Armenia weathers the storm

Richard Giragosian, Regional Studies Center (Armenia, Yerevan)

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Just six weeks after the parliamentary elections, a municipal election in the Armenian capital Yerevan on 14 May saw the return of the ruling Republican Party. With more than 71% of the vote, a mere 41% of voters actually turned out, largely due to the combination of the voter fatigue and a sense of resignation over the dominance of the incumbent party. But Armenia weathered the political storm as new signs of an improved economy, buoyed by a rebound in remittances, bolstered the government. Although foreign policy was again dominated by the Nagorno-Karabakh conflict after an Azerbaijani missile strike

Domestic Policy. Political re-branding

After a heated parliamentary election early last month, the municipal elections in the capital Yerevan were largely seen by many Armenian voters as an afterthought. Especially as the incumbent Republican Party was intent on securing the re-election, once again relying on the traditional vote buying and interference practices. Despite their win, with only about 41% of the voters casting ballots, it was neither particularly decisive, nor divisive. Beyond a degree of a political fatigue, many voters were also put off by the rather one-sided context, as the incumbent Republican Party assured a strong showing.

And a lack of competition only fostered a second reason for such a voter disinterest. More precisely, Yerevan voters were disappointed, if not disgusted, by the arrogance of the ruling authorities in the capital, which spurned offers to hold the public debates and skirted any serious discourse over pressing issues facing the capital. This refusal to address real concerns, ranging from the traffic and transport problems to the garbage collection issues, only sparked the public anger not apathy.

Nevertheless, the return of the Republicans as the masters of Yerevan, the center of the political and economic power in the country, also solidifies the trend of the one-party dominance that was evident in their sweep in the recent parliamentary election. In fact, mounting concerns over the tendency of the one-party dominance, which first emerged in the last month’s parliamentary election, only add to the mounting level of a voter distrust and a citizen mistrust. From a broader perspective of the back-to-back elections, despite the seeming “victory” of the ruling authorities, the loss of the public trust and lack of the legitimacy will only exacerbate the coming challenges.    

Beyond the local election, the national politics dominated this month with the inaugural session of the newly elected parliament, marked by the Republican Party government’s re-appointment of nearly all of the outgoing cabinet. The few exceptions were the elevation of the female Justice Minister to the post of a deputy speaker of the Parliament and the replacement of the elderly Parliamentary Speaker with a more presentable former Minister of Health. Overall, these moves were the latest elements of the ruling party’s attempt to re-brand the image of the government.

Economy. Rare good news

For the Armenian government, the economic developments only bolstered its confidence, buoyed by a fresh assessment by the World Bank, forecasting long awaited and much improved growth for this year. After the anemic last year growth, the projected 2.7% GDP growth for 2017 and the estimated increases of 3.1% and 3.4% for 2018 and 2019 respectively, extended a new sense of confirmation of the optimistic state budget. But even with those more optimistic figures, it may not be enough for the government, whose state budget is predicted on an underlying base of 3.2% growth in GDP for 2017. That means that anything less will threaten the fiscal viability of the set spending plans and programs already underway this year.

The return of the Republicans as the masters of Yerevan solidifies the trend of the one-party dominance that was evident in their sweep in the recent parliamentary election

Although the positive news was offset by the more cautious warnings of the country’s vulnerability to “the negative impact external shocks” inherent in its dependence on Russia and concerns over “the investor confidence” and “the pace of the reform”, the World Bank embraced the Prime Minister Karen Karapetian’s pledges and promises to improve the domestic business environment, combat tax evasion and attract some foreign investment. Also helping the government to weather the storm of the political uncertainty, a significant increase in the amount of remittances, which rose by almost 15% in the first quarter of this year to $313 million, also ended a three-year decline.

Foreign Policy: Apples of discord

For the Armenian foreign policy, the unresolved Nagorno-Karabakh issue has long served as the primary consideration, and this month was no exception. Most notably and especially given heightened tension after a brief but deadly clash with Azerbaijan in April 2016, the military situation continued to deteriorate, as an upward escalation in ceasefire violations mounted. But the scale and scope of such clashes expanded this month, with a precision missile attack by the Azerbaijani forces destroyed a Russian-supplies air defense unit. The mid-May operation, which consisted of a volley of the three Spike missiles that targeted an Osa air defense system, demonstrated the increasingly effective and improved operational capabilities of the Azerbaijani armed forces.

As usual, that incident only triggered a further military response as Karabakh forces retaliated by targeting several Azerbaijani military positions, including a communication command point and a military vehicle beyond “the contact line”  between Nagorno-Karabakh and Azerbaijan.

Beyond the frontline exchanges of fire, the conflict also took a new twist this month, when a discovering of the Azerbaijani apples in the Armenian markets sparked a heated, if not silly response. After the discovery of the Azerbaijan-labeled apples, a hurried official investigation was launched, officially justified not by the country of origin of the apples but rather, on the grounds of the illegal import, skirting safety and tax inspections. By the end of the rushed inquiry, several Armenian customs officers were arrested for allegedly accepting bribes by the smugglers to allow the illegal tax-free import of the Azerbaijani apples. Despite the somewhat comic concern over “the enemy apples”, the case did reveal the problem of the entrenched corruption within the Armenia’s notorious customs and tax services.

In a serious setback for the Organization for Security and Co-operation in Europe (OSCE), the Azerbaijani diplomatic pressure within the organization forced the closure of the OSCE office in Yerevan. The move by Azerbaijan to veto the routine extension of the office was prompted by their new concern over an OSCE humanitarian demining program implemented in Armenia.  Although the program never raised any objection in the past, Azerbaijan successfully avoided any temptation to compromise and hailed the move as a diplomatic vindication.

The eviction of the OSCE from Armenia has wider implications, however, for two reasons.  First, after Russia forced the closure of the office in Georgia in the wake of the August 2008 Russian-Georgian war, and the Azerbaijani government shut down its own OSCE office in Baku in 2015, the OSCE presence in Armenia was the organization’s last remaining diplomatic outpost in the South Caucasus region. But a second, even more negative implication form the move, which was most likely not anticipated by Azerbaijan, was the fact that the OSCE office in Yerevan was always by practice headed by a Russian diplomat. Although this consideration did not trigger a public Russian reaction, it was bound to have prompted an unpleasant reaction in Moscow due to the loss of the one OSCE office under Russian diplomatic leadership.