EUR DAS KENNEDY'S OCTOBER 14 - 17 VISIT TO ARMENIA

C O N F I D E N T I A L SECTION 01 OF 02 YEREVAN 002348

SIPDIS

STATE FOR T AND EUR/CACEN
DEFENSE FOR OSD/ISP

E.O. 12958: DECL: 10/20/2014
TAGS: PREL PARM MARR AM
SUBJECT: EUR DAS KENNEDY'S OCTOBER 14 - 17 VISIT TO ARMENIA

REF: A. YEREVAN 2281


B. YEREVAN 1815

Classified By: Ambassador John M. Evans for reasons 1.4 (b) and (d)

Summary
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1. (C) Armenia plans to follow through with its commitment
to deploy non-combat troops to Iraq. The issue is a
political hot potato, however, and the GOAM hopes the USG
will help keep the issue out of public view while it works to
obtain the parliamentary approval required for deployment.
This was a key part of President Kocharian's message to EUR
DAS Laura Kennedy during her October 14-17 visit to Armenia.
In addition to covering a broad range of issues with top
government, business, and civil society leaders, DAS Kennedy
signed a new bilateral Article 98 agreement with FM Oskanian.
End Summary.


2. (C) DAS Laura Kennedy visited Yerevan from October 14-17
and met with President Robert Kocharian, Foreign Minister
Vartan Oskanian, Minister of Defense Serzh Sargsian, and
National Assembly Speaker Artur Baghdasaryan. She covered
the full range of issues including GOAM support to the
coalition in Iraq, efforts to open the border with Turkey,
resolution of the Nagorno-Karabakh impasse and the nature of
USG assistance for Armenia. President Kocharian and FM
Oskanian complained bitterly about a move in the UN General
Assembly by Azerbaijan to raise Nagorno-Karabakh outside the
context of the Minsk Group negotiations. (Details of the
discussion on the UNGA discussion are covered in REF A.) DAS
Kennedy also attended the launch of a USAID-sponsored program
supporting the development of new small and medium sized
businesses. Press coverage of DAS Kennedy's visit was
widespread, factual and generally very positive.

TROOPS TO IRAQ: TOUGH POLITICAL SLEDDING AHEAD
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3. (C) DAS Kennedy congratulated the GOAM for its decision
to deploy non-combat troops in Iraq, noted reports of
domestic criticism, and asked if we could help in this
regard. Officials voiced their support for the move, but
each expressed concern that it may be difficult to pass this
decision through the National Assembly, Armenia's parliament.
They noted popular concern that this deployment could affect
the security of ethnic Armenians residing in Iraq and
elsewhere in the Middle East. Defense Minister Sargsian told
DAS Kennedy that he continued to support deploying Armenian
troops in Iraq. He was confident that the support of the
MFA, MOD and the President should be enough to push the
legislation through the National Assembly. Speaker
Baghdasaryan also expressed confidence in the passage. He
did not indicate specifically when the proposal would be
dealt with, but indicated a general November timeframe.
Sargsian requested the help of U.S. troops to protect
Armenians in Iraq if they suffered from a backlash in
response to this deployment.


4. (C) President Kocharian echoed Baghdasaryan in indicating
that the government wanted to handle the planned deployment
in as low-key a fashion as possible in order to get it
through the National Assembly quickly and successfully. He
specifically requested that the USG assist the GOAM in
keeping this issue out of the public eye.

ARTICLE 98 AGREEMENT: SIGNED BUT PENDING RATIFICATION
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5. (C) DAS Kennedy signed a new Article 98 agreement with FM
Oskanian in a quiet ceremony on Saturday, October 16. (Note:
The GOAM Constitutional Court declared the previous Article
98 agreement -- the text of which referred to the Rome
Statute -- unconstitutional until Armenia ratifies the
Statute itself. In a clear gesture of good will, the GOAM
pushed a new text without reference to the Statute through
its interagency process in short order (REF B). End Note.)
Oskanian told DAS Kennedy that he expected the National
Assembly to ratify the Article 98 agreement by the end of
November. The agreement must still, however, be certified by
the Constitutional Court before it moves to the NA for
ratification.

Business and Civil Society: Some Progress, Much To Do
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6. (C) At a luncheon with leaders of non-governmental
organizations, DAS Kennedy pressed for closer engagement with
the government; remaining outside the process simply means
that dissenting voices will not be heard. She pledged
continued USG support for the development of Armenia's civil
society. Mikhael Daniliyan, chair of Armenia's Helsinki
Association told DAS Kennedy that while there have been some
improvements -- like the recent registration of Armenia's
Jehovah's Witnesses -- much progress needs to be made to
secure citizen's basic human rights. Kennedy commended NGOs
for pursuing regional ties and urged them to develop them
further with Azerbaijan and Georgia.

7. (C) At a dinner with U.S. business leaders, DAS Kennedy
heard a litany of complaints about the difficult business
environment in Armenia, with corruption stressed by all.
Byzantine, often contradictory legislation makes it tough to
run a successful business in Armenia. Sporadically enforced
laws and predatory tax inspectors were challenges, but
business leaders were nevertheless optimistic about prospects
in this steadily-growing economy.

ASSISTANCE: APPRECIATION ACROSS THE BOARD
--------------

8. (C) On October 15, DAS Kennedy attended a USAID-sponsored
event where Ambassador Evans launched a "road map" for
startup businesses in Armenia. This project, in partnership
with the Armenia's Ministry for Trade and Finance, is
intended to help new businesses navigate the difficult waters
of local legislation. In each of DAS Kennedy's meetings,
GOAM officials expressed gratitude for effective, carefully
targeted, USG assistance. President Kocharian, FM Oskanian
and Defense Minister Sargsian all expressed embarrassment
over their first attempt at a proposal for the Millennium
Challenge Corporation (MCC) and acknowledged that their
proposal was poorly focused. Kocharian said he had ordered
that it be redrafted immediately. DAS Kennedy underscored
the fact that there was still time to improve the proposal
and that the MCC remained eager to engage Armenia on this
issue.


9. (C) During her meeting with Defense Minister Sargsian,
DAS Kennedy raised the issue of the Foreign Military
Financing (FMF) projects. Sargsian noted that he wished to
spend FMF "more effectively." He brought up a recurring MOD
request to use FMF funds exclusively for the purchase of
military communications equipment. Sargsian stated that this
purchase would address one of the "basic needs" of the
Armenian Military. DAS Kennedy replied that the nature of
FMF spending is up for discussion between Embassy Yerevan's
Office of Defense Coordination (ODC) and the MOD and
expressed concern over the focus of the pattern thus far.
She welcomed the pending defense assessment as a major way to
allow the USG and Armenia to more effectively address MOD
needs.


10. (U) DAS Kennedy has reviewed this telegram.
EVANS