Thursday, July 31, 2014

U.S. Warns Armenia Over Sanctions Against Russia

YEREVAN (RFE/RL) — The United States has urged Armenia to avoid doing business with Russian companies and individual entrepreneurs that have been subjected to U.S. sanctions in retaliation for Moscow’s alleged role in the Ukraine crisis.


“We encourage all countries and their nationals to consider the reputational risk of doing business with sanctioned individuals and entities and cease business dealings inconsistent with the sanctions that we and others have imposed,” the U.S. Embassy in Yerevan said on Thursday.


“The U.S. Embassy in Armenia, like other U.S. embassies around the globe, distributed information about these latest sanctions to Government of Armenia representatives as well as to local business organizations,” it added a statement to RFE/RL’s Armenian service (Azatutyun.am).


The embassy did not specify whether Armenia will only jeopardize its reputation or also face other, more tangible consequences if it ignores the warning.


The Armenian government declined to comment on the statement. Senior government officials refused to answer relevant questions from journalists after a weekly cabinet meeting in Yerevan.


The Russian entities sanctioned by Washington include defense and energy firms and commercial banks mostly owned by the state. Two of those banks, Gazmprombank and VTB, have subsidiaries in Armenia playing a major role in the local banking sector.


The Gazprombank subsidiary, Areximbank, and the VTB Armenia bank declined a comment on the U.S. Embassy statement. They both insisted on Wednesday that the U.S. sanctions will not seriously affect their operations in Armenia.


The sanctions bar U.S. persons and firms from providing financing for longer than 90 days or issuing new equity to Gazprombank, VTB and three other state-controlled Russian banks. However, American customers of those banks are still allowed to conduct other dollar transactions with those banks, and debit and credit cards issued by them are not subject to restrictions.


The U.S. blacklist also includes Rosneft, Russia’s largest oil company run by a close associate of President Vladimir Putin. Over the past year, Rosneft has negotiated with the Armenian government on the possible purchase of a moribund chemical plant in Yerevan. Armenian officials said early this year that the Russian oil giant is ready to invest $400 million in reviving the Nairit plant that used to employ thousands of people.


“I’m not going to answer any questions,” Energy and Natural Resources Minister Yervand Zakharian said when asked whether the U.S. sanctions could scuttle the deal with Rosneft. Economy Minister Karen Chshmaritian and Central Bank Vice-Governor Nerses Yeritsian also refused to comment on the sanctions’ implications for Armenia.


The Armenian Defense Ministry likewise avoided answering a question about Yerevan’s cooperation with Russian defense firms sanctioned by Washington.


Meanwhile, Arsen Ghazarian, the chairman of the country’s leading business association, suggested that Armenia is too dependent on Russia to sever ties with blacklisted Russian firms. “Some of the companies mentioned in the US Embassy statement have monopolist positions in Armenia’s transport and energy sectors,” he told reporters. “Like it or not, we have to work with them.”


The Russian Embassy in Armenia reacted to the “thinly veiled threats” to the Armenian government and business community just hours after the statement on the matter released by U.S. Embassy in the country.


“We express concern over American attempts to complicate the work of Russian business in the Republic of Armenia,” the Russian mission said in a statement. “All Russian companies present in Armenia, including the VTB Armenia and Areksimbank banks, are under its jurisdiction, operate within the framework of the country’s legislation, make profits and pay taxes in Armenia, and employ a considerable part of the population.”


“The calls to end contacts with Russian companies disavow American officials’ hypocritical statements about [Washington’s] readiness to foster the development of Armenia’s economy,” read the statement.


Echoing the official Russian position, the embassy also denounced as “illegitimate” the U.S. sanctions imposed on Russian companies and individuals in connection with the continuing crisis in Ukraine. It said they will only worsen U.S.-Russian relations and undermine international security.



U.S. Warns Armenia Over Sanctions Against Russia

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