Monica Ellena in Tbilisi -

On the face of it, Armenian President Serzh Sargsyan won a significant victory. On March 5 Gagik Tsarukyan, founder and leader of the opposition Prosperous Armenia party and one of the richest men in the country, resigned from politics, leaving Armenia’s already fragile opposition even more demoralised. With no other rivals of a similar stature to oppose him, Sargsyan’s grip on power has grown even stronger.

The magnate’s capitulation came at the end of a tumultuous few weeks. On February 12, Sargsyan effectively declared war on Tsarukyan, a former ally, labelling him as an “evil” politician with “low intellectual capacity” in a speech to his party. That followed disagreements over a constitutional reform package that would have strengthened Sargsyan’s Republican Party’s hold on power for the next several years, and enabled the president to stay in power beyond the 2018 presidential election. The only party that could have opposed him – Prosperous Armenia – is now in no shape to do so.

Prosperous Armenia, which is the second largest party in parliament, and a couple of smaller opposition parties announced mass protests to bring down the government later that month and Tsarukyan visited Moscow in February courting Russia’s support. Indeed, some analysts suggest that Moscow’s reluctance to support Tsarukyan highlights the depth of its support for Sargsyan, and reinforces his position even further.

Potential for protest

The manner of the president’s victory says much about the workings of Armenian politics, in which the ruling party uses state resources to its own ends.

“The harsh rhetoric of his speech was going beyond the ethical norms,” explains Haykak Arshamyan, history professor at Yerevan State University. “Moreover, the leader of Republican Party was actually guiding the speaker of the parliament, the PM and the finance minister and security agencies to start a political persecution against the leader of Prosperous Armenia. The speech also was a message for the other members of the Republican Party, who began to detract and criticise [Tsarukyan] and his team members in different formats and venues.”

Action soon followed words. Tsarukyan was expelled from the National Security Council, a government advisory panel on national security, and investigations were launched into the tycoon’s alleged tax-dodging and failure to attend parliament sessions. Then came his dismissal from the post of chairman of the Armenian State Institute of Physical Training under a premier’s decree, as well as from the governing boards of various universities. Other members of Prosperous Armenia also left the party, including some members of parliament and the mayor of Armenia’s second biggest city, Gyumri.

With Tsarukyan’s capitulation, the government hopes it will be less likely to be confronted by any of the country’s oligarchs who dominate the country’s economy. However, others aren't so sure it will be so straightforward. “Waves of protest activity have been a constant feature of Armenia’s political life,” states Mikayel Zolyan, political analyst at Regional Studies Centre, a Yerevan-based think-tank. “So it would be extremely dangerous for Armenia’s rulers to assume that by removing Prosperous Armenia from the scene they have stabilized the regime. In fact, by doing that they removed a valve which had channeled the negative attitudes existing in the society in a way that was relatively safe for the political system. With the economy in tatters and social inequality as high as ever, the absence of such a valve may prove very dangerous.”

Armenia’s socio-economic situation may indeed change the so far carefully maintained balance. The economy is over-monopolised and stagnant, and closed borders with Turkey and Azerbaijan heighten the country’s reliance on Russia. However, the economic downturn in its key ally from the Western sanctions and low oil price has had a huge knock-on effect on Armenia.

Remittances from abroad, which accounted for 21% of GDP in 2013, have been steadily falling and in January were down by 34.8% on year. Thousands of migrant workers have returned to Armenia from Russia, allegedly because of contravening Russian immigration laws. The country suffers high levels of corruption – it ranks 94 out of 175 countries in Transparency International’s Corruption Perceptions Index – and poverty.

Politically, Armenia is yoked ever closer to Russia through the Eurasian Economic Union, which it formally joined on January 1. Yet that appears to be bringing more problems than it solves. Armenian exporters have benefitted little from increased trade with Russia. And cumbersome rules and poor intellectual property rights could actually threaten some sectors, such as Armenia’s thriving IT sector, which contributed 5% of GDP in 2013.

The falling value of the dram, the Armenian currency, has led to inflated commodity prices, making life harder for ordinary people in the street. And when people have taken to the streets to voice their frustrations, as they did following the murder of six Armenian family-members in Gyumri in January, the government’s heavy-handed reaction is alienating them further.

Bad old days

Some worry that Sargysan’s victory over Prosperous Armenia is the beginning of a new phase of authoritarianism in Armenia – particularly in light of Armenia’s membership of the EEU. But it is hard to know how far it will go. The country’s large diaspora and an increasingly weaker economy make it dependent on the West to a greater degree than other post-Soviet states. Escalating tensions with Azerbaijan over the oil-rich neigbour’s breakaway region of Nagorno-Karabakh keep the country on a constant, nerve-breaking state of alert. Armenia also lacks the energy resources that have fuelled authoritarianism elsewhere. And popular protest is well entrenched in people’s minds, suggesting they would not roll over easily.

At root, the problem is that the political system is closed, says Richard Girogasian, director of the Regional Studies Centre. “Opposition parties propose little by way of alternative policies,” he explains. “Instead, they represent rival elite factions consumed by the fight for power.” 

Yet change is brewing outside the established political frame. In 2013 a new political platform was set up with the aim of pulling down Sargysan and his elite. While the driving force behind Civic Contract (CC) is the outspoken journalist and opposition figure Nikol Pashinyan, the majority of the governing board members are young civic activists with no former political affiliation. CC has so far remained a grass roots movement, gaining support by the day among the young both the smartphone-yielding in central Yerevan and the disenfranchised in the poorer regions. But the mood is changing. Pashinyan, a harsh critic of the constitutional reforms designed to transform the country into a parliamentary republic with a powerful prime minister, announced that CC is ready to enter mainstream politics. The target is running in Armenia’s next parliamentary and presidential elections due in 2017 and 2018 respectively.

Also, despite joining the EEU, Armenia is seeking to reopen the door to Brussels and negotiate a new cooperation framework after surprisingly closing on the EU’s free trade and association deal in 2013. “Somehow, Armenian politics will have to open up,” concludes Giragosian.

But will it do so without violence and unrest?