PRIME MINISTER UNDERSCORES COMMITMENT TO U.S.

S E C R E T SECTION 01 OF 02 YEREVAN 000926

SIPDIS

SIPDIS

E.O. 12958: DECL: 07/18/2017
TAGS: PREL PGOV PHUM KDEM AM
SUBJECT: PRIME MINISTER UNDERSCORES COMMITMENT TO U.S.
RELATIONSHIP IN PRIVATE DINNER WITH CDA

REF: YEREVAN 827

Classified By: CDA R.V. Perina, reasons 1.4 (b,d)


1. (C) SUMMARY: Prime Minister Sargsian hosted CDA and DCM to
a private dinner July 18, for a long evening of vodka toasts
and frank conversation, by way of welcome to CDA and farewell
to DCM. The overarching message of the event was the Prime
Minister's clear intent to sustain a close working
relationship with the U.S. Embassy. Sargsian brought a
workmanlike pragmatism to most issues. Substantively, he
spoke of his genuine readiness to reach an NK peace deal with
Azerbaijan, and to make the tough compromises necessary. He
was again encouraging on resolving the Radio Liberty
difficulties. He was less forthcoming on the Alexander
Arzumanian case, saying that there was more genuine dirt in
the case than we realize. He said that post-presidential
election, President Kocharian would take three or four months
off, and only then decide what to do with the rest of his
life. He described speculation that Kocharian would become
prime minister was completely baseless. END SUMMARY


2. (S) NAGORNO KARABAKH: The PM vowed himself fully committed
to negotiating a real NK settlement with Azerbaijani
President Aliyev. He told us he has all along been the voice
in the GOAM pushing hardest for getting a settlement done.
He knows that neither Armenia nor especially NK itself will
ever be attractive for serious foreign investment so long as
the conflict is unresolved, and both pay a high economic
price for this loss. He thanked the USG for detailing in a
study the potential economic benefits of resolving the
conflict, but said that the "moral" case for solving the
conflict is even more compelling, as the dynamism of
Armenia's growth would only increase. Sargsian confessed his
frustration with President Aliyev for his inconstancy in the
negotiations and constant bellicose rhetoric. CDA agreed
with the PM's points about the costs of inaction, and how
imperative it is for all sides to find a peaceful resolution.
the situation grows more dangerous with each passing year of
status quo. He noted that resolving the conflict would be a
"historic achievement" for the PM.


3. (C) RADIO LIBERTY: Sargsian again spoke positively of the
prospects for negotiating our way past the technical,
contractual problems between Radio Liberty and Armenian
Public Radio. He said he trusted the chairman of the state
television and radio commission to work out the details.


4. (C) ARZUMANIAN CASE: The PM was less forthcoming on the
case of jailed former Foreign Minister Alexander Arzumanian,
who remains in National Security Service detention under
investigation for money laundering. Sargsian acknowedged
that it is not in Aremnia's national interest, politically,
to have Arzumanian in jail, looking to many like a political
prisoner. However, he asserted that the evidence against
Arzumanian is substantial and the crime serious. Sargsian
said that, far beyond the roughly $55,000 confiscated from
Arzumanian's apartment that have been reported in local
press. The NSS actually intercepted some $180,000 (nine
transactions of roughly $20,000 each) being fraudulently
wire-transferred to Armenia from Russia, and have learned of
an additional $900,000 that they did not successfully
intercept. The money came from known organized crime figures
in Moscow, and clearly for no good purpose, Sargsian
insisted. He told of his private meeting with Arzumanian's
AmCit wife, in which he said to her, "do you think all these
politicians demonstrating and waving signs outside my office
care anything about your husband? They are just using him
for their own purposes."


5. (C) NATIONAL DEMOCRATIC INSTITUTE: CDA made our points
that the continued unregistered status of the NDI remained a
black mark on Armenia's democracy credentials. We had
understood from President Kocharian NDI would be registered
after the parliamentary election, but now are told he had
along along meant after the presidential election next year.
NDI is highly regarded in Washington, including in Congress,
and it does Armenia's reputation no good to leave this
situation unresolved. Sargsian heard our points on this, but
made no substantive comment.


6. (C) PRESIDENT KOCHARIAN'S FUTURE: Sargsian dismissed
media speculation that President Kocharian might take up the

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newly-enhanced post of prime minister after stepping down as
president. The PM said that Kocharian had no concrete plans,
but looked forward to taking three or four months completely
off, and only then figuring out what he wants to do next.
Sargsian hypothesized that Kocharian might find he quite
likes being an ex-president, and relinquishing altogether the
pressures of government. Sargsian commented that the past
nine years of high office had taken their toll on Kocharian;
he had practically no close personal friends anymore after so
many years making touch decisions, isolated by the
presidency. Sargsian thought Kocharian may well find himself
content with a successful political legacy in which he can
take pride, and that private life may be a refreshing change.


7. (C) PROSPEROUS ARMENIA: Sargsian acknowledged, however,
that Gagik Tsarukian had launched his Prosperous Armenia
party, to rival Sargsian's Republicans, at Kocharian's
instigation. Sargsian did not elaborate on why; the seeming
implication was as a means for Kocharian to maintain
independent political leverage. Sargsian said Tsarukian was
genuinely surprised and depressed when his Prosperous Armenia
party failed to win a plurality in the National Assembly.
Tsarukian had surrounded himself with sycophants and with

SIPDIS
their voices always in his ear, had convinced himself that he
was much-beloved in Armenia and his momentum was unstoppable.
Sargsian said he had called Tsarukian in for a chat about a
week after the election and said, in effect, "buck up, you'll
be fine, you're in a great position. You've got all your
successful businesses going here, and I'm not going to
interfere with any of that." In other words, "no hard
feelings."


8. (C) ELECTIONS: Sargsian said that he had put the word
out prior to the parliamentary elections that "you don't
cheat this time." Sargsian felt that since he himself was
now so closely associated with the Republican Party, it
behooved him to ensure this message went out for the
protection of his own reputation. Looking ahead, he hoped
and expected the upcoming presidential election to be better
still. He really saw no one in the fractured opposition who
had the standing to be an effective challenger. He said that
frankly speaking the presidential campaign began May 12.

9. (C) REFORMING STATE REVENUE: Sargsian spoke highly of the
newly-appointed head of Armenia's Tax Service, Vahram
Barseghyan. The PM's mandate to Barseghyan is to improve
collection and instill rigorous fairness. No one must be
allowed to get away with evading rightful tax obligations.
Sargsian defended the incumbent chairman of the State Customs
Committee, Armen Avetikyan, saying that "He's not nearly as
bad as you think he is, and the good thing is everyone hates
him equally." The implication being that Avetikyan plays no
favorites in administering the Customs service.


10. (C) WASHINGTON VISIT: Sargsian plans to visit Washington
October 18-21 or possibly 22, on the margins of the IMF/World
Bank meetings, to lead Armenia's USATF delegation, and
hopefully to have high-level USG meetings. He may also
extend his visit to intersect with the Armenian Catholicos in
the United States.


11. (S) INTELLIGENCE REFORM: DCM asked whether statements he
had reportedly made to NATO Assistant Secretary General
Robert Simmons (reftel) that the National Security Service
would come under reform scrutiny were accurate. Sargsian
acknowledged that Armenia's intelligence services were in
need of serious reform, and that he had been slow to take on
the issue. If he were to do so, Sargsian said he would need
help and support from the United States. DCM said that, as
in every area in which our collaboration was successful, we
would have to have a reliable and engaging partner to work
with in the intelligence agency, which had been lacking up
until now. Sargsian took the point.


12. (C) BIO NOTE: Sargsian was relaxed, candid, and
confident, bringing a welcome cool-headed pragmatism to the
discussion of tough issues. His trick of half-filling his
shot glass with an ice cube ("I like my vodka very cold") is
a very convenient way to keep the volume of liquor manageable
on these occasions where local custom demands a string of
bottoms-up toasts.
PERINA