AMBASSADOR'S TRAVEL TO TAVUSH MARZ

C O N F I D E N T I A L SECTION 01 OF 03 YEREVAN 000625 SIPDIS E.O. 12958: DECL: 09/03/2019 TAGS: PGOV PREL EAID ECON AM SUBJECT: AMBASSADOR'S TRAVEL TO TAVUSH MARZ YEREVAN 00000625 001.2 OF 003 Classified By: Ambassador Marie L. Yovanovitch, reasons 1.4(b,d) -------------- SUMMARY -------------- ¶1. (SBU) On August 21 the Ambassador traveled to Tavush marz, one of Armenia's 11 administrative regions. The region's governor and the mayor of the capital, Ijevan, remarked on the effects of the current economic crisis and the challenges of local governance. The USAID-supported Advocacy and Assistance Anti-corruption Center and Ijevan Employment centers both reported on the progress they have made in providing services to the local community. The Ambassador visited a USDA/MCC drip irrigation project where economic strides are being made despite the current economic crisis. End Summary. -------------- POSITIVE OUTLOOK IN DIFFICULT ECONOMIC TIMES -------------- ¶2. (SBU) Although the Tavush region has been hit hard by the economic crisis and the unofficial unemployment rate stands at 30%, Governor Armen Ghularyan emphasized the positive economic strides being made in the region. The now predominantly agricultural Tavush region had several large industrial concerns during Soviet times, including a wood processing plant, carpet weaving and clay processing factories, a cannery and a winery. While the majority of these industrial facilities are currently non-functional, some of the infrastructure put into place during Soviet times is being used today. The peach cannery, well known throughout Armenia, operated at partial capacity last year with peaches purchased from local farmers. The Governor discussed plans to operate one production unit of the factory and purchase peaches locally again this year. The region also had extensive orchards and vineyards during the Soviet period, and the Governor said that they are slowly being rebuilt. Last year, wineries purchased 6,000 tons of grapes from local farmers. Farmers are also growing tobacco on 350 hectares of land. The Governor noted that the city of Dilijan has both a successful mozzarella factory and a mineral water bottling plant. -------------- FIGHTING CORRUPTION IN THE MARZ -------------- ¶3. (SBU) The Ambassador visited the USAID-funded Ijevan Advocacy and Assistance Center, where she spoke with local employees and four center beneficiaries. The center has recently provided legal advice and support to a woman whose son was murdered, a woman involved in a property dispute with her sister, and a man whose recent land purchase has not been recognized by the proper authorities. In addition, the Ambassador met with Albert Davtyan, who has an outstanding legal case against Ijevan Mayor Varuzhan Nersisyan for alleged corruption. The Center is an important tool in helping ordinary citizens fight back against corruption. -------------- THE MULTIPLE FACES OF THE MAYOR -------------- ¶4. (SBU) Throughout the course of the trip to Tavush Marz, the Ambassador was exposed to competing views of the mayor. One day prior to the Ambassador's visit, an article was published in a national Russian language newspaper alleging in great detail that Mayor Nersisyan was corrupt and had demanded large bribes from local citizens and business people on a number of occasions. The article stated that Mayor Nersisyan's nickname in the region is "Karabas-Barabas," which is a Russian language reference to a Pinocchio-style tale where "Karabas-Barabas" controls the puppet Pinocchio. The article claims that land and property had been purchased by friends of the mayor, but that he is the actual owner and financier of the purchases. The major source for the story was Albert Davtyan. ¶5. (SBU) Davtyan's case revolves around the Mayor's alleged demand for a bribe related to a construction project Davtyan was working on in the city center. The project would have provided a youth club for Ijevan residents. Davtyan stated that the mayor declared his construction project to be 'illegal construction activity' when he refused to pay the requested bribe. (Note: Davtyan claimed he had paid an initial $10,000 bribe to begin construction, but refused to pay a second larger sum after construction had already begun. End Note). The case is still pending. In the newspaper article, the mayor is quoted as saying that he will get out of the charges. In a private conversation with the YEREVAN 00000625 002.2 OF 003 Ambassador, the Mayor could not recall having heard of the Ijevan Advocacy and Assistance Center and said he was unaware of the charges against him by Davtyan. The Mayor also agreed to meet with the chief lawyer of the Advocacy and Assistance Center to clear up the legal issue and see how the city and the center can partner against corruption. ¶6. (C) In an NGO roundtable, all NGO leaders spoke very highly of Mayor Nersisyan, the work he did in the community, and his support for their efforts. They also noted that he provides free bus transportation every summer for the children of Ijevan to travel to national parks. While meeting with the Ambassador, Nersisyan spoke knowledgeably about the issues facing the city and the specific challenges of local governance. (Comment: Nersisyan is easily the most impressive mayor in Armenia, an assessment AID's local government program agrees with. This makes the allegations of corruption all the more troubling. End Comment.) -------------- -------------- GREATER DECENTRALIZATION NEEDED FOR EFFECTIVE LOCAL GOVERNANCE -------------- -------------- ¶7. (SBU) Mayor Nersisyan emphasized the problems of local governance in a society where he believes greater decentralization of authority is needed. He noted that constant budgetary concerns hinder his ability to govern effectively. He explained that all profit taxes from local businesses/industry go to the national government. Although a law was recently enacted whereby a percentage of profit taxes would be returned to the community where the business is located, the mayor said that so far the city of Ijevan has received no revenue from profit taxes. Instead, the local government budget depends primarily on property taxes, much of it levied on now defunct Soviet-era factories. In addition, out of all tax revenue gathered in the city, only 6.5% is returned to the local government while the rest is administered by the central government. The mayor noted that maintaining public order is also a challenge in Ijevan. He recounted, for example, that when the city imported 50 palm trees from the Georgian coast for a beautification project, the trees were dug up and stolen, presumably by local residents. When the mayor requested assistance from the local police to investigate the theft, he was told that police had more important matters to investigate and would not pursue the case. -------------- -------------- HARSH REALITY OF JOB SEARCH IN CURRENT ECONOMIC CLIMATE -------------- -------------- ¶8. (SBU) The Ambassador visited the Ijevan Employment Center, which USAID recently renovated and to which it continues to provide funding for ongoing job training classes. The employees at the center said they reach out to employers to find available jobs, and then match job seekers to these opportunities. They also have an apprenticeship program, where the unemployed are matched with business owners to learn job-related skills. The Ambassador met apprentices in auto repair and two recently hired confectionery decorators. Between 50-60 clients register per month, and all clients have an individual consultation with an employment counselor. Center employees said that the average wait time for finding employment is three years. The center director noted that the official unemployment rate is 8.3% in Tavush, the highest of any region in Armenia. As elsewhere in Armenia, he added that part of the discrepancy between official (8.3%) and unofficial (30%) unemployment statistics is that owners of privatized land are not eligible to register as being unemployed. -------------- TAVUSH MARZ SUPPORTIVE OF LOCAL NGO WORK -------------- ¶9. (SBU) In her meeting with local NGOs, the Ambassador learned that the climate in Tavush Marz is supportive of NGO work. Green Tavush (an environmental NGO),Dilnet Service Educational NGO, and the Center for Community Dialogues and Initiatives (CCDI) Ijevan branch met with the Ambassador to discuss their work and explain their current projects, including a Green Summer Camp for children from vulnerable families, election observing, voter seminars, work with youth groups in rural communities, the development of tourism materials for the region, and the development of a policy initiative to improve the lives of youth in Tavush. -------------- -- TOURIST INFO CENTER - GO IT ALONE OR COOPERATE? -------------- -- YEREVAN 00000625 003.2 OF 003 ¶10. (SBU) During the NGO Roundtable, the president of Dilnet Service NGO Ashot Hovhannisyan said he wanted to open a tourist information center on the highway into Dilijan, even though USAID has already established a tourist information center in a major hotel in the city. At a later meeting with Peace Corps volunteers, one volunteer stated that the Government of Armenia had recently established a tourist agency in Dilijan, but that Mr. Hovhannisyan and Dilnet refuse to work with this government sponsored agency as well. In addition, it is widely believed that the Dilijan director of the government-sponsored tourist agency uses government money for personal travel, and that the Dilijan office is largely nonfunctional. -------------- GRAPE- GROWING SUCCESS -------------- ¶11. (SBU) The Ambassador visited an MCC water-to-market (WTM/USAID/CARD site in a small village adjacent to the Azeri border. Representatives from MCA-Armenia, two Agricultural Support Centers, and MCA-Armenia stakeholders and farmers who have received training by MCA-Armenia were present for the visit. In 2005 USDA/CARD provided assistance to establish a hectare of vineyards using imported varieties of American grapes to help farmers access the highest value and most disease resistant grapes. In 2006 USDA/CARD installed a drip irrigation system for these grapes. Recently MCC rehabilitated the main water supply pipeline for the drip irrigation system initially installed in 2006. The site was well cared for, and a variety of grapes were ripening on the vines. The WTM program also provided important fruit tree saplings to improve the local assortment and to make available high quality bud wood for grafting. -------------- --- THE CHALLENGES OF LEGITIMATE BUSINESS ENTERPRISE -------------- --- ¶12. (SBU) While in Tavush Marz, the Ambassador stayed at the Apaga Active Rest Club, a private tourist rest home outside the city of Ijevan. It provides guests with opportunities for horseback riding and hiking, as well as more traditional sightseeing tours. In conversation with the proprietors, the Ambassador learned that the owner was a doctor who had previously worked in Moscow. With the money earned by working abroad and in Armenia, and with the help of Armenian diaspora investors, the owners tried to create a family-friendly resort atmosphere. While they were initially successful, they are now plagued by visits from less savory business people who come with armed body guards and loud companions, ruining the family environment. In an effort to control the clientele and who has access to the resort, the rest club now blocks off its entrance drive with a large truck, and guests must call ahead in order to be admitted and the owner is thinking about making the hotel a private club. The owner also noted that the population in the nearby village has actually grown - an anomaly in Armenia, where most relocation is from rural areas to the cities - as a result of the employment provided by the resort -- first in construction and now in tourist services. PENNINGTON