MCA BI-WEEKLY REPORT -- JULY 26, 2004

UNCLAS SECTION 01 OF 02 YEREVAN 001641

SIPDIS

SENSITIVE

DEPT FOR EUR/CACEN, EUR/ACE, EUR/PGI, DRL, EB
DEPT PLEASE PASS USAID AND MCC

E.O. 12958: N/A
TAGS: PREL PGOV EAID AM
SUBJECT: MCA BI-WEEKLY REPORT -- JULY 26, 2004

REFS: A) YEREVAN 1556 B) HYUSYAN-DUTKEWYCH JULY 22 E-MAIL


Sensitive but unclassified. Please treat accordingly.

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SUMMARY
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1. (U) The GOAM has indicated that it may be ready to
present its MCA compact proposal to the GOAM's MCA Board by
September 1, and to follow this with a consultative process
that we understand will include the donor community here. A
recent consultative session in Armenia's Syunik region was a
first-hand indication for Emboffs that the GOAM has taken
the MCA process to the people, but that logistical
complications resulting from using the country's Poverty
Reduction Strategy Paper (PRSP) consultative structures may
be causing the GOAM to miss some of its target audience.
The GOAM acknowledged this issue during a recent GOAM MCA
Board meeting and told the Embassy that it is addressing the
problem and repeating meetings where all NGOs might not have
had the opportunity to attend. Recent press releases
regarding high-level USG-GOAM meetings in Washington and in
Yerevan have put MCA-related issues back in the media
spotlight. End Summary.

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GOAM AIMS FOR SEPTEMBER 1 INTERNAL DEADLINE
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2. (U) MCA issues dominated discussion during a July 21
meeting of Armenia's PRSP commission (ref B). USAID and IFI
representatives attended the meeting at the GOAM's
invitation. Minister of Finance and Economy Vardan
Khachatryan announced during the meeting that the GOAM was
reviewing the input and proposals from a number of NGOs and
international organizations and would incorporate them to
the extent possible into the GOAM's compact proposal by its
internal September 1 deadline. According to Khachatryan,
the GOAM will submit the proposal o/a that date to the GOAM
MCA Board for comment and review. We understand that this
will be followed by another round of public consultations,
which will also include the donor community here, prior to
submitting the compact proposal to the MCC.


3. (U) The MFE acknowledged publicly during the meeting that
the use of the GOAM's PRSP consultative structure has caused
some confusion in some cases and may have "unintentionally
missed some of the NGO community." It was also reported on
the sidelines of the meeting that the GOAM has instructed
regional governments and PRSP NGO networks to repeat or
expand consultative sessions in those areas where this may
have occurred. According to reports, select Yerevan-based
NGOs that have not attended or commented on previous MCA
discussions, including the Open Society Institute, have been
recently approached by the GOAM's MCA Board and invited to
hold consultative sessions with their affiliate NGOs and
submit their comments this month.

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EMBOFFS ATTEND CONSULTATIVE SESSION IN SYUNIK REGION
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4. (U) Embassy and USAID representatives attended a
consultative meeting co-hosted by the GOAM MCA Board and
municipal leaders in the southern town of Goris on July 23.
Approximately 25 people attended the meeting, including
three representatives of the GOAM MCA board (whose official
capacities include responsibility for implementation of the
GOAM's PRSP). NGOs sending representatives to the meeting
included: The Goris Teacher's Union; the PERAS
Organization; the Partnership Arch; the Goris Boomerang; the
Goris Karate Federation; the Goris Artists' Union; the Tteni
Partnership; and the Employees' and Teachers' Union of the
Goris Arts Center.

5. (U) GOAM MCA Board representative and GOAM PRSP
Coordinator Hovik Azizyan opened the meeting by explaining
the GOAM's opinion that a tangible link should exist between
the PRSP and any MCA compact submission. Azizyan presented
the general sectors in which the GOAM expected to submit a
compact proposal (rural roads, irrigation, social sector
including health and/or education). NGOs took an active
role in the ensuing discussion and appeared unhindered in
voicing their opinions. In a brainstorming session, NGO
representatives and other attendees made a list of priority
areas they want the GOAM to consider when completing its MCA
compact proposal. The final list ranked the areas as
follows:
-- rehabilitation of irrigation and drinking water systems
-- school renovation and heating projects
-- rehabilitation of rural roads
-- job creation programs


6. (SBU) NGOs, while calling the meeting mostly productive,
voiced disappointment about what they perceived as
lackluster participation by other NGOs in the region. They
said that some NGO representatives were confused about the
nature of the consultations and thought its purpose was to
discuss the implications of the PRSP, not the MCA.
(Comment: Post has heard similar comments before. While the
PRSP mechanism has enabled the GOAM to quickly mobilize, it
brings with it a certain amount of history and perhaps even
prejudice on the part of some NGOs. While far from totally
debilitating it is a valid concern about the consultative
process, which the GOAM appears committed to addressing -
see para. 3 above. End Comment.) NGOs called on the GOAM
and local leaders to convene an additional meeting in Goris
and pledged to "activate" their internal NGO network to
ensure that more NGOs were present for the next meeting.

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RECENT DOMESTIC PRESS COVERAGE ON MCA
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7. (U) There has been an increase in MCA-related media
reports during recent weeks. There was generally objective
reporting of Senior Presidential Economic Advisor Vahram
Nercissiantz' mid-July meeting with the MCC Board in
Washington. In addition, MCA issues featured prominently in
coverage of Ambassador Ordway's July 13 meeting with
Minister of Finance and Economy Khachatryan. Media reports
tend to concentrate on the consultative process and
emphasize the likely areas of concentration of Armenia's
eventual MCA proposal (ref A). GOAM and World Bank sources
tell us that regular domestic coverage of the GOAM's MCA
consultative process (including meeting proceedings and
updates) continues on Armenia's public television network.
The Armenian Embassy in Washington has already begun
publicizing an August 18 press conference at the National
Press Club in Washington with Nercissiantz as likely to
cover MCA issues.
ORDWAY