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Armenia: Officials Says Sanctions Will Not Worsen Ties With U.S.

Armenian leaders are playing down the political implications of U.S. sanctions imposed on an Armenian chemical company and a businessman accused of helping Iran develop weapons of mass destruction. They say the penalties will not spoil Armenia's relations with the United States. The two private firms, meanwhile, deny having engaged in any deals with Iran that breached U.S. and international nonproliferation rules.

Yerevan, 21 May 2002 (RFE/RL) -- President Robert Kocharian and other top Armenian officials have been quick to distance themselves from the Armenian biochemical company Lizin after the U.S. State Department identified it as being among 12 foreign entities being slapped with U.S. sanctions.

Kocharian said: "It is not a state-run company, and the state has nothing to do with all that. But we should clarify [the situation]. We already know pretty much what this story is all about and how it happened."

This is why, Foreign Minister Vartan Oskanian explained over the weekend, Yerevan believes its relations with Washington will not suffer from the affair: "I want to once again reaffirm our bilateral and multilateral obligations related to that sphere. The only negative side of this is that Armenia's name is mentioned in connection with the blacklisting of that firm. This could be bad in terms of shaping public opinion, but I don't think this will have any practical negative effects on U.S.-Armenian relations."

Oskanian effectively admitted that Lizin did sell sensitive "products" to Iran last year. More importantly, he revealed that the U.S. had warned at the time that products sold by Lizin could have a dual -- that is, civilian and military -- use. But he said the deal went ahead because such claims "can always be debated" and because Lizin is a private company, free to make its own deals.

Oskanian appeared to refer to last year's sale of a former Lizin factory to a trading company registered in the United Arab Emirates -- the apparent reason for the U.S. sanctions. The Soviet-era factory used to produce lysine, an amino acid used as an additive in animal fodder. It can also be used to produce proteins that enhance blood resistance to nuclear radiation. Scientists say the equipment used in the production process can also make other biological substances.

But it is not clear whether Lizin's production facilities are included in international control lists that seek to curb exports of chemical, biological, and nuclear weapons. According to the Armenian government's Commission on Securities, Lizin was paid almost $102,000 for what its owners claim were obsolete facilities. But other sources familiar with the factory say the equipment is quite sophisticated.

Meanwhile, Lizin's main shareholder claims the company never sold banned technology and equipment to Iran. And Ashot Ohanian, who owns 43 percent of its shares, said in a statement on 17 May that an Armenian businessman who was also blacklisted by the U.S. government, Armen Sarkisian, has never had any connection to Lizin.

Sarkisian issued a similar denial in an interview with RFE/RL: "I have never had any connection with that enterprise. I have never bought that factory; it has never been mine. This is just a misunderstanding."

Sarkisian is the younger brother of Armenia's two former prime ministers. One of them, Vazgen Sarkisian, was murdered in the October 1999 terrorist attack on the Armenian parliament. Armen Sarkisian said neither his brothers nor any other member of the extended family "had anything to do with that enterprise."

However, two well-informed sources -- who wish to remain anonymous -- insist the Sarkisian brothers did win control of Lizin when it was privatized in 1997. But they both claimed that the Sarkisian family sold Lizin to other businessmen in 1999 and were hardly involved in last year's transfer of its equipment to the Iranians.

The U.S. Federal Register, in which the sanctioned Armenian, Chinese, and Moldovan entities were listed, did not specify the nature of their activities. It said only that the sanctions were imposed under the Iran Non-Proliferation Act of 2000, which prohibits the sale of chemical and biological weapons components and missiles and missile technology to the Islamic Republic. The companies and individuals in question will be barred from doing business with the U.S. government, from entering U.S. government programs, or getting export licenses for certain goods for two years.

The State Department has made it clear that the Armenian and Moldovan governments will not be affected by the sanctions. Spokesman Richard Boucher reiterated last week that both governments have been "helpful" in U.S. nonproliferation efforts, a fact emphasized by officials in Yerevan.

But in the words of Armenia's former Foreign Minister Alexander Arzumanian, the very fact of the sanctions damaged "mutual trust in U.S.-Armenian relations." Arzumanian said last week that Armenia will risk spoiling its vital relationship with the world's sole superpower unless it addresses American concerns.

Some local analysts view the latest developments as a U.S. warning that Yerevan should exercise greater caution in its close ties with Tehran, which President George W. Bush accuses of being part of a global "axis of evil."

But Oskanian dismissed those suggestions, telling reporters: "Our relations [with Iran] have been on a high level since 1991, and they remain on that level today. We see no reason to introduce any changes into our policy, and we have no problem with the United States in that regard."

Iran, for its part, denies the latest U.S. allegations. The Iranian Embassy in Yerevan said in a statement that "not a single Iranian-Armenian venture" has engaged in the transfer of banned equipment or technology.

Lizin's second-biggest shareholder is an Iranian citizen of Armenian origin.