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Armenia – further changes and challenges ahead in 2018

Article by Craig Oliphant OBE

August 7, 2018

Armenia – further changes and challenges ahead in 2018

Current developments in Armenia, following the April 2018 revolution (‘Velvet Revolution’) and advent to power of Nikol Pashinian,  seem to  prompt a mix of optimism and caution. On the upside,  while what unfolded in April was dramatic and unexpected,   it was  peaceful change,  and literally without a single shot being fired. As things stand,  there is a lot of goodwill towards Nikol Pashinian and his new coalition government. And local popular support for him personally is genuine.

There is certainly a need for significant change in the country – and in particular for urban renewal.  There is a need to modernise the agricultural sector – and to diversify energy supplies.  There are opportunity areas within the country (R&D ‘hub’ in Yerevan) – and a space to watch is what happens or continues to happen with talented Armenian youth abroad.  To what extent are those who left the country looking to return?

On the other hand,  there is a massive amount of work to be done. And challenges to be faced,  including key vested interests to he grappled with.  And Armenia is not going to get the kind of trade and investment it requires unless there is clarity on reforms going forward.

Also on the sobering side, the new government (the Cabinet line-up formed in mid-May 2018)   has come to power without much preparation.   The new Armenian Government is a coalition made up of members of the ‘Civil Contract Party’ and the ‘Way Out’ bloc (Yelik);  plus Dashnaktsutyun and ‘Prosperous Armenia’.   The new Foreign Minister (Zohrab Mnatsakanyan) and Defence Minister (David Tononyan) are two well-regarded professional officials who have both previously served as deputy ministers in their respective ministries.  These and other ministries have to contend, though, with severe shortages in civil service personnel and funding.

The new government faces a very complex situation.  It inherits a legacy where nearly 30% of the country’s population live below the poverty line.  Armenia is not in a great position security-wise or from the economic standpoint.   But expectations are now high – and  time is not necessarily on the side of the new government.   So it is constrained too to look for tangible outcomes..

One aspect of ‘tangible outcomes’ is that some eye-catching arrests are starting to happen,  despite the early pledge when Pashinian  took over power that there would be  ‘no vendettas’.   The most notable of the arrests was that of former president Robert Kocharyan who was remanded in custody for 2 months from 27 July.   That is in connection with the brutal clampdown against protesters on 1st March 2008, as part of a 20-day state of emergency declared in that period to tackle large-scale unrest and demonstrations against the elections that brought Serzh Sargsyan to power. This arrest,  along with a similar move against  (among others) the former Chief of Staff of the Armenian armed forces, General Yuriy Khachaturov,  who is the Secretary General of the CSTO,   has prompted an expectedly jaundiced reaction in Moscow.   In public remarks at the beginning of August,  Russia’s Foreign Minister Lavrov said this “looks like a vendetta”, pointedly using the word for actions that Pashinian a few months ago had pledged to steer clear of (EADaily, 1st August 2018).   The reaction of Russia to recent changes in Armenia has thus far been subdued – but it will be a key space to watch in the coming weeks as the tone of commentaries sharpen on the ‘Kocharyan affair’ – ‘Delo Kocharyana’. (See also below on Russian reactions).

New elections?

The current expectation is  that snap elections are likely to  be called in Spring 2019.  In that sense the situation is already one of a ‘pre-election’ buildup. Nikol Pashinian has a tight-rope to negotiate. He naturally wants to demonstrate some tangible outcomes.  But he is is also keen  to avoid making clear-cut decisions one way or the other so as not to (unnecessarily) alienate the electorate.

On forthcoming elections,  a Commission has been formed – in a welcome move  – including main political groups & parties in the parliament to discuss possible changes in legislative provisions and the electoral law.  Agreement has already been reached to put forward a proposal removing the ‘majoritarian’ system or component (for individual candidates in a first-past-the-post system) which favoured the previous ruling RPA (Republican Party of Armenia) – and replace it entirely with proportional (party) lists alone. Other key issues are still under discussion,  including  the vexed question of party funding or ‘charitable’ donations which was an ‘open sesame’ for oligarchs to “buy” and control things in the past.   The problem area here is that “Prosperous Armenia” – and its tycoon leader Gagik Tsariukian – is part of the current coalition and his automatic approach is one of continuing to engage in familiar  practices of buying support locally through largesse and other ‘charitable’ initiatives.   So that is likely to be one point of tension within the coalition looking ahead..  But, overall, a key marker on the near-term horizon for domestic politics is going to be the substance and amendments to the Election Law.

Initial achievements:

Among some of the initial achievements – and these are still early days – the new political leadership is taking measures to tackle corruption in many areas – taxation, customs, police, education, health.   Oligarchs have been “invited” to pay the taxes they avoided in the past, partly through cosy agreements made with the Sargsyan regime. [In the first 2-3 months since the April Revolution,  more than $40mn USD were raised additionally into the budget through this drive on unpaid taxes].  Also,  criminal cases have been opened against  Sargsyan acolytes including his extended family on a range of charges of embezzlement, corruption.

The medium to longer term challenges are considerable.   And the demands of the immediate term, as alluded, constrain room for manoeuvre.  But expectations remain high. The medium/longer term demands, once the euphoria fades away,  centre on maintaining and further building trust among the wider public towards the government, including ministries, agencies and other structures. The old adage remains as true as ever:  ‘trust takes months & years to build but can be lost in a moment’.  As part of this there is the slow, incremental process of ensuring that policies are the result of politics and technocratic competence rather than oligarchic rule. In a nutshell,  the key long-term challenge will be “regaining” a state which over the past 2 decades or more was treated by the  RPA and the oligarchs linked to it as their private property or private ‘network state’  – and without adversely affecting the country’s defence capability.

The situation is likely to continue being very fluid for the months ahead as it has been since the early part of the year. In one sense,  it can be said that  the ‘Revolution’ has already morphed through 4 shifting phases or objectives:  -Get rid of Serzh Sargsyan;  -Get rid of the RPA;  – Hold Free & Fair elections;  and (now, looking ahead)  -Win those free & fair elections.

Regional context – more of the same?

On foreign policy and regional implications,  Nikol  Pashinian has sought to convey since coming to power that internal changes in Armenia do not affect geopolitics  i.e. the substance of the country’s external relations remains as is.   Despite saying different things in opposition,   he has underlined that Armenia will remain in the CSTO,  the Eurasian Economic Union (EES), Customs Union and CIS. His first visit abroad after becoming prime minister was to Russia (the EES summit in Sochi) in mid-May.  And then to Moscow in mid-June for a bilateral meeting with President Putin.   In mid-July he was in Brussels, partly to attend the EAPC (Euro-Atlantic Partnership Council) at summit level as part of the NATO Summit on 11th/12th July.   The main message he delivered in Brussels is that Armenia is no longer a corrupt, oligarchic, undemocratic state failing to represent the will of the people.     And his strong card  in his approach is the ‘legitimacy’ factor.  He has enough support from the people who will stand behind him,  at least in the short to medium term as he charts the waters ahead.

Russia’s approach:

As mentioned above,  Moscow’s stance over the coming months is going to be a very important factor – and a crucial space to watch. Thus far,  until the arrest and detention in custody of Robert Kocharyan,  the approach had been fairly restrained. But it is clearly looking for a number of assurances behind the scenes.   And the ‘levers’ that Moscow has at its disposal are many, whether in the energy sphere, ‘strategic assets’,  and the whole issue of arms supplies.   One overarching concern that persists comes back to the familiar mindset of Kremlin views:  namely,  that  street protests do not or should not ultimately be seen to win out . In that connection,  former Georgian president Mikheil Saakashvili’s reported remarks on 2 August [Mediamax.am],  in which he reiterated an earlier claim from April taking some credit  for the revolution in Armenia, are (at best) unhelpful in this connection, and really only serve to aggravate perceptions and stir sharp reactions.    There are those furthermore who might, for example, draw comparisons between Nikol Pashinian and the Russian opposition activist Aleksandr Navalny.  While there are more differences than similarities,  nevertheless some uncomfortable (for Moscow) general parallels do exist in terms of two anti-corruption campaigners, who spent time in prison, and resonate with the public mood..

NK prospects:

Finally, on Nagorno Karabakh (NK),  the conventional wisdom given regional constraints is there is unlikely to be any read-across or opening from changes in Armenia for the NK situation.  On the one hand Nikol Pashinian has made two important statements in recent weeks:  Firstly,  that he is ready to talk peace with Azerbaijan on Armenia’s behalf,  not NK’s simply because he does not represent the people living  there who have their own institutions.   And, secondly, that there should be peaceful messages and signals coming from Baku in order to consider a compromise settlement or resolution.   That is because the current militaristic approach will only constitute a broader threat to peace in the region.. However,  President Ilham Aliev made Baku’s position  clear in remarks on 2 August.  He was dismissive of the idea of a new initiative of talks, involving Stepanakert.  He said Baku wants peace – but it also wants its territory back.  And until that territory is returned “there will be no peace” (Turan, 2 August 2018).

Based on that stance,  and the limited room for manoeuvre for the new government in Yerevan ahead of expected elections,  it is hard to see any early prospect  for progress in talks.   But it may not be beyond the realms of feasibility to achieve at least some easing in the aggressive rhetoric and a ratcheting down in militaristic pressure (from Baku).  An area that could or should be explored is the scope for reinstating a senior-level ‘hotline’ between Baku and Yerevan.   That might be something to watch, and not least  perhaps  in the context of President Aliev’s visit to Moscow, scheduled for 1st September.  Then again,  there is always the disconnect between ‘western’ analysis of what should or might happen – and local patterns of behaviour in the Caucasus which do not always conform to what might seem a desirable or logical way forward.

Footnotes
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