By Hrach Melkumian and Shakeh Avoyan
After nearly two years of negotiation, the governments of Armenia and Russia signed on Tuesday a long-awaited agreement to settle Yerevan’s $100 million debt to Moscow, saying that it will also bolster bilateral economic ties.
Under the terms of the deal, Russia will write off the debt in exchange for gaining ownership of five state-run Armenian enterprises, the list of which was agreed last year. Those are Armenia’s largest thermal power plant located in the city of Hrazdan, an electronics factory in Yerevan and three research institutes that used to be part of the Soviet military-industrial complex.
A joint protocol was signed in Yerevan by Defense Minister Serzh Sarkisian and Russian Industry and Science Minister Ilya Klebanov in the presence of the Armenian and Russian prime ministers. Sarkisian and Klebanov co-chair an intergovernmental commission on economic cooperation and have personally led negotiations on the issue.
Russian Prime Minister Mikhail Kasyanov said the swap agreement, which may set a precedent for other ex-Soviet states owing substantial sums to Moscow, is mutually beneficial and amounts to Russian investments in the Armenian economy.
“It is obvious that, while buying these companies, the Russian side is expecting that the productive capacity of the companies and their scientific and technical potential must be used in full,” Kasyanov told journalists at the signing ceremony.
His Armenian counterpart, Andranik Markarian, also welcomed the debt repayment scheme, saying: “I believe that what we have done today is a great achievement.” Similar optimism was expressed by President Robert Kocharian who met with Kasyanov later in the day.
Official said the entire procedure of transferring the assets under Russian control will take up to six months. “The Russian Federation will soon provide information as to which Russian companies will be managing the enterprises that have become Russian property in accordance with the agreement we have signed,” Kasyanov said.
Some Armenian opposition leaders denounced the debt settlement. “If other creditor states and organizations adopt the same approach, then there will be nothing left of Armenia,” said Shavarsh Kocharian, leader of the National Democratic Party.
However, Armenia’s largest creditor, the World Bank, gave the thumbs-up. “I think it’s a positive step,” said Rodger Robinson, head of the bank’s Yerevan office. “It was costing [Armenia] $20 million to service that debt every year, and some of those assets that have been transferred were not working very well.”
The Hrazdan plant is by far the most valuable of them. The plant’s largest but still incomplete Fifth Unit is not covered by the equities-for-debt deal, with the Russians promising to decide by 2005 whether or not to buy it separately. According to Kasyanov, the decision will depend on possibilities of electricity exports from Armenia to third countries.
Armenian Deputy Energy Minister Ara Simonian disagreed with the argument that the transfer of the thermal plant will deepen Armenia’s already strong dependence on Russia for energy. “I don’t think that by giving away the Hrazdan plant we reduce our energy independence,” Simonian told RFE/RL. “On the contrary, the existence of a serious investor is an additional guarantee of our energy security.”
“It may make things easier for the export of power from Armenia,” Robinson agreed.
Last September, the Armenian government decided to give up more of its assets to repay almost $47 million in separate outstanding debts to Russian suppliers of natural gas and nuclear fuel. Markarian assured on Tuesday that Yerevan will not incur new Russian debts in the coming years.