3.08.2006

Introduction



Armenia was one of the first Soviet republics to rid itself of Communist rule
after a democratic election in 1990. The small South Caucasus state's transition
to democracy and a market economy had a very promising start as its new, young
leaders embarked on sweeping political and economic reforms that earned them
acclaim in the West. However, the process slowed considerably with the outbreak
of a war with neighboring Azerbaijan over the disputed Nagorno-Karabakh region
following the collapse of the Soviet Union. The fighting in Karabakh, coupled
with armed conflicts elsewhere in the region, cut off Armenia's key routes of
communication with the outside world. The country's gross domestic product (GDP)
shrank by more than half from 1992 through 1993. The new regime, meanwhile,
developed authoritarian tendencies that increased following a May 1994 ceasefire
agreement with Azerbaijan that sealed Armenian victory in the bitter war.

The democratic regression manifested itself in a December 1994 government ban on
a major opposition party and the closure of the newspapers it controlled. It
culminated in the disputed parliamentary election of July 1995, which marked the
beginning of Armenia's post-Soviet history of electoral fraud. Armenia's first
president, Levon Ter-Petrosian, secured reelection in a reputedly rigged
presidential ballot in September 1996 that provoked serious unrest in Yerevan.
Ter-Petrosian's lack of legitimacy enabled his government rivals to force him to
resign 16 months later. His successor and the current president, Robert
Kocharian, cannot boast a democratic track record either. Kocharian was twice
(in 1998 and 2003) declared the winner of presidential elections marred by
serious fraud. His political opponents likewise refuse to recognize his
legitimacy.



The Armenian authorities' systematic failure to hold free and fair elections was
highlighted by a November 2005 referendum on a package of constitutional
amendments put forward by Kocharian and his governing coalition. Official
results, which showed a crushing "yes" vote, sharply contrasted with largely
empty polling stations and reports of massive vote rigging.



The Kocharian administration's human rights record has repeatedly been described
as poor by the international community. It hit a new low in 2004 with an
unprecedented government crackdown on the Armenian opposition that involved mass
arrests and even violence. The ruling regime tightened its grip on electronic
media in 2002 by closing the country's sole television station critical of
Kocharian.



The past two years have also seen an erosion of the civil liberties enjoyed by
Armenians since the collapse of Communism. The Armenian law enforcement bodies
have effectively been given the new roles of political policing and keeping
track of and bullying opposition activists, especially in the regions outside
the capital.

Accountability and Public Voice – 3.51



"Power in the Republic of Armenia belongs to the people," reads Article 2 of the
nation's post-Soviet constitution, adopted in 1995. It provides for free and
fair elections at all levels. However, all national elections held in Armenia
since independence have been marred by some degree of ballot stuffing, vote
rigging, and similar irregularities. Observers from the Organization for
Security and Cooperation in Europe as well as the Council of Europe reported
serious fraud during the most recent Armenian presidential and parliamentary
elections, held in 2003. They concluded that the elections fell short of Western
standards, giving weight to opposition claims that they were blatantly rigged.



The disputed constitutional referendum held on November 27, 2005, underscored
the country's culture of electoral fraud. A monitoring team from the Council of
Europe cast serious doubt on the credibility of the official results, according
to which nearly two-thirds of Armenia's 2.3 million eligible voters took part in
the referendum, and over 93 percent of them backed President Kocharian's
constitutional changes. "The extremely low voting activity did not correspond to
the high figures provided by the electoral commissions," the observers said in a
statement.1 The Armenian opposition, which boycotted the vote, put the turnout
at about 16 percent.



The disputed referendum reinforced the widely held belief that Armenians cannot
change their leadership through elections. The nation's sole post-Soviet regime
change, in February 1998, was the result of government infighting rather than
the expression of popular will. Free and fair elections have proved elusive
despite frequent changes to electoral legislation that are supposed to inhibit
chronic vote rigging. But the legal amendments have been rendered meaningless by
the Armenian leaders' evident reluctance to let the public decide whether or not
they should remain in power. Furthermore, the amendments have not weakened the
regime's tight grip on the election commissions. The legally guaranteed equal
campaigning opportunities exist only on paper, with state television and the
private networks controlled by Kocharian routinely providing extremely biased
coverage of opposition activities. Campaigning for the referendum was no
exception.



The ruling regime has also relied heavily on its status and extensive financial
resources, which are often used to buy votes, a phenomenon that again came to
light during nationwide local elections held over the course of 2005. The local
polls, boycotted by the opposition, were won mostly by wealthy candidates
representing various business clans and even quasi-criminal elements loyal to
the regime. The latter increasingly relies on government-connected oligarchs.




The authorities' poor human rights record deteriorated further in the spring of
2004, when the Armenian opposition launched a campaign of antigovernment
protests in a bid to replicate the November 2003 Rose Revolution in neighboring
Georgia. Kocharian's regime responded with an unprecedented crackdown on
opposition supporters across the country. Hundreds were arrested and sentenced
to up to 15 days in prison on trumped-up petty charges under the Soviet-era code
of administrative offenses. Very few of them had access to lawyers or a public
trial.



Police also arrested several opposition leaders in April 2004 and charged them
with calling for a "violent overthrow of the government." The authorities
released the leaders three months later under pressure from the Council of
Europe. Around that time, two other prominent opposition figures and a human
rights activist were assaulted in Yerevan. The assailants were never brought to
justice. The victims described them as burly men with very short haircuts,
resembling in their appearance bodyguards for government-connected oligarchs.
Two dozen such men attempted to disrupt an opposition rally in Yerevan on April
5, 2004. Scores of police stood by and looked on as they smashed the cameras of
photojournalists who were filming their actions. Only two of the thugs were
subsequently prosecuted and given symbolic fines.



Tension came to a head on the night of April 12-13, 2004, when security forces
dispersed an opposition demonstration outside Kocharian's residence, using water
cannons, stun grenades, and even electric-shock equipment. They went on to
ransack the Yerevan offices of the main opposition parties. Facing criticism by
various domestic and international organizations, the authorities argued that
heavy-handed tactics were justified because they staved off a coup d'etat.2

Armenia's democratization has also been hampered by an extremely lopsided system
of governance that gives sweeping powers to the president of the republic. The
constitutional amendments, approved in the referendum and adopted, gave some of
those powers to the cabinet of ministers and parliament. The president, for
example, will no longer be able to sack the prime minister and dissolve the
National Assembly at will. His authority to appoint and dismiss virtually all
judges will also be somewhat restricted. The United States, the European Union,
and the Council of Europe endorsed those amendments. But the Armenian opposition
dismissed them as insignificant and said the authorities should respect the
existing laws in the first place.



Despite the constitutional reform, the Armenian president will remain by far the
most powerful state official. In particular, he will continue to form
single-handedly the State Civil Service Council that oversees the government
bureaucracy. This council was set up in 2002 in accordance with a new law
intended to protect civil servants against arbitrary dismissal, cleanse
government agencies of incompetent officials, and create a merit-based system.
The council, according to its chairman, Manvel Badalian, fired about 350 civil
servants and hired more than 1,350 others on a competitive basis by November
2004.3 But critics say that the selection process, which includes an oral
interview, is discretionary and open to abuse.



Armenia boasts more than 3,000 nongovernmental organizations (NGOs) registered
with the Ministry of Justice. Although most of them hardly operate in practice,
the figure suggests that the registration process is rather simple. The NGOs
engage in a wide range of activities, including benevolence, human rights
protection, women's and minority affairs, and consumer rights. The most
successful usually have external sources of funding. The government rarely
interferes with their activities, but the impact of NGOs on government policies
and decisions has been minimal.



Local civic groups rarely dealt with political affairs until the 2004 government
crackdown on the opposition, which was trying to unseat Kocharian. From April
through June 2004, some groups held rallies and picketed the prosecutor
general's office in Yerevan in protest of mass arrests of opposition activists
and Armenia's perceived transformation into a police state.4 Following the
campaign, some three dozen NGOs created a coalition advocating political reform.
The coalition, called Partnership for Open Society, unsuccessfully lobbied for
more serious changes in the Armenian constitution and electoral code throughout
2005. The government did, however, give in to pressure from local environmental
protection groups in June 2005, when it decided to reroute a planned new highway
that would have passed through one of Armenia's last remaining virgin forests.



The Armenian media operate in a more hostile environment than the NGOs, with the
authorities continuing to maintain tight control over the state-owned Armenian
Public Television and virtually all private channels, which are owned by
businesspeople loyal to Kocharian and rarely air reports critical of his
administration. Their reporters are believed to operate under editorial
censorship. The only TV station critical of the authorities, A1+, was
controversially pulled off the air in 2002. Its repeated attempts to resume
broadcasting have been thwarted by the Kocharian-controlled National Commission
on Television and Radio. The regulatory body likewise rejected an A1+ bid to
obtain an FM radio frequency in February 2005. The Armenian newspapers
(virtually all of them privately owned) are far more diverse and free, but their
low circulation seriously limits their ability to inform the public.



From 2003 to 2005, virtually no libel suits were filed against the media. Nor
did the authorities use a controversial clause in the Armenian criminal code
that allows them to prosecute journalists for defamation of character. Still,
the year 2004 saw the worst-ever government-sanctioned violence against
journalists. At least four were severely beaten by special police while covering
the brutal break up of an antigovernment demonstration in Yerevan. The beatings
were never investigated by law enforcement authorities. "The impunity
surrounding these attacks made journalists more vulnerable," the New York -
based Committee to Protect Journalists said in a subsequent report.5 In a
separate incident, a photojournalist was assaulted by several men after
photographing luxury villas belonging to senior government and law enforcement
officials. Although one person was sentenced to six months imprisonment for the
attack in October 2004, the bodyguard of a senior police officer, who reportedly
provoked the assault, was not prosecuted.



Internet users as well as writers, musicians, and other artists are not known to
have faced any government restrictions. Economic problems and poor enforcement
of copyright laws are far more serious obstacles to free cultural expression.



Recommendations

The Armenian authorities should make firm and resolute efforts to curtail
election fraud.

The authorities should at last start enforcing legal provisions that make vote
buying a serious crime.

President Kocharian must end the de facto impunity enjoyed by increasingly
feared oligarchs.

Armenia needs a deeper, consensus-based reform of its flawed constitution.

The ruling regime should lift restrictions on the electronic media, permit A1+
to resume broadcasting, investigate instances of unwarranted violence against
journalists, and bring those responsible to trial.

Civil Liberties – 3.81



The constitution makes it clear that "no one may be subjected to torture and to
treatment and punishment that are cruel or degrading to the individual's
dignity." However, ill-treatment of detainees, the most common form of human
rights violation in Armenia according to domestic and international watchdogs,
remains widespread, with law enforcement officers routinely beating criminal
suspects to extract confessions. The situation does not seem to have improved
since the Armenian parliament's ratification in 2002 of the European Convention
for the Prevention of Torture and the European Convention on Human Rights. The
move led to the first-ever inspection of Armenia's prisons and detention sites
by the European Committee for the Prevention of Torture (CPT). In a report made
public in July 2004, the Council of Europe concluded that individuals arrested
or interrogated by Armenian law enforcement bodies run a "significant risk" of
torture, humiliation, and psychological pressure.6 The report said members of a
CPT delegation who met with Armenian detainees heard "numerous and consistent
allegations of physical ill-treatment. ... The ill-treatment alleged consisted
essentially of punches and kicks, and of striking the persons concerned with
truncheons and/or other hard objects, such as chair legs, thick metal cables or
gun butts."



Human Rights Watch likewise noted in its 2005 World Report that "Torture and
ill-treatment in police custody remain widespread in Armenia."7 The illegal
practice has continued unabated due to the atmosphere of impunity in which the
Armenian police and other security agencies operate. No officer is known to have
been prosecuted for such abuses in 2003-04. Furthermore, the Armenian government
challenged the CPT's conclusion, saying that "the facts indicated in the report
were not concrete."8



In April 2004, an opposition activist in the southern town of Artashat, Grisha
Virabian, had to undergo urgent surgery after enduring a reportedly brutal
interrogation at a local police station. The authorities refused to investigate
his harrowing account of torture. Furthermore, Virabian himself was nearly
prosecuted for resisting one of his police interrogators.



The country's human rights ombudsperson, Larisa Alaverdian, said in July 2005
that a large proportion of the citizen complaints filed with her office concern
violations of due process of law. She said many Armenians believe that court
rulings against them and their relatives are based on testimony extracted under
duress. An annual report by the ombudsperson's office said that the local
courts' bias in favor of state prosecutors is "constantly evident" and that the
law enforcement agencies rarely investigate torture allegations.9 Law
enforcement agencies are often eager to keep criminal suspects in pretrial
detention, making it easier for them to extract "confessions."



The maximum legal period of pretrial detention in Armenia is one year. Detainees
are less likely to be mistreated by law enforcement officials after being
convicted and sentenced. Conditions in local Soviet-era prisons have reportedly
improved since 2002, when Armenia's penitentiary system was transferred from
police to Justice Ministry jurisdiction. But they were deemed unsatisfactory by
a monitoring group comprising representatives of a dozen NGOs that conducted a
yearlong inspection of prisons across the country. Their report, released in
June 2005, said most Armenian prisons remain overcrowded and unsanitary and are
in urgent need of repairs.10 Justice Ministry officials accepted the criticism
but blamed the problem on a lack of funds.11 The Council of Europe has
repeatedly demanded the abolition of the code of administrative offenses, under
which hundreds of opposition activists were arrested in 2004. However,
Kocharian's regime continues to use the code on a vast scale whenever the
opposition threatens its grip on power.



Aside from the 2004 opposition crackdown, the Armenian opposition has been
generally free to hold rallies, although virtually none of its 2004 protests in
Yerevan were formally permitted by the authorities. In May 2004, at the height
of the opposition campaign, the Kocharian-controlled parliament passed a new law
on rallies that many saw as an infringement of citizens' constitutionally
guaranteed freedom of assembly. The law was amended a year later in line with
recommendations of experts from the Council of Europe. In particular, a
provision was scrapped that allowed police to disperse a street gathering if it
posed a threat to public and state security. But another controversial clause
that bans demonstrations outside the presidential palace in Yerevan was kept in
force.



The state largely respects citizens' constitutional right to freedom of
association, as evidenced by the existence of over 60 political parties and
thousands of NGOs. Citizens are not forced to belong to any organization. Still,
many civil servants and other public sector employees have been compelled to
campaign for incumbent presidents and ruling parties during elections. They were
similarly instructed to campaign for the passage of Kocharian's constitutional
amendments in November 2005. Several trade unions unite mainly public sector
workers. The bulk of the private sector workforce is not unionized due to high
unemployment and weak government protection of workers' rights.



The creation in 2003 of Armenia's Office of the Human Rights Defender gave
citizens an important new avenue for seeking justice. Despite having been
appointed by the president, Ombudsperson Alaverdian has proven quite vocal in
condemning and tackling abuses committed by various government bodies. Her
relations with the government markedly deteriorated over the course of 2005.
Alaverdian complained in July 2005 about a lack of legal powers, saying that her
office is able to look into only a fraction of citizen petitions against courts
and law enforcement bodies.



The Armenian constitution guarantees gender equality, and there are no laws
discriminating against women. Nevertheless, Armenia is a conservative,
male-dominated society in which few women hold senior government posts. Local
women's organizations say domestic violence is not uncommon, but they have yet
to determine the precise scale of the problem. Trafficking of Armenian women
abroad is seen as a more serious problem. In 2003, the U.S. State Department
upgraded Armenia from its so-called Tier 3 group to its Tier 2 group of states,
which the United States believes are making "significant efforts" to tackle
illegal cross-border transport of human beings. However, the department's latest
annual report on the issue, released in June 2005, put Armenia on a Tier 2 watch
list because of its "failure to show evidence of increasing efforts to combat
trafficking over the past year."12 Washington's warning to Yerevan followed an
independent journalistic investigation that implicated senior Armenian law
enforcement officials in prostitution rings operating in the United Arab
Emirates.13



The constitution gives equal rights and protection to ethnic minorities (mostly
Yezidi Kurds, Russians, and Assyrians), which make up less than 3 percent of the
country's population. Even though the minorities rarely report instances of
overt discrimination, they often complain about difficulties with receiving
education in their native languages, partially due to financial constraints,
including the lack of textbooks and resources for teacher training.



Armenia also has constitutional guarantees for freedom of conscience, with about
50 religious organizations reportedly operating in the country. Their members
have been generally free to practice their religious beliefs. The Armenian
Apostolic Church, to which over 90 percent of the population belongs, enjoys a
quasi-official privileged status. One of the constitutional amendments put to
referendum in November 2005 upholds that status by recognizing the ancient
church's "exceptional mission" in the spiritual and cultural life of the
Armenian people.



The church advocates restrictions on activities of nontraditional religious
groups, notably Jehovah's Witnesses. The U.S.-based group was for years denied
official registration primarily due to its strong opposition to military
service, which is compulsory in Armenia. Dozens of its young male members have
been imprisoned for refusing the two-year duty. Jehovah's Witnesses was finally
legalized in October 2004, shortly after the entry into force of a new law on
alternative civilian service. At least two dozen Jehovah's Witnesses enlisted
for the new service, mostly as hospital attendants. However, most of them had
deserted their civilian places of service by May 2005 on the grounds that they
were overseen by military officials. Seven of them were sentenced to between two
and three years in prison in October 2005 on desertion charges.14



Recommendations

The Armenian authorities should stop tolerating ill-treatment of detainees
and should investigate persistent torture reports. Law enforcement officials
should be ordered explicitly to discontinue the practice.

Persons taken to police stations for questioning should be given access to
lawyers from the very moment of detention, rather than after being formally
declared criminal suspects.

The Armenian authorities should finally abolish the Soviet-era administrative
code in line with Council of Europe recommendations.

The Armenian ombudsperson should be given greater authority to investigate human
rights abuses.

Authorities should clamp down in earnest on human trafficking.

Rule of Law – 2.69



Armenia's judicial system remains under strong government influence, despite
having undergone substantial structural changes since the Soviet collapse. It is
mistrusted by the population, which perceives it as riddled with corruption. The
current Armenian constitution introduced a three-tier structure of courts of
general jurisdiction topped by the Court of Appeals. It also created a separate
nine-member Constitutional Court empowered to overturn government decisions,
impeach the president, and invalidate elections. On paper, these judicial bodies
are protected against state interference. But they have been highly subservient
in practice, rarely ruling against the government and prosecutors. This is not
least because of the fact that all Armenian judges, except five members of the
Constitutional Court, are appointed by the president of the republic without
parliamentary confirmation.



In a study conducted in 2004, the American Bar Association's Central and East
European Law Initiative (ABA/CEELI) found no fundamental progress in judicial
independence and corruption in recent years. It rated Armenia negatively on 13
out of the 30 indicators making up its judicial reform index, used to assess the
rule of law in emerging democracies.15 Among the factors negatively rated were
the selection and appointment of judges and the courts' susceptibility to
improper influence. The ABA/CEELI study, based on interviews with Armenian
judicial officials and legal experts, concluded that "legal culture in Armenia,
mainly in the criminal law field, is still dominated by Soviet-era thinking that
puts the procuracy at the top of the legal system, followed by judges and lastly
defense advocates."16



The mass imprisonment of opposition activists in 2004, when Armenian judges
rubber-stamped police fabrications, was a vivid manifestation of this reality.
Another indication of their subordination to the executive is the fact that the
local courts sanction pretrial detentions of criminal suspects in the vast
majority of cases. According to official statistics unveiled by a senior judge
at the Armenian Court of Appeals, Mher Khachatrian, more than 96 percent of
5,116 arrest petitions filed by prosecutors in 2003 were approved by judges at
various levels.17 Less than half of those remanded were convicted and sentenced
to prison terms in subsequent trials. Khachatrian admitted that many judges
"seem to be scared" of rebuffing prosecutors, who are usually guided by the
Soviet-style presumption of guilt.



Some of the key constitutional amendments enacted by the Armenian authorities in
2005 are meant to strengthen the judiciary by making Armenia's Council of
Justice, a body that has the exclusive authority to recommend to the president
the appointment and removal of judges, more independent. Until now all the
council's members were named and dismissed exclusively by the head of state. The
constitutional reform empowered Armenian judges to elect nine council members by
secret ballot. The president and the parliament each appoint two of the
remaining four members of the body. It will take years before the practical
impact of this change emerges.



It also remains to be seen whether the authorities will make any changes in the
procedure for the selection of judicial candidates. The process involves oral
interviews with the justice minister. The ABA/CEELI study noted a "widespread
public perception that this process is guided by bribery, nepotism, and
partisanship." In addition, Armenian law does not require prospective judges to
have practiced before a tribunal or to undergo relevant training before taking
the bench. This might explain why many judges are perceived to be incompetent.



"All persons are equal before the law," proclaims one of the constitutional
amendments pushed through in the disputed referendum. It is hard to imagine this
provision being enforced under Armenia's existing law enforcement and judicial
systems. Armenian law may prohibit any discrimination based on a person's gender
or ethnic origin, but the reality has been very different. Innocent citizens
lacking money and government connections are practically unprotected against
mistreatment in custody, while criminals may have cases against them dropped in
exchange for a bribe.



Trials in Armenia are usually open to the media and the public in general.
Criminal suspects have a legal right to hire defense attorneys. If they cannot
afford to do so, the state is required to provide them with a lawyer free of
charge. However, government-appointed counsels are notorious for secretly
collaborating with prosecutors. The Office of the Prosecutor General is tightly
controlled by the president, which is why politically motivated trials are not
uncommon in Armenia. The procuracy, the police, the National Security Service
(the former KGB), and the military are directly subordinate to Kocharian.
Parliament and even the Cabinet of Ministers have little control over their
activities.



Ruling regimes in Armenia have always used the security apparatus for carrying
out and covering up vote falsifications. Law enforcement bodies have also become
powerful tools of political repression in recent years, with police departments
across the country detaining opposition activists whenever Kocharian's hold on
power is challenged by his foes. This was evident in the run-up to and in the
wake of the November 2005 referendum. Local human rights groups saw more and
more elements of a police state in Armenia during 2003-05.



It is little wonder that there were virtually no reported instances of senior
law enforcement officials prosecuted for abuse of power. Most of these
officials, wealthy individuals with extensive business interests, operate in
utter disregard for human rights. Prosecutor General Aghvan Hovsepian, for
example, is believed to control a dairy firm, a TV channel, and other
businesses. Another powerful official, Deputy Police Chief Hovannes Varian, was
described by a newspaper as Armenia's richest policeman, who has made a "very
serious fortune" fed by at least a dozen businesses.18 Not incidentally, Varian
has been present at just about every major opposition rally in Yerevan and
personally led the brutal break up of the April 2004 protest outside Kocharian's
palace.



The constitution gives everyone the right to own private property, which the
state can take away only in exceptional cases and with commensurate compensation
defined by law. This provision appears to have been generally respected until
the start of a massive government-sanctioned redevelopment project in central
Yerevan in 2004. Hundreds of old houses were torn down to give way to expensive
residential and office buildings constructed by private investors. Many of the
house owners protested against the amount of financial compensation offered by
the municipal authorities, saying it was well below the market value of their
property. Some even sued the government, accusing officials overseeing the
scheme of corruption. However, Yerevan courts sided with the government in
virtually all cases, and a human rights lawyer who represented the last
resisting house owners was arrested by former members of the KGB on dubious
fraud charges in October 2005. Most of those low-income residents were forcibly
evicted from their homes by the end of 2005.



In a special report issued in September 2005, Ombudsperson Alaverdian condemned

the entire process as unfair and even illegal. She argued in particular that the
properties were alienated in accordance with government directives rather than
under a special law, as is required by the constitution.19 The government
ignored the report.

Recommendations

The Armenian authorities should enact additional safeguards for judicial
independence, such as a parliamentary endorsement of all judicial candidates,
and put an end to the justice minister's involvement in their selection.

The government and law enforcement agencies should stop pressuring courts into
handing down verdicts favorable to their interests.

State prosecutors should scale down recourse to pretrial detentions.

The ruling regime must stop using the police and the former KGB operatives to
deal with political opponents.

Anticorruption and Transparency – 2.62



Armenia's business environment has long been regarded by Western lending
institutions as one of the most liberal in the former Soviet Union. The
government appears to have liberalized it further in recent years under pressure
from the International Monetary Fund (IMF) and the World Bank. In an extensive
study on the Armenian economy, a group of IMF economists pointed to a
simplification of licensing procedures, a higher "quality of [government]
regulations," and their increased accessibility to the local business community.
"These changes led to an improvement in the business environment and put Armenia
ahead of most CIS countries in a variety of governance indicators," they
wrote.20 The World Bank arrived at a similar conclusion in a September 2005
survey that assessed "the ease of doing business" in 155 countries on the basis
of ten factors such as taxation, business registration, and labor legislation.
Armenia was 46th in the rankings, ahead of all other CIS countries.21

Still, government connections remain essential for doing business in Armenia.
Some forms of large-scale economic activity, such as importation of fuel, wheat,
and other basic commodities, have effectively been monopolized by oligarchs.
Another form of excessive state involvement in the economy is a notoriously
corrupt and arbitrary tax and customs administration. The IMF and the World Bank
have been pressing the authorities to tackle the problem, but harassment from
tax authorities remains the number one subject of complaints by Armenian
businesspeople. They usually avoid publicly challenging the government for fear
of retribution.



In a very rare exception to this rule, the coffee importing company Royal
Armenia publicly accused the leadership of the Armenian customs authority
throughout 2004 and 2005 of illegally penalizing it for its refusal to engage in
a scam that would have enriched senior customs officials. The extraordinary
allegations, denied by the Armenian customs authority, were widely covered by
the Armenian press. But the embattled company faced serious consequences as a
result, when it was all but driven out of the coffee business and its two top
executives were arrested on dubious fraud charges in October 2005. Their example
will hardly encourage whistle blowing by other entrepreneurs.



Many ministers and other senior government officials are themselves involved in
business, directly or indirectly owning companies. Armenian newspapers regularly
carry reports about their and their relatives' extravagant lifestyles. Their
questionable self-enrichment is clearly facilitated by the absence of any laws
on conflicts of interest. Armenia did enact a law in 2002 that obligated senior
public officials to declare their assets. However, the law has proven
ineffectual, with many officials routinely underreporting their conspicuous
wealth.



This reality is a reflection of the widespread corruption that has engulfed all
areas of life in Armenia, including the education sector. Bribery remains a
serious problem in the selection of students for the prestigious programs of
state-run universities. In November 2003, the government unveiled a long-awaited
plan of mainly legislative actions aimed at fighting corruption. Throughout
2005, the government claimed to be successfully implementing the program
endorsed by the World Bank, but indications that it has actually reduced the
scale of graft were absent. For example, Armenia scored 2.9 out of 10 on
Transparency International's 2005 Corruption Perceptions Index (CPI)--down from
3.1 in the 2004 global survey conducted by the Berlin-based watchdog.22



There is a widely held belief, shared by Transparency International
representatives in Yerevan, that the Armenian authorities lack the will to
combat corruption in earnest. During 2003-05, no senior officials are known to
have been prosecuted for bribery and other corrupt practices. Law enforcement
authorities claimed to have solved 227 corruption-related crimes in the first
half of 2005 but refused to identify any of the individuals who allegedly
committed those crimes.23



Although Armenian laws and regulations are published on time and are even
accessible on the Internet, government transparency has generally been lacking.
In September 2003, the Armenian parliament passed a potentially significant law
that gives citizens the right to obtain important information from both public
and private legal entities. Under that law, government agencies cannot turn down
citizen inquiries that deal with "cases of emergency threatening citizens'
health and security," the economic situation in the country, education, health
care, and environmental protection. Such information must be provided, normally
free of charge and in writing, within 30 days of the receipt of an application.
Public awareness of these important provisions has so far been weak, and it is
therefore premature to gauge their overall impact on government transparency.




At least one government structure, the Yerevan municipality, has clearly failed
to comply with the law by refusing to release copies of all of its decisions
regarding lucrative land allocations in the Armenian capital in recent years.
The information was requested by Hetq.am, an online investigative publication
that extensively covered the process, which was tainted with reports of
high-level corruption and nepotism. The copies had still not been provided by
the municipality as of November 2005, despite successful legal action taken by
Hetq.



The government's budget-making process has been reasonably transparent, with the
National Assembly publicly debating and even altering spending bills submitted
by the executive. The government also reports to parliament and must secure its
approval for the execution of the national budget. The government's detailed
execution reports must be considered by lawmakers after being examined by
parliament's Audit Chamber. However, although the oversight body, the most
important in Armenia, has repeatedly criticized the government's use of public
finances and external loans, it lacks the legal and administrative muscle to
affect government policies.



The authorities also claim to have cracked down on corrupt practices in the
awarding of government contracts with a 2000 law that mandates competitive
bidding for every single government purchase of goods and services worth more
than $500. But the head of a government agency handling state procurements,
Gagik Khachatrian, admitted in February 2005 that many potential suppliers avoid
taking part in such tenders, presumably because of lack of faith in their
integrity.24 Much of the foreign assistance in Armenia comes from the United
States and Europe, who administer its distribution themselves.



Recommendations

The Armenian authorities should stop tolerating endemic corruption in their
ranks and should enforce relevant laws by prosecuting corrupt high-level
officials.

The authorities should enact a stringent law on conflicts of interest and amend
the existing law on financial disclosure to allow for the verification of
declared assets.

Tax and customs officials must be explicitly banned from collecting state
revenues in an arbitrary and discretionary manner.

The freedom of information law should be amended to specify sanctions against
government agencies illegally refusing to provide data requested by citizens.

Author



Emil Danielyan is a Yerevan-based journalist and political analyst.

Notes



1 "Statement by the Council of Europe Observer Mission for the referendum on
constitutional amendments in Armenia" (Strasbourg: Council of Europe [COE], 28
November 2005).

2 Cycle of Repression: Human Rights Violations in Armenia (New York: Human
Rights Watch [HRW], Briefing Paper, 4 May 2005),

http://hrw.org/backgrounder/eca/armenia/0504/.

3 Hrach Melkumian, "Armenian Civil Service Watchdog Sums Up Two-Year Work," in
RFE/RL Armenia Report (Prague and Washington, D.C.: Radio Free 
Europe/Radio Liberty [RFE/RL]), 4 November 2004,
http://www.armenialiberty.org. 

4 Hrach Melkumian, "Civic Groups Protest Against Police State,'" RFE/RL Armenia
Report, 15 April 2004.

5 "Armenia," in Attacks on the Press 2004 (New York: Committee to Protect
Journalists [CPJ]),
http://www.cpj.org/attacks04/europe04/armenia.html. 

6 Report to the Armenian Government (Strasbourg: COE, European Committee for the
Prevention of Torture and Inhuman or Degrading Treatment or Punishment, 28 July
2004),
http://www.cpt.coe.int/documents/arm/2004-25-inf-eng.htm.

7 World Report 2005 (HRW), http://hrw.org/wr2k5/.


8 Final Response of the Armenian Government to the Report of the European
Committee for the Prevention of Torture and Inhuman or Degrading Treatment or
Punishment (Strasbourg: COE, European Committee for the Prevention of Torture
and Inhuman or Degrading Treatment or Punishment, 28 July 2004),

http://www.cpt.coe.int/documents/arm/2004-27-inf-eng.htm

9 Anna Saghabalian, "Ombudsman Criticizes 2004 Crackdown on Opposition," RFE/RL
Armenia Report, 26 April 2005.

10 Karine Kalantarian, "Civic Groups Want Better Prison Conditions in Armenia,"
RFE/RL Armenia Report, 30 June 2005.

11 Ibid.

12 Trafficking in Persons Report 2005 (Washington, D.C.: U.S. Department of
State, Office to Monitor and Combat Trafficking in Persons, 3 June 2005),

http://www.state.gov/g/tip/rls/tiprpt/2005/

13 Edik Baghdasarian, "Prosecutors are Hard at Work, But Human Trafficking is
Booming," Hetq-Online (Investigative Journalists of Armenia), 30 March 2005,

http://www.hetq.am/eng/society/0503-dub-9.html. 

14 Vahan Ishkhanian, "Convictions for Conviction: Alternative service recruits
sentenced on AWOL charges," Armenia Now, 11 November 2005,

http://www.armenianow.com/?action=viewArticle&CID=1378&IID=1055&AID=1202. 


15 "Armenia," in Judicial Reform Index (Chicago and Washington D.C.: American
Bar Association, Central and East European Law Initiative [ABA/CEELI], December
2004),
http://www.abanet.org/ceeli/publications/jri/home.html.  

16 Ibid, 2.

17 Karine Kalantarian, "Arrest Data Highlight Court Weakness In Armenia," RFE/RL
Armenia Report, 27 April 2004.

18 Karen Mikaelian, "Adherents of the Criminal Underworld," Chorrord
Ishkhanutyun, 6 December 2005. 

19 Vahan Ishkhanian, "Is Anybody Listening?" Armenia Now, 25 September 2005. 


20 E. Gelbard, J. McHugh, C. Beddies, and L. Redifer, "Growth and Poverty
Reduction in Armenia: Achievements and Challenges" (Washington, D.C.:
International Monetary Fund [IMF], December 2005), 10.

21 Atom Markarian, "Armenia's Business Environment Best In CIS,'" RFE/RL Armenia
Report, 21 September 2005.

22 2005 Corruption Perceptions Index (Berlin: Transparency International, 18
October 2005),

http://www.transparency.org/policy_and_research/surveys_indices/cpi/2005. 


23 Ruzanna Stepanian, "Government Reports Rise In Corruption Crimes,'" RFE/RL
Armenia Report, 2 November 2005.

24 Nane Atshemian, "Official Admits Business Distrust Of State Procurements,"
RFE/RL Armenia Report, 16 February 2005.