CARC DIRECTOR HEARS PESSIMISM ON DEMOCRACY,

C O N F I D E N T I A L SECTION 01 OF 03 YEREVAN 000002 SIPDIS E.O. 12958: DECL: 01/04/2019 TAGS: PGOV PHUM EAID ELAB ECON KDEM KJUS AM SUBJECT: CARC DIRECTOR HEARS PESSIMISM ON DEMOCRACY, ECONOMY, NK, AND TURKEY REF: YEREVAN 994 YEREVAN 00000002 001.2 OF 003 Classified By: AMB Marie Yovanovitch, reasons 1.4 (b,d). -------------- SUMMARY -------------- ¶1. (C) During his December 7-10 visit to Yerevan, EUR-CARC Director Baxter Hunt met with civil society leaders, members of parliament, heads of various think tanks, business leaders, senior officials, and representatives of the political opposition to discuss a wide range of domestic and foreign policy issues. Hunt heard mostly pessimistic views on the prospects for democratization in Armenia and an agreement on Nagorno-Karabakh (NK). The opposition offered new allegations of official culpability in the March 1 violence, and business leaders expressed concern about the possible effects of the global financial crisis on Armenia. END SUMMARY. -------------- PESSIMISM ON DEMOCRACY -------------- ¶2. (C) EUR-CARC Director Baxter Hunt visited Armenia December 7-10 for meetings with a wide range of contacts from the GOAM, the National Assembly (parliament),the political opposition, civil society, think tanks, and the Armenian business community. Much of the substance of Hunt's discussions focused on Armenia's domestic political situation in the wake of the flawed February 2008 presidential election and the March 1 violence in Yerevan that left 10 dead, and efforts by a parliamentary commission and a newly-formed fact-finding group to investigate the March 1 events. There was also considerable discussion of the government's reform efforts, as well as foreign policy issues such as NK, Turkish-Armenian relations, and the Russia-Georgia conflict. ¶3. (C) On domestic reforms, Hunt heard decidedly downbeat assessments from human rights groups and think tank representatives. Human rights activists condemned the authorities for continuing to hold political prisoners, and criticized the international community for not taking a stronger public stand on the issue. Mikayel Danielian, head of the local Helsinki Association human rights watchdog in Yerevan, urged the United States and other international actors to isolate the authorities and cut off assistance programs. "As long as they hold the prisoners," he said, "Armenia should be treated like Belarus." Tigran Khzmalian, a filmmaker and activist on behalf of the prisoners, argued that the United States should refer to those in jail for the March 1 events specifically as "political prisoners" in our public statements, a formulation to which the GOAM would strongly object. Larissa Minasian of the Open Society Institute characterized the government's reform efforts as "imitations," and urged that the United States not be fooled. "Your indicators for MCC are telling you the same thing," she added. Deputy Foreign Minister Arman Kirakossian acknowledged continuing difficulties with democratization, but cited the recent presidential pardon of three prisoners -- who first acknowledged their guilt in writing -- as a step forward (reftel). ¶4. (C) Hunt heard similarly pessimistic assessments of the authorities' highly touted efforts to fight corruption. Armenia's Human Rights Defender (Ombudsman) Armen Harutyunian insisted that corruption cannot be addressed in isolation from Armenia's other problems with democratization. Without greater media freedom, protection of individual rights, major judicial reform, and transparency in government, he said, efforts to combat corruption in the tax and customs services are doomed to failure. Tevan Poghosian, who heads a local development think tank and is relatively sympathetic to President Sargsian, asserted that the lack of an independent judiciary was the biggest obstacle to a serious fight against corruption. Poghosian even suggested -- only somewhat facetiously -- that Armenia consider turning over its judiciary to another country. "If we as Armenians cannot do this," he said, "then why not admit it and invite 100 judges from Scotland to come here and do it for us?" -------------- AD HOC COMMISSION AND FACT-FINDING GROUP -------------- ¶5. (C) Discussions with parliamentarians -- both from the ruling coalition and lone parliamentary opposition Heritage party -- and the non-parliamentary opposition centered on the work of the ad hoc parliamentary commission on the March 1 YEREVAN 00000002 002.2 OF 003 events and the newly-established fact-finding group formed at the behest of the Council of Europe. Samvel Nikoyan, Chairman of the ad hoc commission, expressed appreciation for U.S. support of the commission's work, and said he spends "at least 50 percent" of his time fending off criticism from both the coalition and its critics. Nikoyan appealed for assistance from international forensic experts to determine which weapons were used to fire the tear gas capsules that apparently caused three of the deaths on March 1. He added that the commission would now postpone its final report pending information to be provided by the fact-finding group. ¶6. (C) Representatives of the Armenian National Congress (ANC),the opposition umbrella organization led by former president Levon Ter-Petrossian (LTP),referred to the parliamentary commission (in which the ANC refused to participate) as "a mockery," citing a lack of transparency, withholding of information from the public, and the absence of international experts. The ANC used the meeting with Hunt to present a new allegation that Armenia's Ministry of Defense had distributed 950 unmarked uniforms through pro-government oligarchs to "provocateurs," who they claim were responsible for turning a peaceful protest into a violent confrontation. The uniforms, according to the ANC, were necessary so that the government-sponsored agents would not be fired on by police snipers. The ANC promised to provide the Embassy with documentation for its claim. (NOTE: During a December 16 meeting with DCM, LTP confidant David Shahnazarian handed over a paper with names of the oligarchs who allegedly distributed the uniforms, and a precise description of quantities delivered. Shahnazarian claimed the information had come from sources "inside" the security services, but declined to give further details. END NOTE.) -------------- TURKEY AND NK -------------- ¶7. (C) Most interlocutors were supportive of Armenia's recent overtures to Turkey, including President Sargsian's invitation to President Gul in the summer, and would like to see the two countries resume diplomatic relations and re-open their land border. However, Parliamentary Foreign Affairs Committee Chairman Armen Rustamian, faction head of the ultra-nationalist Dashnaktsutyun, gave a dissenting view. Rustamian argued that normalization of relations with Turkey without "addressing the real issues" would be unacceptable. (NOTE: Rustamian was likely referring to genocide recognition and compensation from Turkey. END NOTE.) He claimed that a border opening with Turkey would bring negative consequences for Armenia, but acknowledged that an open border would increase Armenia's leverage in the NK negotiations. ¶8. (C) Deputy FM Kirakossian reiterated Armenia's commitment to establish relations with Turkey in a way that would include an open border, a position supported by most representatives of think tanks and NGOs. Virtually all interlocutors, however, strongly opposed the Turkish proposal to establish a bilateral commission of historians to examine the events of 1915, which they believe would implicitly call into question the "fact" of the "genocide." Tevan Poghosian went a step further, insisting that Turkey would only agree to open relations with Armenia if there were "more international pressure on Turkey" to recognize the "genocide." (COMMENT: This line of thinking, however unrealistic, is common even among well-informed Armenians. END COMMENT.) Opposition ANC representatives highlighted their support for Armenia-Turkey rapprochement, noting that the ANC suspended street rallies during President Gul's visit in order to minimize security problems for the authorities. ¶9. (C) The moderately optimistic views expressed on Turkey-Armenia stood in contrast to a generally gloomy forecast for NK settlement talks. Think-tankers universally expressed the view that Azerbaijan is not seriously seeking a settlement, and most were skeptical that President Sargsian could deliver a deal on the Armenian side. Commenting on the recent statements by the two countries' foreign ministers at the OSCE summit in Helsinki, Poghosian said that he "used to think an agreement would take 30 years. Helsinki has pushed it back to 40." Other interlocutors expressed little urgency on the need for an NK agreement, implying that the status quo is preferable to what they believe is being offered through the current negotiating process. -------------- RUSSIA-GEORGIA CONFLICT -------------- ¶10. (C) Foreign Affairs Committee Chairman Rustamian repeated YEREVAN 00000002 003.2 OF 003 the Armenian Government's claim that the Russian-Georgia conflict resulted in a 700 billion USD loss to the Armenian economy. (COMMENT: We and the IMF believe this figure is greatly inflated. END COMMENT.) Rustamian said the conflict showed the need for a new security arrangement for the South Caucasus. He argued that in addition to the three countries of the region, Turkey, Iran, Russia, the United States, and the EU needed to play a role in developing that system. He described Armenia's decision not to recognize Abkhazia and South Ossetia despite Russian pressure as a sign of Armenia's "foreign policy maturity." Armen Melikian, a former "NK foreign minister," said the Russia-Georgia conflict and Turkey's renewed interest in cutting a deal with Armenia represents an attempt by Russia and Turkey to reestablish cooperation and hegemony in the South Caucasus along the lines of the pre-1915 period. Melikian noted that "nothing good for Armenia came from that arrangement," and expressed alarm at what he described as warming relations between Turkey and Russia. Other think-tankers and the Ombudsman strongly disputed Melikian's argument, countering that Armenia is in a position to develop its own policy rather than having it dictated by other regional powers, and pointing out that the Georgia-Russia conflict highlighted the importance of opening the border with Turkey. -------------- EFFECTS OF THE ECONOMIC CRISIS -------------- ¶11. (C) Although GOAM officials have generally been reluctant to acknowledge the potential negative effects of the ongoing worldwide financial crisis, Presidential staffer Gagik Khalachian described unemployment as "a major concern" for the authorities. He said there is particular concern about the mining sector which is a major -- and sometimes the only -- source of employment in provincial towns and rural areas. Some gold and copper mines are already shutting down, and more are likely to follow. A group of Armenian business leaders echoed these concerns, adding that the 200,000-300,000 Armenians working in Russia's construction sector have little assurance that they will be able to return to their jobs after the New Year holiday. If they cannot, the businessmen said, Armenia will be faced with a compound problem -- a significant drop in remittances from Russia, which make up a large portion of Armenia's GDP growth, and thousands of unemployed Armenians returning to the country. The HSBC bank director predicted that Armenia's GDP growth in 2009 will be around 5 percent, or less than half of what it has been for the past six years. ¶12. (U) This cable has been cleared by CARC Director Baxter Hunt. YOVANOVITCH