Haykakan Zhamanak , Armenia
March 5 2009

Programme may be suspended

Following the known report of the US State Department, 2008 Human
Rights Report, Armenia may get another slap from the United States.

The thing is that the Millennium Challenge Corporation is set to hold
its board’s meeting in Washington on 13 March. This meeting will be
crucial for Armenia. The Millennium Challenge Corporation [MCC] was
supposed to allocate 70m dollars in grant to Armenia this year. We
should understand that "year" means from 29 September 2008 to 29
September 2009 because this is the fiscal year for the MCC.

After the 1 March 2008 events, the corporation’s director, John
Danilovich, sent a letter to [then president] Robert Kocharyan on 11
March, warning that because of the regress in democracy in Armenia,
the Millennium Challenge Account could be suspended, and that this
should be regarded as an official warning.

Three months later when the project was discussed in Yerevan, US
charge d’affaires Joseph Pennington, in response to a question voiced
by a member of the programme’s board of trustees if the more funds
could be allocated to Armenia due to the dollar depreciation, said
that "the original amount is under question, not speaking about
additional funds". The press reported about this at that
time. Pennington also said that if Armenia had the scores of 2008 in
2006, no agreement would have been signed with Armenia. On 12 December
2008, the MCC refused to extend the 7m dollar tranche to Armenia under
the sub-project of rural roads, quoting the state of democracy in the
Republic of Armenia.

[Passage omitted: In MCC’s December 2008 report, Armenia scored "red"
in five out of six sectors that are used to make a decision whether to
extend the grant or not.]

In addition, the corporation takes into account the US Department of
State report on human rights, the corruption level report issued by
the Transparency International, and the report by the Human Rights
Watch. If taking into account the Department of State report and the
other reports – which contained tough wording – it is clear that
Armenia is in a risk zone. This means that all the projects here could
be considered as failed, and the "red" scores are serious threats that
the Millennium Challenge Account may be suspended in Armenia. The
agreement between Armenia and MCC was signed on 27 March 2006, and the
programme’s start was on 29 September 2006. Armenia was supposed to
get 236.65m dollars over five years’ period

[Passage omitted: the breakdown of the amount for each year]

The MCC has so far allocated about 32m dollars to Armenia while
Armenia was supposed to have received more than 100m dollars. On 13
March the corporation will make a semi-annual review to see how the
candidate countries meet the requirements. Our sources in Washington
told us yesterday that MCC may really suspend the funding. This,
however, depends on several factors. According to our sources in
Washington, the Armenian lobby in the US has been working hard to have
this grant extended to Armenia; it’s a question of prestige for
them. However, the US government uses this programme as a pressuring
instrument, and an effort will be made to get concessions from Armenia
in the issues of the Karabakh conflict and relations with Turkey. Our
sources also say that the US will issue more reports on Armenia,
especially on the economy, and most likely, they are going to be
toughly worded.