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The wannabe nation of Nagorno-Karabakh

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He's comfortable with the arcane world of budgetary mandates and foreign direct investment: His shelves are piled with manuals from international organizations and statistical compilations. He pulls out a series of heavy books, covered in Armenian script and containing government statistics on Karabakh (example: The region grows wheat, grapes, potatoes, and garbanzo beans, yet must import 55 to 60 percent of its food). "We observe all international standards," he says patting the books with pride.

But Karabakhi officials are the only people who ever see them. The UN, World Bank, and other international organizations that usually collect such statistics and distribute them to the world won't use them, no matter how good, because – Nagorno-Karabakh doesn't officially exist.

A Soviet-trained economist, Danielyan is well versed in Communist centralized planning. But it's to Reaganesque, trickle-down economics that he's turned for salvation. Low taxes and private investment are now his mantra: "Within one year we decreased the income tax from 30 percent to 5 percent. The tax on business revenue has fallen from 28 to 5 percent. Property tax is now only 6 percent," he says, with growing enthusiasm, as the list grows longer. "For imports, there were six different types of taxes. Now there is one standard tax of not more than 2.5 percent!" A veritable business paradise, except for glitches such as sporadic lack of running water and the hostile Azeri military massed on the border.

The next morning, it's time for a tour of the capital, Stepanakert, to see the fruits of the government's low taxation plan. The first stop, though, is of a historic nature: a red sandstone monument depicting the faces of an old woman and old man, called Tatik Paptik (grandmother and grandfather, in Armenian). This symbol of Karabakh, explains a young adviser to the president, looks toward the motherland, Armenia.

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