ARMENIA: ECONOMIC CHALLENGES DURING THE CHANGE OF GUARD
Abstract
The next parliamentary elections in Armenia are to take place in May 2007, followed by presidential elections in March 2008. In oth-er words, the country is to go through a radical “change of guard:” Robert Kocharian is to leave the post of president because in accordance with the Armenian Constitution he cannot be nominated for a third term of office. This highlights the importance of the 2007 parliamentary elections, considering that the name of the future occupant of the presidential palace for a term of four years will in large part depend on the results of these elections. Amendments to the Basic Law made in November 2005 enhance the role of parliament and government by transferring to them some of the president’s powers, and this complicates the picture still further.
Another point to note about the coming change of power is that Robert Kocharian’s ten-year presidency and Andranik Margaryan’s seven-year tenure as prime minister (2001-2007)have undoubtedly proved to be quite successful for the country’s economy. This means that the coming change of power is also a test for the economy of this small (in size) republic or, more precisely, a test for its stability and policy continuity. In addition, on the threshold of this decisive change of guard the country faces (or may face) a number of economic challenges, whose successful resolution is also part of the test.
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See: EBRD Transition Report 2005. According to forecasts for that year, only six countries were expected to reach that level: Uzbekistan, Estonia, Turkmenistan, Belarus, Kazakhstan and Armenia. But then it turned out that in 2005 the Soviet-period GDP level was also reached by Azerbaijan, whose record GDP growth (26%) at that time was due to a sharp increase in oil production and world oil prices.
See: H. Khachatrian, “Economic Situation in the South Caucasus Countries in the 15th Year of Independence. A Comparative Analysis,” Armenian Trends, 2006, Q4.
According to an updated technique applied a year later, Armenia’s ranking was even higher: 37th place (see:
www.doingbusiness.org/ExploreEconomies/Default.aspx?economyid=10]).
In effect, stability has lasted for almost seven years, since the appointment of Andranik Margaryan as prime min-ister in May 2000. The Kocharian-Margaryan tandem was able, without much difficulty, to keep the reins of power during the 2003 presidential and parliamentary elections. True, these elections took place with obvious violations in favor of the ruling elite, but the weak and fragmented opposition failed not only to undermine the existing regime (to realize their dream about a “color revolution” of their own), but even to create a tangible threat to its stability. One of the main reasons for the weakness of the opposition was evidently the weakness of the protest electorate, which could not be strong in the condi-tions of rapid economic growth accompanied by poverty reduction in the country.
Here is what he said in an interview on 15 December, 2006: “I have no intention of becoming the youngest pen-sioner in Armenia” (see: [http://news.president.am/rus/separate.php?sub=press&id=96&year=2006]).
Today one can say the following about this party. First, it was set up and is financed by Gagik Tsarukian, one of the country’s wealthiest businessmen. Second, the party engages in charity on a large scale, winning widespread populari-ty. And third, it has no prominent professional politicians among its members.
Of course, a great deal will depend on the occupations of people returning in the first place. The country has re-cently experienced a growing shortage of skilled labor, primarily in construction. But skilled construction workers are un-likely to return, because Russia itself is in the midst of a building boom.
For more detail, see: “Svet v kontse truby,” Kommersant, 26 January, 2007.
See: H. Khachatrian, op. cit.
The results of a recent conference are available on the website of the U.S. Embassy in Armenia:
www.yerevan.usembassy.gov/news/2007/january/news011307.pdf].
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