In the list of the failed states Armenia ranks 112th, while Georgia and
Azerbaijan rank accordingly 58th and 62nd. See the full list here:

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Failed States Index Scores 2007:

Overview: Armenia

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Armenia is located in Southwestern Asia, bordering Azerbaijan, Georgia, Iran
and Turkey. It has a population of almost 3 million and a GDP per capita of
$4,500. Armenia became independent in 1991 after the collapse of the Soviet
Union. It had a modern industrial sector under the Soviet system of central
control, but this was neglected following the Soviet Union’s collapse and
economic activity turned to small-scale agriculture. The population is 97.9%
Armenian, 1.3% Yezidi (Kurd), 0.5% Russian, and 0.3% other ethnic groups. It
is also 94.7% Armenian Apostolic, 4% other Christian, and 1.3% Yezidi.

Social Indicators
Demographic pressures received a rating of 6.0 in the Failed States Index
2006 (FSI 2006). Population growth was negative at -0.19%. A drop in the
birth rate from 21.6 per 1,000 in 1989 to 10.2 per 1,000 in 2002 coincided
with a rise in the death rate from 6.5 per 1,000 in 1989 to 8.5 per 1,000 in
2003. The unemployment rate is very high, however, and is estimated at
32-35% (three times the official figure). The high unemployment rate, which
has caused many people to return to subsistence farming, is largely
responsible for the rating of 6.0 for demographic pressures. The rating for
refugees and internally displaced persons (IDPs) was 7.1. Armenia is
currently hosting about 235,000 refugees from Azerbaijan and also has about
50,000 IDPs resulting from the conflict with Azerbaijan over the
Nagorno-Karabakh region from 1988 to 1994. Group grievance was rated 5.0.
Although the conflict with Azerbaijan is still unresolved, Armenia’s
population is now very homogenous because most of Armenia’s ethnic Azeri
minority fled to Azerbaijan as a result of the conflict, while 250,000
ethnic Armenians fled to Armenia from Azerbaijan. The homogenous population
accounts for the low level of group grievance. Human flight was high, with a
rating of 7.0 in the FSI 2006. An estimated 800,000 people have left the
country since the fall of the Soviet Union, giving Armenia a net migration
rate of -5.72 per 1,000 people. The rate of emigration has fallen in recent
years, however.

Economic Indicators
Armenia has a high level of inequality, resulting in a rating of 6.0 for
this indicator in the FSI 2006. The top 10% of the population controls 41.3%
of the wealth while the bottom 10% controls only 1.6%. The high unemployment
rate combined with the return to subsistence agriculture from manufacturing
has exacerbated the situation. The rating for the economy was 5.1. Although
Armenia suffered from negative economic growth during the 1990s as a result
of the conflict with Azerbaijan and the collapse of the centrally managed
industrial economy left from the days of the Soviet Union, there were
positive growth rates from 1995-2005. Armenia has stabilized its currency
and reduced inflation significantly, and the economy grew by an estimated
13.9% in 2005.

Political/Military Indicators
Legitimacy of the state received a rating of 7.0 because of government
corruption and an excessive concentration of power in the hands of the
president. The president, Robert Kocharian, was first elected in 1998 and
was reelected in 2003, but the elections were deemed flawed by international
observers. An Anti-Corruption Council was created in 2003, but the fact that
its members are mainly taken from the government or the judiciary has called
its independence into question. Armenia received a rating of 6.5 for public
services because, although public services were fairly well developed under
Soviet rule, they have deteriorated since independence. The adult literacy
rate is 99%, but spending on education has been cut from 6.6% of GDP in 1990
to 2% in 2003. Many schools now close in the winter because they are unable
to provide heating, and books and teachers are in short supply. Healthcare
has also deteriorated since independence.

Although Armenia had the highest life expectancy of any of the Soviet
Republics, the number of hospitals, clinics and health professionals has
declined since independence. Although human rights were generally respected,
human rights was rated 6.0 in the FSI 2006 because there were scattered
incidents of human rights abuses. These included beating of detainees and
impunity of the security forces. The rating for the security apparatus was
4.5 because the military’s support for the president played an important
role in preserving presidential power. The indicator for factionalized
elites received a rating of 5.8 because the country’s ethnic homogeneity
reduced political factions, and the president and his supporters (mainly the
Republican Party) were the dominant force in government, with the opposition
having very little influence. The rating for external influence was 5.5,
mostly due to Russia’s economic influence and military bases. Armenia relies
on military support from Russia, and much of Armenia’s energy sector is
under Russian management. Armenia also receives substantial amounts of aid
from the U.S., thanks, in large part, to the activism by large Armenian
community in the U.S.

Core Five State Institutions

Leadership: Weak; Military: Moderate; Police: Weak; Judiciary: Weak; Civil
Service: Moderate

Armenia has a strong president and a unicameral parliament. President Robert
Kocharian was first elected in 1998 and reelected in 2003 in elections that
international observers considered to be flawed. The last parliamentary
elections, in which the pro-president Republican Party won the largest
number of seats, were held in 2003 and were also considered to be flawed.
Although the opposition organized several demonstrations calling for a
public vote of confidence in the president, a government crackdown ended the
protests and no vote of confidence was held.

Presidential power is connected to the military, with the officer corps
playing an influential role in government. The military consists of a total
of about 45,000 troops.

Impunity was a serious problem in the police force. Members of the police
were involved in a number of human rights abuses, including beating of
detainees and other forms of abuse. The police force lacked the resources or
established procedures to end the abuses, and there were no reforms in
progress. Corruption was also an issue and the police often set up
checkpoints to extort bribes from motorists.

Judges are appointed by the president without parliamentary approval, which
has resulted in a judiciary that is weak and lacks independence.

Civil service reform has been progressing since 2002, which includes raising
salaries to reduce corruption and attract more qualified staff, but
corruption still remains an issue.

Prognosis
Armenia, like many of the former Soviet Republics, has an authoritarian
government and is still struggling with the transition to a market economy.
The conflict with Azerbaijan over the Nagorno-Karabakh region also remains
unresolved. In addition to reaching an agreement with Azerbaijan over the
Nagrono-Karabakh issue, the government needs to allow greater democracy,
uphold human rights, and focus on reducing unemployment to prevent the
Armenian workforce from leaving the country or becoming too dependent on
subsistence agriculture.

Copyright (C) 2006 The Fund for Peace