|                                                                                                                                                             |  | REGIONAL CORNER: SHIRAK PROVINCE, ARMENIA                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
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|**BISNISHome PageSearchBISNISEmbassyReportsCountryReportsIndustryReportsPublicationsSourcesof FinanceLeadsand EventsExchangeRatesState ExportsOtherSources** |  | July 1997by Armen Vahradyan & Andrew HovhannisyanArmenia's Shirak Province is a region with a mixed industrial and agricultural economy in the
northwestern corner of this Caucasus republic.  Shirak has a population of 310,000.  It is one of
11 provinces established in 1996 as the result of changes in the country's administrative
subdivisions.  A number of U.S. Government and World Bank financial programs support
investment in Shirak Province.Covering 1,019 square miles, Shirak has a 40 mile-long border with Turkey in the west and a
somewhat shorter border with Georgia in the north.  The climate is continental, with hot summers
and severe winters--low temperatures reach minus 4-11 degrees Fahrenheit.  Shirak's capital,
Gyumri (formerly Leninakan), is the second largest city in Armenia and has a population of
211,000.1988 Earthquake
Shirak Province suffered heavy damage in a 1988 earthquake, which severely damaged the
provincial capital and hundreds of small villages around it.  Rehabilitation has proceeded slowly,
supported largely through a World Bank rehabilitation loan, which will fund the construction or
renovation of approximately 1.6 million square feet of housing, as well as a few industrial facilities
by the year 2002.The province has 68 medium-sized and large enterprises, including 18 apparel, 6 machinery, 13
electronic, and 16 food processing companies.  Most of these firms were heavily damaged by the
1988 earthquake.  The medium- and large-sized manufacturing facilities are undergoing
privatization.  More than 500 new small private firms are mainly involved in importing and
retailing foodstuffs and consumer goods.  Eighty percent of the region's industry is located in
Gyumri.The province's natural resources include various types of building stone, including tuf, granite,
and basalt, as well as largely unexploited coal reserves estimated at 400-500,000 tons.  Shirak's
second largest city, Artik, is known for its deposits of tuf.  The state enterprise Artiktuf, once a
major building stone exporter, is rehabilitating its facilities.Thirty-two percent of Shirak's land area is arable. The province's main agricultural products are
corn, potatoes, and other vegetables. In 1996, Shirak Province produced 44,500 tons of potatoes
and 73,000 tons of grain.Two road and rail transportation corridors currently link Shirak Province to foreign markets: one
via Georgia to the Black Sea port of Poti (see BISNIS Bulletin, June 1997, Page 7), and a
second, also via Georgia, to the Turkish port of Trabzon.  Shirak International Airport in Gyumri
is under utilized, although a subsidiary of Armenian Airlines operates several flights a week to
destinations in Russia and the United Arab Emirates.Financing
The relatively new private Armenian banks are not strong enough to provide long-term project
finance for projects in Shirak.  Several international finance projects have been designed to
address this problem until national financing mechanisms are established.  In 1997, the Eurasia
Foundation will expand implementation of a U.S. Agency for International Development
grant/loan program for small and medium-sized enterprises.  A similar program will be
administered by the U.S. Department of Agriculture for Shirak's agricultural sector.  Both
programs will make loans ranging between $25,000 and $50,000.Larger Shirak companies are counting on private foreign investment, as well as a new $16.7
million World Bank enterprise development loan.  Of this total, $4 million is allocated to pay for
technical assistance and $11 million is for lending (with a $500,000 ceiling per loan). A similar
program is being developed by the European Union. At the same time, two U.S.
Government-supported funds targeted at the countries of the Caucasus are expected to begin
operations in 1998 and provide financing and guarantees to projects involving U.S. companies
and procurement of U.S. products. For more information on Armenia's Shirak Province, visit
BISNIS Online at www.mac.doc.gov/bisnis/cables/970408am.htm.Armen Vahradyan represents BISNIS in Yerevan.  Andrew Hov-hannisyan is with the U.S.
Commercial Service in Yerevan.This report is provided courtesy of the Business Information Service for the Newly
Independent States (BISNIS)