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R 171204Z OCT 07
FM AMEMBASSY YEREVAN
TO RUEHC/SECSTATE WASHDC 6478
INFO RUCNCIS/CIS COLLECTIVE
RUEHLMC/MILLENNIUM CHALLENGE CORP
RUEHNO/USMISSION USNATO 0433

UNCLAS SECTION 01 OF 03 YEREVAN 001255 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
DEPT FOR EUR/CARC 
 
E.O. 12958: N/A 
TAGS: PGOV PREL PHUM ECON ETRD KCRM AM
SUBJECT: ARMENIA NEWS HIGHLIGHTS 
 
YEREVAN 00001255  001.2 OF 003 
 
 
(U) Sensitive but unclassified.  Please protect accordingly. 
 
¶1.  This is the latest in our periodic series of cables highlighting 
news of U.S. policy interest. 
 
¶2. TABLE OF CONTENTS: 
 
(U) POLITICAL NEWS: 
-- Ex-President Blasts Government In Quasi-Campaign Speech 
-- ...And Reaches Out To Old Enemies 
-- PM Sargsian Talks Iran and Turkey in Moscow 
-- Pro-Opposition Journalist Attacked 
-- Wealthy Armenian MP Attacked in Moscow Hotel 
-- Appeals Court Upholds Verdict for Alleged Coup Plotters 
-- Archbishop of Canterbury Visits Armenia 
 
(U) ECONOMIC NEWS: 
-- Armenia's Transparency International Corruption Score Steady 
-- Russian Troika Dialog Acquires Armenian Bank 
-- Armenia Exploring Nuclear Power Options With Russia 
-- ...As EU Ups The Ante On Aid To Shut Down Metzamor Reactor 
-- Armentel Telecommunications Monopolies Expired October 1 
-- New Executive Director for Armenian Development Agency 
-- Synopsys Armenia Opens New Research and Educational Center 
 
(U) AND IN OTHER NEWS... 
--  Pachyderm Politics 
 
POLITICAL NEWS 
-------------- 
 
EX-PRESIDENT BLASTS GOAM IN QUASI-CAMPAIGN SPEECH: 
 
¶3.  (SBU) The Armenian National Movement's September 21 Independence 
Day reception became a de-facto campaign rally for former President 
Levon Ter-Petrossian (LTP), attended by PolChief.  The event was 
packed, with the guest list a virtual who's who of Armenia's 
opposition.  The Marriott general manager later told us that some 
1,200 people tried to swarm into the event ballroom (capacity 700, 
and booked for 500 guests).  The guests' boisterous chants of 
"Levon! Levon!" and the palpable buzz of anticipation in the room 
made this the most optimistic opposition gathering PolChief has ever 
witnessed in Armenia.  The former president stopped just short of 
announcing his candidacy for president.   His remarks were a 
scathing indictment of alleged criminality and corruption in 
government.  Media outlets reported the event, but none broadcast 
the speech, and state-run H1 television punctuated its coverage of 
the event with file footage of economic privation in Armenia in the 
early/mid-1990s during LTP's government. 
 
...AND REACHES OUT TO OLD ENEMIES 
 
¶4. (U) Former President Ter-Petrossian called on two senior ARF 
(Dashnaktsutyun) leaders, Hrant Markarian and Armen Rustamian, at 
the Dashnak headquarters, in an apparent bid to make peace with the 
nationalist party.  ARF and the ex-president (and by extension, 
LTP's Armenian National Movement) have been bitterly opposed since 
Ter-Petrossian outlawed the ARF while president, calling it a 
terrorist organization.  Markarian and Rustamian were among dozens 
of party activists arrested and imprisoned in 1994 and 1995 on 
murder and coup charges, which were denied by the nationalist party 
as politically motivated.  Meanwhile, the former president also 
called on another bitter, long-time rival, Vazgen Manukian, whom he 
defeated (under highly questionable conditions) for president in 
¶1996.  The systematic bid to mid fences and heal grudges with old 
adversaries is a canny early move in his bid to become the unified 
opposition candidate. 
 
PM SARGSIAN TALKS IRAN IN MOSCOW 
 
¶5. (U) On September 25, Prime Minister Serzh Sargsian spoke to the 
media about Armenia's relations with Iran and Turkey during his 
visit to Moscow.  According to Sargsian, a U.S. attack on Iran would 
be the worst-case scenario for Armenia. "I am hopeful that the sides 
will settle the discord via talks. Iran is a very important state 
for us. It's our outlet to the world," he said. According to the PM, 
Armenia will strengthen relations with Iran. Russian RIA Novosti 
reported Sargsian saying "We will expand the building of the gas 
pipeline, since it raises Armenia's security in the region. As any 
country, we proceed from national interests. Our cooperation with 
Iran is justified." 
 
PRO-OPPOSITION JOURNALIST ATTACKED 
 
¶6. (U) On September 15 two unknown persons attacked Hovhannes 
Galajyan, editor-in-chief of the pro-opposition Iskakan Iravunk 
newspaper, who was hospitalized after the attack. According to 
Galajyan, he was beaten up in the stairwell of the building housing 
 
YEREVAN 00001255  002.2 OF 003 
 
 
the newspaper moments after receiving a phone call from a man who 
identified himself as a correspondent for another Armenian paper. He 
said the two assailants said nothing as they kicked and hit him with 
metal bars. Galajyan told the press that he suspected Hrant 
Khachatrian - the leader of the small opposition party Union for 
Constitutional Rights, whom other senior party members including 
Galajian had been challenging for the past year - was behind the 
attack.  Khachatrian strongly denied involvement in the beating, 
claiming that it might have been orchestrated by his rivals.  The 
prosecutor's office has launched an investigation, but there have 
been no arrests. 
 
WEALTHY ARMENIAN MP ATTACKED IN MOSCOW HOTEL 
 
¶7. (U) On September 26 in Moscow, Republican Party MP and wealthy 
businessman Tigran Arzakantsian - owner of one of Armenia's largest 
brandy companies - was assaulted.  Two unknown men shot and stabbed 
Arzakantsian in the lobby of the Metropol Hotel.  A Republican Party 
spokesman cited reports that the incident resulted from a gambling 
dispute.  Arzakantsian underwent emergency surgery at a Moscow 
hospital, where he remains in stable but serious condition. 
 
APPEALS COURT UPHOLDS VERDICT FOR ALLEGED COUP PLOTTERS 
 
¶8. (U) On September 25 the Court of Appeals upheld prison sentences 
for Zhirayr Sefilian and Vardan Malkhasyan, leader of the marginal 
opposition Motherland and Honor party.  Both had been arrested in 
December 2006 for allegedly plotting to overthrow the government. 
Malkhasian was convicted by a Yerevan court in July and was 
sentenced to two years in prison, while  Sefilian was handed an 
18-month term for illegal arms possession. 
 
ARCHBISHOP OF CANTERBURY VISITS ARMENIA 
 
¶9. (U) The Archbishop of Canterbury visited Armenia September 22-25 
to strengthen ties with the Armenian (Apostolic) Church.  The 
Archbishop, together with Armenian Catholicos Garegin II, spent most 
of the time visiting churches and other religious institutions. 
They also attended the British Embassy's offficial Queen's Birthday 
reception -- delayed so that the Archibishop could be the featured 
guest -- which was held at Garegin's pontifical residence in 
Echmiadzin.  The Archbishop also met with President Kocharian. 
 
ECONOMIC NEWS 
------------- 
 
ARMENIA'S TRANSPARENCY INTERNATIONAL CORRUPTION SCORE STEADY 
 
¶10. (U) The 2007 Corruption Perceptions Index released by 
Transparency International showed Armenia's ranking fell six places 
(from 93rd to 99th), while its raw score improved from 2.9 to 3.0 
(within the margin of error) on the organization's ten-point scale. 
The group found that endemic government corruption in Armenia 
remains a major problem.  According to a phone survey conducted by 
CRD in 2007, 62.9 percent of respondents believe that corruption has 
increased in the country despite the GOAM's stated anti-corruption 
commitments. 
 
RUSSIAN TROIKA DIALOG ACQUIRES ARMENIAN BANK 
 
¶11. (U) TDA Holdings Ltd, a subsidiary of the Russian Troika Dialog 
investment company, has acquired 96 percent stake in Armimpexbank, 
owned by British-Armenian investor Vatche Manukian. The cost of the 
deal was $13 million.  Ruben Vardanian, the ethnic Armenian 
president of the Moscow-based Troika Dialog, said the company plans 
to transform the bank into an investment bank that will offer a 
broad spectrum of services to its clients.  He pledged to invest $50 
million in the bank by early next year. 
 
ARMENIA EXPLORING NUCLEAR POWER OPTIONS WITH RUSSIA 
 
¶12. (U) The Russian-Armenian Intergovernmental Commission for 
Economic Cooperation (chaired for Armenia by PM Sargsian) has tasked 
the Armenian side of its task force on nuclear cooperation to submit 
technical justification for investment in the construction of a new 
nuclear power unit in Armenia to be approved by November 2007.  The 
sides were instructed to study possible financing schemes for the 
project, including governmental financial support.  RA Minister of 
Energy Armen Movsisyan said the construction of a new power plant 
will cost  $2bln and would require 4-5 years. 
 
...AS THE EU UPS THE ANTE ON AID TO SHUT DOWN METZAMOR 
 
¶13.  (U) The European Union doubled, to 200 million Euros, its 
previous offer of financing to pay for the prompt shut-down of the 
Armenian Nuclear Power Plant at Metzamor.  The EU proposal offered 
nothing in the way of help to secure replacement power generation 
capacity to make up for the electricity ANPP generates. 
 
YEREVAN 00001255  003.2 OF 003 
 
 
ARMENTEL TELECOMMUNICATIONS MONOPOLIES EXPIRED OCTOBER 1 
 
¶14.  (U) The Public Services Regulatory Commission (PSRC) has ended 
all telecommunications monopolies of Armentel, once the country's 
monopoly telecommunications provider.  ArmenTel has lost its 
monopoly on local, intercity and international telecommunications 
and telephone services, leasing of telephone lines, international 
transit and satellite services, public mobile communication, IP 
telephony and broadband video transmission services.  Armentel 
Director General Oleg Blizniuk told journalists that the company 
yielded its monopolies voluntarily and welcomes healthy competition. 
 But according to the agreement between "ArmenTel" and the GOAM, a 
new mobile telephony operator may appear in Armenia only beginning 
from January 1, 2009.  At present, the market is shared by Armentel 
(owned by the Russian firm Vimpelcom) and two-year-old VivaCell (80 
percent of which was recently purchased by the Russian firm MTS). 
 
NEW EXECUTIVE DIRECTOR FOR ARMENIAN DEVELOPMENT AGENCY 
 
¶15.  (U) The Prime Minister appointed Tigran Davtian, Deputy Trade 
and Economic Development Minister, to the position of executive 
director of the Armenian Development Agency (ADA).  His predecessor, 
Vahagn Movsisian, was appointed Ambassador to China.  The ADA's 
primary mission is to bring foreign investment to Armenia.  There is 
hope that Davtian will enjoy more success than his predecessors, 
given his experience working with Armenian diaspora investors. 
 
SYNOPSYS ARMENIA OPENS NEW RESEARCH AND EDUCATIONAL CENTER 
 
¶16. (U) President Kocharian presided over the opening ceremony of a 
new center owned by Synopsys Armenia CJSC -- a subsidiary of 
Synopsys Company (US) -- a world leader in electronic design 
automation software.  Synopsys President and CEO Chi-Foon Chan said 
that Armenia is among those nations that value intellectual capital. 
According to him, 500 engineers-designers and 120 students will work 
at the newly-opened research and educational center. The center is 
the company's largest production facility outside the US, and is the 
result of a USD 6.5 million investment.  Synopsis executives told 
the CDA that they are satisfied with their Armenian operations, 
which they originally obtained by happenstance through earlier 
corporate acquisitions.  They remarked, however, on the challenges 
of employing high-tech workers in a country that lacks a robust 
community of technology workers, universities, and related 
enterprises to provide both a talent pool and an idea-rich 
environment. 
 
AND IN OTHER NEWS... 
-------------------- 
 
PACHYDERM POLITICS 
 
¶17. (U) Sri Lanka's "Daily News" reported (on its front page, we 
understand) that the Sri Lankan cabinet has approved donation of an 
elephant to Armenia as a friendship gesture.  No word yet on when 
Asokamala, a nine year old female from the Pinnawela Elephant 
Orphanage, will arrive in Yerevan to take up residence.  Meanwhile, 
Armenia is to reciprocate by providing Sri Lanka with veterinary 
training and native Armenian fauna to be named later. 
 
 
PERINA