ARMENIAN REACTION TO SECRETARY'S LETTER ON MCC

C O N F I D E N T I A L SECTION 01 OF 02 YEREVAN 000347

SIPDIS

E.O. 12958: DECL: 05/20/2019
TAGS: PGOV KDEM AM
SUBJECT: ARMENIAN REACTION TO SECRETARY'S LETTER ON MCC

REF: YEREVAN 345

YEREVAN 00000347 001.2 OF 002


Classified By: Ambassador Marie L. Yovanovitch, reasons 1.4(b,d)

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SUMMARY
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1. (C) Following receipt of the Secretary's May 12 letter to
President Sargsian concerning Armenia's MCC program,
Ambassador requested an appointment with Sargsian to discuss
the letter and gauge reaction. Although scheduling issues
prevented that meeting from taking place before the
Ambassador's previously planned internal travel from May
18-20, we learned on May 14 that the Presidency had in fact
received a copy of the letter through the Armenian Embassy in
Washington. Presidential advisors have told us the President
viewed the letter as "positive," and would be preparing a
response soon. FM Nalbandian reacted negatively, however,
complaining to the Ambassador on May 16 that the timing of
the letter -- coming just days after Nalbandian's visit to
Washington -- was problematic. Nalbandian downplayed MCC
conditionality, stating that the U.S. "knows very well that
the March 1 detainees will be released," and arguing that the
U.S. should help Armenian in these difficult economic times.
End summary.

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PRESIDENT VIEWS MCC LETTER AS "POSITIVE"
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2. (C) Although the Ambassador has not yet had the
opportunity to discuss the Secretary's May 12 letter on MCC
personally with President Sargsian, we have been told by two
of Sargsian's chief advisors that the President views the
letter as "positive." Vigen Sargsian, the President's Chief
of Staff, made that comment to Deputy PolChief on the margins
of a National Security Council conference on May 14, and
repeated it to the DCM in a meeting on May 20. Sargsian
added to DCM that the Presidency is now preparing a response
to the letter, which should be ready "in a matter of days."


3. (C) Vigen Sargsian and presidential advisor (and
son-in-law) Misha Minasian added that Armenia views the MCC
program as an important part of its bilateral relationship
with the United States, and said MCC infrastructure funding
is especially critical as the Armenian economy continues to
struggle with the consequences of the worldwide economic
downturn. Sargsian said that the President "recognizes that
the program is conditional," but urged that the MCC Board
take current economic circumstances into account as it makes
its decision. On the substantive points raised in the
letter, the advisors noted that there would be "a major step
forward" on the detainee issue before the June Board meeting,
but made no commitment that any detainees would actually be
released by that time. (see reftel)

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NALBANDIAN MORE NEGATIVE
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4. (C) In a meeting with the Ambassador on May 16, FM
Nalbandian gave a more negative reaction. Nalbandian
complained that the timing of the letter - coming just a week
after his Washington meeting with the Secretary -- was
problematic. Nalbandian said he had been compelled to point
out to President Sargsian that the letter had been in the
works well before he arrived in Washington. (Comment:
Nalbandian's remark suggests that the President may not have
viewed the letter as positively as his aides would have us
believe. End comment.)


5. (C) The Foreign Minister also highlighted Armenia's
difficult economic straits, noting a 6.1 percent drop in GDP
in the first quarter alone. Nalbandian said Armenia is
"looking for a signal" that the United States is supporting
Armenia, and flatly stated that the roads funding should be
restored. When the Ambassador raised the letter's main
points on conditionality, Nalbandian bristled. "The United
States knows very well that the March 1 detainees will be
released," he said. "That's why we changed our laws."
(Comment: Nalbandian is referring to recent changes in
Armenia's Criminal Code that were passed at the insistence of
PACE. The changes resulted in reduced charges against some
high-profile detainees, but have not led to any releases. End
Comment.) Nalbandian said that not funding the roads "won't
bring democracy to Armenia," but will "create resentment
toward the U.S. and U.S. conditions.


6. (C) The Ambassador noted that we welcomed last week's
release of Shant Harutyunian, one of those charged in the
"Trial of Seven," for humanitarian reasons, but said the U.S.

YEREVAN 00000347 002.2 OF 002


was not at all certain about the release of other detainees.
The Ambassador said the U.S. and the Secretary would very
much like to keep the roads program going, but added that
Armenia needed to help us do that by showing progress on the
relevant issues, especially detainees.

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COMMENT
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7. (C) Nalbandian's testy response to the Ambassador likely
reflects the pressure he is under on a range of issues,
including Turkey-Armenia normalization and Nagorno-Karabakh.
The Foreign Minister generally doesn't engage on the
democratization issues relevant to MCC conditionality, so
there is probably little he could do substantively (even if
he were so inclined) to advance Armenia's case for a positive
MCC decision. The one common thread in our conversations
with Nalbandian and the Presidency is that the GOAM regards
the June decision as important, both for economic and
political reasons. The Government is feeling embattled on a
number of fronts, and is looking for a boost. Whether that
will be sufficient to spur the GOAM to take the necessary
action remains another question. End comment.
YOVANOVITCH