FM NALBANDIAN WARNS ON MCC

C O N F I D E N T I A L YEREVAN 000391 SIPDIS E.O. 12958: DECL: 06/08/2019 TAGS: POGV PHUM PREL ASEC AM SUBJECT: FM NALBANDIAN WARNS ON MCC REF: YEREVAN 378 Classified By: Amabassador Marie Yovanovitch. Reason 1.4 (B/D) ¶1. (C) On June 5, Foreign Minister Nalbandian asked Ambassador to send a personal message to Washington on his behalf regarding MCC. He stated that not resuming funding for the roads project risked sending "a very wrong message from Washington" given the Turkey-Armenia negotiations, the Nagorno-Karabakh talks and the serious economic crisis. Ambassador explained that resuming funding is not the issue; at this point, Armenia would be fortunate if the roads project was not cancelled or formally suspended. Armenia needed to move forward in the areas outlined in the Secretary's letter to President Sargsian, she said. ¶2. (C) Nalbandian defended Armenia's May 31 mayoral elections and said the U.S. "knows" the amnesty will happen. Ambassador told Nalbandian that Embassy monitors observed systemic fraud throughout the city during elections and during the count and that the GOAM had been discussing the amnesty option for months, with no results to date. Nalbandian restated his strong view that not funding the roads project would send "a very wrong message." ¶3. (C) In a separate meeting on June 5, Ambassador met with Harout Sassounian, (AMCIT please protect) the owner of the "California Courier," who enjoys excellent access to the President and others. He reported that the GOAM would protest vigorously if MCC cancelled the program and that the U.S. would be blamed for not living up to its side of the bargain - an argument he said he would applaud in print. Ambassador explained the conditionality of the MCC program, and that it was Armenia which was lagging in its performance. ¶4. (C) COMMENT: Not unexpectedly, the GOAM is sending strong signals that funding should resume for the road project. For all the reasons outlined by the FM (and by the embassy in reftel),post continues to recommend keeping the informal hold on funding - unless Washignton can design a way to mitigate the political effects of a suspension or cancellation of the roads project. YOVANOVITCH