VZCZCXRO6779
RR RUEHDBU RUEHLN RUEHSK RUEHVK RUEHYG
DE RUEHYE #0337/01 1381155
ZNR UUUUU ZZH
R 181155Z MAY 09
FM AMEMBASSY YEREVAN
TO RUEHC/SECSTATE WASHDC 9067
INFO RUCNCIS/CIS COLLECTIVE
RUEHLMC/MILLENNIUM CHALLENGE CORPORATION WASHINGTON DC
RUEHAK/AMEMBASSY ANKARA 1767
RUEHIT/AMCONSUL ISTANBUL 0778
RUEHNO/USMISSION USNATO 0723

UNCLAS SECTION 01 OF 02 YEREVAN 000337 
 
SENSITIVE 
 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PGOV PREL EAID ECON AM
SUBJECT: ECONOMIC CRISIS TAKES IT TOLL ON ARARAT REGION 
 
YEREVAN 00000337  001.2 OF 002 
 
 
------- 
SUMMARY 
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¶1. (SBU) On May 29 the Ambassador traveled to Ararat marz, one of 
the country's 11 administrative regions that is also the primary 
agricultural growing area in Armenia.  The region's governor and the 
mayor of the regional capital of Artashat said that while 
remittances from abroad had noticeably decreased since the onset of 
the global economic crisis, the region was receiving assistance from 
the national government in the form of low cost loans to key 
businesses and monthly budget transfers.  The Ambassador visited two 
large enterprises in Ararat:  a cannery that continues to export in 
spite of the downturn; and a winery that has not received an export 
order in six months.  The Ambassador also visited ex-Prime Minister 
Aram Sargsian, who said he favored opening the Armenia-Turkey 
border, and met with the owner of Artashat TV, the region's only TV 
station, who revealed that his station was not reporting at all on 
the possible border opening with nearby Turkey.  End Summary. 
 
------------------------------------- 
REMITTANCES DOWN, BUT WE WILL BE OKAY 
------------------------------------- 
 
¶2. (SBU) Ararat Governor Vazgen Hovakimian downplayed the long-term 
effects of the global economic crisis on his region, saying the 
impact of the current crisis was not as severe as that of the 1998 
collapse of the Russian ruble.  He acknowledged, however, that 
remittances being sent from Armenians living and working abroad to 
Ararat were down since the onset of the crisis.  He also noted that 
unemployment in the region had increased as a result of the slowdown 
in construction in neighboring Yerevan.  (Note:  Ararat marz 
directly borders Yerevan to the south.  End Note)  On the positive 
side, he said that the national government had begun to provide the 
region anti-crisis assistance in the form of low cost loans to the 
region's two largest fruit and vegetable canneries ("ArtFood" and 
"Borodino").  He justified this outlay by saying the two concerns 
had large export portfolios that had been hit hard by the financial 
crisis but were now recovering.  (Note:  Pro-government politicians, 
including the Speaker of the Parliament Hovik Abrahamian, own these 
two canneries, with Ararat being the home and quasi-personal fiefdom 
of the powerful Abrahamian.  End Note)  Outside of agriculture, the 
governor stated that the region's cement factory had also reduced 
its output, but so far it had not laid off any personnel. 
 
¶3. (SBU) Artashat Mayor Gagik Muradian remarked that while his city 
continued to receive monthly budget transfers from the national 
government, the economic crisis was making it harder for his city of 
25,000 to collect the property, land and "sin taxes" that normally 
funded its municipal budget.  Muradian said the city was indeed 
feeling the impact of less remittances from its 5,000-7,000 former 
residents who now reside and work abroad.  With less money entering 
the local economy, the city had to postpone some road repairs and 
beautification projects.  When asked by the Ambassador how the 
national government could better empower local governments, Muradian 
replied that there were already too many communities in Armenia, and 
that they should be consolidated into larger administrative 
groupings in order to more effectively allocate financial 
resources. 
 
-------------------------------------- 
POLITICAL TIES CAN HELP ONE'S BUSINESS 
-------------------------------------- 
 
¶4. (SBU) Manvel Ghazarian, Member of Parliament and Chairman of the 
Board of the Ararat-based "Alco Vedi" Wine Factory, stated that his 
company had not received any export orders from Russia, its main 
client, in the last six months.  Local sales were also declining as 
price-conscious consumers purchased less expensive wines or chose 
cheaper vodka over wine.  The largest grape producer and purchaser 
in Armenia, "Alco Vedi" has already laid off production staff and 
cut salaries to its agricultural workers who tend the company's 
vineyards and orchards.  Ghazarian said that in January he had been 
able to extend by one year two bank loans with interest rates of 
14-15 percent, but now it is expensive to access any new credit, 
even with his good credit history.  Ghazarian said he had no silver 
bullet for weathering the current downturn, and noted that his 
company's goal was simply to survive until the situation improved 
worldwide. 
 
¶5. (SBU) The Ambassador also called on Sergo Karapetian, the 
president of the Artashat-based "ArtFood" fruit and vegetable 
cannery, whose company is currently benefiting from new low-cost 
loans from the national government.  The company has also received 
financing or assistance in the past from USAID, USDA and the World 
Bank.  The company controls a 40 percent share of the domestic 
market in canned fruits and vegetables, and has significant export 
 
YEREVAN 00000337  002.2 OF 002 
 
 
sales in tomato concentrate and dozens of canned products. 
According to Karapetian, over 7,000 farmers from all over Armenia 
supply the cannery with produce, and the company currently has 
active contracts with over 500 farmers whom they have trained and 
supplied with seed and fertilizer.  The cannery directly employs 
350-600 workers seasonally, and during the Ambassador's visit dozens 
of employees were seen processing seasonal vegetables and 
hand-labeling jars prior to distribution.  When asked whether the 
present Speaker of Parliament (and former mayor of Artashat) Hovik 
Abrahamian owned the "ArtFood" cannery, Karapetian grew bright red 
and adamantly denied he did, instead stating that the factory's 
workers owned 20 percent of the factory.  (Note:  Karapetian 
conveniently left out who owned the remaining 80 percent.  End 
Note) 
 
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THE TURKISH BORDER 
------------------ 
 
¶6. (SBU) The Ambassador met with ex-Prime Minister Aram Sargsian, 
the younger brother of slain former Prime Minister and Minister of 
Defense Vazgen Sargsian, at his family home in Ararat village. 
Sitting just three kilometers from the Armenia-Turkey border, 
Sargsian said he favored opening the border and improving relations 
with Turkey in order to realize the region's agricultural export 
potential.  Sargsian remarked that he traveled frequently to 
Nagorno-Karabagh (NK), where his brother's war hero status allowed 
the younger Sargsian to engage and disagree with NK leaders on ways 
forward for the Armenian-populated enclave.  Sargsian added that NK 
needed a media outlet that could broadcast into Armenia, so that 
Armenians residing in Armenia proper could better understand the 
issues of the NK people and leadership. 
 
----------------- 
MEDIA IN THE MARZ 
----------------- 
 
¶7. (SBU) The Ambassador met with Artak Manukian, the owner of 
Artashat TV (the only TV station in all of Ararat marz), to discuss 
the state of media in the region.  A local businessman and former 
assistant to Ararat's governor, Manukian admitted that since 
purchasing the station in 2006 he has supported it with his own 
funds, due to the lack of support from the state and insufficient 
advertising revenue.  Manukian stated that the station was 
encountering no problems with censorship during the election season. 
 He boasted that seven of the region's 11 journalists worked at his 
station.  When asked if his station was covering the possible border 
opening with Turkey, Manukian surprisingly said they were not 
covering the story because the people of Ararat were passive and 
uninterested in the topic.  (Comment:  Artashat TV seems to be a 
personal vanity project.  In addition to being its owner, Manukian 
is also one of the station's newscasters, and he seemed uninterested 
in independent journalism or covering serious news items. End 
Comment) 
 
YOVANOVITCH