Armenia Debates Reasons For Millennium Challenge Cancellation

By Marianna Grigoryan

The decision to drop Armenia from the US-financed Millennium Challenge development program has renewed debate about the status of democratic reform in Armenia. The opposition, predictably, blames the government for the decision; the government is keeping quiet, but some ruling party representatives scoff that the decision is unjust.

US Ambassador to Armenia Marie Yovanovitch on April 15 indicated that Armenia’s failure to show progress in such “good governance” areas as freedom of the press and assembly as among the reasons why its Millennium Challenge compact would not be renewed when the $235.6 million, five-year program ends this September.

“I think this will encourage Armenia to boost the required indicators, particularly, in terms of good governance,” Ambassador Yovanovitch told RFE/RL on a visit with Prime Minister Tigran Sarkisian to two irrigation canals repaired under the Millennium Challenge program.

The government has not yet issued an official response to the decision to cancel Armenia’s Millennium Challenge program, which focused on the renovation of irrigation systems and reconstruction of rural roads.

Some observers believe, though, that Ambassador Yovanovitch’s assessment reflects the domestic political situation in Armenia, where protests calling for greater civil liberties, led by ex-President Levon Ter Petrosian’s Armenian National Congress, started up again in February; others – namely, the ruling Republican Party of Armenia — consider the ambassador’s evaluation wide of the mark.

“Back in 2008 [following the deaths of 10 people in a police crackdown on protests against presidential election results – ed], the US side spoke about these indicators, but we’ve recorded much progress in the past three years and have demonstrated a serious political will [for reform],” asserted Republican Party of Armenia spokesperson Eduard Sharmazanov. “We have had progress rather than regress during the past few years. I don’t think that sanctions promote democracy.”

Sharmazanov described the government’s anti-corruption campaign as “notable” and underlined that “several high officials” have left their posts; resignations for which, at the time, official reasons were not given. “Steps” were also taken “in dialogue with the opposition,” he added.

Some analysts, though, believe the decision is a wake-up call for the government. After the “warning” in 2008, Armenia saw its Millennium Challenge compact in 2009 reduced by roughly $68 million, a decrease that cut into its road construction plans.

“This is a signal indicating that we are being excluded from the cooperation framework,” political scientist Anush Sedrakian argued in reference to the decision to drop Armenia out of the Millennium Challenge program. “This is a serious message for our authorities — a sign saying that you are becoming an outsider, you do not meet our standards and cannot be a part of a new, big, global network of full-fledged cooperation.”

Armenia, however, still has recourse to other financial assistance networks. The International Monetary Fund last week dispatched a team to Yerevan to evaluate the status of economic reforms as part of its review for a possible $58 million loan to Armenia. A loan of $55 million was made in December 2010; the country can receive up to $392 million by 2013.

Government officials and members of the ruling Republican Party have not addressed the degree to which the loss of the Millennium Challenge program might hamper Armenia’s economic development goals. But one senior Republican Party parliamentarian cautioned that the program’s loss could undermine public trust in the government and its preparations for the 2012 parliamentary elections.

“[The ambassador’s statement can have a negative impact on the people’s trust towards the authorities while we are doing our best to strengthen this trust,” argued Hovhannes Sahakian.

One political analyst takes that notion a step further, arguing that the US government sees canceling the Millennium Challenge program amidst opposition protests as a way to pressure President Serzh Sargsyan’s government for further democratic change.

“This means that the Armenian authorities know that the US has been their partner so far, and if they think this will continue in the future as well, the US is signaling it is no longer like that,” claimed Ruben Mehrabian, a political analyst at Yerevan’s Armenian Center for National and International Studies.

The US has given no indication that the protests factored into the Millennium Challenge decision, but has made clear that it sees the 2012 vote and the 2013 presidential election as a chance for Armenia to improve its performance on “good governance.”

“As Armenia enters into an election cycle, with parliamentary elections next year and presidential elections the year after, there is an opportunity to boost these indicators,” said Ambassador Yovanovitch.

Marianna Grigoryan is a freelance reporter based in Yerevan and editor of MediaLab.am.