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R 210240Z MAY 08
FM AMEMBASSY YEREVAN
TO RUEHC/SECSTATE WASHDC 7553
INFO RUCNCIS/CIS COLLECTIVE
RUEHIL/AMEMBASSY ISLAMABAD 0006
RUEHBUL/AMEMBASSY KABUL 0022
RUEHLMC/MILLENNIUM CHALLENGE CORPORATION WASHINGTON DC
RHEHNSC/NSC WASHDC

UNCLAS SECTION 01 OF 03 YEREVAN 000415 
 
SENSITIVE 
 
SIPDIS 
 
H PASS TO CODEL SCHIFF 
 
E.O. 12958: N/A 
TAGS: PHUM PGOV PREL OTRA OVIP KDEM AM
SUBJECT: SCENESETTER FOR CODEL SCHIFF, MAY 24-25, 2008 
 
YEREVAN 00000415  001.2 OF 003 
 
 
(U) Sensitive but unclassified.  Please protect accordingly. 
 
¶1. (SBU) SUMMARY:  Your visit comes during a critical phase in 
post-independence Armenia's political development, and democracy is 
firmly at the top of the U.S. agenda.  After flawed and hotly 
disputed presidential elections February 19, violent clashes, a 
20-day state of emergency, and the arrest of more than 100 political 
prisoners, the new government's democratic legitimacy is badly 
damaged.   We have urged Armenian officials to take bold action to 
repair the damage and rebuild legitimacy.  To date, they have not. 
Post would warmly welcome the CODEL's assistance in underlining the 
seriousness of the U.S. commitment to democracy and human rights, 
and in conveying to Armenian officials that there is much work to be 
done.  Without carrying out significant reform and a restoration of 
democratic freedoms, the new President will remain plagued by 
questions of legitimacy, and will not be the strong partner we need 
to address the Nagorno-Karabakh conflict and other key regional 
issues.  END SUMMARY 
 
MANY ISSUES, BUT DEMOCRACY IS TOP PRIORITY 
------------------------------------------ 
 
¶2.  (SBU) A FULL BASKET:  We have a number of important policy 
interests in Armenia, but Armenia's dismal political situation has 
captured top billing in our agenda. But let us begin with a quick 
overview of our other priorities before outlining the political 
history and challenges (starting at paragraph 7). 
 
¶3.  (SBU) PEACE, INDEPENDENCE, AND PROSPERITY: We work to enhance 
regional peace and stability through the Nagorno-Karabakh peace 
negotiations (the Minsk Group process, of which the U.S. is a 
co-chair) and through diplomacy and civil society programs to foster 
normalized relations with Turkey.  We have had wide-ranging programs 
to develop free markets and a diversified economy.   We support 
Armenia's energy independence and have extensive cooperation to 
promote nuclear power safety, including a safe replacement for the 
Metsamor nuclear power plant.  We have had good case-by-case 
cooperation on law enforcement:  Armenia has helped us prosecute 
cases of Armenians wanted for crimes in the U.S. 
 
¶4.  (SBU) DEFENSE, SECURITY, AND RULE OF LAW:  Through U.S. 
assistance, we have worked with judges, prosecutors, and defense 
attorneys to improve the rule of law, though Armenia has a very long 
way to go in this sphere.  Military engagement and assistance 
(FMF/IMET) is aimed at promoting Western-style reforms, NATO 
inter-operability, democratic and human rights values, and 
accelerating Armenia's growing peacekeeping capabilities.  We have a 
new USAID program just getting started to help Armenia combat its 
endemic corruption, which is deeply rooted in almost every aspect of 
Armenian governance and society.  We have a robust and wide-ranging 
democracy and governance program that included $7.6 million over the 
last three years to help Armenia prepare for the May 2007 
parliamentary and February 2008 presidential elections.  Other 
democracy and governance programs focus on civil society, youth, and 
women's empowerment initiatives. 
 
¶5.  (SBU) MILLENNIUM CHALLENGE COMPACT:  The $236 million Millennium 
Challenge Compact signed in November 2006 is focused on rural 
poverty, and is slated to build hundreds of miles of rural roads and 
irrigation systems, while also providing training to Armenian 
farmers.  The Millennium Challenge program may be in jeopardy, 
however, because of Armenia's dismal performance in the 2008 
elections and post-election crisis, on top of what was already a 
weakening scorecard on the standard MCC eligibility indicators.  We 
have foreshadowed to the Armenian government that we intend to give 
the new president sufficient time to correct problems before taking 
any irrevocable action, but the September 2008 MCC Board meeting in 
Washington will take a hard look at Armenia's continued eligibility 
for MCC. 
 
ARMENIA'S FOREIGN POLICY AND GEOPOLITICAL REALITY 
--------------------------------------------- ---- 
 
¶6. (SBU) Armenia's stated foreign policy is one of 
"complementarity," in which Armenia seeks to develop strong 
relations with Russia, the U.S., the EU and Iran.  As difficult as 
it is to balance these often competing interests, Armenia is, for 
the most part, succeeding.  It continues to rely on Russia as its 
"strategic partner" while moving forward in its relationship with 
NATO.  Armenia is developing its energy relationship with Iran while 
staying within the Russian fold.  Pressure from Russia is 
increasing, however, and Armenia is finding it difficult to maintain 
this balance.  President Sargsian's desire to continue building ties 
with the West may also be diminished in the face of (deserved) 
Western pressure over Armenia's poor democratic and human rights 
 
YEREVAN 00000415  002.2 OF 003 
 
 
record in the wake of the 2008 election. 
 
DEMOCRACY AND POLITICAL CRISIS 
------------------------------ 
 
¶7. (SBU) WHERE WE ARE TODAY:  Armenia's political situation simmers 
with discontent over the flawed presidential election of February 
19, 2008, and its violent aftermath.   President Sargsian faces a 
crisis of legitimacy due to the popular conviction that he stole the 
election, and outrage over the government's zeal in cracking down on 
opposition protests after the fact.  Authorities have arrested 
dozens of opposition politicians, activists, and sympathizers on 
mostly specious political charges.  More than 100 remain in jail. 
The State of Emergency decreed by then-President Robert Kocharian on 
March 1 -- after a violent clash between protesters and police -- 
enforced a media black-out on any political opinion other than the 
government's point of view, while banning all political rallies. 
The ban was enforced by massed troops and riot police posted around 
Yerevan.  While the worst of the state of emergency has passed, a de 
facto ban on public demonstrations remains in effect.  Despite 
several years of solid economic growth and improved standards of 
living, a new wave of Yerevan intelligentsia are actively pursuing 
emigration abroad -- shocked and disgusted by the political 
situation. 
 
¶8.  (SBU) UNREPRESENTATIVE DEMOCRACY:  Aside from the Heritage Party 
(which holds seven of 131 parliamentary seats) virtually the entire 
National Assembly is part of the governing coalition.  With 
Armenia's electorate now seriously polarized -- we lack hard data, 
but opposition sympathizers probably number around 50 percent of 
voters -- there is a massive imbalance between the opposition's 
popular support and its nearly complete exclusion from meaningful 
representation in government. 
 
¶8. (SBU) HOW WE GOT HERE:  Ex-President Levon Ter-Petrossian's 
late-summer 2007 re-entry in active politics jolted the Armenian 
electorate from its previous lethargy.  Despite having himself been 
driven from office in 1998 amid charges of corruption and of having 
stolen his own reelection, Ter-Petrossian brought stature and 
credibility that other opposition leaders lacked, and inspired a 
disaffected segment of the population with a new belief in the 
possibility that PM Serzh Sargsian's ascension to the presidency was 
not a foregone conclusion.  Sargsian's partisans responded to that 
challenge with heavy reliance on "administrative resources," voter 
intimidation, heavily biased media coverage, and vote tabulation 
fraud to produce a tainted first-round majority of 52.8 percent of 
votes cast.   International reaction to the result was initially 
driven by an unduly positive preliminary report issued by the joint 
international (OSCE, Council of Europe, European Parliament) 
observation mission on February 20, before many of the worst abuses 
had come fully to light, and by a spurious exit poll attributed to a 
little-known British firm that was paid by pro-government forces. 
The extent of serious flaws became more clear over time.  Our 
assessment is that the presidential election was significantly worse 
than the May 2007 parliamentary election, which we had viewed as a 
modest step forward. 
 
¶10. (SBU) POST-ELECTION PROTESTS AND CLASHES:  Ter-Petrossian and 
his allies began daily protest rallies the day after the disputed 
election, occupying the downtown Freedom Square (aka Opera Square) 
with their peaceful protest continuously from February 20 through 
March 1.  These daily rallies attracted anywhere from 40,000-70,000 
each afternoon, while a hard core of 500-2,000 supporters remained 
encamped overnight to hold the square.  Early in the morning of 
Saturday, March 1, police cleared Freedom Square, employing brutal 
force, and placed Ter-Petrossian under house arrest. 
 
¶11.  (SBU) AND AFTERMATH:  By mid-afternoon March 1, a new crowd of 
Ter-Petrossian supporters had gathered -- more or less spontaneously 
-- in the vicinity of the French, Italian, and Russian Embassies, 
near City Hall.  A core group of thuggish mid-level organizers, 
possibly including veterans of the Nagorno Karabakh war, set up 
barricades and deployed Molotov cocktails and other improvised 
weapons, but the vast bulk of the crowd (which numbered up to 
20,000) were ordinary, outraged Armenian citizens.  The standoff was 
eventually resolved -- after hours of standoff, fierce skirmishes, 
scattered looting, and incidents of mob violence -- in the pre-dawn 
hours of March 2, but not before at least ten Armenians, including 
two police officers, had been killed.  President Kocharian declared 
a State of Emergency (SOE) late in the day on March 1, and army 
units were sent to Yerevan to quell the violence. 
 
¶12. (SBU) QUIET BUT NOT CALM:  This series of dramatic events left 
in its wake an Armenian electorate divided between rage and 
insecurity.  The government fears, not without reason, the risk of 
 
YEREVAN 00000415  003.2 OF 003 
 
 
new, sudden eruptions of political violence and popular outrage, 
although things seem to have settled into an uneasy calm for the 
time being.  Ter-Petrossian and his allies predict that the Sargsian 
government will soon collapse.  The semi-oppositional Armenian 
Revolutionary Federation (Dashnaksutyun) and Rule of Law (Orinats 
Yerkir) parties have joined the governing coalition, but neither 
commands broad-based popular support or significant legitimacy.  The 
Orinats Yerkir party, in particular, seems to have lost most of what 
popular support it previously had by joining the coalition.  Only 
the tiny Heritage Party remains as a true oppositional force in 
parliament.  Heritage endorses a moderate, reformist political 
agenda. 
 
¶13. (SBU) URGENT REFORMS NEEDED:  We have urged the government to 
focus on bold political reforms that could relieve public anger and 
build new political legitimacy by addressing the most egregious 
elements that enrage Armenians.  Steps we have urged include 
investigating and prosecuting pro-governmental as well as opposition 
figures for election-related violations, restructuring public 
television and radio to eliminate the strongly pro-governmental 
bias, restoring the television license (revoked for political 
reasons in 2002) of the pro-opposition A1Plus news agency, and 
launching a credible public inquiry into the events of March 1-2. 
Overhauling the corrupt customs and tax agencies would be another 
way to win over skeptical voters, and there have been some early 
indications of government steps toward this end.  We remain 
concerned that the government's strategy appears to rely on 
hunkering down and riding out the crisis, relying heavily on its 
police and security service tools to quash dissent, and entrench 
itself firmly in power at all costs.  While the Ter-Petrossian led 
opposition is not comprised of angels -- and Ter-Petrossian's own 
record as president in the 1990s leaves much to criticize -- it is 
fundamentally the government's responsibility to uphold human and 
political rights.  As of right now, this government has failed to do 
so, and shows little sign of willingness to mend its authoritarian 
ways. 
 
PENNINGTON