'Armenia’s Donald Trump' mulls risks of returning to politics

'Armenia’s Donald Trump' mulls risks of returning to politics
Gagik Tsarukyan is said to have a "personal style which would make Donald Trump look like an ascetic".
By Carmen Valache in Lund November 21, 2016

For extravagance, the American president-elect has a serious contender in the person of Armenian oligarch Gagik Tsarukyan, who was once described in a leaked US State Department cable as having a "personal style which would make Donald Trump look like an ascetic".

The former president and founder of the leading opposition party, Prosperous Armenia, Tsarukyan has kept an unusually low profile over the past couple of years, after upsetting the establishment - and President Serzh Sargsyan - because of his party's cooperation with former President Levon Ter-Petrosyan’s Armenian National Congress.

Despite his official retirement from politics, Tsarukyan continues to be a busy man - at least on paper. For the man nicknamed "Dodi Gago" (which loosely translates as "Gary the Dummy", according to the same leaked cable) is, in theory, an MP, and has been since 2003, although one would be hard pressed to ever find him in the National Assembly building in Yerevan.

Like Tsarukyan, a couple of dozen other Armenian oligarchs occupy positions in parliament, but rarely attend sessions or vote, and therefore seem disinterested in the political clout that the position could bring them. Being an MP for Armenia's oligarchs appears to mean little else than immunity from prosecution, plus status and connections.

A former heavyweight arm-wrestling champion, Tsarukyan is also the head of the Armenian Olympic Committee. When he is not tending to Armenia's promising athletes, he busies himself with varied business interests related to food processing, cement, gas distribution and brandy manufacturing, among others. These businesses operate under the umbrella of the "Multi Group" holding, and were estimated to be worth more than $500mn a decade ago.  

Just like Trump, Tsarukyan's popularity is on the rise, for his uncouth, no-frills style has won him the support of the public, who are disenchanted with the political elite's inveterate corruption. In late October, 1,000 or so demonstrators presented themselves at Tsarukyan's mansion, which is located on top of a hill some 20km away from Yerevan, to ask him to return to politics.

He asked them to leave that day, but a few days later made an ambiguous public statement suggesting that he might "reopen the page" that he had turned [politics] if the country needs him, because he had "always been with the people".

His reappearance on the political scene would be timely, for Armenia is preparing to hold parliamentary elections in April. The current leadership of his party - which occupies 36 out of 131 seats in parliament, half of the ruling party's seats - had already been pressing for his return for several months.  And, following a referendum held in December 2015, the incoming government will be invested with more power than any of its predecessors, at the expense of the presidency.

But whether Tsarukyan would become Armenia's Trump by taking a page out of The Donald's book is unlikely. For Tsarukyan would have to fight - and win against - an entire class of political oligarchs, who look down on him for being provincial, an outsider and a convicted rapist.

Besides, while he shares some things with Trump - like his passion for endangered animals and a chequered track-record with women, the Armenian oligarch is more of a shadow man than a show man.

Tsarukyan usually avoids public appearances, and has in the past professed his desire to finance a class of "real smart" legislators that would govern to further the wellbeing of the country, instead of their own personal interests.

His forced political withdrawal in February 2015 was allegedly part of a truce mediated by another oligarch, Samvel Karapetyan, under which the administration would refrain from pursuing Tsarukyan for tax evasion and would not touch his business interests.

In exchange, the oligarch was to go silently and stay away from politics. Not keeping his end of the bargain would mean that the attention-hating oligarch would have to grapple with possible public accusations of tax evasion and corrupt business practices, a factor that he will undoubtedly consider before deciding his next move.

Armenia's oligarch problem

Tsarukyan is not the wealthiest Armenian out there. That accomplishment goes to Samvel Karapetyan, the current prime minister's brother, who has built a $4bn-worth real estate empire in Russia. But he is perhaps the most popular of a class of Armenia-based oligarchs that have controlled the helms of power and business in the country for the last two decades.

Forged in the volatile early days of Armenia's independence from the Soviet Union, when the country was grappling with the threat of war from neighbouring Azerbaijan over the breakaway region of Nagorno-Karabakh and an economic blockade imposed by Turkey and Azerbaijan, Armenia's oligarchs built their wealth by controlling imports of commodities and food and – as the country resumed industrial production throughout the 1990s – exports of minerals, jewellery and alcoholic beverages.

Richard Giragosian of the Yerevan-based Regional Studies Centre explains in an email to bne IntelliNews that "over time, Armenia's oligarchs were able to extend their informal networks of political power through informal cartels and commodity-based semi-monopolies [...]Moreover, this oligarchic elite has further acquired both substantial wealth and significant economic-commercial power, most often at the expense of the state authority, depriving the state of both tax revenue and defoliating the country of national assets through the privatisation process".

The oligarchs of the 1990s took advantage of the Nagorno-Karabakh war with Azerbaijan and of their military backgrounds to consolidate their economic and political power, Giragosian adds. Foremost amongst them were Serzh Sargsyan, then-defence minister and current president; then-Prime Minister Robert Kocharian and the late Vazgen Sarkisian, also a former defence minister and army commander. The three men - all of whom hail from Karabakh - played an important role in forcing Ter-Petrosyan into resigning in 1998 for his alleged moderate stance on the Nagorno-Karabakh conflict.

But while certain clans, like the Karabakh one, began accumulating political power in the 1990s, it wasn't until 2003 that oligarchs began entering the parliament, motivated by their desire to acquire status, Giragosian explains. Many of them initially supported the ruling Republican Party, but then began to break off from it by running as independent candidates and even founding their own parties.

Such is the case with Tsarukyan, who founded his Prosperous Armenia party in 2004, and with the United Labour Party of oligarch Gurgen Arsenyan, who founded the party three months before the elections in 2003 and used his wealth to push the party into parliament that same year.

Tsarukyan's criticism of successive Armenian governments has mostly been related to economic mismanagement, something which, ironically, he has profited from in building his business empire.

His comfortable position could now be in jeopardy if he breaks his truce with the government to stay out of politics, and if the new government of Prime Minister Karen Karapetyan is as serious about cracking down on corruption and tax evasion as it claims to be. With almost 40% of the Armenian GDP believed to be generated by the grey economy, cracking down on these practices would make good sense for an impoverished country that is seeking to increase budget revenues.

But, as bne IntelliNews concluded in a previous feature, the government's reform drive is likely to be short-lived for several reasons, including Karapetyan's poor track record of standing up to oligarchs in his past posting as mayor of Yerevan; his lack of credibility (critical voices accuse him of being his billionaire brother's political pawn); and the little time that he has to tackle entrenched issues such as corruption and tax evasion.

Conspiracy theories

Political analysts Vigen Akopyan and Gagik Gambraryan told Vestnika Kavkaza news agency that Tsarukyan's re-appearance on the political scene might actually be beneficial for the ruling party and that, if it takes place, it would be with the ruling party's consent and perhaps even at its initiative.

"Tsarukyan rejects a revolutionary scenario, since, in his words, there is blood there," Akopyan believes. If he returns, he would be loyal to the establishment, he contends.

Gambrariyan adds that the early October local elections, in which the ruling party failed to secure a majority in large constituencies like the Gyumri and Vanadzor municipalities, was a red alert for the ruling party. "The return of Tsarukyan is probably their next plan," he speculated.

A divided electorate, who has shown its disenchantment with the ruling party and President Serzh Sargsyan in mass protests over the last two summers, may explain Tsarukyan's sudden desire to come back, the analyst adds. "The Prosperous Armenia Party might coalesce with the ruling party after the elections, and thus attract votes from the real opposition," he concluded.