US embassy cable - 04YEREVAN811

UNCLAS SECTION 01 OF 02 YEREVAN 000811 
 
SIPDIS 
 
DEPT FOR EUR/CACEN 
 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: PREL, PGOV, AM 
SUBJECT:  NOTHING NEW UNDER THE SUN:  ARMENIAN 
POLITICOS STICK CLOSE TO LONG-HELD POSITIONS 
 
1. (U) Sensitive But Unclassified.  Please treat 
accordingly. 
 
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SUMMARY 
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2. (SBU) With few new ideas to present, Armenian 
government and opposition figures stuck to their 
standard positions during a recent series of 
meetings with EUR/CACEN Office Director John Fox. 
Our interlocutors all stressed the importance of the 
bilateral Armenian-U.S. relationship and, depending 
on the degree to which they support or oppose the 
current administration, either saw the situation in 
Armenia on the upswing or veering further into 
economic and democratic malaise.  END SUMMARY. 
 
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PRESIDENT'S MAN SEES PROGRESS:  A GLASS HALF-FULL 
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3. (SBU) Chief Economic Advisor to the President 
Vahram Nercissiantz outlined the progress the 
Armenian economy has made over the past decade as it 
has transitioned to a free market.  Highlighting 
Armenia's recent double-digit growth in GDP, 
Nercissiantz cited the dropping poverty rate, 
especially the extreme poverty rate, as a sign that 
Armenia's macroeconomic improvement is finally 
bearing fruit for the general population. 
Nercissiantz acknowledged that a large portion of 
Armenia's economy is still "underground," noting 
that in "off-the-record" conversations with local 
businessmen they admit that their businesses' 
incomes are considerably higher than what they 
report officially.  With tax collections still only 
at roughly 15 percent of GDP, the GOAM is not in a 
position to implement all the reforms it would like, 
and also unable to fully fund social programs. 
 
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BILATERAL RELATIONSHIP ON TRACK 
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4. (SBU) As a measure of the strength of the GOAM- 
U.S. bilateral relationship Foreign Minister Vartan 
Oskanian met with Fox late on a Saturday afternoon 
in a relaxed, freewheeling and largely off-the- 
record, exchange.  Earlier in the visit Deputy 
Foreign Minister Ruben Shugarian welcomed Fox and 
noted that our bilateral relationship is generally 
extremely good.  Fox took advantage of the 
opportunity, however, to urge the GOAM to ratify the 
PfP SOFA and Article 98.  (Note:  The National 
Assembly (NA) subsequently ratified the PfP SOFA on 
March 31.  End Note.)  Fox and Shugarian also 
discussed the recent events in Budapest and how they 
might affect Armenia's interactions with NATO and 
the PfP. 
 
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THE OPPOSITION SEES DECAY:  A GLASS HALF-EMPTY 
--------------------------------------------- - 
 
5. (SBU) Former Presidential candidate and National 
Democratic Union (NDU) Chairman Vazgen Manukian met 
with Fox and outlined what he sees as a national 
malaise.  Manukian acknowledged that the opposition 
has no strong figure around whom to rally, but 
described the meetings his party is holding around 
the country.  (Note:  Two regional party leaders had 
just finished briefing Manukian when we arrived in 
his office; he told us that the NDU message 
resonated in the regions.  End Note.)  Fox and 
former Ambassador David Hovhannisian discussed 
regional grass-roots cooperation in a roundtable 
with the Caucasus Forum, a think tank with members 
from 20 Caucasus regions including the North 
Caucasus, Armenia, Azerbaijan, Georgia and Turkey. 
 
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COMMENT:  NO SURPRISES 
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6. (SBU) Opposition plans for mass demonstrations 
notwithstanding (septel), the political scene in 
Armenia appears basically stable, with broad 
agreement across the political spectrum on the 
importance of the Armenia-U.S. relationship.  Of the 
many interlocutors Fox met during his brief visit, 
none strayed from previously held positions.  With 
no new ideas to offer the public, opposition plans 
for this Spring are not likely to lead to a change 
in government, but the opposition could well put the 
GOAM on the defensive.  How the government chooses 
to respond will be critical. 
 
7. (U) EUR/CACEN Director John Fox has cleared this 
cable. 
ORDWAY