ROCKING THE BOAT
by Arpi Harutyunyan

Transitions Online
Aug 4 2008
Czech Republic

Armenia’s new prime minister vows to combat graft and overhaul the
government. But changes won’t come easily.

YEREVAN | Environmentalists campaigned fervently against plans to open
a large tract of relatively untouched forest land to strip mining,
only to watch the Armenian National Assembly approve the deal anyway.

This spring, as the snows in the mountainous north began to melt and
work started at the Teghut mine, a coalition of conservation groups
renewed their push to have the government reconsider the approval
of what they contend will cause irreversible damage to the nation’s
dwindling forestland.

More accustomed to setbacks than progress in dealing with political
leaders in Yerevan, environmentalists got a shock when the country’s
new prime minister, Tigran Sargsyan, not only agreed to discuss their
concerns, but seemed to cozy up to their arguments.

Prime Minister Sargsyan, center. Photo by Anahit Hayrapetyan.

"We can’t damage nature, because it’ll cost our state and the people
much more to repay," Sargsyan told a group of conservationists on
20 June. "And clearly, we need to take that into account from the
very beginning and make balanced decisions. We need not be seduced by
industry’s statistics alone, but realize the importance of providing
a proper living environment for people."

Environmentalists hailed as unprecedented the prime minister’s
decision to meet face-to-face and to openly discuss the government’s
controversial approval – even if the mining operations in northern
Armenia’s Teghut forest continue.

"This was the first serious meeting with a high-ranking official
like the prime minister within the last 15 to 20 years," said Hakob
Sanasaryan, chairman of the Greens’ Union. "But the outcome of the
meeting showed the discussion in fact was a formality. Maybe he will
carry out serious reforms in other spheres, but not Teghut, I think."

A NEW STYLE OF LEADER

Formality or not, the meeting is one sign that the prime minister, who
has been in office less than six months, is trying to change Armenian
politics. With a reputation for corruption, divisive politics, and
a political culture wedded in favoritism, the country has a long way
to go. But the former Central Bank chairman has been talking change –
and has already ruffled some feathers in the process.

Since taking office after an explosive political spring, Sargsyan
met lawmakers discouraged by the deadly crackdown on demonstrators
who claimed that the dominant Republican Party stole the February
presidential election. He is also setting standards almost unheard
of among public officials in Armenia – punctuality, competence and
openness.

Tatul Manaseryan, an economics professor at Yerevan State University
and a former independent member of the National Assembly, believes
the prime minister is trying to shake up the system and rattles off
a long list of changes.

"The PM has started important reforms from his office: the work
day starts at 9 a.m., the government sessions are as transparent as
possible, he demands computer and other kinds of literacy from the
ministers, organizes regularly scheduled meetings with citizens and
actively responds to the questions raised, made a call for cooperation
to the opposition and participated and spoke at the opposition
congress, set a compulsory requirement for the ministries to work
with non-governmental organizations, and so on," Manaseryan said.

Indeed, Sargsyan has been unafraid to criticize corruption, bribery,
smuggling, and other problems – charges often made by monitoring
organizations and citizens, but rarely from the mouths of senior
politicians.

"The number one problem in the Republic of Armenia is not the problem
of democracy, nor the lack of freedom of expression," Sargsyan recently
told the National Assembly. "The number one problem is the corruption
that hinders all our reforms. If we don’t manage to create equal
conditions of competition for economic entities, there won’t be any
democracy in Armenia. That is the basis and corruption is our number
one enemy."

In an effort to combat corruption and improve the tax system in this
close-knit nation of 3 million people, the prime minister announced
on 19 June the creation of a council to monitor the customs service
and tax collections. He also set up telephone hot line to record
feedback and complaints.

DIFFICULT HURDLES AHEAD

Sargsyan has promised to openly discuss these problems and make public
cases when public servants are punished for breaching the rules.

"We have thousands of corrupt people and the problem is that even when
we replace them with others, we have no guarantees the newcomers will
not continue the tradition," he told an anti-corruption committee
on 26 June. "We have 2,000 tax collectors in the tax agency, and
200,000 more dreaming of taking the position not because they are
ready to honestly serve the country, but because they see it as an
easy opportunity to get rich."

Whether Sargsyan can overcome entrenched interests and succeed is open
to speculation. "It will take several months to reveal whether the
middle and minor corrupt officials, or the ‘sharks,’ have been made
accountable," Manaseryan said. "It is still too early to make judgments
whether the open and transparent work style will be compulsory for all,
or just the PM and the colleagues obedient to his call. But I see no
grounds to mistrust the newly appointed officials. At the same time I
believe the atmosphere in which those promises were given will create
more obstacles than favorable conditions for reforms."

Although Sargsyan is not aligned with a party, he calls the
shots in parliament. The Republican Party controls 64 of the 131
National Assembly seats, and draws support from smaller political
groups. Sargsyan’s anti-graft campaign plays into the hands of the
opposition, which for years has accused the leading party of arrogance
and fostering corruption. After stormy parliamentary elections in 2007
and a bitter presidential contest earlier this year, the premier’s
polices may appeal to a disillusioned public thirsty for change.

President Serzh Sargsyan appointed Tigran Sargsyan prime minister on
9 April. (The men are not related.) The new premier is a graduate
of the Yerevan State Institute of National Economy, and studied at
the N. A.Voznesensky Financial-Economic Institute in Leningrad, now
St. Petersburg. He’s also been trained at Georgetown University’s
International Law Institute in Washington.

After serving in various government posts when Armenia gained
independence in 1991, Sargsyan served as chairman of the Armenian
Bankers’ Association before moving to the Central Bank in 1997.

At 48, the guitar-playing father of three is a member of the Armenian
Orthodox Church and is well known around the capital. During the
blazing heat of Yerevan’s summer, Sargsyan and his family are often
seen at swimming pools in town.

REPUTATION HONED IN FINANCE

Sargsyan developed a reputation as a reformer while at the Central
Bank, and won praise from international institutions for helping
the country emerge from the dire economic conditions it endured
after the collapse of the Soviet Union and its turf war with
Azerbaijan. Armenia’s economic fortunes have improved markedly in
the past decade, including a decline in poverty and sharp rise in
growth, but the World Bank and monitoring agencies say corruption
and bureaucratic inefficiency continue to be a drag on the country’s
potential.

Dominique Strauss-Kahn, managing director of the International Monetary
Fund, was among the first to congratulate Sargsyan when he became prime
minister. "Numerous very important reforms were realized within your
10-year chairmanship of the Central Bank, including the alleviation of
inflation, introduction of an effective system of bank supervision,
and development of anti-laundering legislation." Strauss-Kahn also
praised Sargsyan’s "particular commitment to the continuity of reforms
and intelligent governance."

But not everyone is so glowing. Levon Ter-Petrosian, a former president
who lost to Serzh Sargsyan in the February election, recently told
an opposition rally that as Central Bank chairman, Tigran Sargsyan
cost the country dearly when he sold gold reserves for $17 million
when prices were low.

"This is absurdity in all aspects," he told the rally. "Gold is the
most liquid asset. States sell gold in serious situations when famine,
war, natural disasters and other things threaten the country. What
stupid man on earth would sell gold, when there are no such threats?"

Beyond combating corruption, the prime minister has vowed to improve
the quality of public service, which in many offices still suffers
from a Soviet-era work ethic.

"Our citizens’ major complaints with the state here is that the state
provides bad quality, untimely services and creates problems for them,"
Sargsyan told the National Assembly. "As a result we have serious
complaints and mistrust in the government. The order given to all
ministries and agencies was the following: ‘Together we have to catalog
the services provided to our citizens and monitor their quality.’ "

Sargsyan also wants overhaul the passport and visa agency. The
government gets dozens of complaints about the agency from citizens
and the country’s large diaspora returning for work and holidays.

"Obviously, we have serious problem in this sphere. It’s corruption –
when the service is delivered in the name of the state, but money is
extorted by a set price list," the prime minister said.

BURIED IN GRAFT

Sargsyan appears intent to tackle the graft that is inescapable
in Armenia, even in death. "The corruption [in cemeteries] simply
flourishes. If you want a proper burial plot, a big place, money will
solve the problem. And the cynicism has reached its height and nothing
keeps people back," the prime minister said in a speech on 26 June.

"Last week, we took part in the funeral of one of our chess
grandmasters. He was a renowned, talented chess player; the chairman
of the chess federation is the president of the republic, I am the
deputy chair, which means that everyone was well aware we were in close
contact with that talented chess player. However, no one appeared to
be constrained from taking a bribe of $2,000 to provide a place in
the cemetery."

Changing this system could take time and not everyone is convinced
Sargsyan can succeed.

"Tigran Sargsyan seems a well-bred, smart person at first sight,"
said Gayane Ohanyan, 48, a resident of Yerevan. "He is well educated,
has a lot of work experience. But it is unbelievable [that he can]
make significant reforms in a corrupt system like this, especially
as the officials are the bearers of the system of traditions."

Yerevan State’s Manaseryan says Sargsyan’s reform plans will take time,
but are feasible. "The process of getting rid of weeds is never short."