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Everybody should respect the rule of law, be it Levon Ter-Petrossian, George W. Bush or Robert Kocharyan. Rule of law is the building block of civil society. What should be done: Respect the law and the constitution.

Yes, I am. I am a citizen of Armenia and a grandson of genocide survivors.

According to the Constitution of the Republic of Armenia, Republic of Armenia is home of the citizens of the Republic, be it a Kurd, Russian, Armenian or any other ethnic group (even a Turk). Learn to respect the rule of law. If you want to be your home, start applying for a citizenship, then you can have the full freedom to call it your home. Otherwise, you are just a guest in the country of your ancestors, and as far as I know guests don't get to keep any keys.

You don't live in Armenia, it's not your home, why do you care who has the keys. Stop having claims on somebody else's house.

It’s blasphemous to call people “hooligans”, who fight for their fundamental rights to elect government. Hooligans in all societies should be prosecuted; however political dissent should never be classified as hooliganism. Those are the first steps toward authoritarianism. People who break windows and loot stores should be prosecuted, no questions about it, but prosecution should not stop there. The leaders who give commands to shoot at civilians should be prosecuted as well. Ceausescu was a revered leader for many years, but when he ordered his troops to shoot at its own people, he created a massive discontent which led to revolution. Kocharyan was a respected leader during the Artsax War, but when he gave order to shoot at people he crossed the line, and joined the ranks of Ceausescu and Co. Blocking access to information (Youtube, a1plus, etc.) and censuring information shows the frightening face of the regime. What should be done: - stop information blockade, - start prosecuting people who violated people’s rights to have fair elections (ballot staffing, intimidating people, bribing), - Conduct new and fair elections to heal the wounds created in the society - Prime Minister should step down if he wants to run for the President (it’s says in the Constitution). Velvet revolutions are not and have never been the norm. When people feel unable to express their voice in ballots, they express their anger through massive demonstrations. It makes me laugh when people blame the opposition about illiteracy. The president’s knowledge of Armenian is below 8th grade level (he can not be blamed for it, he grew up in Azerbaijan, where Armenian was not advocated by the government and rose through the ranks of Azerbaijani Communist Party, which was led by Heydar Aliev). His top cadres have sub-standard educational qualifications. The argument by Aghvan Hovsepyan proves my point. (I still can not understand was he being sarcastically funny, or was he serious about hypnosis”). Armenians ‘Hypnotized By Ter-Petrosian’ Former President Levon Ter-Petrosian and his allies resorted to a mass hypnosis of the population and other “psychological tricks” to muster popular support for their bid to topple Armenia’s leadership, Prosecutor-General Aghvan Hovsepian said on Friday. He indicated that the allegation could be part of the Armenian authorities’ coup case against the opposition presidential candidate that has already resulted in scores of arrests. “All along they carried out a psychological sabotage against the segment of the people who went to their rallies and who were supposed to be the instruments of the entire criminal act,” Hovsepian told a news conference. “During the psychological sabotage they used all kinds of psychological tricks, mechanisms of deception.” The powerful prosecutor said the ongoing investigation into the post-election deadly unrest in Armenia will therefore be conducted not only by law-enforcement officials but also psychologists and psychotherapists. Ter-Petrosian was thought to be highly unpopular when he ended his decade-long political retirement and announced his participation in the February 19 presidential election last September. Despite a hostile coverage of his political activities by the government-controlled media, he quickly attracted a substantial following and emerged as Prime Minister Serzh Sarkisian’s main election challenger with his harsh attacks on the government. According to the Central Election Commission, Ter-Petrosian won 21.5 percent of the vote, trailing only Sarkisian, the official election winner. The ex-president has rejected the official vote results as fraudulent and rallied tens of thousands of supporters in Yerevan to demand a re-run of the ballot. In Hovsepian’s words, the more than 350,000 votes which the CEC says were cast for Ter-Petrosian were primarily the result of a “mass psychosis” created by the opposition leader and his entourage. He claimed that was part of their broader coup plot foiled by the Armenian authorities. The powerful prosecutor said a total of 68 opposition leaders and activists have been arrested or detained and about 350 others questioned as part of the ongoing inquiry. He said 52 of them have already been formally charged with seeking to “usurp power,” organizing or participating in “mass disorders” and assaulting law-enforcement officers. The accusations stem from Saturday’s clashes in Yerevan between security forces and thousands of Ter-Petrosian supporters. According to the Armenian police, as many as 407 people were detained during and after the unrest that left at least eight people dead. A police statement on Thursday said the vast majority of them were set free. Some of the released oppositionists have already gone public with harrowing accounts of torture at the hands of police officers. The Ter-Petrosian camp says at least 98 of its supporters remained under arrest as of late Thursday. Dozens of others are believed to be on the run. Hovsepian again indicated that Ter-Petrosian too may end up behind bars soon. He said testimony given by detainees proves that all opposition actions were “managed from one center.” Hovsepian also said that all of the detainees will go on trial soon. “I have made a decision to finish those cases very quickly and send them to the court,” he told reporters. “We have no intention to keep them in our coffer. Very soon you will be witnessing the presentation and discussion of that evidence during court sessions.”

What should be done: 1.Armenia should become independent once again, instead of being viewed as a Russian province. 2. People should get access to youtube and other sources of information. (we used to make fun of Turkey for blocking access to youtube, see what happened). 3. Freedom to move and assemble 4. Freedom to express one's opinion, even if it's contradicts the government's.

The government is lying to its own people. WHY? The thugs who looted the buildings and the people who gave the command to shoot should be brought to justice. A loss of human lives should have consequences and any cover up by the government should be condoned.

The topic is what should be done? The people who ordered police to shoot at the people should be put to justice. The government should have to courage to step down and not lie to its people. http://youtube.com/watch?v=9xCj3OmvlQM

The first president of Armenia addressing to the Constitutional Court today underlined his thoughts of what should be done. It's a viable course of events the authorities in Armenia can pursue. It will be interesting to read the course of events offered by the Prime Minister Serje Sarkissian. http://www.payqar.net/am/80/item/182/ ADDRESS OF THE FOUNDING PRESIDENT OF ARMENIA LEVON TER-PETROSSIAN AT THE SESSION OF THE CONSTITUTIONAL COURT OF 05.03.08 Honorable Chairman of the Constitutional Court, Distinguished Members of the Constitutional Court, I would like to mention right away that I will refrain from the political evaluation of the situation and will concentrate exclusively on some of the legal aspects. Although my legal team has already touched upon the issue, I, nevertheless, feel obliged to do that once again. Since this is my first public appearance after the morning (6.30 a.m.) of March 1, I would like to take this opportunity to express my deep regret with regard to the tragic events of March 1, and to convey my sincere condolences to the families of the victims. Now I will deliver my speech. I would like to bring to your attention Article 78 of the Electoral Code of the Republic of Armenia. From the moment of registration the candidates for the President of the Republic who are in civil service or work in the local self-governing bodies, are dismissed from the performance of their professional duties during the election period, and have no right to use the advantage of their office. The President of the Republic of Armenia, or in conformity with the Constitution of the Republic of Armenia, the acting President – the Chairman of the National Assembly, or the Prime Minister – in the event of being nomination as a candidate for the President of the Republic, continue the performance of their duties, but shall not misuse the advantage of their office. This Article is distinct and imperative. Imperative articles aren’t subject to comment. The Prime Minister could have been nominated and registered as candidate for the President only in the status of the Acting President. The incumbent Prime Minister doesn’t have that status. I consider that his registration is illegal from the very beginning, hence not legitimate. My second point is Article 53.1 of the Constitution of Armenia. According to the article during martial law or state of emergency no elections of the President of the Republic shall be held and the President of the Republic shall continue the discharge of his/her responsibilities. Election of the president refers to the entire electoral process – from the nomination till the decision of the Constitutional Court upon the appeal of the disputed results of the election. Currently we are in the electoral process. Therefore, since we are in emergency situation, these elections can’t be valid or legitimate. Third, I refuse to understand the unilateral coverage of the Constitutional Court procedure. The appealing side lacks the opportunity to cover the Constitutional Court procedure. The principle of parity has been violated. Moreover, many of the witnesses – our supporters, as well as the activists of my campaign headquarters are under arrest. They are our main witnesses. Therefore, under given circumstances, any decision of the Constitutional Court, than that of recognizing the elections not valid, will create atmosphere of deficit of legitimacy that is dangerous for the future of the country, as well as the prestige of the Constitutional Court. I can’t imagine how any decision of the Constitutional Court will be accepted by me, the people of Armenia and international community. It means that Armenia will face the challenge of having illegitimate authorities. To overcome the created situation we should act according to the recommendations of the EU Declaration of yesterday, which I am presenting to you. I fully accept the recommendations, considering them as guidelines to actions for the Constitutional Court. Those recommendations call upon the authorities to lift the state of emergency, release all the detained citizens, provide equal opportunities for media coverage, conduct an independent international investigation of the events of March 1, engage in constructive dialogue with the opposition. As I have already mentioned, I fully accept these recommendations, and consider them to be the basis of our actions in the Constitutional Court and in public. Thank you.

An interesting analysis of this topic appeared in today's Radio Free Europe / Radio Liberty. http://www.rferl.org/featuresarticle/2008/...1F28755717.html Armenia: Crisis Spotlights 'Artsax Clan' By Brian Whitmore Serzh Sarkisian: "Yes I am Artsaxian, but I am Armenian first" (AFP) As Armenia's first post-Soviet president in the 1990s, Levon Ter-Petrossian brought in top officials from Nagorno-Artsax to serve in his government. Today, as an opposition leader, Ter-Petrossian is the most outspoken critic of what he and his allies call the "Artsax clan," lambasting his former proteges for raiding the country's treasury, strangling the economy, and stifling democracy. The main targets of the broadside have been outgoing President Robert Kocharian and his preferred successor, Serzh Sarkisian, the current prime minister who defeated Ter-Petrossian in Armenia's February 19 presidential election. Both Kocharian and Sarkisian hail from Nagorno-Artsax, an Armenian-controlled and populated enclave within Azerbaijan over which Baku and Yerevan fought a war in 1988-94. Speaking on the campaign trail in February, Ter-Petrossian accused Kocharian and Sarkisian of bringing their Artsax allies to Armenia and handing them the crown jewels of the economy. "Because of these two persons, 15,000 people have moved from Artsax to Armenia, mainly Yerevan, in the past 10 years," Ter-Petrossian said. "Each of them has been given a position. As if that wasn't enough, now the business sphere is also being given to them." Sarkisian's pat response to the criticism has been to say: "Yes I am Artsaxian, but I am Armenian first." Armenia's controversial election has led to allegations of fraud, government resignations, violent street protests, a deadly police crackdown, and a state of emergency. It has also exposed a deep rift in society between those born in Armenia proper and those from Nagorno-Artsax who have resettled in the country. Critics allege that Artsax Armenians have benefited from government favoritism and that Kocharian and Sarkisian have dragged their feet on formally ending the conflict to advance their cronies' business interests. Yerevan-based political analyst Stepan Grigorian, who is sympathetic to Ter-Petrossian and the opposition, says having a president from Nagorno-Artsax "who governs Armenia very badly" has fueled resentment. "Certain negative feelings exist," Grigorian says. "They do not extend to ordinary people of Artsax, but refer to those people who came to Armenia from there. Robert Kocharian brought many people with him, and appointed them to high positions. This created more caution. So yes, certain tension exists, of course." The Artsax Oligarchs Armenia had control of Artsax when a cease-fire was reached in 1994. But the victory came with a price, as Armenia's borders with Azerbaijan and Turkey have remained sealed. Ter-Petrossian, who became Armenia's first post-independence president in 1991, brought Sarkisian -- who was a senior military official in Nagorno-Artsax -- to Yerevan in 1993 to serve as defense minister. In 1998, he named Kocharian, who served as chairman of Nagorno-Artsax's State Defense Committee and later as president, Armenia's prime minister. It was a decision Ter-Petrossian soon regretted. He proposed a compromise solution to Azerbaijan on Nagorno-Artsax that Kocharian staunchly opposed. Ter-Petrossian was forced to resign over the issue in February 1998 and Kocharian won a special election to succeed him. Under Kocharian, Sarkisian served in a number of posts including defense minister, interior minister, national-security minister, presidential chief of staff, and most recently, prime minister. Aram Abramian, editor in chief of the Yerevan-based daily newspaper "Aravot" and who has roots in Nagorno-Artsax, says Kocharian and Sarkisian brought in associates from the territory who took over state posts and dominated the business elite. "There are 20, 30 families -- oligarchs -- people who, thanks to the opportunities that are provided to them by the authorities, became rich, and have wide possibilities of avoiding taxes and custom fees," Abramian says, adding that well-connected moguls were able to gain "monopolies" over fuel, sugar, and other commodities. "Others, who are less powerful, do not have this right," Abramian adds. "Not all of these people are from Artsax. It does not matter where they come from -- the most important thing is for them to serve the authorities." Among those identified by analysts as part of the Artsax clan are Kocharian's son, Sedrak, who reportedly controls mobile-phone imports; Barsegh Beglarian, who dominates the gas-station market; Mika Bagdasarov, who controls oil imports and heads the national airline; and Karen Karapetian, head of the Armrusgazard gas company, a joint venture with Russia's Gazprom. Closed Borders Abramian and other analysts say these oligarchs benefit from the lack of a final resolution to the Artsax conflict and the closed borders with Turkey and Azerbaijan. "This is one of the reasons why these issues are not being solved, because to have open borders with Europe, Asia, and so on -- in [that] case, the flows of goods, in either direction, will be wider, and it will be more difficult to control them," Abramian says. "Now, however, when one narrow flow comes through Georgia and another, even narrower, comes via Iran, controlling these flows of goods is much easier." Observers say such arrangements also stifle local production, hinder small business development, and ultimately harm the country's economy. And that is a major reason why one of Ter-Petrossian's main bases of support is among small and mid-level entrepreneurs. "This kind of economy -- when the high-ranking officials are importing goods -- leads to these same officials not being interested in promoting local production," Grigorian says. "And, because of this, it is in very difficult shape now. So during the elections, mid-size and big business wholly supported Ter-Petrossian." There are slight cultural differences between native-born Armenians and those from Nagorno-Artsax, according to analysts. Abramian says Artsaxians are more "favorably oriented toward Russia," are more likely to speak the Russian language, and are less religious than Armenians, for example. He adds, however, that it is the dominance of Kocharian and Sarkisian's allies that has fueled resentment against people from Nagorno-Artsax, few of whom have benefited from the largesse. "Armenian people, our compatriots who live in Artsax -- or, like me, have roots there -- have nothing to do with this," Abramian says. "They are Armenians just like everybody else. However, two people who have kept power throughout a decade -- and plan to do so for many more decades -- they indeed provoked certain negative attitude within the Armenian population. For it was not only them, but their relatives, acquaintances -- tens, hundreds of them -- arrived here, and occupied high-ranking positions and had successful business careers. This triggers a natural reaction." RFE/RL correspondent Salome Asatiani contributed to this report

TB, The model of development that you have described (closed borders, nurturing a few high margin industries), is very similar to the Korean model of development through choebols, where the economy is closed for number of years and effectively a number of industries are nurtured within before opening it up to competition. Armenia is a small country it does not have the markets for following that path of development. Take a look at the Irish model of development. Liberalism and EU subsidies got Ireland to be one of the fastest growing economies in EU. They have disputes in Northern Ireland and bloody history of dealing with English. That did not hinder achieving peace in their region and did not make Ireland a British protectorate. Why do you assume that open borders with Turkey will turn Armenia into a Turkish protectorate? With no borders with Russia Armenia has effectively become a Russian protectorate. Open borders with Turkey and Azerbaijan gives alternatives to trading routes, opens consumer markets, just to name a few of the advantages. Turkey is going through a lot of changes. There are a lot of conflicts within the Turkish society as well. It was only a year or so ago when hundreds of thousands of Turks gathered in Istanbul and chanted “We are Armenians”. Open borders will increase human interaction and we will change our perception of Turks from genocide committers to fairly normal people. Change of status quo also means change in our perceptions of our neighbors. Georgians embrace Turks, even though they dislike them as well. I don’t think it’s a secret to anyone that Greeks passionately hate Turks, but that doesn’t hinder development of normal relations. I don’t agree with the assumption that developing normal relations with Turkey and opening of borders will turn Armenia into a Turkish colony. I don’t see any basis for it.

Armenia is a country with actual people who want to have decent jobs and good prospects of future for their kids. It’s not a fortress that is at a constant war with it’s neighbors. Turks are our neighbors and nothing can be done about it. Armenians and Turks have to learn to live next to each other and tolerate each other. Federalism has multiple levels, California is one example. Other examples of federative states noteworthy of mentioning is Switzerland or former Soviet Union. I am a proponent of change and listed a lot of reasons in my posts yesterday and today for it. My vision of Armenia. The opposite of my view is the status quo. I am open for a discussion why should the status quo be maintained. How will it solve the problems of people living in Armenia? What’s the vision of Armenia the status quo leads to.

Yes and that's an affirmation of the fact that without final peace agreement there will always be clashes.

Things are not as binary as people perceive. What do you mean Artsax is given back? No it can never become a region of Azerbaijan, like Lenkoran. It can be a federal republic with Azerbaijan, with its own tax collection, police force and other attributes of federalism. Our entire country will be lost if we maintain the status quo and the demographic picture does not improve.

The fact that he was the president of a country that won the war is a major accomplishement.

Before I proceed with my comments I’d like to ask the audience to be more respectful and tolerant toward people with different views. Please stop name-calling otherwise the whole discussion will turn into a monologue. How can we achieve normalization of relations with our neighbors a lot of people ask? I don’t think it’s impossible. Armenia can not ignore its neighbor which has 70= million people and $636 billion GDP. (Armenia’s GDP is $17 billion). Turkey is not an ideal democracy, but it’s a far more advanced democracy than Armenia. At least in Turkey it’s possible to change government through elections. Armenian political elite can not close its eyes to the challenges the country faces because of closed borders. It’s imperative for development of the country, which stands at the doorstep of demographic catastrophe to have open communications with all its neighbors. It’s imperative to trade and import to a country which has one of the fastest growing economies of the world. Both Armenia and Azerbaijan ought to reject maximalism. Maximalism caused Azerbaijan to lose 7 regions around Artsax. What has maximalism got us in the past, loss of Kars and Sevres Treaty. I think lessons from the past should be learned thoroughly. The topic here is Mr. Sarkissian vs. Mr. Ter-Petrossian. I’ll try not to deviate from it. Let’s discuss what each one is offering. Mr. Sarkissian is status quo. It’s true under current leadership Armenia’s economy developed rapidly and the quality of life has improved dramatically. One must be blind not to see all good changes. However, what Mr. Sarkissian is offering is maintaining status quo. Does not offer realistic compromises to our neighbors. Does not put forward opening of communication with our neighbors on the forefront of its platform. His political past is too murky. The guy has changed parties 3 times during the last 20 years. I’d like supporters of Mr. Sarkissian to answer the questions I posed in my previous post. I am not a supporter of Mr. Ter-Petrossian, just because he is an intelligent person (I don’t think anybody disputes the fact that he is much more well-read than anybody in current Armenian leadership). I just support his liberal ideas. I see Armenia developing to become a beacon of democracy not a pariah state. It’s imperative for us to have open communications with our neighbors, even if we have to agree to some form of settlement of Artsax issue, where the region is a federal republic within Azerbaijan. If Armenia is not capable of populating the occupied territories, it has to come to realization than those lands are better off in the hands of Azerbaijan (it’s a bitter truth that’s hard to swallow), with appropriate security guarantees. Armenia’s economy can develop with a different trajectory if borders are open. The country needs access to world markets and Turkey provides it. Armenia needs Turkey more than Turkey needs Armenia. The population of Republic of Armenia is less than half than the population of Istanbul and the economy is less than 3% of Turkey’s.

TB, While I don’t agree on your assessment of nationalism in Armenia in 1920’s, I don’t want to steer our discussion from the main topic. It seems like most people in this forum or anywhere else in Armenian circles be it Armenia or Diaspora are against, some are against Mr. Ter-Petrossian some against Mr. Sarkissian. Very few are for something. I strongly believe when people elect leaders they choose a path of development that they believe in. I keep emphasizing the idea of having a vision, but nobody has given his/her vision of the future of the Republic of Armenia. Some form of master plan. My vision of Armenia is seeing Armenia become a part of EU. Develop to be a beacon of democracy in a volatile region. It has been a beacon of Christianity for hundreds of years, why can’t it be the pharos of democracy, liberalism and tolerance. Strong leaders are able to sell their dream to masses (great example is Obama). My vision is having open communications and good relations with all countries in the region. Where one can drive from Yerevan to Igdir in 30 minutes (it’s only 30 miles). Where Armenia’s economy is competitive on a global and regional scale and where the goods made in Armenia can have readily accessible markets in Turkey or other countries. Where the cement made in Ararat can be sold to a Turk living in Igdir and use that capital to make the cement factory more competitive. Without good neighborly relations Armenian economy can not compete. Without competitive economy there won’t be any prosperity, without increase in new job creation the emigration will further increase. That’s why I am for Ter-Petrossian. (open borders, free economy, liberalism).

To all supporters of Serje Sarkissian and Republican Party I have a few questions. Before you express your support to a candidate try to convince the opposition (i.e. me and like-minded people) by answering to the following questions: 1. Do you believe in nationalistic ideals set forth by Njdeh in the beginning of 20th century, which serve as the guiding force behind the ideas of the Republican Party? If you do, then don’t you think that most if it is outdated with current developments in the world? Nationalism took a severe blow after the WW II. 2. How can you believe a guy who has changed 3 parties since 1988 (Communist, HHSh, and Republican). Don’t you think that if opportunity comes he will desert the Republic for which it stands? 3. What’s your vision of Armenia and the model of development it should pursue? I see a lot of people here reject liberalism, but I don’t see the alternatives to it. To me the alternatives are isolationism and nationalism (we saw what it led to in 1920). Please educate. 4. Do you think a person who was in charge of the security services in 1999 has a moral right to serve as the president of the Republic, when the agency he ruled made fatal blows to the statehood of Armenia by failing to protect the National Assembly?

We have a pretty hostile group of people here. Being a long time member of this forum I see a lot of things have changed around here. Let me answer some of the questions raised after my first post. 1. First of all I don’t intend to normalize relations with Turkey. The democratically elected president of the Republic of Armenia through means of constructive dialogue should lay the foundation of normalization. If England and France were able to normalize their relations after hundreds of years of hostility than I think there is a hope for Armenians and Turks too. 2. Liberalism - I might have a different worldview than some of the participants in this forum. I believe in liberal ideals. The ones that helped Europe heal its wounds after the WW II. While it’s true that things can not happen overnight, however without taking steps toward the final destination, without having the vision, one can never get anything done. Have you asked yourselves what’s your vision of Armenia? Armenia 2020 was an interesting project that gave a vision to possible outcomes.

Shame, shame on these authorities!!! Shame on people who have tainted their hands with the blood of innocent people. Butchering its own people is analogous to treason. I am not an ardent supporter of LTP, however I agree with his liberal-democratic ideas. I am not an Armenian citizen, so I don’t have a moral right to support anyone, all I can do is agree or disagree. I agree that the only way Armenia can develop into a modern democracy is through solving the Artsax problem. I agree that normalization of relations with all neighboring countries; yes all of them, including Azerbaijan, is imperative for normal development of the Republic of Armenia. Armenia ought to become a beacon of democracy and liberal ideas in the region. It has the potential to build a European country, based on the ideals of Voltaire and Jean Jack Rousso. The present situation has to change. The often used word, stabilitiy, should be used in positive content. Stability of what? Authoritarianism. The current regime resembles the autocratic middle-eastern regimes, Hosni Mubarak’s Egypt, or Bashar Assad’s Syria, just to name a few. Moral degradation has engulfed all aspects of the society. It’s like a parasitic disease that’s eating the country from within. Whoever can not be bought (like Arthur Baghdasarian), or controlled (like Artashes Geghamyan) is severely persecuted. Is this the type of Armenia you have dreamed of in 1991? Where the president is a semi-educated former communist mid-level bureaucrat? I am embarrassed time and time again when Mr. Kocharyan gives “speeches” in Armenian. His advisors should have recommended him long time ago to take Armenia courses. I don’t blame him for not being able to converse in proper Armenian. In Artsax there were not many Armenian schools and the level of education was not at very high levels. Do you see his long time protégé, the so called black cardinal of Armenian politics as the third president of the republic? If you can envision that than I take my hat off to you, you must be a visionary that I am not.

I think it's time for structured finance industry to follow the lead of the Russian market. Troika Dialog Asset Management closes first-ever Russian corporates CDO Thu, 06 Sep 2007 Moscow-based Troika Dialog Asset Management, in conjunction with Deutsche Bank, has closed CDO I, the first ever rouble-denominated collateralised debt obligation invested in Russian corporate bonds to be fully placed with investors. CDO I is a three-year, RUB8.95bn (USD350m) CDO based on a diversified portfolio of local currency corporate credits, and according to the issuers is a testament to both the growth in non-governmental domestic debt issuance in Russia and the increased investor appetite for such structured risk. The portfolio is managed by Troika Dialog, which had assets under management of USD3.7bn at the end of June 30, including more than USD1.1bn invested in bonds and cash. The capital structure of the CDO includes equity, mezzanine and senior tranches. The risk underlying the transaction is synthetic, consisting of credit default swaps of varying maturity referencing the rouble-denominated obligations of the underlying names. Troika Dialog Asset Management may make substitutions within the portfolio based on certain agreed criteria in order to maintain the diversity and credit quality of the underlying portfolio. Founded in 1996, Troika Dialog Asset Management is part of the Troika Dialog Group of companies and is one of the largest independent asset management companies in Russia, with mutual funds and the Troika Russia Fund, an equity long/short fund launched in May 2006. Founded in 1991, Troika Dialog Group is active in securities trading and investment banking as well as asset management and has offices in 12 cities in Russia as well as in New York, London and Kiev.

Armenian dram might go down the same route as Latvian lat, if current macroeconomic trends continue, economic growth combined with huge current account deficit. Tigran Sargsyan should keep its eye on emergin market currency movements and somehow control abberate credit movements and the flactuations of dram vs. major currencies. Latvia struggles with currency weakness Lat's movement has implications for emerging market currencies By Wanfeng Zhou, MarketWatch Last Update: 2:04 PM ET Mar 16, 2007 NEW YORK (MarketWatch) -- A year ago, a sell-off in the currency of Iceland, a North Atlantic island nation with a population of less than half a million, triggered a meltdown in emerging markets across the globe. There are growing signs that Latvia may be the next Iceland. Speculation has been rising that the Baltic republic may soon have to devalue its currency, the lat, which is getting closer and closer to the low end of its narrow fluctuation band. The Bank of Latvia only allows the lat to trade in a 1% range against the euro. In fact, the Latvian central bank confirmed that it has intervened in the market in the past two days by selling euros to support the local currency, according to Lars Christensen, senior analyst at Denmark's Danske Bank. The lat breached the lower limit of the trading band on Friday. Latvia's domestic situation increasingly resembles that of Iceland last year - it has an overheated economy fueled by credit growth, soaring inflation and a huge current account deficit. In fact, the country's current account deficit, at 22% of gross domestic product, and inflation rate, running at 6.6%, were the highest in the European Union in 2006, according to Fitch Ratings. "It's not often that you see this sort of headline, but Latvia could be the one to watch if the recent weakness in emerging market currencies is to gather speed," said Steve Barrow, chief currency strategist at Bear Stearns. Scary numbers The Latvian government is trying to restore confidence in the lat by playing down the devaluation risk. But global risk aversion, which is on the rise following the sell-off in the equity markets of the past several weeks, will keep the pressure on the lat and with it, on the riskier, and more volatile emerging market currencies. With such a narrow trading band for the lat, and with some "scary" looking economic numbers, "it seems almost inevitable that something has to give," Barrow said. The ripple effect from a sharp slide in the lat could be significant. It was the sudden depreciation of the Thai currency, the baht, which triggered the Asian financial crisis in the late 1990s. And there was a similar domino effect from a sell-off in Iceland's krona last year. Emerging-market currencies fell sharply between February and June 2006 after an unexpected downgrade of Iceland's outlook by Fitch. Fears of a global liquidity crunch forced investors to bail out of riskier investments. The Latvian economy by any measure is quite small, said Danske Bank's Christensen. Still, "the Latvian story is extremely interesting in the sense that [it] should be a reminder to people about other countries with similar problems," he said. The current account deficit and debt liabilities make Latvia vulnerable to an increase in risk aversion because of its dependence on external financing. Earlier this month, Fitch warned that the country looked most vulnerable to an "abrupt adjustment in capital and financial flows and slowdown in economic growth." Gloomy outlook Overheating is another concern. The Latvian economy has enjoyed stellar growth in recent years, reaching an all-time high of 11.9% in 2006. In February, credit agency Standard & Poor's lowered its outlook for Latvia to negative from stable, citing "an escalated risk of a hard landing" if no corrective actions were taken. The economy is showing "clear signs of overheating," said S&P. In an attempt to cool the economy and rein in inflation, the Latvian central bank on Thursday raised its key interest rate by a half percentage point to 5.50%. The bank admitted that the country faced problems. "Alongside Latvia's rapid development, the economic imbalances have continued to worsen as suggested by the key macroeconomic indicators: persistently high inflation, large current account deficit, and rapidly growing external debt," the central bank said in a statement. "The rate hike will help reduce the pressures on the lat moderately," said Danske's Christensen. "But the risks still are considerable and more rate hikes might very well be needed if the lat weakens further." "If the narrow band is breached it will obviously be a massive blow to the credibility of the peg," he said. "It is getting harder and harder to avoid a hard landing in the Latvian economy and we therefore continue to recommend strongly to hedge exposure to the Latvian markets." Contagion risk The problem is that the danger doesn't stop at Latvia's borders. Its neighbors, Estonia, and Lithuania, are also showing signs of overheating, rising inflation, tightening labor markets, rapid credit growth and substantial current account deficits. Eral Yilmaz, an analyst at Fitch, warned that a delay to euro adoption, along with weak economic conditions, is a constraint on rating upgrades for these three countries, collectively known as the Baltic Republics. A failure to address overheating could lead to negative rating actions. "'Psychological' contagion, by which markets draw parallels between economic and financial trends across countries and react accordingly -- as seen in the Asian crisis and the emerging-markets sell-off in May 2006 -- is a risk in the Baltics," Yilmaz said. The situation in the Baltic States is "worrying," agreed Katrin Robeck, economist at Moody's Economy.com. "Rapid credit growth paired with growing external account deficits could contribute to capital flight and currency depreciation," she said. "We'd be surprised if the current bout of weakness in many emerging market currencies were to end here," said Bear's Barrow. "There still seems to be plenty of bad news out there waiting to prolong the risk-reduction process. Much of [it] looks set to come from the U.S. subprime mortgage market." "One thing that there probably isn't a debate about is that this market will get worse," he said. Most emerging market equities, bonds and currencies are trading at fairly rich valuations, said Danske's Christensen. Meanwhile, the ratings outlook for many of these economies is turning more negative. On Thursday, Fitch downgraded Iceland's foreign and local currency issuer default ratings, citing new data pointing to "a material deterioration in Iceland's external balance sheet." If there were a devaluation of the lat, "the market is almost bound to see some contagion effects given that a number of other countries in the region have similar issues, involving large current account deficits and overheated economies," said Bear's Barrow. "And, if this contagion spreads wide enough, it could certainly cast a pall over the emerging market landscape." Wanfeng Zhou is a markets reporter in New York.

In order for a poor country to develop there needs to be a break in a cycle of “low savings rate -> low investments -> low productivity”. Armenia has a great resource, it’s Diaspora. Diaspora should not only provide money for subsistence or building infrastructure, but should play a vital role in getting some institutional investments to Armenia. Higher investments will lead to higher productivity which will turn to higher disposable income and higher savings rate among population. One might ask, how can we get institutional money to Armenia? Whoever has worked in the financial services industry knows that connections play a vital role in the decision making process. The connections established by Armenian professionals can be very helpful. Armenia got a B2 rating by Moody’s this summer, which puts it in the same category as Turkey, Hungary (?) or Bulgaria. This should help to alleviate some of the risks. The government could work out a mechanism and set up a system to attract talented diasporans to help Armenia in various capacities. One way to do this is to invite some talented Wall Street experienced Armenians to run the Central Bank. I am sure they’ll do a better job at it then Tigran Sargsyan. Another level is telecommunications. Armenia is behind in development, due to mismanagement in the system. Who heads the system, notorious corrupt official, Andranik Manukyan. I come across Armenians that work in Wall Street and have pretty good connections all over the financial world. These people can be very helpful. I was at a conference organized by Goldman Sachs in New York a few weeks ago and bumped into couple of Armenians. All of them showed an enthusiasm in putting their skills in use for the good of Armenia. I believe there is a way out of this if the country is managed properly.

There was an interesting article in today's Wall Street Journal about sending remittances by migrant workers. This applies to Armenia as well. Direct Deposits: Migrants' Money Is Imperfect Cure For Poor Nations --- Earnings Sent Home From U.S. Fuel Increased Spending But Not Much Investment --- Thugs Extort Cash by Phone By Bob Davis 2471 words 1 November 2006 The Wall Street Journal A1 English (Copyright © 2006, Dow Jones & Company, Inc.) CIUDAD BARRIOS, El Salvador -- This lively mountain town survives on money sent from its sons and daughters living in the U.S. On days payments arrive, lines at the local credit union can reach 150 deep. The crowds then hail motorcycle taxis and head for the town's open-air market to stock up on food and clothing, or browse tiny appliance stores stuffed with blaring televisions and stereos. It's the sort of scene that many development economists believe could transform some of the world's most impoverished regions, by putting cash directly in the pockets of the poor. With tens of millions of migrants around the globe sending remittances home, the flood of money has grown immense -- $167 billion last year, according to the World Bank. But Ciudad Barrios also demonstrates why reliance on remittances may turn out to be the latest development fad that fails to live up to its hype. The downside: a cycle of continued poverty, as dependence on remittances turns the town into a kind of ward of the U.S. Those with entrepreneurial ambition head north, emptying out the town of its talent. Only a tiny fraction of the money they send home is invested in industry or agriculture that could produce jobs. And with the breadwinners away, organized thugs pounce on a place where money pours in from outside. All of that leaves little opportunity for the next generation except to follow their predecessors north, if they can. "As soon as people go home and see what their salaries are [there], they come back to the U.S. again," says Israel Hernandez, 38 years old, who left Ciudad Barrios in 1998 and has been cleaning houses in Washington, D.C. He has sent enough cash home to his grandmother for her to buy a house. She misses him, she says, but urges him to stay up north. For countries to reduce poverty on a sustained basis and to create a middle class, they need to grow rapidly over years. Though remittances fuel some spending, there isn't much evidence they have added to sustained growth. Instead, the infusions of outside cash often distort the local economy and may diminish the long-term prospects for gains. The flood of money from abroad can raise the value of local currencies, making it harder for exporters to compete because the effective price of their goods goes up. Meanwhile, about 85% of the money goes to pay the daily bills of the people left behind, with little left over for savings and investment. Migrants eventually return to retire in their home nations, not to help build their economies. "Remittances are a band-aid on fundamental development problems," says Dean Yang, a public-policy professor at the University of Michigan. "Labor export and remittances won't turn El Salvador, the Philippines and other poor countries into the next development tigers." Even the World Bank, which has pushed the development potential of remittances, is having second thoughts. In a report on Latin America released yesterday, the bank says that remittances are "neither 'manna from heaven,' nor a substitute for sound development policies." Remittances have received increasingly widespread attention in recent years as a way to boost aid without spending government money, as other formulas for growth have failed to produce widespread gains. In the 1970s and early 1980s, many nations tried closing their borders to protect their local industries from competition, which boosted growth for a while but led to high prices and monopoly control. Then they tried the opposite approach, free trade and market liberalization, with limited effect so far except in Asia. Meanwhile, foreign aid has been too small and inefficient to make much of a difference, while private investment has been targeted at a limited number of countries and industries. Remittances do directly help many poor families feed themselves and educate their children. Money sent home from abroad accounts for about 60% of the income of the poorest households in Guatemala, and has helped reduce the number of people living in poverty by 11 percentage points in Uganda and six percentage points in Bangladesh, according to World Bank studies. Nevertheless, a look at El Salvador shows the ways in which the cash also can hinder impoverished nations. The nation of seven million has revamped its economy since the civil war ended in 1992 in a so-far elusive effort to spur rapid growth. El Salvador abolished price controls, privatized industries, slashed tariffs that were as high as 290% and adopted the dollar as its currency in 2001 to limit inflation. Earlier this year, it joined a regional free-trade bloc with the U.S. Salvadorans started to flee the country in great numbers in the 1980s as the civil war there intensified. Now one in six Salvadorans -- 1.5 million people -- live abroad, many of them illegally in the U.S. They send home nearly $3 billion annually, equal to about 16% of the country's gross domestic product. Ciudad Barrios, a remote town 100 miles east of San Salvador, ping-ponged between guerrilla and government control during the civil war. Jose Edgardo Diaz Cordero worked in the town's hospital pharmacy in 1990 when guerrillas demanded that he give them medicines to treat their wounded. Then, he says, he received an anonymous message from a right-wing death squad accusing him of being a guerrilla ally and warning him to leave the country. Mr. Diaz made his way to the Washington, D.C., area where many others from his town had settled, attracted by a booming construction industry. He started sending home several hundred dollars a month to his wife to care for their five children. He has been home just once, for about a year in 1995, but wages were too low to make a go of it, says Mr. Diaz, who is now 54. He returned to the U.S. and was later joined by two sons who became his partners in a flooring business. Another burst of Ciudad Barrios natives, who worked in the region's coffee fields, headed for the U.S. starting in 2000 when coffee prices plummeted. Francisco Membreno, once a Ciudad Barrios coffee farmer, left his pregnant wife in 2000, worried that he wouldn't be able to support his newborn. He hasn't ever been back to meet their son, Ronald, who's now 6 years old. Mr. Membreno works two jobs cleaning offices in Washington, D.C., making $575 on a good week, and sharing an apartment with another Salvadoran. Each month he sends home about $300 to his wife, Ernestina Argueta, who moved with Ronald to her parents' sweltering concrete house lit by a single light bulb. The money goes for food and medicine mostly, says Ms. Argueta, with a little left over to save to expand a tiny plot of land her husband purchased and hopes someday to cultivate. Though her elderly mother dreams of a new sewing machine, Ms. Argueta says, "For now, we're not buying anything, until he comes back." About one-third of the 40,000 residents of Ciudad Barrios and surrounding hamlets receive remittances, estimates Claudia Rodriguez-Alas, an American University researcher who has studied the town. Salvadorans abroad typically share apartments, keep each other current on job openings and lend relatives at home the $5,000 or so necessary to pay "coyotes" to guide them illicitly across Mexico to the U.S. In Ciudad Barrios, monthly remittances average about $157 a household, according to Ms. Rodriguez-Alas. That's slightly more than the government calculates is enough to feed a family of four. But it often doesn't pull families above the official poverty line of $275 a month. Essentially, remittances are sufficient to push families out of extreme poverty, but not much higher. The extra cash does have beneficial effects. It gives even the most destitute families the means to pay for food at the town's markets, and is extra disposable income for those who work. Salvadoran families that receive remittances are more likely to keep their children in school than other families, according to a study by two economists, Alejandra Cox of California State University, Long Beach, and Manuelita Ureta of Texas A&M. Better-off Salvadorans abroad often send two checks a month -- one for their family's daily expenses, and another to save up to buy small homes with luxuries such as glass windows, electricity in every room, steel gratings on the doors and windows, and tile floors. A small consumption boom fed by the checks has doubled the number of businesses registered with the Ciudad Barrios City Hall to 220 since 2000, and even helped prompt the opening of a "cyber cafe." Around the town's central square are five financial institutions that handle remittances, including Western Union, which also advertises on highway overpasses on the way to town. One hardware store, Agro Ferreteria Rivera, has carved out an unusual niche: The couple that owns the store travels monthly to Maryland to take orders for homes sketched out by migrants, who wire payments to their families. A separate appliance store takes orders by cellphone from abroad, while a city council member sells solar panels for homes built in fields that lack electricity hook-ups. Some of the new homeowners also get their fences electrified for extra security. The gains in consumption financed from abroad could fuel the economy. But paradoxically, the easy money from remittances leads to a fall, rather than a rise, in domestic savings as a percentage of gross domestic product. The investment rate as a percentage of GDP stagnates as well. The result: The country makes little progress. Between 1999 and 2005, remittances doubled to $2.8 billion, but the country limped along at an annual growth rate of just 2.4% -- far too low for a poor country to advance much. The tide of money from abroad boosted the value of its currency compared with that of its neighbors by nearly 50% between 1992 and 2001, which damaged exports. El Salvador has since adopted the dollar as its currency, but competition from China has intensified and other Central American nations have kept their currencies undervalued, so Salvadoran exporters haven't recovered. Soaring remittances have boosted real-estate prices to levels that locals without outside help can't afford, while reducing the incentive of remittance recipients to work at home -- since wages are a pittance compared with what their relatives make in the U.S. In Ciudad Barrios, the coffee-growing cooperative recruits Nicaraguans and Hondurans to work the fields, because they can't find enough Salvadorans to fill jobs that pay between $5.50 and $8 a day. Elsewhere, the same pattern occurs. Examining Mexican labor data, economists Catalina Amuedo-Dorantes of San Diego State University and Susan Pozo of Western Michigan University say that a boost in remittances prompts men to cut back their hours at salaried jobs and fill in with informal work. Groups of Salvadorans abroad do form associations to help finance municipal improvements back home. In Chinameca, a town near Ciudad Barrios, for instance, migrants have helped to pay for the town's water tower and for the roof on a local church. But the efforts have fallen well far short of the need. Economists say that El Salvador and other remittance-receiving nations must figure out ways to route money from abroad into domestic investments. The Salvadoran government, for instance, wants to create investment vehicles for Salvadorans abroad to bankroll domestic projects or industries. In that vein, Salvadoran developers are holding fairs around the U.S. to try to make it easier for migrants to buy real estate. A Washington, D.C., financial company, Microfinance International Corp., is starting to offer Salvadorans transnational loans, which they can use to make investments in El Salvador and make payments in the U.S. -- and avoid having to pay fees on money wired home. Since many Salvadorans don't use banks or credit cards, the company's customers can use their remittance history to prove their creditworthiness. In Ciudad Barrios, Lorena Romero, the acting manager of a local credit union, says only a tiny percentage of remittance receivers take out business loans. Even those often use the proceeds to pay coyotes to take them to the U.S. instead of opening businesses locally. Another credit union called AMC, which does business throughout eastern El Salvador in conjunction with Microfinance International, says just 1% of its remittance customers take out loans for businesses. Wilson Salmeron, AMC's general manager, says many migrants don't invest in El Salvador because they're afraid their families will become targets of gang violence. One of the reasons that many nations have come to depend so heavily on remittances -- Haiti, Bosnia, Serbia, Honduras, Nicaragua -- is because people were frightened away by war, and their nations are still torn by violence. In Ciudad Barrios, many remittance recipients try to avoid calling attention to themselves. Some pick up their cash in neighboring towns where they aren't known. Others pace their purchases of appliances, so their neighbors don't notice. The latest gang tactic is to call remittance receivers on their cellphones and extort cash instead of doing it in person. Some in Ciudad Barrios won't answer calls from numbers they don't know. The fear damps local investment, too. Mr. Salmeron says his credit managers are afraid to travel into the countryside where gang influence is strong. A number of migrants say they wouldn't start a business in Ciudad Barrios for fear they'll draw unwanted attention. "You'll be robbed," says Dora Ruiz, a cook at a Washington, D.C., McDonald's restaurant, who wires $200 a month to care for her four children who live with her sister-in-law. "People will come in through the windows if need be." At Ciudad Barrios' sole high school, students recognize one important benefit of remittances: They aren't forced to drop out of school to work, as their parents were. The senior class this year is triple the size of a decade ago, says the school's assistant principal, Lex Marvin. But some now leave early to join parents abroad, and few see much opportunity in El Salvador after graduation. Jose Ines Aguilar Osorio is a shy, slender senior whose father works as a mason in the U.S. "If I don't find work here," he says, "I'm leaving." --- John Lyons in Mexico City contributed to this article.

Estonia is the best model for growth that Armenia should follow. They don’t get institutional investors from Western Europe investing there. They have implemented corporate governance systems that are in par with European countries. I just came across this article about hedge funds operating in Armenia. How many private equity funds or hedge funds do you know in Armenia? To my knowledge there are none. In order for the country to prosper the financial sector of the economy should have more leverage on overall development. The money transfers from diaspora should not be in the form of donations or active investments, but can be in the form of institutional investments. Remember when Israel was found the government issued Israeli bonds (I am not sure about the name), to finance the operations of the country. There are a lot of Armenians in investment banks in US who hold high positions (one of the top guys in CSFB private equity is an Armenian from Yerevan, also the head of sec lending group in Dresdner bank is also an Armenian, the list is pretty long). The Armenians in these institutions should promote the investment opportunities to their clients. Here is the article about Estonia. Estonian hedge fund manager LHV Financial Advisory Services becomes GILD Bankers 10/31/2006 12:34:39 PM - Nordic News The Estonian LHV Financial Advisory Services, a former subsidiary of the LHV Group, has become an independent investment bank under the name GILD Bankers. The investment bank will retain an institutional focus and have a significant focus on alternatives, including hedge fund management. The Estonian LHV Financial Advisory Services, a former subsidiary of the LHV Group, has become an independent investment bank under the name GILD Bankers. The investment bank will be targeting institutional investors and have a significant focus on alternatives, including hedge fund management. The company sees its new corporate structure and identity as a logical result of expansion: “Our independent teams in the Baltics and Ukraine have grown to the point where more differentiation was needed,” said Rain Tamm, managing partner at GILD. GILD offers a broad range of advisory, capital raising and alternative asset management services. The investment bank is run as a partnership by one of the most prominent corporate finance and investment management teams in the Baltics. GILD manages two hedge funds, LHV Arbitrage and LHV Global Opportunity, and a venture capital fund New Economy Ventures, the latter being closed for new investments. Also, in the area of alternatives, the company co-manages the real estate fund Eastern Europe Real Estate Investment Trust. LHV Arbitrage (LHVA) is a Baltic market-neutral hedge fund, which tries to exploit inefficiencies found in these markets. The fund is the biggest retail option market maker on Baltic equities. These positions together with underlying make up around 10% of the portfolio. Approximately half of the portfolio has been invested in tailored, structured fixed income deals, including buyout financing, mezzanine, bridge loans, convertible loans and contractual agreements. LHVA earns on average 20-30% p.a. fixed return on such investments and participates in the potential upside. To a lesser extent, LHVA also makes private equity-like investments. LHVA has exposure to real property market, agriculture, consumer financing, production, entertainment and wholesale businesses. The fund has an annualized net return of 25% since its launch in 2001, with an annualized volatility of 8%. LHV Global Opportunity (LHV GO) is a multi strategy hedge fund, which invests a part of its portfolio in other global hedge funds, therefore being partly a fund of hedge funds.The majority of the fund’s portfolio is, however, made up by Baltic direct investments, mostly asset based loans and convertibles issued by local real property and pre-IPO companies. LHV GO targets annual return above long-term stock market returns, but with lower volatility and infrequent negative monthly returns. NEV has made some of the landmark venture capital investments in the region. These include CVO Group – the leading integrated recruitment and HR outsourcing company in CEE and ONE Ltd – the leading Baltic social network. “Although the market size is limited, there are plenty of lucrative opportunities that GILD hedge funds can exploit” as concluded by Mihkel Oja, one of the fund managers at GILD.