ALACO DISPATCHES: Armenia's Sargsyan prioritises stability over economic reform

ALACO DISPATCHES: Armenia's Sargsyan prioritises stability over economic reform
The centre of Yerevan retains an air of affluence. / Photo: CC
By Jonathan Melliss of Alaco March 1, 2017

There was not much pre-election buzz in Yerevan.  This was of course understandable given the timing of my visit – deep midwinter. Heavy snow had fallen in the city the day I arrived.

However, even among the political scientists and local journalists I spoke to, there seemed to be little genuine interest in parliamentary elections in April.  Surprising, given the significance of this year’s poll which – following a constitutional referendum in 2015 – sees the country switch from a presidential system of governance to one where the legislature will hold significantly more sway.

Yet during my stay in Yerevan I got the impression that many in the city had little faith their vote will have much influence on the course of the country. 

Apathy among the electorate, particularly the younger generation, is not exactly a new political phenomenon in Armenia or countless countries across Europe. In Armenia’s case, the disengagement is perhaps predictable in view of the country’s gloomy economic prospects.

A marked demographic decline, stubbornly high unemployment and a lack of foreign investment suggest the country is unlikely to see the stellar growth of the mid-2000s – which earned it its Caucasian Tiger moniker – anytime soon.

In spite of the economic predictions, the centre of Yerevan retains an air of affluence. Interspersing the city’s Soviet-era grandeur, large building sites herald the construction of apartment blocks, shopping centres and offices.

But while a GDP growth forecast of 2.2% sounds attractive from a Western European perspective, high levels of poverty mean much more is required of the government, which talks up reform but fails to deliver.

Criticism of the government was temporarily muted last year during renewed fighting with Azeri forces around the Armenian enclave of Nagorno-Karabakh, the so-called Four-Day War in April 2016.   The conflict mobilises and unifies Armenians like little else. However, it is also an issue that could bring down a government if it was felt that the future of the breakaway state was in jeopardy.

To date, Serzh Sargsyan, who is coming to the end of his second and final presidential term, has not felt too threatened by discontent over the country’s flagging economy, mainly expressed by increasingly influential civil society activists from ecological, anti-corruption and military veterans groups. Assertive as they are, I was told their periodic protests, notably the Electric Yerevan movement in the summer of 2015, have not received much backing outside the Yerevan elite.

The authorities came under significant pressure in July, when a group of predominantly army veterans seized a Yerevan police station demanding the resignation of Sargsyan and the release of the country’s political prisoners. A lengthy stand-off ended with the group’s surrender. The attempted coup attracted a degree of wider support in the capital, but failed to generate any real momentum for change.

Alert to the tensions, Sargsyan has done his best to shuffle the cards in his pack to placate the general public, political allies and influential business figures.  In September 2016 he replaced Prime Minister Hovik Abrahamyan – accused of building up a commercial empire in his home region, Artashat – with former Gazprom executive Karen Karapetyan. On his appointment, Karapetyan loudly proclaimed his reformist agenda.

I heard numerous theories that Sargsyan intends to use the 2017 elections to carry out a Putin-style castling move by becoming Prime Minister, or even head of the ruling Republican Party, from where he could continue to exercise influence behind the scenes. 

Sargsyan’s public statements have been predictably ambiguous on the matter and it appears likely that whatever the composition of the government post-April, he will retain a guiding hand over policy. Colourful oligarch Gagik Tsarukyan’s return to frontline politics would appear to strengthen potential opposition to the current president. Tsarukyan stepped down from his Prosperous Armenia Party two years ago, ostensibly following pressure from Sargsyan.

However, several commentators have suggested that Tsarukyan’s re-emergence has been coordinated to create an impression of political plurality, while at the same time attracting votes away from any genuine opposition to Sargsyan and his Republican Party.

The decision of the former Defence Minister of Armenia, Seyran Ohanyan, to join US-born opposition candidate Raffi Hovannisian on a united ticket is potentially more of a threat to the Republicans.  Ohanyan, who is widely respected within the military and much more popular than his successor Vigen Sargsyan, has teamed up with Hovannssian, a presidential candidate in 2013, and former Foreign Minister Vardan Oskanyan to form a new political bloc which seems likely to enter parliament.

But the chances of this movement ultimately defeating the Republicans are very slim. So perhaps those apathetic voters have a point.

Jonathan Melliss is a Senior Analyst at Alaco.  Alaco Dispatches is the business intelligence consultancy’s take on events and developments shaping the CIS region.