Once dubbed the Soviet 'silicon valley', Armenia's economy collapsed when its old markets disappeared.

OVERVIEW

It has since recovered significantly, but job creation and poverty reduction have not kept pace with growth. Armenia also suffers from a trade blockade, imposed by neighbouring Turkey and Azerbaijan since the dispute over Nagorno-Karabakh.

The conflict over the predominantly Armenian-populated region in Azerbaijan overshadowed Armenia's return to independence in 1991. Full-scale war broke out the same year as ethnic Armenians in Karabakh fought for independence, supported by troops and resources from Armenia proper. A ceasefire in place since 1994 has failed to deliver any lasting solution.

Armenia has always experienced waves of emigration, but the present exodus is causing much alarm. It is estimated that Armenia has lost 20% of its population in recent years, as young families leave for what they hope will be a better life abroad. The negative consequences for the economy have been widespread.

Around 50% of Armenians live below the poverty line. Corruption and political killings add to the sense of a society under threat.

Gunmen who stormed the Yerevan parliament in 1999, killing the prime minister and other politicians, said the plight of the Armenian people was the reason for the bloodshed. Analysts believe that there were more complex political factors involved as well.

The government is trying to promote tourism and technology parks. But foreign investors are reported to be extremely wary.

FACTS

Libel and defamation are punishable by prison terms and journalists have been sentenced under these laws. All print and broadcast media must register with the Justice Ministry.

In 2003 the US-based NGO Freedom House downgraded its assessment of the media climate in Armenia from "partly free" to "not free", citing the use of security and libel laws to silence criticism and the closure of a private TV station in 2002.

The press