By Haroutiun Khachatrian (12/13/2006 issue of the CACI Analyst)

BACKGROUND: Russia is the largest source country of investments in the economy of Armenia, (US$405 million between 1996 and 2005) which is significant for this small country. As a result, a significant part of the country’s economic assets are controlled by Russians, both by the government and state-owned companies, and by private Russian companies. The bulk of the former group of assets came from the 2002 debt-for-equity swap, whereby Armenia repaid its US$97 million dollar debt to Russia accumulated during the crisis of 1990s.

By Ariel Cohen and Conway Irwin (12/13/2006 issue of the CACI Analyst)

BACKGROUND: The Wider Black Sea region is a patchwork of overlapping political areas and spheres of influence. Bulgaria and Romania are NATO members and soon-to-be EU members. Ukraine is caught between the West and Russia.

By Jaba Devdariani and Blanka Hancilova (12/13/2006 issue of the CACI Analyst)

BACKGROUND: On December 6, the lower house of the Russian parliament approved in a first reading the draft law that would legalize economic sanctions against politically unfriendly countries. The sanctions have already been in force against Moldova, to block wine imports and, more heavily against Georgia – including the cutoff of the transport and postal links. The Kremlin-dominated gas giant, Gazprom, has also announced plans to almost double the gas price for Georgia and Azerbaijan, while keeping considerably lower rates for Armenia in exchange for a sell-off of its gas transit network to Gazprom.