US embassy cable - 05YEREVAN127

UNCLAS SECTION 01 OF 02 YEREVAN 000127 
 
SIPDIS 
 
COMMERCE FOR 3150/PBRADLEY/BSMITH 
COMMERCE FOR 4201/ITA/IEP/OEERIS/BISNIS/EHOUSE 
EMBASSIES - PLEASE PASS FCS 
DEPT FOR EUR/CACEN, EB/CBA 
ANKARA ALSO FOR CFC/ SNYDER/BALLINGER 
PASS TDA-STEIN, OPIC, EXIM-TUMMINIA/PANARO 
 
E.O. 12958: N/A 
TAGS: KTDB, BBSR, BEXP, BTIO, AM 
SUBJECT: (IMI) ARMENIA, COMMERCIAL NEWS SUMMARY: 
JANUARY, 2005 
 
 
------- 
SUMMARY 
------- 
 
1.  This cable summarizes press reporting on commercial 
developments in Armenia for January 2005.  Major 
headlines include: 
 
-- EBRD invests in private Armenian construction 
company; 
 
-- French company takes over Armenia's water supply 
system under the World Bank credit program; 
 
-- Kazakh bank plans to buy 48.9 percent of shares of 
Armenia's Interinvestbank; 
 
-- A newly established Swiss-owned bank opens in 
Armenia; and 
 
-- Armenia's National Statistics Service releases 2004 
year-end statistics. 
End Summary. 
 
--------------------------------------------- -------- 
EBRD INVESTS IN ARMENIAN PRIVATE CONSTRUCTION COMPANY 
--------------------------------------------- -------- 
 
2.  The European Bank for Reconstruction and 
Development (EBRD) invested 850,000 Euros to buy 28 
percent of the Armenian construction company Shen 
Concern.  This is the first time that EBRD has invested 
in a private construction enterprise in Armenia.  Shen 
Concern will use EBRD funds to begin production of 
concrete products and other construction materials.  By 
April 2005, the EBRD plans to increase its share of 
Shen Concern to 36 percent. 
 
--------------------------------------------- ----- 
FRENCH COMPANY TO TAKE OVER ARMENIA'S WATER SYSTEM 
--------------------------------------------- ----- 
 
3.  Saur France, one of the world's largest water 
supply companies, won the right to operate the Armenian 
Water and Sewerage Joint-Stock Company (AWSC) in an 
international tender in August 2004.  The Government of 
Armenia and Saur France recently signed a management 
contract for four years with a possible two-year 
extension.  AWSC is planning to invest USD 15.7 million 
over the next four years to restore the water supply 
system outside Yerevan.  The World Bank financed USD 23 
million of the project costs. 
 
------------------------------------------- 
KAZAKH BANK TO BUY SHARE OF INTERINVESTBANK 
------------------------------------------- 
 
4.  Kazakhstan-based TuranAlem Bank intends to acquire 
48.9 percent of the Armenian Interinvestbank. 
Interinvestbank's two other shareholders are also 
foreign companies:  ZRL from Austria (31.1 percent) and 
Mobilex from Kazakhstan (20 percent).  The acquisition 
is awaiting approval of Armenia's Central Bank. 
TuranAlem's shareholders include EBRD, IFC, and several 
German banks. 
 
--------------------------------------------- -------- 
A NEWLY ESTABLISHED SWISS-OWNED BANK OPENS IN ARMENIA 
--------------------------------------------- -------- 
 
5.  A group of Diaspora-Armenians based in Switzerland 
recently established ArmSwiss Invest and Trust Bank 
(AITB) in Armenia.  The Armenian Central Bank licensed 
AITB in July 2004, and the bank recently transferred 
the minimum statutory capital of USD 6 million to 
Armenia.  AITB plans to provide private banking 
services. 
 
---------------------------------- 
ARMENIA'S 2004 YEAR-END STATISTICS 
---------------------------------- 
 
6.  According to the Armenian National Statistical 
Service, real GDP growth was 10.1 percent in 2004. 
Inflation was 7 percent, higher than the Central Bank's 
target of 3 percent.  Armenia's foreign trade increased 
by 5.1 percent to USD 2.1 billion, despite a dramatic 
fall in Armenia's diamond trade.  For the first nine 
months of 2004, trade with the U.S. accounted 8.8 
percent of country's foreign trade, about USD 130 
million.  The average dram/dollar exchange rate was 
533.45 dram/dollar. 
EVANS