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

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

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SUMMARY
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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.

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POSITIVE OUTLOOK IN DIFFICULT ECONOMIC TIMES
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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.

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FIGHTING CORRUPTION IN THE MARZ
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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.

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THE MULTIPLE FACES OF THE MAYOR
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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

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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.)

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GREATER DECENTRALIZATION NEEDED FOR EFFECTIVE LOCAL
GOVERNANCE
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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.

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HARSH REALITY OF JOB SEARCH IN CURRENT ECONOMIC CLIMATE
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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.

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TAVUSH MARZ SUPPORTIVE OF LOCAL NGO WORK
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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.

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TOURIST INFO CENTER - GO IT ALONE OR COOPERATE?
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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.

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GRAPE- GROWING SUCCESS
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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.

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THE CHALLENGES OF LEGITIMATE BUSINESS ENTERPRISE
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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