TER-PETROSSIAN APPEALS TO OLIGARCHS FOR SUPPORT WHILE

UNCLAS SECTION 01 OF 02 YEREVAN 001431

SIPDIS

SENSITIVE

SIPDIS

DEPT FOR EUR/CARC

E.O. 12958: N/A
TAGS: PGOV PHUM PREL AM
SUBJECT: TER-PETROSSIAN APPEALS TO OLIGARCHS FOR SUPPORT WHILE
DEFENDING HIS VIEWS ON TURKEY

REFS: A) YEREVAN 1364 B) YEREVAN 1307

YEREVAN 00001431 001.2 OF 002


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SUMMARY
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1. (SBU) Addressing approximately 15,000-20,000 citizens gathered at
his third public rally in Yerevan on December 8, ex-President Levon
Ter-Petrossian (LTP) urged oligarchs and businessmen to throw off
"the yoke" of the Kocharian regime and support his candidacy. LTP
also responded to Kocharian's labeling him as pro-Turkish, blasting
the latter's regime for conducting a foreign policy of gimmicks that
has only exacerbated Armenia's isolation. He said recognition of
the genocide should be for the Armenian Diaspora to address, not
Armenia, as he voiced his continued support for normalizing ties
with Turkey without preconditions. END SUMMARY.

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APPEAL AND PARDONING OF THE OLIGARCHS
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2. (U) In a conspicuous effort to expand his camp's number of
influential supporters, LTP urged Armenia's leading oligarchs - most
of whom are dependent upon or allied with President Kocharian - to
throw off the government's "yoke" and join him in changing the
regime. Drawing historical comparisons between rulers and slaves
during the medieval Mongol empire, LTP challenged oligarchs to
rethink their ties with President Kocharian and Prime Minister
Sargsyan, asking "Until when will you tolerate that humiliation" and
"Until when will you put up with your slave-like status?"


3. (U) LTP pointedly reminded Armenia's super wealthy that the
ruling regime could take their property at any moment. He also
disputed the widely-held belief that oligarchs were allowed to evade
taxes in return for supporting the authorities. He contended that
oligarchs in fact paid taxes, but instead of the state budget these
ended up in the pockets of the "jackals" running the country.
Extending an olive branch to the oligarchs and ostensibly
exonerating them from any misdoings, LTP acknowledged that they had
no choice but to play by the illegal rules set up by the
authorities.

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APPEAL TO BUSINESSMEN AND RURAL POPULATION
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4. (U) Ter-Petrossian also reached out to businessmen of small and
medium-sized enterprises, condemning government plans to raise their
taxes by abolishing the so-called "simplified tax" which they have
paid until now. In a move that the government says will help it
combat widespread tax evasion, the parliament earlier this year
amended existing tax legislation to make it harder for businesses to
qualify for the simplified tax. (Note: According to media reports,
under the simplified tax policy small and medium business paid tax
worth approximately five percent of revenues. Under the amended
rules, effective January 1, small and medium business will have to
pay both a VAT (20%) and profit tax (20%). End note.)


5. (U) In condemning the measure, LTP reiterated his claims that the
government-linked super rich are increasingly monopolizing the
Armenian economy. In a nod to Armenia's rural population, LTP also
called Armenia's farmers the unrecognized heroes of modern times,
crediting them with sustaining Armenia during the early nineties -
when war, closed borders, and energy blockades threatened Armenia's
survival.

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DEFENDS VIEWS ON TURKEY
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6. (U) LTP responded to Kocharian's portrayal of him as pro-Turkish
by defending his views on Turkey as logical and in Armenia's
interests. He also characterized the last ten years of Armenian
foreign policies as "shameful defeats." LTP said Kocharian's
foreign policies were conducted as "gimmicks," were done in vain,
and only served to isolate Armenia further. Among others, he cited
Armenia's misguided efforts spent on preserving Section 907 of the
Freedom Support Act penalizing Azerbaijan for its blockade of
Armenia, genocide recognition by Turkey, and opposition to the
Kars-Akhalkalaki-Baku railway.


7. (U) In reaffirming his conciliatory position on normalizing ties
with Turkey, LTP said the Diaspora, not Armenia, should pursue
international recognition of the genocide. LTP questioned the sense
and sincerity of Kocharian's declaring recognition a major foreign
policy goal, saying it only served to antagonize the Turks. He said

YEREVAN 00001431 002.2 OF 002


neither ultimatums nor cornering Turkey could force the latter to
change its position. At the same time, however, LTP rejected as
"unacceptable and offensive" Turkish calls for creating a bilateral
commission of historians to assess whether the mass killings of
Ottoman Armenians constituted genocide. He also said Armenians
should find the strength to overcome the "victim's mentality" and
use the past as a source for revival rather than continued grief.

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COMMENT
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8. (SBU) Seeking to capitalize on the momentum and numbers of rank
and file followers his rallies continue to generate, LTP must now
lure the wealthy and powerful to his cause. With many of them
dependent on Kocharian for their continued prosperity, this will be
an uphill climb. Not one has come to the defense of the sole
oligarch who has publicly supported LTP, and whom the authorities
are aggressively pursuing with tax inspections and charges of
financial misfeasance. On foreign policy matters, LTP also has a
hard sell in the face of a relentless, one-sided propaganda campaign
that characterizes him as pro-Turkish, pro-Azeri, and a traitor on
Nagorno-Karabakh. While his views may resonate in various segments
of the population, the fact that they are effectively drowned out by
pro-Sargsyan propaganda means their intended audience rarely gets to
hear them. END COMMENT.

PENNINGTON