Assistance Policy for the Republic of Armenia

December 2012

1. Relevance of assistance to the recipient country
         After gaining independence in 1991, Armenia has generally achieved steady economic growth as a result of reform efforts towards the transition to market economy, and in 2002 it joined the World Trade Organization (WTO). With a population of approximately 3 million people and up to 7 million Armenians living abroad (Diaspora), Armenia has constant influence internationally. As Japan’s partner in the Caucasus region, which occupies an important location as energy and logistics corridor linking Central Asian countries, Caspian Sea region and Europe,  Armenia shares with Japan the basic values and institutions such as freedom, democracy, basic human rights, the rule of law and market economy, and the two countries cooperate in the international arena.
        On the other hand, in Armenia, where 60% GDP is concentrated in Yerevan, the capital of the country, the gap between urban and rural areas is expanding. In particular, after the global financial crisis in 2008, poverty rate in rural areas has been growing rapidly. Also, much of the electricity and road infrastructure, which was set up in the Soviet era and has become decrepit, is a factor inhibiting further economic and social development. Besides, in Armenia, which is an earthquake prone country, the improvement of disaster prevention system is a matter of great urgency.
        In these conditions, Japan’s assistance to Armenia in the framework of Official Development Aid (ODA) will not only help solve the problems this country is facing, but also make the cooperative relationship between Japan and Armenia stronger. In addition, it will also lead to strengthening the diplomatic influence of Japan in the international community and achieving stability in the whole Caucasus region which locates in an important geographic place.

 

2. Basic Policy of Assistance: Achieving Balanced and Sustainable Economic Growth
        The government of Armenia has drawn up a government development strategy on the basis of Poverty Reduction Strategy Papers (PRSP) with an aim to achieve rapid and sustainable economic growth, implement social policy, increase the efficiency of governance in public sector and so on.  In order to help attain “sustainable growth”, stipulated in this Strategy as a goal of high priority, Japan’s cooperation focuses on such areas as improvement of institutions and infrastructure that contribute to balanced economic and social development including in the provinces, and disaster prevention measures.

 

3. Priority Areas
   (1)  Improvement of institutions and infrastructure for economic growth and regional development
        The background of 60% concentration of the country’s GDP in the capital city is explained by the fact that many of the rural areas are located in the mountains, therefore access to such areas is not easy; the productivity of agriculture as the region’s main industry is low, and no other major industry apart from agriculture is developed and so on. With an aim to stimulate the region’s economy Japan provides assistance in maintaining the basic infrastructure such as power grids, which are the foundation of economic activity and civic life, and also in creating employment opportunities. In addition, Japan offers assistance in personnel training for promoting the development of small and medium enterprises.

   (2) Strengthening of disaster prevention measures
        Being part of the Alpine-Himalayan belt, Armenia with most of its territory covered by mountains is a country with many active faults which frequently suffers from earthquakes. Therefore Japan offers its experience and technologies in the sphere of disaster prevention and provides assistance in such fields as personnel training to improve Armenia’s disaster management capacity.

 

4. Points to be considered
        In Armenia, where the US, Germany, France, the World Bank, the International Monetary Fund (IMF) and other international organizations also provide assistance, close information exchange and coordination with these other donors are necessary in order to avoid overlapping of activities and offer efficient and effective support.

 

 

Appendix:  Japan’s ODA: Rolling Plan for the Republic of Armenia (on the process of revision)