ARMENIA: PRIORITIES AND ECONOMIC DEVELOPMENT AFTER THE ELECTIONS

Equilibri.net (subscription), Italy
June 8 2007

The country is facing a delicate moment in its history. Following May
twelfth’s elections democratic rule appears to be in place, however,
economic growth is unstable and is far from uniform throughout the
country. A point of force could be the energy sector. Future foreign
policy will be fundamental to improving the troubled diplomatic
situation with neighbouring countries.

Gianfranco Brusaporci Equilibri.net (08 June 2007)

Democratic elections: the key to international trust

Following the parliamentary elections held on 12 May, the Government
of Yerevan is once more in the hands of the Republican Party of
Armenia’s (RP) leader, Serzh Sarkisian. In addition to the RP another
pro-Presidential and pro-Russian party achieved a significant number of
votes, Gaguik Tsarukian’s Prosperous Armenia (PA). The opposition was
comprised of three groups: Dashnaktsoutioun (Armenian Revolutionary
Federation), Orinats Erkir (Rule of Law), and the Heritage Party
Armenia’s Central Electoral Committee (CEC) counted the votes of
1.389.521 electors out of the 2.316.038 who have the right to vote.

Of the 21 parties that participated only 5 passed the 5% minimum
threshold: Republican Party of Armenia – 457.032 votes – 32,8%
Prosperous Armenia – 204.443 votes – 14,7 Dashnaktsoutioun (Armenian
Revolutionary Federation) – 177.792 votes – 12,7% Orinats Erkir (Rule
of Law) – 95.256 votes – 6,8% Heritage Party – 80.890 votes – 5,8%

This is the fourth time that Armenia has voted since the collapse of
the Soviet Union and the first time that elections have been judged
positively by the international observers. An Organisation for Security
and Cooperation in Europe (OSCE) report – the organisation sent 300
experts – states that the elections were held "in conformity with
international democratic standards". The head of the OSCE mission,
Boris Frlec, underlined how the vote had been important to restoring
the trust of the Armenian citizens.

Notwithstanding, opposition leaders protested claiming that
the electoral results had been manipulated. A demonstration was
held during which exponents claimed to have proof of electoral
irregularities conducted by the winning parties during the counting
of the votes. The Orinats Eerkir party, which lost about 6% compared
to the previous elections in 2003, declared their intention to appeal
to the Armenian Constitutional Court. The current tense climate is
not helping the country to concentrate on more relevant issues and
of distancing the spectre of internal revolution, as has happened in
Georgia and the Ukraine.

Due to the positive reports of the international observers Armenia
has conquered the trust of the Unitised States and Europe. Both had
applied diplomatic pressure to the political classes in order to
assure the correct management of the voting procedure. The US has
promised 200 million dollars to assist development while Europe has
committed to examining a series of agreements with Armenia.

Javier Solana, the European Union High Representative for Common
Foreign and Security Policy, commented that: "the Armenians have
demonstrated greater political maturity in respect to the past and
have been an example to the other countries in the region" Economic
development is tied to foreign policy

The Armenian electoral campaign was somewhat confused. The opposition
was defeated because they presented themselves in a disjointed
fashion without any common plan that represented an alternative
to the pro-Presidential parties.All 21 parties focused above all
on development and foreign policy; however, none of them gave any
convincing arguments in merit to how the situation of these sectors
could be improved.

In an interview given to the Russian daily newspaper, Nezavisimaja
Gazeta, Sarkisian described the Republican Party’s seven priorities: a
strong army, creating new jobs, territorial development, the doubling
of the lowest pensions, health services for all of the citizens,
quality education, and a competitive scientific sector. The Premier
claimed to be capable of implementing the necessary reforms and noted
the positive economic results that have been reached over the last two
years; in 2005 and 2006 Armenia’s GDP grew by 13 and 14% respectively.

>>From a 2006 International Development Agency (IDA) analysis the
growth of GDP can be traced over a ten year period, the average is
10%. In the same timeframe the level of poverty has decreased from
55 to 30%.These positive signs are insufficient, the economy is still
to grow in some of the internal areas of the country, for example in
the mountain areas where infrastructure, transport, and communications
are lacking.Change is required, According to data contained in a 2006
report by the International Organisation for Migration (OIM), since
1998 around 1 million people have emigrated, 300 thousand between
2002 and 2006 alone.

To contrast this phenomenon on 3 April the Energy Minister, Movsisian,
stated that the development strategy for the RP had to focus on
industrial production. This, in his opinion, would create employment
and better the quality of life of citizens in general.

Movsisian has announced the restarting of chemical production in the
Mayor Ghukasian region, suspended in 1988 due to an earthquake.

According to predictions this will create around 370 new jobs.

The opposition parties have concentrated on developing the poorest
and most needy areas. The objective is to create an equal balance
throughout the country. In particular attention is being paid to the
northern border regions which are characterised by economic depression
and a high level of unemployment. In Gyumri, the principal town of the
north-west region of Shirak, the Orinats Erkir party has promised the
local population that they will install aerials for the transmission
of Russian television. The party has also stated their wish to build
safer roads and bridges for the villages that remain isolated during
the winter months.

Another key element that distinguished the electoral campaign was
foreign policy. According to the majority of political leaders
Armenia’s difficult relations with the surrounding countries have
to be resolved. The most important issue regards the diverse ethnic
minorities present in Turkey, Iran, Azerbaijan, and Georgia. The
nationalist character of the populations is very strong and the
parties in government, during the electoral campaign, used this fact
to their advantage.

Due to the question of the Republic of Nagorno-Karabakh, Armenia has
particular diplomatic difficulties both with Azerbaijan and Turkey.

The borders with both countries are closed. There are no commercial
exchanges and the export of goods takes place via the Georgian
border alone.

Both political groups, government and opposition, have underlined
the necessity to resolve the Nagorno-Karabakh question, however the
majority’s position appears to be more determined. The Government has
decided that military needs to be strengthened and that agreements
have to be reached with both Russia and the United States. During the
beginning of the current year the historical Soviet ally organised a
series of military anti-terrorism exercises that involved the Armenian
forces, while the US, on 30 March, emitted an amendment that brought
military support funds to the level of 75 million dollars.

Even if the Government parties are considered pro-Russian and
those of the opposition pro-Western the effective foreign policy of
Yerevan is balanced between Russia and the United States. Military
agreements with Russia have been solid since 2002, the year in which
the Collective Security Treaty was ratified, and relations with NATO
are advancing quickly. On 12 March NATO opened an information centre
in Yerevan, the objective is to introduce the population to NATO
and facilitate relations with the Armenian Government. The Foreign
Minister has pronounced himself as satisfied that the "centre, one of
the objectives of the Individual Partnership Action Plan, was created
in the course of the first year of entry into the plan". The objective
of the Individual Partnership Action Plan between NATO and Armenia is
bilateral assistance on general themes: politics, security, defence,
science, environment, management of emergencies etc.

The most difficult foreign policy issue for Yerevan will be continuing
to ponder upon relations with the major international players. The
Government will have to exercise particular attention not to lean too
much to one side because, as Premier Sarkisian has stated, "the best
situation for us is not to be found in conflicts between the major
powers, but, on the contrary, in their collaboration".

Energy at the centre of national interests

On common point in the electoral campaign was the will to invest in
the energy sector.

The political class understands Armenia’s geo-strategic position and
knows that this could be of benefit in the future. Iran, Russia,
the US, and Europe are all ready to ‘make friends’ with the small
south Caucasian Republic. In an astute fashion Yerevan is attempting
to maximise its interests though careful, balanced moves and through
making a series of economic agreements at international level.

Over the last few years the energy Minister, Movsisyan, has encountered
the American Energy Security Secretary, Samuel Bodman, on a number of
occasions and has assured Armenia a high level of technical assistance
and finance in order to develop the country’s energy sector.

On 19 March, in Meghri, a city on the border with Iran, the Armenian
President Kocharian and his Iranian counterpart Ahmadinejad,
participated in the opening ceremony of a new 140 km long gas
pipeline. The pipeline will unite Iran and Armenia transporting,
initially, 1,1 billion cubic metres of natural gas a year which will
rise to 2,3 after 2019. The old system only allowed the importation
from Tehran of 300/400 million cubic metres a year.The project of the
Armenian-Russian company ArmRosgazprom takes into consideration the
construction of a further 197 km on Armenian soil that will connect
the line from Kajaran as far as Ararat. This second phase will require
52 billion drams, approximately 144,5 million dollars. The project
which sees the frontline involvement of the Russian multinational
Gazprom will allow Armenia to improve its economic-strategic position.

Conclusions

The 12 May elections have been considered by some critics as a general
exam for the Presidential elections which will be held in 2008. Ample
popular consent for the leader Sarkisian has confirmed him as one
of the favourites to take over from the current Prsident, Robert
Kocharian. Over the coming months the choices of the new Government
regarding economic development and foreign policy will crown, or be
the fall of, Sarkisian.

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