VZCZCXRO1027
OO RUEHDBU
DE RUEHYE #0418/01 1681014
ZNY CCCCC ZZH
O 171014Z JUN 09
FM AMEMBASSY YEREVAN
TO RUEHC/SECSTATE WASHDC IMMEDIATE 9190
INFO RUCNCIS/CIS COLLECTIVE PRIORITY
RUEHLMC/MILLENNIUM CHALLENGE CORPORATION WASHINGTON DC PRIORITY

C O N F I D E N T I A L SECTION 01 OF 02 YEREVAN 000418 
 
SIPDIS 
 
E.O. 12958: DECL: 06/17/2019 
TAGS: POGV PHUM PREL ASEC AM
SUBJECT: OUTRAGED GOAM REACTION ON MCC DECISION NOT TO FUND 
ROADS 
 
REF: YEREVAN 391 
 
YEREVAN 00000418  001.2 OF 002 
 
 
Classified By: Amabassador Marie Yovanovitch.  Reason 1.4 (B/D) 
 
 
¶1.  (C)  SUMMARY. FM Nalbandian expressed dismay that MCC had 
chosen not to fund the roads portion of the MCC compact.  He 
said that the U.S. did not understand the political blow this 
represented; the opposition would use this for their own ends 
and wrongly interpret the MCC decision as a lack of U.S. 
support for Armenia.  Nalbandian said that there could be 
spillover into other areas.  He also criticized the U.S. OSCE 
statement on Armenian elections which was coincidentally 
issued in Vienna on June 11, the day the GOAM learned of the 
MCC decision.  The President's Deputy Chief of Staff Vigen 
Sargsian told Ambassador it would be important to 
re-establish trust.  The best way to do this, he said, was a 
high-level visit, so that principals could discuss these 
issues directly.     While the GOAM has been angling for a 
high-level visit for years, we believe a visit by the 
Secretary in coming months would be useful, especially in the 
context of progress on Turkey-Armenian relations and 
Nagorno-Karabakh.  END SUMMARY. 
 
FM ANGRY AND DISAPPOINTED ABOUT MCC 
------------------------------------ 
 
¶2.  (C)  In a phone conversation with the Ambassador on June 
11, FM Nalbandian expressed (predictable) dismay that MCC had 
chosen not to fund the roads portion of the MCC compact.  He 
said the MCC made a "wrong decision" that - based on the 
public statement - amounts to a termination of the roads 
program in all but name.  The FM claimed that the decision 
will be interpreted by many in Armenia - including some who 
are involved in decision-making - as an expression of 
dissatisfaction by the U.S. with the Government (presumably 
over Armenian policy on Turkey and/or N-K and, in fact, there 
have been several press reports linking the MCC decision with 
U.S. pique over Armenia's foreign policy). 
 
¶3.  (C)  The Ambassador said that the USG was, in fact, 
trying to send the message to Armenia that following the 
flawed presidential election and the March 1 violence, 
Armenia must improve its performance in ruling justly. This 
was the same, consistent message that the U.S. had been 
sending for over a year.  The Ambassador pointed out that it 
could have been worse - suspension or cancelation - which is 
the decision the Board took with respect to Nicaragua. The 
Ambassador also noted that the credibility of MCC was at 
stake, and that the GOAM had been aware for months that 
something like this would happen in the absence of real 
progress. 
 
¶4.  (C)  The FM would have none of it, and noted that the 
public statement essentially rules out future roads funding, 
which amounts to termination, although that word was not 
used.  He said that the U.S. did not understand the political 
blow this represented; the opposition would use this for 
their own ends and wrongly interpret the MCC decision as a 
lack of U.S. support for Armenia. Nalbandian said that there 
could be spillover into other areas (clearly implying 
Turkey-Armenia and N-K), because there are others that decide 
Armenia's direction on these matters, who might be swayed by 
the MCC decision.  The FM chided the U.S. for not 
understanding that in this part of the world "every word 
matters" and that it is important for the U.S. to look 
forward and provide encouragement. 
 
AND ANGRY OVER THE US OSCE STATEMENT ON YEREVAN ELECTIONS 
--------------------------------------------- ------------ 
 
¶5.  (C)  The Ambassador and FM also discussed the U.S. 
statement to be delivered later on June 11  at the OSCE PC. 
He described it as a "very wrong statement" that will be 
"used by the opposition."  He complained that the timing of 
the statement was also problematic, insulting newly-elected 
Mayor Beglarian on the very day of his inauguration. 
Ambassador responded that the timing was coincidental - we 
did not know Beglarian was being inaugurated on June 11. 
June 11 was the first OSCE PC session since the election 
results were certified, which was the first opportunity for 
the USG to comment on the elections.  Nalbandian's final 
salvo was that the elections do not concern the OSCE - "PACE 
deals with this," to which the Ambassador responded that the 
U.S. is not a member of PACE and the OSCE has a long and 
proud tradition of election monitoring.  The FM did not 
mention, although others have, that during the same week, the 
State Department issued the annual Advancing Freedom and 
Democracy Report (AFDR) on human rights and democracy which 
was critical of the GOAM, in particular for the 2008 
presidential elections and the March 1 violence and its 
 
YEREVAN 00000418  002.2 OF 002 
 
 
aftermath. 
 
RE-ESTABLISH TRUST WITH A HIGH-LEVEL VISIT 
------------------------------------------ 
 
¶6.  (C)  The President's Deputy Chief of Staff Vigen Sargsian 
also expressed concern to Ambassador about the MCC decision 
and the U.S. OSCE statement on Armenian mayoral elections, 
and how they would be interpreted in the government and by 
the public. "It was not a good day" for U.S.-Armenian 
relations, he said, and it would be important to re-establish 
trust.  The best way to do this was a high-level visit, so 
that principals could discuss these issues directly. 
 
COMMENT 
------- 
 
¶7.  (C)  We did not expect the GOAM to be happy with the MCC 
decision, and they aren't.  The press reaction has also been 
highly critical and septel provides details on the coverage. 
The Ambassador made a statement on June 15, noting the 
importance of the bilateral relationship and that if Armenia 
makes tangible progress in good governance, we will actively 
work with Congress to find other sources of funding for rural 
roads.  We will have to weather a rough patch, but we hope 
that the statement and our continued support for Armenia in 
other areas will soften the GOAM's reaction to what they 
perceive as lack of political support for the GOAM - and 
President Sargsian personally - at a time of political risk 
and economic crisis.  The fact that the GOAM is nevertheless 
interested in a high-level visit indicates how much they need 
U.S. support to navigate the two negotiations. 
 
¶8.  (C)  While the GOAM has been angling for a high-level 
visit for years, we believe a visit by the Secretary in 
coming months would be useful, especially in the context of 
progress on Turkey-Armenian relations and Nagorno-Karabakh. 
A visit by Secretary Clinton would signal political support 
and help shore up resolve on difficult foreign policy issues 
during the challenging months ahead. 
YOVANOVITCH