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Armenia: Turkish Firm Pioneers Business

Turkish companies don't usually see Armenia as an exciting export market. A troubled past deeply divides the two neighbors and bedevils economic relations. But as Turkish businessmen Erdal Saral and Kerim Kalafatoglu told our correspondent in Yerevan, however, that's not the way things have to be. As Emil Danielyan reports, the businessmen say that once Turkey opens its border with Armenia, trade will flourish.

Yerevan, 29 July 1999 (RFE/RL) -- Turkish businessmen Erdal Saral and Kerim Kalafatoglu defied conventional wisdom three years ago when they opened an Armenian branch of their Turkey-based KalGroup International. KalGroup is the largest of a handful of Turkish firms operating in Armenia.

Saral and Kalafatoglu were hoping to capitalize on what they see as a natural economic relationship between the two neighbors. But political events have thwarted their ambitions.

Turkey closed its border with Armenia in 1993 and has made re-opening it conditional on Armenia's acceptance of Azerbaijani sovereignty over the disputed enclave of Nagorno-Karabakh. This stance has resulted in the absence of direct Turkish-Armenian trade, with small-scale exchange carried out through third countries.

Still, the two remain optimistic. Saral told RFE/RL in the company's Yerevan office recently that the future of economic cooperation looks rosy. He says once the border is reopened, this will give a strong boost to bilateral trade and investments. Headquartered in the Turkish Black Sea port of Trabzon, KalGroup is mainly involved in worldwide cargo shipments. In Armenia, it specializes in wholesale foods exported from Turkey through Georgia.

Saral says the Georgian route works, but it's expensive. The company has to pay $3,500 per truck to deliver goods via Georgia. To send a truck from Trabzon directly to Yerevan would cost less than $1,000.

He also says the Georgians change their laws every day and enforce them at will.

According to the two, Turkish manufacturers are becoming increasingly interested in Armenia. They say that each week they are approached by Turkish journalists to give an interview.

Turkey's business community has reportedly lobbied for direct cross-border commerce, but Ankara remains adamant in linking the border issue with progress in the Nagorno-Karabakh peace process.

KalGroup says much also depends on Armenian authorities. The company says the Armenian government has done little to create a stable business environment for foreign investors. Kalafatoglu said if there were 100 Turkish businesses in Armenia, instead of a handful, the Turkish government would look at the border issue in a different way.

Both men deny that there is any overtly anti-Turkish sentiment in Armenia resulting from the World War One-era genocide in Turkey in which hundreds of thousands of Armenians were killed or expelled from the country.

Saral says that's a matter for the historians -- not businessmen -- to work out.

KalGroup is betting on economic common sense to prevail.

The company's construction division is currently involved in a costly project to renovate Yerevan's biggest hotel.

KalGroup is also looking for an Armenian partner to jointly participate in the planned privatization of Trabzon's port. He says the port could become land-locked Armenia's most economically viable conduit to the Black Sea.

Bids for the Trabzon port will likely open in December. KalGroup reckons that it can be bought for $15 million.