US embassy cable - 04YEREVAN1293

UNCLAS SECTION 01 OF 02 YEREVAN 001293 
 
SIPDIS 
 
DEPT FOR EUR/CACEN, EUR/ACE, EUR/PGI, DRL 
DEPT PLEASE PASS MCC AND USAID 
 
E.O. 12958: N/A 
TAGS: PREL, PGOV, EAID, AM 
SUBJECT:  KOCHARIAN ESTABLISHES MCA BOARD, DISCUSSES COMPACT 
SUBMISSION 
 
 
1. (U) Sensitive But Unclassified.  Please treat 
accordingly. 
 
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SUMMARY 
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2. (SBU) The GOAM has formed a Board of Trustees under the 
authority of the Prime Minister Andranik Margaryan with 
Chief Economic Adviser of the President of the Republic of 
Armenia Vahram Nercissiantz as Deputy Chair, to oversee 
Armenia's Millennium Challenge Account (MCA) compact 
submission.  Kocharian suggested during his June 1 meeting 
with a Millennium Challenge Corporation (MCC) delegation led 
by CEO Applegarth that Armenia's initial compact submission 
would focus on large-scale infrastructure projects. 
Presidential Chief Economic Advisor Vahram Nercissiantz 
outlined initial plans to finalize MCA compact proposals, 
solicit civil society input and submit the final product to 
the USG by the end of July.  Kocharian appeared to take on 
board MCC admonitions regarding the importance of civil 
society input when creating Armenia's MCA compact 
submission.  During a May 31 meeting with Prime Minister 
Andranik Margaryan, GOAM officials including Minister of 
Finance and Economy Khachatrian hinted that Armenia's 
initial plans for an MCC compact proposal would likely 
involve the agricultural sector and a large-scale water 
project.  End Summary. 
 
3. (SBU) President Robert Kocharian announced by official 
decree on June 1 that a GOAM Board of Trustees under the 
authority of the Prime Minister Andranik Margaryan and led 
by the Minister of Finance and Economy Vardan Khachatrian 
would oversee Armenia's Millennium Challenge Account (MCA) 
compact submission.  According to the decree, the Board will 
also include the Minister of Agriculture David Lokyan, 
Minister of Transport and Communication Andranik Manoukian, 
and the Chairman of the Water Resources Management Committee 
Andranik Andreassyan.  While short and general in nature, 
the decree does include language empowering the Board to 
establish working groups comprised of GOAM, donor community 
and NGOs presumably for purposes of consultation in 
coordination with a future MCA compact proposal. 
 
4. (SBU) Kocharian suggested during his June 1 meeting with 
a Millennium Challenge Corporation (MCC) delegation led by 
CEO Applegarth that Armenia's initial compact submission 
would focus on large-scale infrastructure projects.  While 
not going into detail, Kocharian revealed a confident 
posture regarding the eventual viability of Armenia's 
compact proposal.  Following MCC Applegarth's delineation of 
the three criteria against which the USG would scrutinize 
compact proposals (a project's positive impact on long-term 
economic growth, input from civil society in the compact 
formulation process and a commitment to continued progress 
on MCA indicators), Kocharian requested that Kchachatryan 
and others at the meeting incorporate these elements into 
Armenia's submission. 
 
5. (SBU) Kocharian reported that long delays during the 
implementation of Lincy Foundation projects in 2002 and 2003 
had caused negative internal pressure within his 
administration and from the general public and expressed 
concern that any future MCA compact be negotiated and 
implemented as quickly as possible.  He underscored his 
philosophy that in order to be successful, any MCA project 
would need to impact a wide portion of the population, lest 
it carry the perception of a program designed for the elite 
and implemented by the elite. 
 
6. (SBU) Presidential Chief Economic Advisor Vahram 
Nercissiantz outlined initial plans to finalize MCA compact 
proposals, solicit civil society input and submit the final 
product to the USG by the end of July.  Nercissiantz said 
that a first draft of the compact proposal could be in 
circulation among GOAM entities for comment as early as June 
11.  Kocharian appeared to take on board MCC's repeated 
admonitions regarding the importance of civil society input 
when creating Armenia's MCA compact submission.  By the end 
of the meeting, Kocharian and Nercissiantz made references 
to initiating a new set of civil society consultations in 
contrast to earlier suggestions that former consultative 
processes (specifically those related to Armenia's Poverty 
Reduction Strategy Paper) might already count toward this 
exercise. 
 
7. (SBU) During a May 31 meeting with Prime Minister 
Andranik Margaryan, GOAM officials hinted that Armenia's 
initial plans for an MCC compact proposal would likely 
involve the agricultural sector and a large-scale water 
project.  The Prime Minister openly deferred to Minister of 
Finance and Economy Khachatrian on detailed points of 
substance, foreshadowing the June 1 presidential decree and 
paralleling suggestions by various GOAM officials that the 
Ministry of Finance and Economy would serve as the principal 
ministry in charge of future MCA issues. 
 
8.  Begin text of the June 1 Presidential Decree: 
 
EXECUTIVE ORDER OF THE PRESIDENT OF THE REPUBLIC OF ARMENIA 
ON ESTABLISHING THE BOARD OF TRUSTEES FOR THE ARMENIAN 
PROJECT OF THE MILLENNIUM CHALLENGE ACCOUNT 
 
Based on Article 55(6) of the Constitution of the Republic 
of Armenia and for the purpose of developing proposals for 
submission to the Millennium Challenge Account of the U.S. 
Millennium Challenge Corporation, getting assistance, 
directing and coordinating the process of implementation of 
the said project activities I decree: 
 
To establish a Board of Trustees (hereinafter to be referred 
as Board) for the Armenian Project of the Millennium 
Challenge Account with the following composition: 
 
--Prime Minister of the Republic of Armenia (Chairman of the 
Board) 
--Chief Economic Adviser of the President of the Republic of 
Armenia (Deputy Chairman of the Board) 
--Minister of Finance and Economy of the Republic of Armenia 
--Minister of Agriculture of the Republic of Armenia 
--Minister of Transport and Communication of the Republic of 
Armenia 
--Chairman of the Water Resources Management Committee of 
the Government of the Republic of Armenia 
 
To define that: 
The Chairman of the Board is authorized to establish working 
groups comprised of the representatives of central and local 
governments, donor organizations and non-governmental units, 
if necessary; 
 
The Chairman of the Board regularly reports the President of 
the Republic of Armenia on the activities of the Board; 
 
The Board approves the procedures for organizing and 
implementing the activities of the Board. 
 
This order becomes effective on the next day following its 
official promulgation. 
 
R. Kocharian 
President of the Republic of Armenia 
May 31, 2004 
Yerevan 
 
End text. 
ORDWAY