World Bank Chief Urges More Investment in Armenia

NEW YORK (RFE/RL)–The president of the World Bank–James Wolfensohn–urged Thursday Western companies to invest more heavily in Armenia–saying that its authorities are committed to free-market economics. Wolfensohn said despite the economic decline of the past decade the country offers potential investors many opportunities and can even become a regional "technological hub."

The official spoke on the second day of a major international conference in New York on investment opportunities in Armenia. Wolfensohn’s presence at the conference–organized by the World Bank and the US government–is seen as another sign of the bank’s support for Yerevan’s policy of economic reform.

"We must support that country," he told more than two hundred senior company executives attending an official dinner for the participants of the forum. Organizers say the stronger than expected participation in the conference of major American and European companies testifies to growing international business interest in Armenia.

President Robert Kocharian–also in New York to promote badly needed investmen’s in the struggling Armenian economy–addressed the participants earlier on Thursday–pledging to improve the business climate and combat "strong bureaucratic obstruction and the evil of corruption" in his country.

The second day of the forum saw the signing of the first investment deal when representatives of the World Bank’s private investment arm–the International Finance Corporation (IFC)–and the US Overseas Private Investment Corporation (OPIC) approved $3.6 million and $18 million respectively in loans and investmen’s to Yerevan’s largest hotel. The money will support a $36 million plan to renovate Armenia Hotel–which is owned by a group of Armenian-Americans and is currently managed by Marriott International. Marriott has made $3 million available for the project–while the owners will contribute $10 million. The parties signed a corresponding agreement in the presence of Wolfensohn and Kocharian.

IFC head Edward Nissim said the deal will help boost investor confidence in Armenia. He said the course of the conference has so far been very encouraging. "I am absolutely delighted so far–my expectations have been exceeded," Nissim told RFE/RL.

The participants split into several discussion panels in the afternoon–focusing on their specific areas of interest. Private Armenian firms seeking capital investmen’s and export markets presented their business proposals to potential partners. Twenty-two such projects are up for consideration.

The total amount of foreign direct investmen’s (FDI) made in the Armenian economy over the past decade stands at a modest $600 million–two thirds of that attracted in the last four years. Economists view a drastic rise in FDI as the only realistic way of getting the country out of a protracted stagnation. Many of them link economic recovery to the success of international efforts to end the conflict over Nagorno-Karabakh.

The presence in the conference of the chief US negotiator on Karabakh–Ambassador Carey Cavanaugh–underscored the issue’s importance to Armenia’s economic development. "I want to talk about the importance of a peace agreement [with Azerbaijan] for greater investment in Armenia," Cavanaugh told RFE/RL. The diplomat was due to deliver a speech to the participants on Friday.

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