybdenum (2,073 metric tons in 2002, down from 3,100 metric tons in 2000). Copper mines were located at Kapan, Kadzharan, Agarak, Shamlugh, and Akht'ala; the latter two were not in operation in 2002. Kadzharan and Agarak also had molybdenum mines. Despite relative proximity to rail and port facilities that supplied European markets, the mineral sector's ability to compete on the world market was inhibited by infrastructure problems. Armenia's production of perlite has been estimated at a steady 35,000 metric tons annually, from 1998 through 2002.

In 2002, Armenia produced industrial minerals such as clays, diatomite, dimension stone, limestone (12.5 million short tons), salt (30,300 metric tons), and semiprecious stones. It mined copper (16,641 metric tons of copper concentrate), copperzinc, and native gold deposits. The Zod and Megradzor gold mines ceased operations in 1997. The government hoped to revive the gold industry through the recovery of gold tailings at the Cuarat gold mill. Significant by-product constituents in the nonferrous ores in 2002 included barite, gold (estimated at 3,200 kg), lead, rhenium, selenium, silver (5,500 kg), tellurium, and zinc.

Armenia's exports of mineral products in 2002 accounted for around 70% of its total exports by value. In that year, total exports were valued at $507.2 million.

ENERGY AND POWER

With only negligible reserves of oil, natural gas, and coal, and with no production, Armenia is heavily reliant on foreign imports. Following the breakup of the Soviet Union, oil consumption has declined from 48,400 barrels per day in 1992 to 38,630 barrels per day in 2002. Natural gas consumption in 2002 was 38.49 billion cu ft. Total electrical consumption in 2002 was 4.446 billion kWh.

Net electricity generation in 2002 totaled 5.215 billion kWh, primarily from the reopened Medzamor nuclear plant at Yerevan (815,000 kW capacity), the Hrazdan (near Akhta) oil/natural gas plant (1,110,000 kW capacity), the Yerevan heat/power plant (550,000 kW capacity), and the Sevan-Hrazdan hydroelectric plant and smaller plants (925,000 kW capacity). Of total electricity generated in 2002, some 31% came from hydroelectric plants, 40% from nuclear power, and 29% from thermal power. Total capacity in 2002 was 3.341 million kW. The Medzama plant, reopened in 1995, increased electricity generation by 40% and has enabled electricity to be supplied around the clock for the first time in years. However, the Armenian government has promised to decommission the plant by 2004 to save money on maintenance if enough alternative power sources can be found by that time. As of 2002 three major and 38 smaller hydroelectric projects were planned, at a total cost of $300 million, with backing by the World Bank.

As of 1999, the domestic distribution grid for electric power was scheduled for restructuring and privatization, with assistance from the World Bank and the US Agency for International Development (USAID). A December 1988 earthquake disrupted the Yerevan nuclear power plant, creating almost total dependence on imported oil and natural gas for power. When ethnic hostilities with Azerbaijan again resurfaced in 1992, Azerbaijan discontinued service of its pipeline to Armenia (with natural gas from Turkmenistan). The only other supply routes passed either through Turkey (which was sympathetic to Azerbaijan) or through Georgia (which was dealing with its own civil chaos). Since the 1994 ceasefire with Azerbaijan, the revival of energy supplies has helped start the recovery of Armenia's economy. If Armenia and Azerbaijan ever resolve their disputes, the transit of oil and gas from the Caspian Sea region abroad will become possible.

INDUSTRY

Before the earthquake in 1988, Armenia exported trucks, tires, electronics, and instruments to other republics. A number of these plants were destroyed by the earthquake. Armenia was also a major producer of chemical products, some 59% of which were exported to other republics. Armenia has the highest number of specialists with higher education and second highest number of scientists of all the former Soviet republics. Since the collapse of the Soviet Union, industrial production has been severely disrupted by political instability and shortages of power. Much of Armenia's industry is idle or operating at a fraction of its capacity.

Economic blockades by Turkey and Azerbaijan as part of the continuing dispute over Nagorno-Karabakh have cut Armenia off from an old direct gas pipeline from Azerbaijan, as well as precluded it from participation in any of the east–west pipelines being built in the post-Soviet era. The alternative Armenia has pursued is a gas pipeline from Iran delivering Turkmenistan gas (to avoid sanctions on customers of Iran, which were renewed by the US Congress in August 2001). Intergovernmental agreements on the project were signed in 1992 and 1995. In December 1997 the Korpezehe-KurtKwi pipeline feeding Turkmen natural gas directly into the Iranian system was opened. In December 2001 agreement was reached on a route that bypassed the Azeri exclave of Nakhichevan, running from Kadzharan to the southern border at Megri. Work on the Armenian section of the Iran-Armenian gas pipeline was to have begun in 2002 but was delayed until 2003 by disputes over the price Iran was intending to charge.

Light industry dominates Armenia's industrial sector and is striking for its diversity. The leading industries in 2002 included metal-cutting machine tools, forging-pressing machines, electric motors, tires, knitted wear, hosiery, shoes, silk fabric, chemicals, trucks, instruments, microelectronics, gem cutting (in 2002, 53 diamond-polishing companies exported $150 million worth of diamonds), jewelry manufacture (up 200% in 2002), software development, food processing, and brandy. Most of the country's small and mediumsized enterprises have been privatized, spurring the recovery of industrial growth.

Progress has been slower with larger industries often due to the lack of viable bidders. About 70% of the larger operations had been privatized by 1998, the year Armenia passed legislation for the sale of the country's electricity transmission and distribution networks, retaining government control over power generation. To support the privatization, the European Bank for Reconstruction and Development (EBRD) bought a 20% share in each of Armenia's four distribution companies in an agreement preserving the government's right to buy back the shares should the agreement be abrogated. In 2002, after two failed offerings, management of the electricity distribution network was won by Daewoo Engineering. In 2001, Armenia reached a debt-to-equity agreement with Russia to exchange the debt it owed Russia—at almost $100 million and requiring about $20 million a year to service, the largest and only nonconcessional part of Armenia's external debt—for five nonperforming staterun enterprises. The center-piece was the Hrazdan Thermal Power Plant, valued at about $100 million, but also including the "Mars" Electronics Factory established in 1986 for making robots, and three research institutes. Under the debt for property agreement the Russian government will turn the operations over to private entrepreneurs.

Armenia has the highest number of cooperatives (per capita) in the Commonwealth of Independent States. By CIA estimates for 2000, industry accounted for 32% of GDP, but employed about 42% of the labor force. In 2002, with 12.5% overall GDP growth, industry grew 16%, including a 42% growth in construction. The country is projecting growth along with partnership opportunities in areas such as power generation, aviation, construction, electronics, apparel, tourism, food processing, industrial property acquisition, banking, and other areas.

In 2004, industry accounted for 36.1% of the overall GDP; agriculture made up 22.9% of the economy, while services came in first with 41.1%. What is remarkable though, is the fact that only about 25% of the working population was employed by the industry, whereas around 45% worked in agriculture. This indicates a high productivity rate in the industrial sector, and a low one in agriculture. The industrial production growth rate was, at 15%, higher than the GDP growth rate, indicating that industry is the main engine of the Armenian economy. Particularly metallurgy, energy, and machine building managed to attract new investment and helped boost the industrial sector output.

SCIENCE AND TECHNOLOGY

The Armenian National Academy of Sciences, founded in 1943 and headquartered in Yerevan, has departments of physical, mathematical, and technological sciences; and natural sciences; and 32 research institutes in fields such as agriculture; biological, mathematical, physical, and earth sciences; and technology. Yerevan State University (founded in 1919) has faculties of mechanics, mathematics, physics, radiophysics, chemistry, biology, geology, geography, and mathematical cybernetics and automatic analysis. Also in Yerevan are the State Engineering University of Armenia (founded in 1930), the Yerevan State Medical University (founded in 1922), the Yerevan Zootechnical and Veterinary Institute (founded in 1929), and the Armenian Scientific and Technical Library. In 1987–97, science and engineering students accounted for 29% of college and university enrollments.

As of 2002, there were 1,606 researchers and 147 technicians per million people, actively engaged in research and development (R&D). Spending on R&D accounted for $24.25 million, or 0.25% of GDP in 2002. Of that amount, government accounted for 55.2% of R&D spending, while foreign sources accounted for 11.2%. The remainder was undistributed. In 2002, high technology exports totaled $3 million, 2% of the country's manufactured exports.

DOMESTIC TRADE

As of 1999, there were about 23,128 wholesale and retail companies registered in Armenia, accounting for over 54% of the total registered businesses. The main retail center is in Yerevan. A majority of retail establishments are small food and specialty item shops. Many of these work with wholesalers and sell items on a consignment basis. There are also large open markets in Yerevan and other cities offering a wide variety of food, clothing, housewares, and electronics.

Beginning in 1996, the government launched a major privatization drive. By 1999, over 80% of small businesses and over 60% of medium and large corporations were in private hands. Nearly all farmland is privately owned. Seasonal openair food markets are also popular. Some of these markets still engage in bartering.

FOREIGN TRADE

Armenia's main trading partners are Belgium, Russia, the United States, Iran, Switzerland, Israel, Georgia, the United Kingdom, the UAE, and the EU. Exports include gold and diamonds, aluminum, transport equipment, electrical equipment, and scrap metal. Imports

Country	Exports	Imports	Balance
World	667.9	1,211.8	-543.9
Israel	142.3	123.4	18.9
Belgium	123.8	129.1	-5.3
Russia	96.0	196.1	-100.1
United States	54.9	99.1	-44.2
Germany	43.6	35.4	8.2
United Kingdom	39.8	56.5	-16.7
Switzerland-Liechtenstein	31.6	42.1	-10.5
Netherlands	21.8	10.8	11.0
Iran	21.4	63.5	-42.1
Italy-San Marino-Holy See	18.8	38.1	-19.3
(…) data not available or not significant.

include grain and other foods, fuel and energy. Inter-republic trade has suffered as a result of border hostilities, particularly the ongoing conflict over the Armenian enclave of Nagorno-Karabakh in Azerbaijan, which may prevent the proposed Caspian Sea oil pipeline from passing through Armenia. As of 2003, recent talks between the leaders of Armenia and Azerbaijan represented a positive step toward resolving the dispute.

Due to its delicate geographic placement, Armenia scores modest foreign trade figures. In 2004, exports totaled only $850 million (FOB—Free on Board), while imports climbed to $1.3 billion (FOB). Main export commodities were precious or semiprecious stones and metals (accounting for 42.5% of total exports), base metals (19.5%), mineral products (11.7%), prepared foodstuffs (9.7%). Principal imports included precious or semiprecious stones and metals (22.5%), mineral products (16.2%), machinery and equipment (10.1%), and prepared foodstuffs (7.0%). These last figures indicate that while Armenia has a vibrant industry, it is not exploiting it to its fullest potential. Existing trade barriers probably hinder the export of manufactured goods, so it has to resort to trading mainly natural resources.

BALANCE OF PAYMENTS

Although the government is working to reduce Armenia's large trade deficits by improving export performance, the conflict over the Armenian enclave of Nagorno-Karabakh in Azerbaijan continues to weaken the economy by disrupting normal trade and supply links. Armenia receives large amounts of humanitarian assistance.

The US Central Intelligence Agency (CIA) reported that in 2001 the purchasing power parity of Armenia's exports was $338.5 million while imports totaled $868.6 million resulting in a trade deficit of $530.1 million.

The International Monetary Fund (IMF) reported that in 2001 Armenia had exports of goods totaling $353 million and imports totaling $773 million. The services credit totaled $187 million and debit $204 million.

Exports of goods and services continued to grow in the following years, reaching $696 million in 2003, and $738 million in 2004. Imports followed a similar path, totaling $1.1 billion in

Current Account			-190.6
Balance on goods		-434.1
Imports	-1,130.2
Exports	696.1
Balance on services		-68.3
Balance on income		93.4
Current transfers		218.5
Capital Account			89.9
Financial Account			174.8
Direct investment abroad		-0.4
Direct investment in Armenia		120.9
Portfolio investment assets		0.1
Portfolio investment liabilities		0.2
Financial derivatives		…
Other investment assets		-63.6
Other investment liabilities		117.6
Net Errors and Omissions			-1.7
Reserves and Related Items			-72.4
(…) data not available or not significant.

2003, and $1.2 billion in 2004. The resource balance was consequently negative in both years, at around -$400 million. The current account balance was also negative, dropping to -$190 million in 2003, and recuperating to -$161 million in 2004. Reserves of foreign exchange and gold reached $555 million in 2004, covering almost six months of imports.

BANKING AND SECURITIES

The Central Bank of Armenia is charged with regulating the money supply, circulating currency, and regulating the commercial banks of the country. Commercial banks in Armenia include the Ardshinbank, Armagrobank, Armeconombank, Armimplexbank, Arminvestbank, Bank Armcommunication, Bank "Capital," Bank "Haykap," Central Bank of Armenia, Commercial Bank "Ardana," Commercial Bank Anelik, "Gladzor" Joint Stock Commercial Bank, Masis Commercial Bank, and the State Specialized Savings Bank of the Republic of Armenia. Leading foreign banks include: Mellat Bank (Iran) and Midland Armenia (UK).

The IMF has been concerned about the direction of policy taken by the National Bank of Armenia and the slow pace of financial reform. Armenia's financial sector is overbanked and beset with nonperforming credits, mainly to large state enterprises. Armenia has been a model reforming country among the former Soviet republics, and multilateral creditors are worried that public pressure may now force the government to loosen monetary and fiscal policies.

It was revealed in January 1997 that the central bank's credits to finance the government's budget gap has surpassed their $100 million limit in the first 10 months of 1996. The bank has been forced to intervene in the domestic markets, selling foreign exchange reserves to maintain the stability of the dram. The dram has lost some 14% in value since September 1996, when it stood at d412:$1. By the end of June1997 the rate had gone down to almost d500:$1. The International Monetary Fund reports that in 2001, currency and demand deposits—an aggregate commonly known as M1—were equal to $141.6 million. In that same year, M2—an aggregate equal to M1 plus savings deposits, small time deposits, and money market mutual funds—was $310.3 million. The discount rate, the interest rate at which the central bank lends to financial institutions in the short term, was 19.4%.

There are three stock exchanges in Armenia the largest of which is the Yerevan Stock Exchange which listed 91 companies in 1999 and had total capitalization of $17 million. The next largest is the "Adamand" Yerevan Commodity and Stock Exchange which listed 45 companies.

INSURANCE

Insurance is largely controlled by government organizations inherited from the Soviet system, although private insurance companies are not unknown.

PUBLIC FINANCE

In 1994, the government began a three-year effort to privatize the national industries. Loans from the IMF, World Bank, EBRD, and other financial institutions and foreign countries aimed at eliminating the government's budget deficit. However, by 1996, external public debt exceeded $353 million with annual debt service payments exceeding $55 million. Loans to Armenia since 1993 total over $800 million.

The US Central Intelligence Agency (CIA) estimated that in 2005 Armenia's central government took in revenues of approximately $786.1 million and had expenditures of $930.7 million. Revenues minus expenditures totaled approximately -$144.6 million. Total external debt was $1.868 billion.

The International Monetary Fund (IMF) reported that in 2002, the most recent year for which it had data, central government revenues were d338,463 million. The value of revenues was us$590 million, based on an exchange rate for 2002 of us$1 = d573.35 as reported by the IMF.

Revenue and Grants	338,463	100.0%
Tax revenue	227,447	67.2%
Social contributions	44,711	13.2%
Grants	50,480	14.9%
Other revenue	15,826	4.7%
Expenditures	…	…
General public services	…	…
Defense	…	…
Public order and safety	…	…
Economic affairs	…	…
Environmental protection	…	…
Housing and community amenities	…	…
Health	…	…
Recreational, culture, and religion	…	…
Education	…	…
Social protection	…	…
(…) data not available or not significant.

TAXATION

Armenia's complex tax system was revised in 1997 and again in 2001. The top corporate profit tax rate was lowered from 30% to 20%. As of 1 July 2001 a single rate was applied to all taxable profits, defined as the difference between revenues and the sum of wages, amortization payments, raw and intermediate purchases, social security contributions, insurance fees, and interest expenses. Newly formed enterprises are exempt from taxes for the first two years, but there is no provision for carrying forward losses.

Individual income taxes are withheld by enterprises and are paid to the Ministry of Finance monthly. The personal income tax has been reduced from three bands to two: 10% for monthly taxable income up to d80,000 ($144) and 20% plus a payment of d8,000 ($14.40) for taxable income between d120,000 and d320,000 ($1,892) for monthly taxable income above d80,000. Armenians also pay taxes to social security and pension funds. In 1992, Armenia introduced a value-added tax, which stood at 20% in 2003. Excise taxes are applied to diesel fuel, oil, spirits, wine and beer at various rates. There are also land taxes and property taxes. Achieving a higher level of tax collection has been an important part of Armenia's economic reform programs. The fiscal deficit was projected at 2.4% of GDP for 2003.

CUSTOMS AND DUTIES

All exports are duty-free. Minor customs duties (up to 10%) are imposed on certain imports. Imports of machinery and equipment for use in manufacturing by enterprises with foreign investment are exempt from all customs duties.

FOREIGN INVESTMENT

Armenia's investment climate is regulated by the bilateral investment treaty (BIT) signed with the United States on 23 September 1992 and by the law on foreign investment adopted by Armenia on 31 July 1994. Armenia has also concluded BITs on investment and investment protection with 15 other countries: Georgia, Turkmenistan, Kyrgyzstan, Ukraine, Iran, Egypt, Romania, Cyprus, Greece, France, Germany, Canada, Argentina, China, and Vietnam. Its investment policy is geared to attract foreign investment, with foreign investors accorded national treatment and any sector open to investment. As of 2003, under the law of profit tax, two-year tax holidays are accorded foreign investors whose equity investment in a resident company is at least 500 million drams, or a little less than one million dollars. There are no limits on the repatriation of profits, or on the import and export of hard currency, so long as the currency is imported or earned in Armenia. Otherwise there is a $10,000 limit on the export of cash.

In late 1997, the government initiated the privatization of 11 of the larger state owned enterprises (SOEs), including the energy sector. It was not until 2002, however, that a suitable and willing foreign investor, Daewoo Engineering, was found to manage privatized electricity distribution. Operations at the Zvartnots International Airport have also been successfully leased. The 2001 debt-for-equity swap with Russia, whereby five unproductive SOEs (Hrazdan Thermal Power Plant, the "Mars" Electronics Factory established in 1986 to build robots, and three research labs) were exchanged for the cancellation of Armenia's debt with Russia (about $100 million of nonconcessional lending that was costing almost $20 million/year to service) promised to increase Russian private investment in Armenia as the Russian government passed the assets on to private investors.

From 1998–2000 annual inflow of foreign direct investment (FDI) ranged from $120 million to $230 million, though it fell to $75.9 million in 2001 in the wake of the global contraction of foreign investment following the 11 September 2001 terrorist attacks on the US World Trade Center. In 2002, FDI increased 12% to about $85 million. A large share of FDI comes from the Armenian diaspora in the United States, Russia, Iran, France, Greece, the United Kingdom, Germany, and Syria. Since 1998, the Lincy Foundation of Armenian American Kirk Kirkorian has made available about $165 million to support small and medium enterprise (SME) development (offering concessional loans for businesses that are at least 51% Armenian owned), assistance for tourism development ($20 million in 2000), and infrastructure repair ($60 million in 2002 and $80 million in 2003). Armenia's accession to the World Trade Organization in 2000 has helped improve the investment climate as a consequence of meeting the WTO's strictures for membership.

The flow of foreign capital into Armenia continued to grow steadily, reaching $155 million in 2003, and $300 million in 2004. The main FDI sources have been Russia, the United States, Greece, France, and Germany. Unfortunately, only a small part of the capital inflows were geared towards green field investments. At the end of 2003, the accumulated stock of FDI amounted to 32% of the GDP.

ECONOMIC DEVELOPMENT

Development planning in Armenia has been aimed at counter-acting the effects of three devastating blows to its economy: the earthquake of 1988; open warfare and economic blockade over Nagorno-Karabakh; and the combination of hyperinflation and industrial collapse following its separation from the Soviet Union. The government has been aggressive in launching economic reform, beginning with its privatization of agricultural land in 1991, which boosted crop output 30% and resulted in a 15% increase in agricultural production. In December 1994, Armenia embarked on a series of ambitious programs of economic reform guided by the International Monetary Fund (IMF) that have resulted in nine years of positive growth rates. On its present course, Armenia will achieve its pre-independence level of per capita income by 2005. By 1997, privatization of most small industry, as well as an estimated 70% of larger enterprises, was complete. Progress has been slower with larger state-owned enterprises (SOEs), not least because the government has had difficulty finding bidders at its cash sales auctions. In 1997, the ministries controlling the SOEs were merged, and their functions changed from direct control to general supervision and special support. The Ministry of Industry and the Ministry of Trade, and certain parts of the Ministry of Economy and the Ministry of Privatization and Foreign Investment were also merged in order to streamline the bureaucracy.

In late 1997, 11 large enterprises were offered for sale and in 1998 the parliament passed a law allowing for the sale of the state electricity transmission and distribution networks. Viable bidders were not immediately forthcoming and on 5 December 2000, as a means of supporting the privatization program, the European Bank of Reconstruction and Development (EBRD) agreed to take 20% shares in each of Armenia's four electricity distribution companies, with provision for the Armenian government's right to buy back the shares if the agreements were abrogated. The privatization process of the distribution networks stalled in 2001 and 2002 as twice the government failed to attract any final bids. To make the offer more attractive, the government merged the four distribution companies into one closed-end joint stock company, Electricity Networks of Armenia, and on 31 October 2002, 100% of the shares were acquired by the English company, Midland Resources Holding, Ltd. Midland in turn contracted with Daewoo International of South Korea to manage the newly privatized company. By 2002, only a small fraction of a total 100 larger SOEs had been privatized, according to the US Agency for International Development (USAID).

The republic has substantial deposits of gold, copper, zinc, bauxite, and other minerals, which could be developed with Western capital. The government is currently exploring alternative trade routes, and seeking export orders from the West to aid production and earn foreign exchange. Much of Armenia's industry remains idle or operating at low capacity utilization in large part because of the country's political isolation from oil and gas supplies.

Armenia's determination to create a market-oriented economy and democratic society has engaged (in addition to the IMF) the World Bank and EBRD as well as other financial institutions and foreign countries. Nevertheless, Armenia continues to remain economically isolated in comparison with its Caucasian neighbors.

The Armenian economy is expected to grow strongly in the coming years, based on increased domestic consumption, which in turn is fueled by higher wages and remittances from abroad. In addition, further investments are expected to come in the country as a result of economic restructuring and trade-oriented policies. Armenia boasts a highly educated work force, a diverse and dynamic industrial base, and a strategic geographic location. However, as long as the Nagorno-Karabakh conflict will not be resolved, the economy will find it hard to reach its fullest potential.

SOCIAL DEVELOPMENT

Pension and disability benefit systems were first introduced in 1956 and 1964. More recent legislation was passed in 2002 and implemented in 2003. Retirement is set at age 63 for men and age 59.5 for women, although earlier retirement is allowed for those engaged in hazardous work. The cost is covered by employee, employer, and government contributions. Work injury legislation provides 100% of average monthly earnings for temporary disability and a proportion of wages up to a maximum of 100% for permanent disability, depending on the extent of incapacity. Unemployment, sickness, and maternity benefits and family allowances are also provided under Armenian law.

Women in Armenia largely occupy traditional roles despite an employment law that formally prohibits discrimination based on sex. Women do not receive the same professional opportunities as men and often work in low-level jobs. In 2004 women earned approximately 40% less than men. Societal attitudes do not view sexual harassment in the workplace worthy of legal action. Violence against women and domestic violence is widespread and underreported. According to a recent survey, 45% of women were subject to psychological abuse, and 25% of women were physically abused. Most women do not report domestic abuse due to fear of reprisal and embarrassment.

The constitution protects the freedom of assembly and the freedom of religion. The government allows minorities, such as the Russians, Jews, Kurds, Yezids, Georgians, Greeks, and Assyrians, the right to preserve their cultural practices, the law allows them to study in their native language. Discrimination is prohibited on the basis of race, sex, religion, language disability, or social status. Human rights abuses appear to be widespread. Prison conditions fail to meet international standards and accusations of police brutality are not uncommon.

HEALTH

The infant mortality rate was 23.28 per 1,000 live births in 2005, an increase over the previous five years. The estimated maternal mortality rate was 35 per 100,000 live births as of 1999. Life expectancy in 2005 averaged 71.55 years. There were 7,000 warrelated deaths from 1989 to 1992; the death rate was estimated at 10 per 1,000 people in 2002. The incidence of tuberculosis was 58 per 100,000 people. Immunization rates declined as of 1994 due to war and earthquakes but have begun to recover. In 1999, the immunization rates were as follows for a child under the age of one: tuberculosis, 72%; polio, 95%; and measles, 92%. In the same year, the estimated immunization rate for DPT was 91%. In 2000 the total fertility rate was 1.3 births per woman and the maternal mortality rate was an estimated 35 per 100,000 live births.

As of 2004, there were an estimated 352 physicians and 473 nurses per 100,000 people and the country spent an estimated 7.8% of its GDP on health care. In this former republic of the Soviet Union, health care has undergone rapid changes in the last few years. The break from the Soviet Union has meant a disruption of the system that once provided member states with equipment, supplies, and drugs. Out-of-pocket payments by individual are now required for most health care services. However, the health care delivery itself is still largely organized as it was during the Soviet era, with regional clinics and walkin centers delivering most primary health care services.

The incidence of heart disease is high compared to other moderately developed countries. There is nearly a 50% chance of dying of heart disease after age 65 for both women and men. The HIV/AIDS prevalence was 0.10 per 100 adults in 2003. As of 2004, there were approximately 2,600 people living with HIV/AIDS in the country. There were an estimated 200 deaths from AIDS in 2003.

HOUSING

Housing throughout Armenia has been somewhat scarce for the past two decades due to a number of factors, including a history of state control, a devastating earthquake in 1988, and civil conflicts. Since the 1993 passage of a law on privatization for previously state and public-owned housing, about 96% of apartments were privatized and transferred to ownership by the existing tenants.

A large number of buildings are neglected and in serious disrepair and utilities are limited and expensive. The total number of housing units in 2001 was at about 750,719. Nearly 59% were multiunit dwellings, most of which are in urban areas. About 25% of all multi-unit homes were built before 1960; another 52% were built between 1960 and 1980. Only about 85% of the population have access to improved water supplies. Only 9% have central heating. About 50% of the population rely on wood burning stoves as a primary heating source.

Overcrowding and homelessness is a great concern, particularly among the population of refugees and displaced persons. In 2001, about 11% of all households lived in one-room homes. In 2001, it was estimated that about 40,000 families (5% of all households) had no permanent shelter. Nearly 40% of these people lived in temporary shelters called domics within the earthquake zone. Another 40,000 families were on waiting lists for new permanent housing because of overcrowding. About 1,200 new housing units were completed in 2001. The same year, there were about 29,000 unfinished housing units (4,487 buildings). Most of these were started in the late 1980s and early 1990s within the earthquake zone, and were simply left incomplete because of lack of funds and materials.

EDUCATION

Education is compulsory between the ages of 7 and 14 years and is free at both the primary and secondary levels. The system is broken into three levels. Primary school lasts for three years, followed by intermediate school, which lasts for five years. This is followed by two years of general secondary education. Primary school enrollment in 2003 was estimated at about 94%; 95% for boys and 93% for girls. The same year, secondary school enrollment was about 83%; 82% for boys and 85% for girls. The pupil to teacher ratio for primary school was at about 17:1 in 2003; the ratio for secondary school was about 10:1.

Since the early 1990s, increasing emphasis has been placed on Armenian history and culture. The school year runs from September to July. Instruction is available in Armenian and Russian. The education system is coordinated through the Ministry of Education and Science and the Council of Rectors of Higher Educational Establishments. About 3.2% of the GDP was given to education in 2003.

The adult literacy rate for 2004 was estimated at about 99%, with a fairly even rate between men and women. There are two universities in Yerevan: the Yerevan State University (founded in 1919) and the State Engineering University of Armenia. Seven other educational institutions are located in the capital. There are several other institutes of higher education throughout the country. About 25% of all age-eligible students were enrolled in tertiary education programs in 2003.

LIBRARIES AND MUSEUMS

There are two branches of the National Library, with the main branch in Yerevan comprising 6.2 million volumes as of 2002. The main library of the Armenian Academy of Sciences in Yerevan has 4.4 million volumes. The Armenian Academy of Sciences and the universities each have research libraries. The Armenian Library Association was established in 1995.

Yerevan's museums include the National Gallery of Arts; the Yerevan Children's Picture Gallery, a unique collection of children's art from Armenia and around the world; the Museum of Modern Art; the House Museum of Ovanes Tumanjan, Armenia's most renowned poet; and the Museum of Ancient Manuscripts. There are also museums devoted to the composer Aram Khachaturian (including his piano) and the filmmaker Sergei Paradjanov, Armenia's most famous sons. The Genocide Memorial and Museum at Tsitsernakaberd is in Yerevan. The Matenadaran Manuscript Museum, also in Yerevan, was established to preserve the ancient written culture of the region.

MEDIA

In 2003, there were an estimated 148 mainline telephones for every 1,000 people; about 60,800 people were on a waiting list for telephone service installation. The same year, there were approximately 30 mobile phones in use for every 1,000 people. Communications are the responsibility of the Ministry of Posts and Telecommunications and are operated by Armental, a 90% Greek-owned company. Yerevan is linked to the Trans-Asia-Europe fiber-optic cable through Iran. Communications links to other former Soviet republics are by land line or microwave, and to other countries by satellite and through Moscow.

A majority of citizens rely on radio and television as a primary source of news and information. Armenian and Russian radio and television stations broadcast throughout the country. In 2004, there were over 20 radio stations and over 40 television broadcasters, most of which were privately owned and operated. In 2003, there were an estimated 264 radios and 229 television sets for every 1,000 people. Though cable television service is available, only about 1.2 of every 1,000 people are subscribers. In 2003, there were 15.8 personal computers for every 1,000 people and 37 of every 1,000 people had access to the Internet. There were four secure Internet servers available in 2004.

The three largest newspapers as of 2002 were Golos Armenii (The Voice of Armenia, circulation 20,000), Hayastani Hanrapetutyun (a joint publication of the parliament and the newspaper's staff), and Respublika Armenia, (the Russian-language version of Hayastani Hanrapetutyun). According to the Yerevan Press Club, the total newspaper circulation in the country in 2004 was 60,000, an increase of 20,000 from 2003. There were about 27 newspapers available in the capital.

Armenia's constitution provides for freedom of expression, and is said to generally uphold freedom of speech and press. However, journalists seem to adhere to an unspoken rule of self-censorship, particularly when reporting on political issues, since they traditionally depend on the government for funding and access to facilities. The government has, it is noted, begun to shed itself of the state publishing apparatus, and it has dissolved the Ministry of Information.

ORGANIZATIONS

Important political movements in Armenia include the Armenian National Movement and the National Self-Determination Association. Armenian trade unions belong to the umbrella organization Council of Armenia Trade Unions. The Chamber of Commerce and Industry of the Republic of Armenia promotes the economic and business activities of the country in world markets.

The National Academy of Sciences of Armenia encourages the public interest in science and seeks to ensure availability and effectiveness of science education programs. The Armenian Physical Society serves a similar role. The group also works with various research programs. The Independent Media Center promotes the freedom and accuracy of press and other media. The Armenian Medical Association promotes research and education in the field; there are also several professional associations for specialized fields of medicine.

There are a number of national sporting organizations, including the Athletic Federation of the Republic of Armenia, the Armenian National Paralympic Committee, and other groups sponsoring football (soccer), baseball, skiing, and the Special Olympics. The National Youth Council of the Republic of Armenia coordinates youth organizations through the support of the Ministry of Culture, Sports, and Youth. An affiliate of the United Nations of Youth (UNOY), a foundation based in the Netherlands, was established in Armenia in 1994. Other youth groups include the Aragast Youth Club and the Armenian Euro Club Unipax. There are active chapters of the Girl Guides and Girls Scouts; the World Organization of Scouting is represented by the Armenian National Scout Movement. The Armenian Junior Chamber is a national leadership development organization. The YMCA is also present.

Organizations representing the rights and role of women in society include the League of Armenian Women, the Union of the Protection of Women's, Children and Family Rights, and the Women's Alliance. There is a national chapter of the Red Cross Society, World Vision, and Habitat for Humanity. The Armenian Relief Society supports local community health development programming.

TOURISM, TRAVEL, AND RECREATION

Although there is a shortage of resources, Armenia has been investing in new hotels to increase tourism. Outdoor activities and scenery seem to be the primary attractions. Lake Sevan, the world's largest mountain lake, is a popular summer tourist spot. The Tsakhador ski resort is open year round for skiing in the winter and hiking and picnicking the rest of the year. Mt. Ararat, the traditional site of the landing of Noah's Ark, is located along the border with Turkey. Yerevan, Armenia's capital, also boasts theaters; the casinos in Argavand are popular with tourists and Albanian citizens.

In 2003, there were about 206,000 visitor arrivals, as compared to 45,000 in 2000. Tourist receipts totaled $90 million in 2003.

In 2002, the US Department of State estimated the daily cost of staying in Yerevan at $184.

FAMOUS ARMENIANS

Levon Ter-Petrosyan was president of Armenia from 1991 until 1998. Gagik G. Haroutunian has been prime minister, vice president, and chairman of the Council of Ministers since November 1991. Gregory Nare Katzi, who lived in the 10th century, was Armenia's first great poet. Nineteenth-century novelists include Hakob Maliq-Hakobian (1835?–1888) whose pen name is "Raffi" and the playwright Gabriel Sundukian (1825–1912). G. I. Gurdjieff (1872?–1949) was a Greek-Armenian mystic and teacher. Soviet aircraft designer Artem Mikuyan (1905–70) served as head of the MiG design bureau. Arshile Gorky (1904–48) was an Armenian-American abstract expressionist painter.

DEPENDENCIES

Armenia has no territories or colonies.

BIBLIOGRAPHY

Abrahamian, Levon and Nancy Sweezy (eds.). Armenian Folk Arts, Culture, and Identity. Bloomington: Indiana University Press, 2001.

Adalian, Rouben Paul. Historical Dictionary of Armenia. Lanham, Md.: Scarecrow Press, 2002.

De Waal, Thomas. Black Garden: Armenia and Azerbaijan Through Peace and War. New York: New York University Press, 2003.

Karanian, Matthew. Edge of Time: Traveling in Armenia and Karabagh. 2nd ed. Washington, D.C.: Stone Garden Productions, 2002.

Kohut, David R. Historical Dictionary of the "Dirty Wars." Lanham, Md.: Scarecrow Press, 2003.

Libaridian, Gerard J. Modern Armenia: People, Nation, State. New Brunswick, N.J.: Transaction Publishers, 2004.

Seddon, David (ed.). A Political and Economic Dictionary of the Middle East. Philadelphia: Routledge/Taylor and Francis, 2004.

Suny, Ronald Grigor. Looking Toward Ararat: Armenia in Modern History. Bloomington: Indiana University Press, 1993.

Transcaucasia, Nationalism and Social Change: Essays in the History of Armenia, Azerbaijan, and Georgia. Ann Arbor: University of Michigan Press, 1996.

Walker, Christopher J. Armenia: the Survival of a Nation, Rev. 2nd ed. New York: St. Martin's Press, 1990.

World Bank. Public Expenditure Review of Armenia. Washington, D.C.: World Bank, 2003.