VZCZCXRO8847
PP RUEHFL RUEHKW RUEHLA RUEHROV RUEHSR
DE RUEHYE #0238/01 0790549
ZNY CCCCC ZZH
P 190549Z MAR 08
FM AMEMBASSY YEREVAN
TO RUEHC/SECSTATE WASHDC PRIORITY 7229
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE PRIORITY
RHEHNSC/NSC WASHDC PRIORITY
RUEHLMC/MILLENNIUM CHALLENGE CORPORATION WASHINGTON DC PRIORITY
RHMFISS/HQ USEUCOM VAIHINGEN GE//ECJ4/ECJ5-A/ECJ1/ECJ37// PRIORITY

C O N F I D E N T I A L SECTION 01 OF 03 YEREVAN 000238 
 
SIPDIS 
 
SIPDIS 
 
DEPT FOR EUR/CARC, NSC FOR MARIA GERMANO 
 
E.O. 12958: DECL: 03/17/2018 
TAGS: PROV PREL PHUM EAID ASEC KDEM AM
SUBJECT: GOAM'S MCC POINT OF CONTACT ASKS FOR PATIENCE 
 
 
YEREVAN 00000238  001.2 OF 003 
 
 
Classified By: CDA Joseph Pennington, reasons 1.4 (b/d). 
 
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SUMMARY 
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¶1. (C) On March 13 MCC resident country director (RCD) and 
acting Polchief met with Minister of Trade and Economic 
Development Nerses Yeritsian to convey USG concerns about 
Armenia's ongoing political crisis, warn about its potential 
impact on continued funding of MCC programs, and urge the 
GOAM take immediate actions to correct the situation. 
Yeritsian in response asked the United States to take a 
balanced view of recent events and recognize that both the 
government and opposition forces shared blame for the crisis. 
 While admitting the GOAM made mistakes, he nonetheless 
defended PM Sargsian's integrity as a leader, and urged the 
USG to give the president-elect time to navigate the country 
out of the troubled waters.  He also advised against pushing 
Sargsian "towards harsher corners," as this could result in 
furthering the president-elect's dependence on security 
figures who might seek to profit from the situation.  END 
SUMMARY. 
 
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YERITSIAN NOTES MCC DIRECTOR'S ABSENCE 
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¶2. (C) The MCC RCD's March 13 meeting with Minister Yeritsian 
fell within the framework of regularly held bilateral 
consultations that both have been holding since January when 
MCC CEO Ambassador John Danilovich issued a written warning 
to Armenia about its failing indicator performance. 
Danilovich issued that warning to President Kocharian in late 
December, well before the current political crisis erupted in 
mid-February.  Kocharian appointed Minister Yeritsian to 
coordinate and serve as USG point of contact for the GOAM's 
MCA Policy Improvement Plan (remediation plan), which is 
designed to show how Armenia intends to improve its indicator 
status.  A young, competent, western-thinking minister with 
an economic policy background, Yeritsian has been approaching 
his task with seriousness, dedication, and a methodical, 
technocratic approach.  He seems more comfortable dealing 
with the more objective social and economic indicators, 
rather than with the inherently less tangible Ruling Justly 
indicators. 
 
¶3. (C) Minister Yeritsian immediately commented on the MCC 
RCD's absence from the regularly held Millennium Challenge 
Account -- Armenia (MCA-Armenia) Governing Council meeting 
March 12.  PM Sargsian always chairs the Governing Council 
meetings, which usually receive ample media coverage. 
Yeritsian also glumly acknowledged receipt of the second 
warning letter from Ambassador Danilovich sent on March 11 in 
which Danilovich expressed USG concern about the GOAM's 
handling of the political crisis.  (NOTE:  The charge 
d'affaires, MCC RCD, and country team had agreed that the RCD 
would not attend the March 12 meeting -- the first time that 
neither the RCD nor deputy RCD had attended a Governing 
Council session -- as an early signal of USG concern about 
Armenia's democratic crisis.  END NOTE) 
 
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GOAM FACES A PIVOTAL MOMENT 
--------------------------- 
 
¶4. (C) RCD commented that recent political events have in 
some ways eclipsed the more routine remediation ideas that he 
and Yeritsian had discussed in earlier meetings, and it is 
important to recognize the bigger picture issues that now 
represent a more serious challenge to Armenia's continued MCA 
program.  RCD cautioned that aid only works when given to 
responsible governments, and that GOAM handling of the 
current political crisis was forcing the MCC and other MCC 
Board agencies in Washington to reassess Armenia's continuing 
eligibility, and this process was ongoing.  He urged the GOAM 
to seize the moment to correct its slippage in democratic 
practices. 
 
¶5. (C) Polchief echoed that it is crunch time for the GOAM on 
the democracy front, and that Washington policymakers' 
patience on Armenia's democratic performance was waning.  He 
urged the GOAM to immediately lift the state of emergency, 
restore all media freedoms, end the arrests of LTP supporters 
that appear to be politically motivated, and start charting a 
course of political reconciliation.  It was now time for PM 
Sargsian to step up and assume the mantle of a true national 
leader.  Polchief further warned that the crackdown was 
 
YEREVAN 00000238  002.2 OF 003 
 
 
giving policymakers at the highest levels in Washington 
serious pause about the increasing disconnect between GOAM 
words and actions which, if uncorrected, could have 
undesirable consequences for America's overall assistance 
programs in Armenia. 
 
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PLEASE TAKE A BALANCED VIEW 
--------------------------- 
 
¶6. (C) Minister Yeritsian took the critiques on board, and 
acknowledged that the GOAM "had made mistakes" in its 
handling of the post-election situation.  But he asked that 
the United States make a balanced assessment of events -- 
that both the government and opposition shared blame for the 
crisis.  He underscored that people on both sides "had been 
led in the wrong direction" by forces that did not 
necessarily have Armenia's best interests in mind.  He 
pointedly admitted that "closing information on our side" was 
the wrong thing to do, in reference to the media ban imposed 
by the state of emergency. 
 
¶7. (C) Yeritsian tried to strike an upbeat tone, however, 
saying "things are already changing" in the right direction. 
He defended the integrity of President-elect Sargsian, 
drawing attention to the conciliatory gestures the PM had 
begun to make.  On March 12, Sargsian met with economic 
students at Yerevan State University to discuss political 
events in the country.  On March 10 Sargsian's newly created 
blog began functioning (septel), and on the evening of March 
13 the president-elect answered questions posted to his blog 
in a 2-hour taped TV interview that Armenian public TV showed 
in its entirety.  Yeritsian said he had convinced PM Sargsian 
to conduct a similar Q&A session for the weekend with 
representatives of small and medium enterprises (SMEs) which 
he (Yeritsian) was personally setting up.  He echoed the PM's 
instructions to government ministers during a March 6 cabinet 
meeting for GOAM representatives "not to be shy," but to 
present their points to the public about recent events. 
 
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AVOID PUSHING TOWARD "HARSHER CORNERS" 
-------------------------------------- 
 
¶8. (C) Yeritsian also requested the USG be patient with the 
president-elect, contending that he needed time to navigate 
the country out of its current troubled waters.  He said 
Sargsian had raised Armenians' expectations during the 
presidential campaign on how he will govern, which meant he 
was now on the hook to deliver on them.  Yeritsian said 
everyone should give the president-elect a chance, saying it 
was important "to wait and see" how he performed in his new 
role. 
 
¶9. (C) Yeritsian independently offered that the political 
crisis has "worsened the situation" for President-elect 
Sargsian, noting that he has lost some freedom of maneuver. 
He said the tenuous security situation had made Sargsian more 
dependent not on outgoing President Kocharian, but on the 
"circle around him," in a veiled reference to security 
advisers in the current government who have been advising 
Kocharian.  He warned the USG not to push President-elect 
Sargsian "toward harsher corners," as other senior leaders 
Washington might not want to see empowered could profit from 
the situation -- to Sargsian's detriment. 
 
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STRESSING SARGSIAN'S ECONOMIC BONA FIDES 
---------------------------------------- 
 
¶10. (C) Yeritsian sought to bolster the PM's economic 
credentials as a viable future partner.  He said he had the 
vision to develop Armenia's economy in the right direction, 
and that the PM's door was always open to Yeritsian and his 
forward-thinking concepts.  He pointed to Sargsian's 
unqualified support of an information technology program 
Yeritsian has recently been pushing, and Sargsian's recent 
support for developing new wheat producing markets in 
Armenia.  He again asked that Washington give the 
president-elect time to perform before taking any precipitous 
action. 
 
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COMMENT 
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¶11. (C) We met with Yeritsian the last time we issued an MCC 
warning letter in January, again to firmly convey our views 
 
YEREVAN 00000238  003.2 OF 003 
 
 
about Armenia's slippage in indicators.  Within 48 hours 
President Kocharian called CDA in to defend his MCC record. 
We're confident Yeritsian got the point once again, and will 
relay the message appropriately.  While a committed reformer, 
Yeritsian himself can only have so much say, and policies 
related to the Ruling Justly indicators are furthest from his 
own ministerial portfolio.  On these issues he can do little 
more than convey our concerns to his political masters.  He 
appeared visibly frustrated over the situation, and in one 
revealing moment, voiced hope for a future when Armenia would 
no longer require foreign assistance.  Interestingly, 
opposition leader Levon Ter-Petrossian told us during a March 
8 meeting at his home that the only minister he respected in 
the Sargsian government was Yeritsian, a view we have heard 
from many quarters.  If this were a problem that could be 
solved simply by a conscientious, technocratic policy 
administrator, Yeritsian would be the perfect man for the 
job.  The political will to resolve Armenia's political 
crisis in a democratic direction lies well above Yeritsian's 
head, however, and his role is limited to message carrier. 
END COMMENT. 
PENNINGTON