Nairit Chemical Plant Director Arrested

YEREVAN (Noyan Tapan–RFE/RL)–Executive Director of the Nairit Chemical Plant and the acting chairman of the Democratic Motherland Party Gagik Nersisian was arrested on October 12.

According to Aravot daily reports–Gagik Nersisian is now hospitalized as his health condition has deteriorated. According to the same source–the Political Council of the "Democratic Motherland" Party has asked the Prosecutor General to alter the preventive punishment in relation to Nersisian and let him at large on a written undertaking not to leave the place.

The state-owned Nairit factory–the flagship of the Armenian chemical industry–is fighting for survival under a crippling burden of debts to the government budget and energy sector. The chemical giant located in the southern outskirts of Yerevan was once the main producer of rubber in the former Soviet but now languishes in a state close to bankruptcy–operating at a fraction of its capacity. The government blames the long crisis gripping Nairit on its chief manager–and has launched criminal proceedings over an alleged mismanagement.

The employer of 4000 workers owes more than $30 million in unpaid taxes and electricity bills. The government’s austerity measures approved by the parliament in August include a $9 million rescue loan to Nairit so that it can cover part of its huge debt to the energy sector. The loan was specially agreed with the International Monetary Fund–indicating Nairit’s impact on the overall economic situation in Armenia.

The government’s rescue plan calls for a "radical change" in Nairit’s management strategy. This involves abandoning the "unclear and damaging" barter exchange with other struggling enterprises in the Commonwealth of Independent States. Despite its adverse effects–the barter has kept the factory going since the collapse of the command economy and erosion of ties with traditional partners.

The economic crisis in Russia–the main market for Armenian rubber–dealt another severe blow to Nairit. But as the Russian economy shows signs of recovery–the company obtains a chance to regain ground. Gagik Nersisian–its director general–said a Russian firm has ordered 1500 tons of rubber from Nairit and–what is equally important–to pay in hard currency. The factory currently produces 8000 tons of the chemical material per annum. It still has to cope with what Nersisian described as "insolvent demand" in the CIS. Barter may again be a solution but it "wrecks both our and their economy," he said.

Nersisian spoke to RFE/RL before his unexpected arrest on Tuesday on charges of "abuse of power" that led to "dire consequences." He was taken to hospital the next day with serious heart problems. Police officers guarding him refuse to allow his contacts with the press.

Nersisian is a senior member of the opposition Democratic Fatherland party. One of its leaders–former parliament deputy Petros Makeyan–told RFE/RL on Thursday that he does not yet see any political motives for the arrest and prosecution. But he dismissed the criminal charges as groundless.

The serious financial problems facing Nairit are part of a wider picture in Armenia’s industrial sector. Their cumulative debts incurred by big enterprises may already be as high–if not more–as the government’s annual budget revenues. Nairit’s sheer size makes its recovery particularly important. Its success would mean a stable source of income for thousands of families in the unemployment-stricken Armenia and substantial paymen’s to the budget.

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