Armenia Leans East?

Opponents of President Kocharian fear a debt repayment deal concluded with Russia late last month will give Moscow far too much influence over the running of the country's economy.

Critics of the Kocharian administration say the debt-for-equity swap, agreed at a meeting between the president and his Russian counterpart Vladimir Putin in Yerevan on September 14-15, could end up scaring away Western investors.

Under the deal, key Amenian enterprises will be handed over to Russia and joint ventures set up between the two countries, as repayment for some 100 million US dollars worth of loans dating back to 1991.

The criticism comes at a time of mounting opposition calls for Kocharian's resignation. Police said around seven thousand anti-government protesters turned up for a rally in Yerevan on October 26, at which the city's mayor Albert Bazeyan, one of the leaders of the Hanrapetutiun Party, blamed the president for the "unprecedented crisis" in the country.

Since the break-up of the Soviet Union, Moscow has enjoyed good relations with Yerevan, but opposition parties and sections of the media say the terms of the agreement will allow Russia to dictate Armenian economic policy.

"Despite the Armenian authorities' claims that Russia is our strategic partner, it has become obvious that it is necessary to redefine Armenian-Russian relations in quite different terms, " said the newspaper Aykakan Zhamanak on October 31.

"Russia is demanding the wholesale giveaway of our assets instead of Armenia's debts. Except for Kocharian and Putin's handshakes and smiles, it is difficult to find evidence of anything 'strategic' in Armenian-Russians relations."

Moscow may well use its economic leverage to gain lucrative Armenian ventures and even elbow its way to the front of the queue in the sell-off of the country's electricity concerns, but Kocharian inisists this will not affect the country's pro-Western policies.

"This deal came from us," said Kocharian. "No one is dictating anything. The point is to make our economy attractive for Russian investment."

Analysts and Western diplomats tend to believe him. "I never thought the Russian and Armenian rapprochement was happening at the expense of Armenia's relationship with other countries, including the US," said the American ambassador to Armenia Michael Lemmon. " Moreover, I myself appealed to many Russians to make their investments in Armenia."

This is a view shared by political analyst Armen Oskanian who believes that under Putin and Kocharian, Russia and Armenia have learnt "to live in a new way".

But Kocharian's opponents are unconvinced. "After Putin's visit Armenia was demoted from Russia's equal partner to its younger brother," said former foreign minister Alexander Arzumanian.

Opposition leader and former prime minister Aram Sarkissian said the country's very independence and its relationship with the West were at risk if it became economically beholden to Russia.

Kocharian has reacted calmly to the criticism, saying that thousands of jobs would be created at the companies being turned over to Russian hands and that it was damaging to think of Armenia as a regional subsidiary of Moscow.

Political observers point out that claims Kocharian is moving too close to Moscow are misleading, as he is merely continuing the pro-Russian policy of his predecessor Levon Ter-Petrosian.

They say that the opposition used to accuse him of being pro-Western and argued for closer ties with Russia. Now that the repayment deal has been struck with Moscow they are leaning the other way. Which makes any criticism that Kocharian is cosying up to Moscow seem somewhat strange.

Ara Tadevosian is director of Armenian news agency Mediamax.