Pakistan’s economy – The Urdu rate of growth

EVEN the swankiest chandelier is not much use these days without electricity. Just as Shahbaz Sharif explains Pakistan’s new energy policy, his Lahore home plunges into darkness, briefly hiding him, his oil paintings and a fine china tea set. Has Punjab’s chief minister staged a blackout for dramatic effect? Laughing, he denies it: power cuts are routine. City dwellers endure as much as ten hours of cuts a day; villagers are usually without power for much longer. On occasion, supply has fallen 40% short of national demand.

Chronic electricity shortages vie with some heavyweight contenders to top the list of Pakistan’s biggest problems. Mr Sharif’s brother is the prime minister, Nawaz Sharif, who won a general election last year promising to fix the country’s electricity mess. Without reliable power, Pakistan will struggle to lift a dismally low rate of economic growth—just 2.9% a year on average for the past five years, not much more than the 2% annual growth of the population, now 186m-strong. Thanks to a stagnant economy, millions of young Pakistanis are without jobs or regular incomes, especially in the burgeoning cities. Poverty and bleak prospects must surely be contributing to the extremist violence that daily rocks the country.

Fixing the mess means cutting through immense and intertwined problems. Private power firms produce much less than they could, because the state purchaser does not always pay them. In turn, electricity consumers, among them the federal and provincial governments, do not pay the state purchaser. It creates a “circular debt”, which reached $5 billion at its peak. The government last year said that it had, in effect, cleared that debt. But the IMF, for one, warns that it can build up again.

Shahbaz Sharif, who has a national role helping the prime minister on economic policy, says that many consumers continue to pilfer electricity and gas. Some, such as somemadrassas (religious schools), refuse to pay even a fraction of their bills, confident that no one would dare cut them off. Liquefied natural gas (LNG), a growing portion of Pakistan’s energy mix, sells at a sixth of its import price. A plan to raise residential electricity tariffs was scrapped in October after judges objected. That ruling may be revisited now that a populist chief justice has retired.

Consumers might be keener to pay if only they got more in return. State-run generation and distribution companies are so ill-managed that the Punjabi cities of Gujranwala and Faisalabad run at 10% capacity. The government’s response is to order the urgent sale of 31 energy and other businesses.

Fixing dysfunctional energy firms would do most to unleash the country’s economic potential, says Mohammad Zubair, the privatisation minister, parachuted in from IBM. Management by state firms is “a disaster”. He talks of gross overstaffing, incompetent engineers and poor financial control. Combined annual losses at all state-run companies have reached $4.7 billion, equivalent to a third of all tax revenue. Private investors must be found to take over, Mr Zubair says, because “the government can’t spend more”.

The biggest task, however, is to change the country’s ill-judged energy mix. About a third of its electricity comes from oil-fired power stations. Many were commissioned in the late 1980s, when crude oil was cheap. With oil now over $100 a barrel, they are desperately expensive. Pakistan spends over $14 billion a year importing oil and other energy products, a big hard-currency bill. Another third of energy comes from gas, much of it also imported. Reliance on imports will certainly grow. Three new LNG import terminals are to be built by 2016, raising capacity by half. And the government this week again confirmed grand plans to bring in natural gas across the border from Iran (and perhaps, in turn, to export some of it to India). But that will remain a pipe-dream for as long as the United States, Pakistan’s biggest donor, is opposed to it. In any case a major pipeline would be vulnerable to violent groups, including Baluchi separatists and the Taliban outfits increasingly active in the south.

Other options exist. Billions of tonnes of coal reserves sit in Sindh province, yet coal accounts for a tiny part of electricity generation. A new plan orders several new coal-fired stations, with Chinese money and help, but even then fuel would be imported from Malaysia. China is also lending money to expand the civil nuclear programme. In November the prime minister inaugurated a $10 billion, 2200MW nuclear plant to be built by 2019, for Karachi, a city of 18m; understandably, there are worries about safety. New plans for solar parks and more hydropower are also trumpeted.

Nothing will fix Pakistan’s energy problems quickly. Long blackouts are certain when temperatures rise again this summer, but gains could show in about three years—in time for the next election. Muhammad Mansha, an industrialist and Pakistan’s richest man, is optimistic that the government’s attempts to grapple with the power sector will boost business confidence and the economy more widely. Chinese investment in the garment industry is a shot in the arm, as is the removal of import tariffs on Pakistani garments going to the European Union. The EIU, a sister company to The Economist, predicts annual GDP growth of nearly 4% a year until 2018.

Mr Mansha sees other hopeful signs, particularly in Pakistan’s abysmally skimpy trade with India. His cement company’s exports of 700 tonnes a day to India are up from 300 tonnes a year ago, and he expects that to double again. On February 14th India’s commerce minister, Anand Sharma, was due in Lahore for a joint announcement to open the land border to cargo for 24 hours a day and to allow container transport—though he cancelled the trip at the last minute. Currently the border is open only during daylight, and—astonishingly—much is unloaded and loaded onto fresh lorries on the backs of porters. If the myriad restrictions went, a Delhi think-tank says, bilateral trade could quickly rise tenfold, from just $2.6 billion a year.

One day cross-border trade in energy could follow. Hydropower in disputed Kashmiri territories, for example, would be best exploited if India and Pakistan co-operated. India has offered to extend its electricity grid across the border in Punjab and to arrange gas imports for Pakistan, though so far nothing has come of it. Pakistan, in turn, could export coal to India, a hungry consumer of the stuff. Huge mutual gains in energy co-operation are to be had—if only the two countries were serious about achieving them.

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Microsoft banks on the cloud under Nadella

Microsoft has staked its future on cloud computing by appointing a company veteran who has presided over its cloud software platforms and services to lead it into the post-PC age.

The naming of Satya Nadella as only the third chief executive in the company’s 39-year history ended a long-running search that had brought calls for an outsider who could force a bigger shake-up in Microsoft’s business.

The new Microsoft boss will still have the company’s earlier CEOs, co-founder Bill Gates and the outgoing Steve Ballmer, looking over his shoulder as directors of the company. However, Microsoft moved to cut Mr Gates’ out-sized influence over its board by replacing him as chairman, even as it co-opted him to spend more time on helping to revitalise the company’s work on new products.

Microsoft has been sidelined by the rise of mobile computing and the internet, which have put Apple and Google at the forefront of the tech industry and forced a management overhaul as it struggles to catch up.

The elevation of Mr Nadella, head of Microsoft’s cloud computing and enterprise business, ends a search that began in August and initially involved more than 100 candidates. A number of high-profile executives were said to have been approached, including Ford boss Alan Mulally and Mark Hurd, the president of Oracle.

Mr Nadella immediately hinted at a narrowing of Microsoft’s broad portfolio of products and services. He called for the company to “zero in on what [it] can uniquely contribute to the world” and to “prioritise innovation”.

Mr Ballmer faced repeated calls from investors to shed consumer businesses such as the Xbox games console division and Bing search engine, and to focus instead on its software and services for corporate and government customers – a business Mr Nadella has headed in his most recent job.

Rejecting a sharp change in direction, the new CEO echoed Mr Ballmer’s efforts to reposition Microsoft around mobile computing and the “cloud”. However, he shifted the focus away from hardware and instead laid a new emphasis on software, in particular the new cloud-based computing platform and applications the company has built to succeed its traditional PC business.

As we look forward, we must zero in on what Microsoft can uniquely contribute to the world. [This] will require us to reimagine what we have done in the past for a mobile and cloud-first world– Satya Nadella, email to staff

The careful repositioning of Mr Gates inside a company at which he remains a central figure has been seen as central to giving the new chief executive more freedom to manoeuvre.

Mr Gates has given up his role as chairman but will spend more time working on new products with a new title as “founder and technology adviser”, the company said. The changes follow complaints from some big shareholders who have been concerned that Mr Gates’ influence over the board made it hard to attract strong outside candidates for the CEO job while threatening to cramp an internal hire.

For the past two years, Mr Nadella, 46, has been head of Microsoft’s cloud and enterprise group, with responsibility for pushing it into an era in which business customers look for technology companies to host much of their IT architecture online – or in the cloud – rather than buying software to run on their own machines.

His earlier roles included running the online services division, including the Bing search engine, a business that Mr Gates took a close personal interest in.

Mr Gates gave up the CEO title in 2000 while remaining in charge of Microsoft’s technology and product direction. By the time he stepped aside in 2008 to focus most of his time on the charitable foundation he runs with his wife, Melinda, Apple had already vaulted ahead of it with the launch of the iPhone.

John Thompson, an independent director who led the search for a new chief, will replace Mr Gates as chairman, Microsoft said.

Russian oligarchs take battle to NY court

Len Blavatnik, chairman and president of Access Industries Holdings LLC, poses in this undated handout photo released to the media on Wednesday, Sept. 5, 2012. Songs from Vivendi SA's Universal Music Group, Sony Corp.'s music business, EMI Group Ltd. and billionaire Blavatnik's Warner Music Group are now available through the Amazon Cloud Player. Photographer: Tim Bishop/Access Industries Holdings LLC via Bloomberg EDITOR'S NOTE: EDITORIAL USE ONLY. NO SALES.The 2013 purchase by two tycoons was the third-biggest oil acquisition of all time. Now another oligarch is demanding a piece of the profits.

Russian billionaire Leonid Lebedev has filed a $2bn lawsuit against Viktor Vekselberg and Len Blavatnik, alleging that he was a secret shareholder in an oil venture that became part of TNK-BP and later Rosneft through a $55bn deal last year.

To acquire TNK-BPRosneft bought out BP as well as its four Soviet-born billionaire partners: Mikhail Fridman, German Khan, Mr Vekselberg and Mr Blavatnik – with the latter two netting $7bn apiece from the March 2013 deal.

The legal case, which was filed in a New York state court, is set to be the biggest oligarch legal battle in the US – a departure from previous years when a stream of Russians aired their grievances in London’s High Court, incurring millions of pounds in legal fees.

In a statement, Mr Lebedev said: “It is with regret that I resort to the courts to resolve a dispute with my former partners, with whom I shared so many achievements through a lengthy collaboration. I have been deprived of the full value of my ownership interest” in TNK-BP.

Mr Blavatnik responded that the complaint was without “any merit”. “It is a false and misleading recasting of the facts. It is an abuse of the American legal system, and seeks to bring false claims based on an alleged grievance arising out of foreign transactions,” said the businessman, who is a US citizen, in a statement.

Representatives for Mr Vekselberg did not immediately respond to a request for a comment on the lawsuit, filed on Tuesday.

Mr Lebedev made his fortune in the Russian oil sector in the 1990s and then went on to become a senator and subsequently one of Russia’s leading independent film producers.

The dispute dates back to a 1997 joint-venture struck between the oil moguls that evolved to eventually include stakes in TNK-BP. Mr Lebedev alleges he contributed $25m cash and transferred his equity stake in TNK and a Russian production company, to Mr Blavatnik and Mr Vekselberg to help them buy control of TNK.

Mr Lebedev alleges that his business partners never transferred the stock to him.

To mollify the dispute, the three men met several times in New York in 2001 – at private residences and a stroll through Central Park – to hammer out a deal, he claims.

In the following decade, Mr Vekselberg went on to become a shareholder of the world’s largest aluminium group Rusal, in addition to TNK-BP. In recent years he has focused on the utilities sector and Skolkovo, a Kremlin-sponsored tech project akin to Silicon Valley.

Mr Blavatnik holds American citizenship but is resident in London, and has moved from natural resources to the music and media industries over the years. He now owns Warner Music and is an investor in Dr Dre’s Beats Music.

According to the lawsuit, Mr Lebedev was paid $600m in dividends through an arrangement struck in 2003, but he is suing over his share of the $13.8bn in profits that their joint venture allegedly made from the sale to Rosneft, plus damages.

Exclusive: Leader of Far-Right Ukrainian Militant Group Talks Revolution With TIME

DOM_2014_02_03_EM18185-3-copy
Dmitro Yarosh, the leader of Pravy Sektor, a coalition of ultra-nationalist groups in Ukraine, stands with some of his fighters at the scene of the worst clashes last month between the group’s fighters and police in Kiev.
 

In his first interview with foreign media, Dmitri Yarosh, leader of the far-right militant group Pravy Sektor, warns that he and his anti-government cohorts in Kiev are ready for armed struggle

Take the smell of an army barracks, add a bit of char and gasoline, and you’d have a rough idea of the air on the fifth floor of the House of Trade Unions, the headquarters of the revolution in Ukraine. When protesters first occupied the building in December, their leaders divvied up its floors among the political parties and activists involved in the revolt. Since then, the only floor off limits to journalists has been the fifth, which houses the militant arm of the revolution, Pravy Sektor (Right Sector), the coalition of right-wing radicals that grew out of the uprising. They had good reason to avoid publicity. After their violent clashes with police last month, their members could face years in prison if the ruling government survives the revolt.

But on Sunday night, their leader, Dmitro Yarosh, agreed to give his first interview to a foreign media outlet. It was not so much an act of vanity as a political coming-out. He has clearly grown tired of being the movement’s anonymous enforcer. In recent days, as a negotiated end to the crisis has started coming into view, the need for a military wing of the revolution has diminished. And so has the trust in its upper ranks. The mainstream opposition leaders, such as the former world boxing champion Vitali Klitschko, have faced growing pressure to distance themselves from Pravy Sektor, which the U.S. State Department has condemned for “inflaming conditions on the streets.” Increasingly marginalized, the group has grown much more assertive and, in some ways, has started going rogue.

In his interview with TIME, Yarosh, whose militant brand of nationalism rejects all foreign influence over Ukrainian affairs, revealed for the first time that Pravy Sektor has amassed a lethal arsenal of weapons. He declined to say exactly how many guns they have. “It is enough,” he says, “to defend all of Ukraine from the internal occupiers” — by which he means the ruling government — and to carry on the revolution if negotiations with that government break down.

But so far, those negotiations have been making significant strides toward resolving the crisis. On Tuesday, the parliament began debating a sweeping reform of the constitution, while allies of President Viktor Yanukovych suggested for the first time that he is ready to consider early elections. Both moves would mark a major breakthrough. But Yarosh, watching from the sidelines, has begun to doubt whether the negotiators have the interests of his men at heart. “This whole peaceful song and dance, the standing around, the negotiations, none of it has brought real change.” Dozens of his men, he says, remain behind bars after their street battles against police two weeks ago.

With that in mind, Yarosh and another militant faction began a parallel set of negotiations over the weekend. On Monday, they claimed to be in direct talks with Ukraine’s police forces to secure the release of jailed protesters, including members of Pravy Sektor. Mainstream opposition leaders said they had not authorized any such talks. At the same time, Yarosh has demanded a seat at the negotiating table with the President. Once again, he was flatly denied. His ideology, it seems, is just too toxic to let him in the room.

But neither can Klitschko and his fellow politicians easily sever their ties with Pravy Sektor. The group serves some of the uprising’s most essential functions. Its fighters control the barricades around the protest camp in the center of Ukraine’s capital, and when riot police have tried to tear it down, they have been on the front lines beating them back with clubs, rocks, Molotov cocktails and even a few trebuchet catapults, in the mold of the medieval siege engines of the Middle Ages. Around the country, its fighters have helped seize government headquarters in more than a dozen cities. “Pravy Sektor has proven its loyalty to the ideals of freedom,” Yarosh says. “Now we needed to present this movement as a source of leadership.”

In any kind of fair election, that would be nearly impossible. Pravy Sektor’s ideology borders on fascism, and it enjoys support only from Ukraine’s most hardline nationalists, a group too small to secure them a place in parliament. But taking part in the democratic process is not part of Yarosh’s strategy. “We are not politicians,” he says in his office, a pack of Lucky Strikes and a walkie-talkie on the table in front of him, while a sentry in a black ski mask and bullet-proof vest stands by the door. “We are soldiers of the national revolution.” His entire adult life has been spent waiting for such a revolution to “steer the country in a new direction, one that would make it truly strong, not dependent on either the West or the East.”

Through all his years in the nationalist movement, Yarosh, a 42-year-old father of three, says he has never had any form of occupation apart from his activism. The son of two factory workers, he was born and raised in a provincial town in eastern Ukraine, and became involved in the nationalist underground in the late 1980s, just as the Soviet Union was disintegrating. Nearly all of the satellite states of the USSR, from the Baltics to Central Asia, were then pushing to break away from Moscow’s control, and in 1988, Yarosh joined one of the more radical groups fighting for an independent Ukraine.

The following autumn, months after the Soviet Union pulled its troops out of Afghanistan, Yarosh was drafted into the Red Army, a common form of punishment for political activists at the time. He was stationed briefly in Belarus before being transferred to Siberia, where he served as a guard at strategic missile sites. The Soviet doctrines of unity between Russia and Ukraine did little to soften his views. “If anything the army made me more convinced that my path is correct,” he says. When Ukraine declared independence from the Soviet Union in 1991, Yarosh went on hunger strike to demand a transfer to the newly established Ukrainian army. His commanding officers ignored him.

In 1994, a few years after he was discharged and returned to Ukraine, he joined a right-wing organization called Trizub (Trident), and slowly climbed its ranks before assuming leadership in 2005. Along with several other far-right groups, Trizub formed the core of Pravy Sektor when the current uprising broke out in Ukraine two months ago. It’s main adversary has always been Russia, although it also has little patience for Western influence on Ukraine. “For all the years of Ukraine’s independence, Russia has pursued a systematic, targeted policy of subjugation toward Ukraine,” Yarosh says. “So of course we will prepare for a conflict with them,” he adds, especially after Russia’s recent invasion of another one of its former satellites, Georgia. “If they stick their faces here like they did in Georgia in 2008, they’ll get it in the teeth.”

So far, his jabs at the leaders of the opposition in Ukraine have not been quite as pointed. He has accused them of vanity and ineffectiveness, but he has also observed the truce they called a week and a half ago to allow their negotiations to proceed. “Not a single Molotov cocktail has gone flying since then,” he says proudly. “A truce is a truce. They want to negotiate, let them negotiate.” But as Yarosh realizes, he and his men have staked a great deal on the outcome of these talks.

If the ruling government holds on to power, Pravy Sektor could be forced to take the blame for the violence that left dozens of police officers in the hospital two weeks ago. “All those criminal charges are already waiting in the prosecutor’s office,” he says. On the other hand, if the opposition forms a new government, they are not likely to carve out a place for Yarosh and his men in the halls of power. So it is no surprise that he has begun to show some political initiative.

For the past two decades, he has been waiting and preparing for the start of the “national revolution,” and now that he finds himself at the head of its armed division, he does not seem ready to let it pass peacefully away, at least not on anyone else’s terms. “People have gotten in touch with us from around the country, saying, ‘Guys, don’t let us down. Take us to victory, to independence, if the other leaders are incapable of that,’” Yarosh says. “So if the time has come for an active struggle, I am ready to carry it to the end. I am not afraid of that responsibility. I see no reason to hide my face.”

Kim should visit China, explain execution of Jang: source

Unconfirmed report echoes earlier Chinese editorials for Kim to visit Beijing

A major Chinese internet portal claims that China has called on Kim Jong Un to visit China as soon as possible and for North Korea to explain the recent execution of Jang Song Thaek.

“First-Secretary Kim Jong Un should visit as soon as possible”, an unnamed Chinese government official was quoted as saying in the report, which was published by popular Chinese internet portal Sohu.com.

The report added that Beijing wanted North Korea to explain the extreme events surrounding the trial and execution of Jang Song Thaek and for Pyongyang to confirm that Sino-DPRK relations would not be negatively affected by Jang’s demise.

Although the report could not be verified, it echoes a December editorial in the Communist Party’s Global Times which, in the wake of Jang’s purge, argued that Kim Jong Un should visit China as soon as possible to assure Beijing that he would be able to keep the country stable.

Since Jang’s execution, China has showed signs of uneasiness about North Korea:  A subsequent editorial in the Global Times published after Jang’s surprise execution argued that China needs to be strong and decisive when dealing with North Korea.

The editorial also pointed out that Jang’s execution had caused relations between China and North Korea to deteriorate and that Chinese public opinion of North Korea had worsened as a result.

Jang Song Thaek was “eliminated” from the Korean Workers’ Party in early December and his “group” purged for reasons including corruption, factionalism, drug abuse, anti-state activities and womanizing.

China’s foreign ministry spokesman Hong Lei initially dismissed the purge as an “internal affair,” telling reporters on December 9 that Beijing would “stay committed to maintaining traditionally friendly relations with the DPRK.”

S. Korea preparing for war, DPRK ambassador to Russia tells press

Ambassador warns S. Korea could spark “full-fledged war”

South Korea is not responding to North Korea’s efforts for peace and is preparing for nuclear war, North Korean ambassador to Russia Kim Yong Jae said on Tuesday.

Speaking to a press conference in Moscow, the ambassador said that despite the DPRK’s efforts to push for peace, South Korea was still going ahead with annual joint Key Resolve and Foal Eagle military exercises which Pyongyang sees as preparations for an invasion of the North.

“Now that important proposals on stopping all slander campaigns have been published, North Korea has unilaterally stopped all campaigns and other actions that could irritate the South Korean administration,” the ambassador said in comments reported by Russia’s Interfax news.

He insisted that North Korea “has made a decision to be the first to take practical steps to fully stop all hostile military and other actions in the air, at sea, and on the military demarcation line, including in the problem areas around five islands in the Yellow (West) Sea”.

In particular the ambassador called on South Korea to halt its annual joint military drills with the United States, saying “we consider these exercises to be aggressive and dangerous because they from beginning to end constitute preparations for a nuclear war against North Korea and are conducted under the guise of defensive and annual training exercises.”

Similar to remarks made by other North Korean ambassadors to media in recent weeks, Kim warned that “the current situation on the Korean Peninsula is such that even an accidental armed conflict could cause a full-fledged war”.

SIX PARTY PLEDGE

The ambassador also used the press conference to explain North Korea was not opposed to the resumption of Six Party Talks on the denuclearization on the Korean peninsula, saying that ”we are not opposed to the launch of negotiations and a genuine discussion of peace and stability on the Korean Peninsula and in the region”.

“We are concerned that the hope for a resumption of the six-nation negotiations is fading away because of the invariably hostile U.S. policy towards our country; they are holding a policy of sanctions, thrusting unilateral dismantlement of the nuclear program on us and setting unfounded preconditions,” he was reported as saying by Interfax news.

“We do not object to the resumption of the negotiations but until the U.S. demonstrates its readiness to stop its hostile policy towards the DPRK, which is the primary source of the problem of the Korean Peninsula, we will never make unilateral progress on that”.

At the conference Ambassador Kim praised DPRK-Russian relations and economic co-operation, citing the successful construction and opening  of a railroad between Rajin (North Korea) and Hassan (Russia) and the building of gas and oil pipelines as evidence of the two nations’ positive ties.

Russia has in the past expressed interest in seeing a prompt resumption of the Six Party Talks, with President Vladimir Putin using a November 2013 visit to South Korea to call for their resumption “without preconditions”.

Putin made the suggestion during an in interview with the Korean Broadcasting Service (KBS), pointing out that the DPRK and Russia traditionally had good relations, which he described as an “advantage”.

“If we constantly set preconditions for the start of talks, they may never begin,” Putin said, “It seems to me that it would be better if the talks resumed and all the participants returned to the negotiating table and then resolved the issues that had brought them together”.

Russia and North Korea do have significant shared business interests, and Russia has in the past provided North Korea with diplomatic support, speaking out against the continued American presence on the Korean peninsula last year.

Armenia: Citizens Feeling Gouged by High Cost of Russian Gas

Let’s shake on it. (Photo: Armenia Presidential Press Service)Pipes deliver natural gas across a snowy field in December 2013 to a new housing development in Gyumri, Armenia. With winter temperatures falling to -20 Celsius, people are feeling the pinch as natural gas and utility prices rise quickly. (Photo: Anahit Hayrapetyan)Re-elected as president of Armenia, Serzh Sarsyan is sworn in for another five-year term. (Photo: Armenia Presidential Press Service)

Armenia is experiencing a Russian-style winter this year, and despite Yerevan’s plans to join the Moscow-led Customs Union, consumers are not catching a break when it comes to the cost of Russian gas. Instead, the price of Russian gas imports has risen 18 percent over last year, a development that is stoking public anger with the government’s decision to cast its economic lot with the Kremlin.

With temperatures dropping as low as -20 Celsius (-4 Fahrenheit), many Armenians have been hit with whopping gas bills that are wreaking havoc with their monthly budgets. Based on interviews by EurasiaNet.org with representatives of 30 separate families paying their gas bills at Yerevan post offices, the average December gas bill for a family of four stood at between 50,000-60,000 drams ($123-$148) – roughly an increase of over 40 percent from last year. Officially, an average monthly income stands at 150,960 drams per month, or $370.

“I kept potatoes in my kitchen, and I used to grow flowers there; they all are frozen now, and I must give my entire pension [25,000 drams or $61] to pay for the small amount of gas I’ve used,” said one elderly woman, wallet in hand, waiting to pay her gas bill in a Yerevan post office.

Back in early December, before the cold spell set in, supporters of President Serzh Sargsyan’s administration painted a different scenario – one in which Yerevan’s September decision to join the Customs Union would ensure that citizens reaped significant economic benefits. Russian President Vladimir Putin, during a December visit to Armenia, reinforced that impression with a pledge that Armenians would be paying Russian “domestic prices” for gas. Gazprom CEO Alexei Miller made a similar promise. But no Russian official ever provided details, and the gas price never decreased, instead it has gone up.

At present Armenia pays $189 per 1,000 cubic meters of Russian gas received at its border; consumers, however, pay a far higher price – 158,000 drams, or $391, per 1,000 cubic meters, an 18-percent increase from the past.

Many customers cannot believe their eyes when they see their gas bills, said one Yerevan post-office employee, who asked not to be named. “They repeatedly ask whether the final sum is correct,” she said. “Some get mad and start cursing the authorities. Others leave in silence, without paying, and ask for installment-plan options.”

Naira Zohrabian, head of the parliamentary faction of the opposition Prosperous Armenia Party, said workers are being pushed to the economic brink. “I was shocked to see the bills I had to pay” – 67,000 drams ($166) for gas in December, she said. “My salary is comparatively high (245,000 drams or about $605). … I cannot imagine how people earning a salary of 40,000-50,000 drams (roughly $98-$123) pay such amounts.”

As popular anger grows over high gas bills, representatives of the governing Republican Party of Armenia have remained largely silent. Some have simply advised citizens to skimp. “Everybody should think about being economical, despite their income level,” said MP Manvel Badeian, who claims he himself received a 300,000-dram (over $740) gas bill for December.

Sneers generally greet such statements.

“What economy are they talking about? Are they mocking us? With the temperature 20 degrees below zero, and three small kids at home, is it normal to pay 60,000 drams [$148] for a single gas heater?” asked 39-year-old Marat Martirosian, a construction worker in Yerevan. “Should we turn off the heater and let our children freeze?”

One middle-aged Yerevan taxi driver, who declined to give his name, agreed. “They said gas will become cheaper when we join the Customs Union, and people will live better, but if they go on like this, nobody will stay in this country,” he said. “They gave everything to the Russians. Why don’t they respond to the people now?”

The Republican Party’s parliamentary faction head, Galust Sahakian, brushed off public complaints, and also emphasized the need to economize. People would be even angrier if there were no gas at all, he told the news site Yerkir.am on January 14. “People now are in such a situation that they try to find someone to blame, and they are blaming the government for this,” Sahakian said.

For their part, opposition leaders appear more focused on the government’s controversial pension-reform plan. Arman Musinian, spokesperson for the Armenian National Congress, the country’s largest opposition coalition, said that “discussions about our steps are being held at the moment.” The coalition views “all issues as part of an integral whole,” he said.

Political analyst Manvel Sarkisian, director of the Armenian Center for National and International Studies, believes the potential exists for public anger over gas prices to boil over. “If a powerful grassroots movement were launched, perhaps opposition parties would unite in light of current developments,” he said. “There is a chance for that at the moment.”

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