Armenia: Political positioning & diplomatic dialogue

Richard Giragosian, Regional Studies Center

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With an unprecedented transformation from a semi-presidential to a parliamentary government in April, 2018, the politics in Armenia remains dominated by who will become the next prime minister, the country’s next head of the state under the new system. In the light of that looming deadline, the parties and individuals are engaged in a period of positioning and posturing.

The sitting prime minister defends his success, thereby suggesting a desire to stay on. While others in the ruling Republican party openly call on the incumbent president to continue to govern the country. At the same time, some improvements in the Armenian economy, allowing the government to increase the state spending, also serve to bolster the incumbent leadership. Meanwhile, the Armenian foreign policy continued to be dominated by the Nagorno-Karabakh conflict, with an Armenian-Azerbaijani ministerial meeting to prepare for a planned presidential summit later this year.

Domestic Policy. Second-largest party to back government

Much of the month’s domestic political discourse was driven by a move by the opposition Yelk (“Exit”) coalition to challenge the Armenian government over purported “benefits” from the country’s membership in the Russian-led Eurasian Economic Union (EEU). The opposition parliamentary faction initiated a legislative attempt to force the government to form an ad hoc commission to the economic and security implications from the membership, arguing that government should also launch a “process”  to invalidate Armenia’s accession treaty with the EEU.

Although the move was voted down, the issue of the Armenia’s position within the Eurasian Economic Union is significant and also stems from the public disappointment over expectations for the strong economic dividends from the bloc membership. The initiative was also a sophisticated tactic by the largely pro-Western Yelk faction, which consists of three opposition parties and holds 9 of 105 seats in the Armenian parliament.

In a long expected statement of support for the government, the oligarch leader of the second largest party “Prosperous Armenia”, businessman Gagik Tsarukian confirmed his consideration of entering into a new power-sharing agreement with the President Sarkisian’s ruling Republican Party. Despite a rather disingenuous attempt to position his party as an opposition force, Tsarukian never fully recovered from his previous political neutralization by the president after a public clash in early 2015, that ended any hopes for challenging the incumbent party.

Holding 31 seats in the 105-seat parliament, the Tsarukian bloc is widely expected to back the dominant Republican Party through the April, 2018 transition to a full parliamentary form of government. The ruling Republican Party, which holds 58 seats in the parliament, already holds the support of the small and marginal seven-seat Armenian Revolutionary Federation-Dashnaktsutyun (ARF-D), which serves as a junior partner and was rewarded with three ministerial posts.

Amid the signs of a rift with the Armenian president, the Prime Minister Karen Karapetian defended his one-year tenure by pointing to what he claimed was a “positive impact on the lives of the ordinary citizens” and a stronger economy. Karapetian added that since his appointment in September, 2016 his reform program has successfully “improved the business environment and attracted more investment”. Yet it remains unclear whether Karapetian will continue to serve as the prime minister, which will become the country’s next head of the state once the April, 2018 transformation to a new parliamentary government is completed. And in a recent statement, the deputy chairman of the ruling Republicans, cast doubt on the prime minister’s future, suggesting instead that the incumbent President Serzh Sarkisian would be a better choice to “continue to govern” the country.

Economy. Increases in spending

In a report for the 28 September weekly cabinet meeting, citing some improvements in the tax collection and higher than expected economic growth, the Armenian Finance Minister Vartan Aramian pledged to significantly increase the public spending on the infrastructure projects and defense, with an 18% increase in the defense spending bringing the total some $515 million for 2017. According to the official statistics, the tax collection increased by some 7% in the first two quarters of the year, and GDP is set to post a 4.3% increase  this year, up from the earlier growth projections of 3.2%.

Opposition tries to force the government to form an ad hoc commission to the economic and security implications from Eurasian Union membership

At the same time, however, the minister admitted that the projected budget deficit would rise in the absolute terms to $330 million, equivalent to about 2.7% of GDP, while the Armenia’s aggregate public debt will expand to $6.7 billion, or roughly 60% of GDP for 2017. Over the longer term, Armenia will also face some serious debt servicing commitments of more than $1 billion by 2020, a serious burden representing one-third of the country’s total state budget.

Foreign Policy. Armenia calls on Turkey “to normalize relations

Despite the plans to participate in a U.S.-led military exercise in Georgia in September, the Armenian Defense Ministry announced that the country would not be participating, leading to a speculation that the decision was made due to the Azerbaijani participation. A group of 30 Armenian soldiers took part in a larger U.S.-led exercise in Georgia a month ago, however, Azerbaijan refused to attend them. On 11 September, the Armenian First Deputy Minister of Defense Artak Zakarian participated in a NATO conference in Washington, reflecting the deepening of the Armenian-NATO ties.

Meanwhile an Armenian delegation led by the Defense Minister Vigen Sargsyan arrived in China with a nearly week-long official visit. Meeting with the Chinese Defense Minister Chang Wanquan and the senior officers, including Xu Qiliang, the vice chairman of the China’s Central Military Commission, the Armenian minister concluded several agreements on the expanded cooperation  in military education and in the defense industry, as a sign of the deepening bilateral military relationship.

In his official address on 19 September to the 72nd session of the UN General Assembly, the Armenian President Serzh Sarkisian called on Turkey to re-engage in the stalled “normalization” process. Noting that Armenia “never made the recognition of the Armenian Genocide a precondition for the normalization of the bilateral relations between Armenia and Turkey”, the Armenian president added that the protocols of October, 2009 “have not been ratified, “but instead were suspended due to Turkey’s “preconditions for their ratification that run counter to the letter and spirit of the protocols”. He warned Turkey that it would be “mistaken” if those documents are  held hostage”, and added that if by the spring of 2018 Turkey fails to “show any progress”, Armenia would declare the protocols “null and void”. Two protocols, signed by the Armenian and Turkish foreign ministers in Zurich in October, 2009 would have established the diplomatic relations and reopened the closed border.

After several months of tensions over Nagorno-Karabakh, the Armenian and Azerbaijani Foreign Ministers Eduard Nalbandian and Elmar Mammadyarov met in New York on the sidelines of the UN General Assembly. While the meeting failed to result in any new agreement, it was a significant move to prepare for a planned presidential summit later this year. The ministerial meeting also followed a rather unpopular public defense  of the Armenian position by Nalbandian that underscored the necessity for the compromise by all sides and, in a policy increasingly going against the Armenian public opinion, the need for the territorial concessions to Azerbaijan.