ARMENIA IN THE GRIP OF GAZPROM

A report published by the Gallup research centre in late May dropped like a bombshell. According to the results of a poll conducted by this authoritative sociological service, 62 per cent of residents of Armenia, a traditional outpost of Russia, have a negative attitude to Russia's state policy. Russian and Armenian experts admit that this upsurge in anti-Russian sentiment was provoked by Gazprom's decision to start supplying gas to Armenia at European prices from 2011.

The review of the terms of the 25-year agreement, which was signed between Gazprom and the Armenian government on 31 March 2006 and set a price of $110 for 1,000 cubic metres of natural gas until 1 January 2009 (against the previous $56), was expected.

In isolated and underdeveloped Armenia, which does not have its own natural gas, the Kremlin's decision was taken extremely unfavourably, although Yerevan realized a long time ago that the incredibly low prices for imported Russian gas cannot last forever and will be reviewed after a new government is formed in the country.

The new government was formed in April, and on 1 May, the Cabinet of Ministers stopped subsidizing gas prices. Many enterprises took advantage of the situation and jacked up gas prices, which pushed up public transport fares in regions of Armenia. The "gas tariff" is also part of the cost of all goods and services.

Of course, the government's decision was a blow to residents of regions which lag behind Yerevan in their development. Specifically, young people in the town of Armavir openly said that if there are no new jobs, they will have no money to pay for gas. "We cannot make money anywhere, there are no jobs, and how shall we pay for this?" representatives of the local youth told the A1+ TV channel in an interview. Some of them have decided to leave Armenia, because they are sure that the increase in gas prices will be followed by an increase in prices for other consumer goods.

Pensioners have already called the price hike "barbarism". "They promised that life would get better, but now the life of the poor is getting worse," they said indignantly. According to the pensioners, in winter they had to spend all their pensions on gas.

Understanding that it will be impossible to coax Moscow this time, Yerevan is now making efforts to defer the payment of its debts or at least secure a smooth rise in prices, hoping to soften the "blow" to the socially-vulnerable category of citizens. There is simply no money to compensate for such a big difference in the prices of the purchased gas and the gas consumed by the population - the state budget is hardly enough to maintain the country.

Moscow understands this as well, which is why Gazprom said that "the change in gas prices for Armenia will be gradual due to the high level of strategic cooperation and the strengthening of Gazprom's positions in this country". Armenian President Serzh Sarkisyan personally intervened in the matter, receiving Gazprom President Aleksey Miller in Yerevan on 19 May. However, Moscow did not change its position significantly. The arguments of Prime Minister Tigran Sarkisyan proved ineffective as well.

In any case, it could not be otherwise. Back in 1997, Armenia totally "surrendered" to Moscow. It was in 1997 that the ArmRosgazprom company was set up. This company is now the only supplier of natural gas to the republic. The company, in which the same Gazprom owns 72.16 per cent of the shares, has a monopoly on the supply and distribution of Russian gas in the country. The 22.78 per cent stake of the Armenian Ministry of Energy and Natural Resources is just a formality. Besides that, 5.06 per cent of ArmRosgazprom shares belong to another Russian company - Itera, so Yerevan has nowhere to escape.

As a result, the Armenian government had no choice but to accept the new proposal of Gazprom which has already announced the price for 2009. It will probably be set at $165.

It would be naive to expect that the volume of gas consumed in Armenia will fall. In 2007, Gazprom supplied 2.05 billion cubic metres of gas to Armenian consumers, and this year its volume is unlikely to fall unless the remaining part of the population leaves their home in search of normal life. Will they pay with state property again?! With what property?! Everything they had was handed over to Moscow in return for debts a long time ago.

We wonder how the Armenian leadership is going to answer its own impoverished people and get out of the current situation. They cannot give up their status as a Russian "outpost" in the Caucasus. Nor can they "run to the West". The West itself also depends on Russian energy supplies. Maybe, it is high time to give up aggression and territorial claims to neighbouring Azerbaijan and Turkey? Look what another neighbour, Georgia, is doing. They are friendly with their neighbours and always have heat in their homes, even if Moscow turns off the taps completely.