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Snows Fall, Prices Rise in Armenia

With food and fuel stocks whittled by five-year war, a new currency adds to hardships

THE first snow of winter is falling thickly onto the streets of this Caucasian capital as Gayane Baghdasavian emerges from a small shed, clutching four tin pipes bound with string. In the narrow streets around Silachi market, scores of stores are doing a booming business fashioning crude wood-burning stoves and the pipes that go with them.

``The snow came, and I have little children at home,'' Ms. Gayane explains. For her stove and pipes, she paid $10 - more than three times what it would have cost her only a few weeks earlier. ``We didn't have the money then,'' she says. Her husband, out of work in Armenia, has sent the money from Russia where he is laboring as a driver. ``We have no wood. We hope the government will give us wood,'' she adds.

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This is the third winter of suffering for the people of this mountainous former Soviet republic. A five-year conflict with neighboring Azerbaijan has cut most transportation routes into this landlocked republic, leaving it dependent for all its fuel and much of its food on a small, frequently attacked gas line and an unreliable railroad, both running through civil-war-torn Georgia.

Once again, Armenia faces a winter with no central heating and only enough power to supply at most two hours of electricity a day. Food is in short supply, especially for the most vulnerable - the very old and the very young.

``We're more prepared to spend this winter than at this time last year,'' said Armenian President Levon Ter-Petrosyan on Nov. 12. Some fuel supplies, such as heating oil to supply limited warmth and electricity to hospitals, bread factories, telephone stations, and other vital facilities, have been stockpiled.

But other government officials and Western relief experts say the situation is in some ways far worse, because the population has been greatly impoverished over the past year. On top of the effects of the blockade, Armenians have been hit with hyperinflation triggered by the collapse of the ruble which, until today, was still circulating in this country's currency.

``Last year people sold whatever they had to get whatever little heat they could,'' says Gassia Apkarian, head of the Yerevan office of the Armenian Assembly of America. ``Now, with inflation [and] the ruble crisis, funds in families are all exhausted.''

The government of Armenia yesterday introduced a new national currency, the dram. The move was forced by Russia, which set such onerous conditions that it effectively ousted Armenia, along with three other former Soviet republics, from the so-called ruble zone. Armenia had been using ruble notes issued before 1993 as its currency, but the value of these had dropped substantially in recent months as the old ruble notes flooded in from Russia, Turkmenistan, and other republics that took them out of circulation.

Prices have doubled and tripled overnight several times since October. ``Inflation is due to the fact that Armenia cannot protect its domestic market,'' President Ter-Petrosyan explains. ``This is only possible with the help of a national currency.''

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But Armenia must do this without any help from the International Monetary Fund, which refuses to aid countries in a conflict zone, or other international agencies - and under the most onerous conditions of economic collapse. Observers expect the currency to lose value rapidly, worsening inflation.

``Because of the need to establish a new national currency, the problems Armenia is facing this winter are compounded, and a broader spectrum of the population is likely to feel itself under acute financial pressures,'' says a Western diplomat here.

Sofia Bagasarian, her shopping bag hanging empty as she scours the central market for something affordable, is on the verge of tears thinking about how to take care of her three children. Her husband's work in a largely idle chemical complex has disappeared, and her job in a school cafeteria is about to end as schools shut down for the three coldest winter months. The family now lives on their daughter's $2-a-month student stipend - not enough to buy 2 pounds of butter.

``I was prepared for last winter, but now we have no winter food,'' Sofia says. ``I hope my mother in the village can send us potatoes.''

This tale is repeated constantly on Yerevan's streets. Some are even worse off. Arzuman Grigorian and his wife are elderly pensioners, trying to get by on an allowance that buys only bread, bad potatoes, and about two pounds of butter a month. Heat comes only from an electric coil - that is, when electricity is on at all.

But some help is on the way. After passage of an $18 million aid bill sponsored by Sen. Phil Gramm (R) of Texas, the United States will provide enough kerosene and heaters to heat a minimum of 155,000 households, more than 3,000 classrooms, and 250 schools this winter. Japan is also contributing to this program, and the United Armenian Fund, mainly funded by the Armenian diaspora, is raising $21 million to buy kerosene.

But Raphael Bagoyan, the Armenian state minister in charge of humanitarian assistance, and Western relief workers are worried as well about hunger. They report that children are too hungry to focus on schoolwork and are coming into hospitals in a state of malnourishment.

Perhaps most seriously, the populace is wearied by years of deprivation and by the memory of last year's particularly severe winter. ``The lack of food for the last two years, especially last year's winter, the difficulties, that cold and darkness, have had serious effects on peoples' psychology,'' Mr. Bagoyan says. ``They are depressed.''

Yerevan residents sit around these days arguing about which is worse - the cold, the hunger, or the darkness. Those with the means plot to escape the country.

After the first couple of days of snow, the airport was packed with people fighting to get on any flight, even to the far reaches of Russia. ``The snow has come, and people are running away,'' one Yerevanite says with a shrug indicating that he, too, would flee if he had the opportunity.

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