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FM AMEMBASSY YEREVAN
TO RUEHAK/AMEMBASSY ANKARA PRIORITY 1897
RUEHKB/AMEMBASSY BAKU PRIORITY 1261
RUEHC/SECSTATE WASHDC PRIORITY 0028
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE PRIORITY

C O N F I D E N T I A L SECTION 01 OF 03 YEREVAN 000078 
 
SIPDIS 
 
E.O. 12958: DECL: 02/15/2019 
TAGS: POGV ECON PREL AJ TU AM
SUBJECT: SARGSIAN CONFIDANTE ON FOREIGN AND DOMESTIC 
POLITICS 
 
REF: 09 YEREVAN 241 
 
Classified By: Ambassador Marie Yovanovitch.  Reason 1.4 (B/D) 
 
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SUMMARY 
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¶1.  (C)  In a wide-ranging recent discussion with Ambassador 
and DCM, Armenian oligarch and Sargsian confidante Mikhail 
Baghdassarov expressed optimism that the Turkish parliament 
would ratify the normalization protocols, but insisted that 
Armenia could not be expected to ratify first.  He said 
Armenia should have good relations with its neighbors, 
including Turkey and Azerbaijan, adding that most of 
Armenia's leading businessmen favored the opening with 
Turkey.  Armenia should continue to take steps to demonstrate 
its goodwill to the Turks, but "will not jump without a 
parachute." Speaking of the Turkey-Armenia and N-K processes, 
Baghdassarov said bluntly that "Russia used to be more on the 
Armenian side, but now the Russians are more with the Turks." 
 Baghdassarov cautioned that it would be wrong to push 
President Sargsian further on N-K at this point given the 
pressure he is under on Turkey-Armenia, and noted that former 
president Ter-Petrossian fell from power over perceived 
concessions on N-K.  Baghdassarov argued for a more "active" 
Armenian policy on N-K, including building settlements in the 
surrounding territories to "show the Azerbaijanis they have 
something to lose" - although he admitted that President 
Sargsian "doesn't even want to think about that." On domestic 
politics, Baghdassarov reiterated his skepticism over the 
performance of Prime Minister Sargsian, and criticized 
Armenia's governing institutions -- government, parliament, 
and presidency -- for poor performance.  He hinted at the 
long-rumored rivalry between the President and National 
Assembly Speaker Abrahamian, but backed off when asked if the 
rivalry was being stoked by former President President 
Kocharian, whom Baghdassarov claimed has taken himself out of 
Armenian politics.  End Summary. 
 
---------------------------- 
WHO IS MIKHAIL BAGHDASSAROV? 
---------------------------- 
 
¶2. (C) Ambassador and DCM met for lunch on January 21 with 
Mikhail Bagdassarov, one of Armenia's leading businessman and 
a loyal friend of President Serzh Sargsian.  Baghdassarov is 
the owner of Armavia, Armenia's national airline (discussion 
of civair issues to be reported septel), and is a major 
importer of gasoline for his extensive chain of filling 
stations.  He is also the monopolistic importer of jet fuel 
for Yerevan's Zvartnots airport, and owns one of Armenia's 
two cement plants.  Baghdassarov also has significant 
business interests in Russia, where he spends much of his 
time.  Baghdassarov is perceived as closer to the President 
than any of Armenia's other oligarchs, and he sees Sargsian 
frequently.  Baghdassarov is originally from Baku -- his 
first language is Russian, and he speaks just a few words of 
Armenian.  We believe Baghdassarov's comments to us often 
represent the President's thinking, or at least reflect 
issues that the two have discussed. 
 
-------------------------------------- 
ARMENIA NEEDS RELATIONS WITH NEIGHBORS 
-------------------------------------- 
 
¶3. (C) As in past conversations, Bagdassarov expressed strong 
support for the normalization process with Turkey.  He said 
Armenia needs to establish "normal" relations with its 
neighbors, including Turkey and Azerbaijan.  Despite the fits 
and starts of the process with Turkey, Baghdassarov said he 
believed the Turks would eventually ratify the protocols. 
Armenia would benefit more economically from normalization 
and a border opening, he said, but Turkey would benefit 
politically.  He chalked up Turkey's delay in ratification to 
the GOT "seeking a higher price" from Armenia for opening the 
border.  Baghdassarov asserted that all of Armenia's major 
businessmen -- with the exception of "one or two illiterates" 
-- support the Turkey-Armenia process. 
 
¶4. (C) Baghdassarov argued that the GOAM should continue to 
take steps that demonstrate Armenia's goodwill toward Turkey, 
but cautioned that "we can't jump without a parachute." 
Although he expressed no doubt that Armenia could easily 
ratify the protocols in the National Assembly, Baghdassarov 
said it is not realistic to expect Armenia to ratify before 
Turkey.  In this situation, he said, "the people will expect 
the stronger country to go first."  Baghdassarov said, 
however, that it might be possible for the Government to 
submit the protocols to the Armenian parliament, much as the 
 
YEREVAN 00000078  002 OF 003 
 
 
Turks have done, as a further signal to encourage the GOT to 
move forward. 
 
--------------------------------------- 
RUSSIANS "USED TO BE" ON ARMENIA'S SIDE 
--------------------------------------- 
 
¶5. (C) In a striking comment that Baghdassarov repeated 
several times, he claimed that Armenia could no longer count 
on Russia for support when it came to dealing with Turkey. 
Referring to the Turkey-Armenia process, he said one problem 
is that "Russia used to be on Armenia's side" but is now 
"more with the Turks" because of Russian-Turkish economic 
interests.  When the Ambassador pointed out that both Putin 
and Lavrov had publicly supported Armenia's position of no 
linkage with N-K, Baghdassarov countered, "that's what they 
say publicly."  He then amended his argument slightly, saying 
that while Moscow may not be on Turkey's side, it is at best 
neutral when it comes to Turkey-Armenia.  (Comment: This 
conclusion is one that Baghdassarov probably didn't pull out 
of thin air.  There was at least a hint that he knew more 
than he was willing to tell, but that he had heard this 
frustration expressed by someone else -- most likely the 
President.  It is even possible that he had been asked to 
deliver that message. 
End comment.) 
 
-------------------------- 
DON'T PUSH TOO HARD ON N-K 
-------------------------- 
 
¶6. (C) Echoing what we have heard repeatedly from President 
Sargsian in recent months, Baghdassarov warned that the 
international community "should not push the President too 
hard" on Nagorno-Karabakh at this time.  He said that while 
most Armenians support normalization with Turkey, there is a 
lot of suspicion that something inimical to Armenians' 
interest is brewing in the N-K settlement process.  These 
fears have been stoked by both the opposition and the 
diaspora -- especially in the United States.  Baghdassarov 
recalled that former president Levon Ter-Petrossian fell from 
power in 1998 for appearing to go too far, too fast on N-K, 
and implied that President Sargsian would run a similar risk 
if he accelerated the process under Turkish pressure. 
(Comment:  Baghdassasrov was particularly concerned that the 
protocols did not establish final status for NK simultaneous 
with Armenia's return of the territories and again recalled 
Ter Petrossian's ouster.  It is possible that he was sending 
a message from the President with this statement.) 
 
------------------- 
SETTLEMENTS IN N-K? 
------------------- 
 
¶7. (C) Baghdassarov revealed that he had told the President 
that Armenia should become "more active" in dealing with the 
N-K issue and the Azerbajanis.  Specifically, he had proposed 
to the President that Armenia begin building settlements in 
the occupied territories that surround N-K proper.  "This 
would show to the Azerbaijanis that they have something to 
lose if they don't resolve the problem."  Baghdassarov was 
clear that the thinking behind his suggestion was not similar 
to the Dashnaks' - who favor settlements as a way of 
consolidating Armenia's hold on the territories -- but rather 
to gain advantage in the negotiation process with Azerbaijan. 
 He lamented that the President "did not agree" with his 
proposal.  The Ambassador pushed back hard, arguing that 
while settlements may theoretically strengthen a country's 
hand in negotiations, the reality is that the government 
becomes hostage to the settler community and cannot move 
forward toward a peaceful resolution. 
 
--------------------------------------------- --- 
DOMESTIC POLITICS:  PM "DOING BETTER;" PRESIDENT "DOES TOO 
MUCH" 
--------------------------------------------- --- 
 
¶8. (C)  In marked contrast to his harsh criticism of Prime 
Minister Sargsian in the past (reftel), Baghdassarov was 
careful in his comments regarding the PM.  He said the Prime 
Minister is "doing better" and that over the last two years 
he had learned a lot.  But Baghdassarov lamented that at the 
Cabinet level, individuals should already be professionals 
and not making mistakes at the expense of the Armenian 
people.  He also grumbled that during the last year of 
economic crisis, the Prime Minister established policies that 
were unfriendly to business - at a time when he should have 
been creating the most welcoming conditions for business. 
Baghdassarov claimed that with his recent investiture in the 
ruling Republican Party, the "technocrat" PM  is one step 
 
YEREVAN 00000078  003 OF 003 
 
 
closer to his dream of a political career. 
 
¶9. (C)  For his part, President Sargsian wanted the PM in the 
party to squelch criticism and unhappiness within the 
Republican Party that the ruling party did not get the plum 
PM position. Baghdassarov said the President had made a 
decision to keep the PM on, because he was skilled at 
handling foreigners and convincing the IFIs that Armenia 
could repay the loans that the GOAM needed to stay afloat. 
He claimed that the President handles "everything else," but 
this isn't an ideal system, because the President travels 
constantly and even when he is in Yerevan can't run every 
ministry.  In addition, the ministries don't have strategies 
and a framework for decision-making, so Ministers aren't sure 
what decisions to take.  Everything waits for the President, 
according to Baghdassarov.  He added that another reason that 
the government is dysfunctional is that the Cabinet is made 
up of different parties.  While the President wanted a 
smoothly functioning government, that might not be the goal 
of the non-ruling party; their goal was to weaken the 
government and strengthen their own position before 
elections. 
YOVANOVITCH