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11 May 2009 / 09:54
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Armenia - with giant steps backwards?
Several German, Austrian and Swiss entrepreneurs and businessmen know Armenia from our investor trip. All participants were impressed by the people's friendliness, the country's potential and the beginnings there of an economic and democratic boom.
Despite the recent war over its two breakaway republics, the boom in neighboring Georgia is long since tangible. The conditions in Armenia were similar to those in Georgia and the expectation was strong that Armenia would undergo similar developments. Unfortunately it didn't turn out that way. Despite the takeover of the Armenian stock market by NASDAQ OMX as well as other promising early signs, the reality looks quite different. Neither laws nor regulations but rather national self-interest is dictating commerce with foreign investors.

The following chronology of one of our investments in Armenia shows the arbitrary nature of dealings with foreign investors:

We bought 1,520 common shares (3.2% of the company) of Yerevan Ararat Brandy Factory NOY on the Armenian stock market in May 2006. Participants on our investor trip in autumn 2007 visited this company as well as a fraction of its enormous real estate holdings and even sampled its outstanding Armenian cognac.

At the time of our purchase, the majority stockholder was the Armenian oligarch Gagik Tsarukyan, the richest living Armenian in the country. He holds his shares through his Armenian firm Multigroup. He is a powerful force in Armenian politics and presides of a (=his) political party called "Prosperous Armenia". The party has 26 of the 131 seats in parliament and is a coalition partner in the current government. It is represented by the heads of three ministries: Health, Sport & Youth and Urban Planning. Search engines like Yahoo and Google provide much additional information for those interested in learning more. Many clips can also be found on YouTube.

On the Prosperous Armenia party website, just click on ENG at the top-right of the screen. The homepage contains several links including those to YouTube presentations, the party's Word Press BLOG, its leader and to other websites.


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