Reuters, US
March 7 2008

ANALYSIS-Riots, standoff destabilise Armenia

Fri Mar 7, 2008 8:02am EST By James Kilner

YEREVAN, March 7 (Reuters) – A political standoff has destabilised
Armenia and threatens stability elsewhere in the volatile Caucasus,
even though soldiers have restored order in the capital after the
worst street violence since independence.

President Robert Kocharyan declared a state of emergency in Yerevan
last Saturday after eight people were killed in clashes between
police and protesters who say he rigged a presidential election on
Feb. 19.

Armenia is a Christian state of 3 million people on the edge of the
Caucasus, a major energy route from Asia to Europe.

"Armenia has had a reputation as the most stable country in the
region and any sign of instability here is a concern," a Western
diplomat said.

The protesters say the election was rigged against former President
Levon Ter-Petrosyan, who accuses Kocharyan and Prime Minister Serzh
Sarksyan of nepotism and corruption. Sarksyan was declared the winner
with nearly 53 percent of the votes.

"He opened a Pandora’s box of questions which started to resonate
with a lot of people," said Svante Carnell of the Institute for
Security and Policy Development in Stockholm.

In Greek legend Pandora, the first woman, opened a box that releases
evil and misery on the world.

Kocharyan and Sarksyan are part of a group that has ruled Armenia for
a decade and comes from the disputed border region of
Nagorno-Karabakh, which threw off Azeri rule during a war in the
1990s.

Witnesses at rallies say Ter-Petrosyan has whipped up anti-Karabakh
sentiment to present the government as greedy outsiders, a tactic
that political analysts say stokes tensions.

Badges handed out at election rallies declared: "I’m a true
Armenian". In interviews Ter-Petrosyan alluded to the government as
"Tartar-Mongols", who in Armenian stories are portrayed as clan-based
Muslim invaders.

"This is a dangerous tactic which could divide Armenians further and
lead to more violence," Alexander Iskandaryan, head of the
Yerevan-based Caucasus Media Institute, said.

DISSENTERS

The government says the 20-day state of emergency, banning
demonstrations and censoring media, is needed to restore stability,
hunt for illegal weapons and counter coup plots.

Opponents say the government is abusing its powers to crush dissent
and have vowed to resume the daily protests which had regularly
attracted 20,000 people since the election, in which Ter-Petrosyan
won only 21.5 percent of the votes.

Outside Yerevan’s central market, labourers are knocking together
shelves in a supermarket looted on Saturday. Dozens of protesters and
police are recovering in hospitals.

Mediators from the United States and Europe are trying to bring the
sides together but neither has agreed to negotiate.

"There’s a chance that the events of Saturday radicalised and
polarised the people and there’s also a chance of further street
protests," Iskandaryan said.

Support from the army is vital for Kocharyan and Sarksyan, political
analysts say. The army has been loyal to the government but its
support is not guaranteed.

Any uncertainty could dent foreign investment to Armenia which last
year hit about $600 million, much of it in the construction and
telecommunications sectors.

Despite Armenia’s rugged terrain, lack of natural resources and
closed borders with Turkey and Azerbaijan, its economy grew in the
last decade, helped by remittances from a huge Armenian diaspora.
More Armenians live outside the country than in it.

In 2007, Armenia’s economy grew by nearly 14 percent to around $10
billion and Armenia has an average income per person similar to Egypt
or Albania.

But many people, especially in Yerevan, blame the government for the
large gap between rich and poor, inflation and high unemployment. One
in four Armenians lives in poverty.

Any leadership weakness in Yerevan could unsettle the fragile peace
with Azerbaijan, which said 12 Armenians and four Azeri soldiers died
in clashes in Nagorno-Karabakh this week.

"An unstable Armenia is a big problem and threatens to upset the
whole region," Iskandaryan said. "This is a small region where all
the countries and peoples are interwoven."

It could also impact Georgia and Azerbaijan, which host a pipeline
that pumps 1 million barrels a day of oil from the Caspian Sea to the
West, a major energy source for Europe.

Instability could spill over into border areas of Georgia where
thousands of Armenians live.

Georgia also imposed a state of emergency in November after police
crushed protests. Azerbaijan holds an election later this year which
could prompt demonstrations. (Editing by Timothy Heritage)