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EU CAN SHUT DOWN ARMENIAN NPP AND OPEN KARS-YEREVAN-BAKU COMMUNICATION

Below is an interview of Coordinator of the European Union's program in Armenia Sebastien Dubost to the ARMINFO news agency.

Q: On what principles are the EU-Armenia relation are built?

A: The European Union is using several mechanisms for implementing its programs in Armenia and other countries of the region. One of them is the food security program, which is aimed at supporting the budget and has nothing in common with humanitarian assistance. We are assisting the Ministry of Agriculture and the Ministry of Social Security by allocating funds for structural reforms. Naturally, we hope that the Ministry of Agriculture will develop food production and the Ministry of Social Security will provide food to vulnerable sections of population. Quite a powerful financial channel has been created through which Armenia yearly receives 10mln. euro from the European Union.

Another mechanism is called ECHO and is restricted to humanitarian aid tasks. The program played an important role in 1993-'95. In the course of time its importance was diminished, as the main emphasis was shifted to development tasks. However, in 2000-2001, under ECHO the EU supplied to Armenia food, fodder and seeds worth a total of 2mln. euro

The third mechanism of assistance is financial grants. Armenia yearly receives 5-5.5mln. euro for covering the budget deficit. Such grants allocated to Armenia now total 30mln. euro. Their mechanism is different from the financial assistance rendered by other international organizations. Each next grants is allocated only if Armenia covers part of its debt to the EU and fulfills its structural reforms commitments.

The debt was formed because of the EU's 28mln. euro credit Armenia received in 1997 for covering its budget deficit. Today, Armenia has 16mln. euro to repay. In January Armenia repaid 7mln. euro as scheduled repayment. This year Armenia has another 7mln. euro to repay, and then the EU will transfer the next grant.

Q: What tasks is the TACIS program fulfilling now?

A: It is one of the biggest mechanisms of the EU's assistance. The program mostly deals with technical support problems, but it also includes elements of investment, which are increasing year by year. TACIS is implementing both national, international and regional projects, for instance, TRACECA and INOGATE. The enhancement of safety of the Mestamor nuclear power plant is regarded as a regional project as well.

Every two years EU representatives and the Armenian government determine the main lines of activities under the TACIS program. Seven or eight urgent issues are normally submitted to discussion, and 3-4 most urgent are selected. The projects being implemented in Armenia now are financed from the 2000 budget. At that time preference was given to administrative reforms, private sector development and energy.

The 2000 budget provides for 4mln. euro for the reconstruction of Armenian hydro-power plants. The works, which is to begin soon, will be focused on Argel and Tatev Hydroes. Besides, in 2001, the EU allocated 11mln. eur for the enhancement of safety of the Armenian NPP and technical assistance to ArmStateAtomControl.

In 2000-2001 the TACIS budget was 10mln. euro. Similar sums were budgeted for the next 2 years. It is difficult to call the exact amount of funds Armenia has received during the ten years the TACIS program has been implemented, as it includes a number of international projects as well. The approximate sum is 100mln. euro. The total assistance rendered to Armenia by the European Union is 300mln. euro.

Q:Does the European Union insist on the shutdown of the Armenian NPP in 2004, as before. And what alternative is proposed?

A: It should first of all be noted that the EU was not the first to raise the issue of shutdown of the Armenian NPP. It was the Armenian government itself that, in 1995, requested us to render assistance in putting the nuclear power plant out of operation, fixing the year 2004 as a deadline. In December 1998, a task group was formed, which included representatives of the European Commission and the Armenian government, to find the most acceptable solution. Experts on both sides arrived at the conclusion that the Armenian NPP could be shutdown only if Armenia would create reliable alternative sources of energy. Of course, it will require considerable funds which can only be received with the assistance of international organizations.

What steps have been made in this direction? An agreement was reached under which Armenia, the European Commission, World Bank, EBRD, and the US Agency for International Development are to elaborate an alternative investment program by the end of April 2002. If all the aforementioned sides approve the program, it will be officially accepted for execution. Thereafter, a conference of investors is to be convened, where Armenia is supposed to state its readiness to shut down the NPP and present the calculated volume of assistance necessary for creating compensating power capacities. It has been stated that the EU will allocate a 100mln. euro grant to the general fund. This money is of course not enough. It is difficult to say now what other investors will offer. The Armenian government must decide whether the allocated funds will be sufficient for the NPP to be shut down. Thereafter the Armenian government is to confirm its commitments on the shutdown of the NPP after the time necessary for the construction of new power capacities expires. We hope that the previously fixed term, 2004, will remain in force.

Q: Can the construction of a new NPP in Armenia be included in the program of alternative energy sources?

A: A good question. I can only say that such a decision is not on the agenda now. Studies were conducted which testify against the economic expediency of constructing a new NPP in Armenia. Seismic hazards are also a serious factor. It is quite obvious that the European Commission will not finance such a project.

Q: You mentioned the TRACECA and INOGATE projects, which are much spoken of in Armenia. There is an impression that our country is involved in them as a stepdaughter. Is it really so?

A: I assure you that it is an erroneous opinion.

Q: Then tell, please, how much is Armenia involved in the TRACECA project, and what is the European Union doing for resuming the Yerevan-Nakhichevan-Baku railway communication?

A: I will first of all point out that Armenia is a full participant in the TRACECA project. It is main goal is not repair of transport trunks, but creating a corridor for unimpeded transportation of passengers and cargoes from Europe to Central Asia via the Caucasus, and vice versa. For you to form the right idea of the tasks assigned under the projects, I will tell you that it is, for instance, aimed at harmonizing border procedures. The EU is rendering assistance to Armenia in settling this issue. In general, your country receives comprehensive technical assistance.

TRACECA is funding the preparation of the feasibility report of the restoration of the Yerevan-Tbilisi and Tbilisi-Baku highways. After receiving the results of this work, Armenia can apply to the World Bank or other international donors for funds for implementation of the project.

Out of the completed projects I will single the construction of a cargo terminal at the Karmir Blur railway station, which cost 1.5mln. euro. Similar work is planned in Giumri.

I would like to draw you attention to the fact that any investment in the reconstruction of port facilities in Poti and Batumi is of benefit not only to Georgia, but also to Armenia, Azerbaijan, Turkmenistan, that is, to all the countries whose cargoes are transported through these ports.

I understand the concern over Armenia's participation in TRACECA. At first sight, your country does not seem to be located in the main corridor, rather in one of the branches. But today the issue of opening the Kars-Giumri-Yerevan-Nakhichevan--Baku railway is under consideration. The EU has budgeted 2mln. euro for the elaboration of the feasibility report of the project. However, for it to be implemented, Armenia, Turkey and Azerbaijan must reach understanding. The EU is helping these countries to find common ground and hopes for success, after which the works will be started.

When the Kars-Yerevan-Baku railway is put into operation, Armenia;s transit role will become more important. The restoration will not require much funding, as the railway is in good state of repair. By the way, the funds allocated by the European Union are also indented for elaboration of the feasibility report of the Abkhaz section.

Q: How are things going with Armenia's participation in the international project of oil and gas transportation to Europe, INOGATE?

A: This project is as important to Armenia as TRACECA. One of its tasks is modernizing the gas-supply infrastructure in the country. Today, Armenia is fully dependant on the gas pipeline running through Georgia. INOGATE is financing the maintenance of the this pipeline. 1.5mln. euro were allocated for the construction of a gas-metering unit at the Armenian-Georgian border, which will be up to the best European standards.

In 2003, the European Union will purchase emergency service vehicles with special equipment for repairing the gas pipeline running to Armenia from Georgia. The INOGATE project also provides for a partial reconstruction of the underground gas storage in Abovian.

Q: Is the connection of INOGATE with the Iran-Armenia gas main possible?

A: This issue was discussed at the tripartite meeting Armenia-Iran-European Commission. The European Commission expressed its readiness to render its assistance in the construction of the Iran-Armenia gas main, as well as assist Armenia in implementing the project. The main difficulty is that Iran and Armenia have not yet reached an agreement on commercial issues. The European Commission's interest in the Iran-Armenia gas main is in its ensuring reliable additional gas supply to Armenia and accelerate the shutdown of the Armenian NPP. Any possible laying of this main on northward or westward will not run contrary to the principles of the European Union. We are for multipronged nature and not politicizing the problem. The most important thing is economic expediency of the projects.

7 March, 2002
Alexander Melkumian, ARMINFO