By Atom Markarian
Germany will provide at least 57 million euros ($74 million) in additional assistance and loans to Armenia’s energy and banking sectors in the next few years, Finance and Economy Minister Vartan Khachatrian announced on Friday.
He said agreements on the release of the funds were reached during last week’s meeting in Berlin of a German-Armenian intergovernmental commission on economic cooperation. Khachatrian is the Armenian co-chair of the commission.
Most of the promised money will be channeled into Armenia through the state-owned German bank KfW which will concentrate on helping the country tap its substantial hydro-electric power resources. Khachatrian said KfW will loan 20 million euros for the refurbishment of a hydro-electric plant near Yerevan which is owned by Russia’s Unified Energy Systems utility.
He told reporters that the Germans are also ready to spend between 12 million and 24 million euros on the planned construction of a big hydro-electric plant in northern Armenia. The project is estimated to cost 80 million euro. The Armenian government hopes to raise the rest of the money needed for its implementation from other Western donors, notably the European Union.
Khachatrian admitted that the assistance reflects the EU’s efforts to speed up the closure of the Metsamor nuclear power plant which the Europeans believe does not meet modern safety standards. Visiting Yerevan a year ago, German Foreign Minister Joschka Fischer expressed concern about Metsamor’s continuing operations and renewed EU calls for its decommissioning.
The Armenian government has made it clear, however, that the plant will remain operational until it finds alternative sources of cheap electricity. Armenia’s fast-flowing mountainous rivers are considered one of those sources.
According to Khachatrian, KfW will also disburse 15 million euros worth of fresh loans to small and medium-sized Armenian businesses through a local commercial bank. The German bank has already spent more than 100 million euros on the scheme over the past decade.
Khachatrian and the German government will directly provide 10 million euros in additional assistance, the bulk of which will be used for the development of Armenia’s fledgling mortgage market. “The idea is to help people with stable income receive mortgage loans repayable in 20-25 years,” he explained. “We especially hope that young people, young families will benefit from the scheme.”
Germany, seen as Europe’s economic powerhouse, has been the single largest contributor to the EU’s separate aid to Armenia that has totaled 380 million euros since 1992.
Berlin, as it turned out on Friday, is not happy with the way in which the Armenian authorities have used the multimillion-dollar German aid. The Armenian parliament’s Oversight Chamber, concluded in a recent report that part of the aid was mismanaged and even embezzled by senior officials in Yerevan. Its chairman, Gagik Voskanian, also attended the meeting of the German-Armenian commission.
“There have been some serious shortcomings,” Voskanian said. “That is why KfW representatives wanted me to take part in the negotiations so that we could jointly discuss how to eliminate those shortcomings.”
Voskanian added that the authorities have investigated some of the Oversight Chamber’s findings and several government officials have been prosecuted as a result. But he refused to name any of them.
(Photolur photo: Vartan Khachatrian.)