US embassy cable - 04YEREVAN1343

UNCLAS SECTION 01 OF 02 YEREVAN 001343 
 
SIPDIS 
 
DEPT FOR EUR/CACEN, EUR/ACE, EUR/PGI, DRL, EB 
DEPT PLEASE PASS USAID AND MCC 
 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: PREL, PGOV, EAID, AM 
SUBJECT:  ARMENIA MCA BI-WEEKLY REPORT -- JUNE 15, 2004 
 
REF:  YEREVAN 1293 
 
1. (U)  Sensitive But Unclassified.  Please treat 
accordingly. 
 
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GOAM MCA BOARD CONVENES FIRST "CONSULTATIVE" MEETING 
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2. (U) Minister of Finance and Economy Vardan Khachatryan 
hosted the GOAM's first "consultative session" with the 
public regarding the MCA on June 4.  Approximately fifty 
representatives from the GOAM, NGOs, businesses and donor 
organizations attended the meeting.  Khachatryan opened the 
meeting by emphasizing the need for any future MCA funds to 
reach vulnerable populations living outside Yerevan 
(estimated at 90 percent of Armenia's poor).  Khachatryan 
echoed MCC Chairman Applegarth's statements during his early 
June visit to Yerevan that a successful MCA compact must 
contribute to sustainable economic growth, involve broad 
consultation with civil society and positively affect MCA 
eligibility criteria.  Khachatryan previewed the structure 
and function of the GOAM's MCC Board (headed by Prime 
Minister Andranik Margaryan) and said that NGOs, businesses 
and local government officials would have a role in the 
board's deliberations.  Press representatives from a wide 
variety of newspapers and agencies were present during the 
meeting. 
 
3. (SBU) In a surprising move that broke with his 
traditional meeting style, MinFE turned the floor over to 
Post, donor organizations and NGOs for comments after only 
these brief introductory remarks.  Ambassador Ordway 
underscored the fact that MCA funding was not guaranteed for 
Armenia and emphasized the fact that MCA compacts would have 
to be competitive in order to win MCC funding.  He also 
encouraged the GOAM to take its time in conducting the 
consultative process, echoing MCC delegation comments that a 
quality consultative process was one of the key elements for 
a successful MCA compact. 
 
4. (U) IFI and Multilateral Organization representatives 
made brief presentations as part of the meeting.  UN 
Resident Representative Lise Grande congratulated meeting 
participants for proposing projects that complemented 
Armenia's Poverty Reduction Strategy Paper (PRSP).  She 
urged GOAM leadership not to allow any future MCA funding to 
eclipse ongoing economic growth projects (specifically job 
creation efforts).  World Bank Representative Roger Robinson 
said the World Bank would not reduce funding for Armenia 
even if a successful MCA compact involved sectors in which 
his organization already sponsored ongoing projects.  He 
offered World Bank technical support for any projects 
involving rural water accessibility and road rehabilitation. 
IMF Resident Representative James McHugh said that private 
sector growth should not be ignored during the formulation 
of a successful MCA compact.  According to McHugh, private 
sector growth remains key to accomplishing MCA objectives 
and should be part of the GOAM's focus when designing its 
compact. 
 
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PRESIDENT'S CHIEF ADVISOR ON CONSULTATIVE PROCESS 
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5. (SBU) President Kocharian's Chief Economic Advisor Vahram 
Nercissiantz told us June 11 that he, as part of the GOAM's 
MCC Board, was anxious for feedback on the GOAM's 
consultative process with the public regarding an MCA 
compact.  He said that the GOAM was planning to 
institutionalize the involvement of the business community 
by formalizing the activity of the High Business Council (a 
business forum consisting of important local private sector 
representatives) as part of the consultative process. 
Nercissiantz said that the Prime Minister had appointed 
someone from his office to act as MCA recorder.  This person 
would record notes and compile recommendations from the 
various consultative meetings for use by the GOAM MCA Board. 
The Ambassador and Nercissiantz discussed the utility of 
following a model similar to the June 4 meeting (allowing 
NGOs to present ideas before GOAM representatives and 
allowing press to be present and document the event) during 
subsequent consultations with the public.  Nercissiantz 
agreed that the consultative process should move beyond 
Yerevan and include the widest possible range of local NGOs. 
Both sides discussed the need for the consultative process 
to serve as more than mere "cover" for a GOAM-backed 
proposal.  They discussed ways for the GOAM to incorporate 
public feedback during the compact design phase. 
 
6. (SBU) Nercissiantz stood by earlier forecasts that the 
GOAM would be ready to submit an MCA compact proposal to the 
MCC by the end of July.  He mentioned upcoming travel by 
GOAM representatives (including FM Oskanian's June 14-15 
trip to Washington and Nercissiantz' own plans to visit 
Washington in July) as an opportunity to meet with MCC 
officials and other stakeholders in advance of officially 
submitting the GOAM's first draft compact proposal. 
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WIDE PRESS COVERAGE, INCLUDING SOME INCORRECT RUMORS 
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7. (U) There was wide press coverage of the MCC delegation 
visit to Armenia and MCC Chairman Applegarth's June 1 press 
conference.  Nearly all television outlets and newspapers 
carried footage of Applegarth's statements, including clear 
indications that there was neither a pre-arranged guarantee 
of MCA funding for Armenia nor a tentative agreement 
regarding funding levels for countries. 
 
8. (SBU) Subsequent press reports regarding MCA included 
wide coverage of the June 4 consultative meeting and were 
mostly objective.  Among the most notable themes of the 
press coverage of the first consultative meeting was the 
fact that well-known political figures (including GOAM 
National Minorities and Regional Issues Representative 
Hranush Kharatian and "Dignity" Party founder Lyudmila 
Harutyunian) used the forum not only to discuss MCA but to 
voice concern over the effectiveness of the GOAM's long-term 
economic strategy in rural areas. 
 
9. (SBU) A problematic statement made by Minister of Finance 
and Economy Vardan Khachatryan on June 9 to the ARKA news 
agency, however, has clouded otherwise objective and on-task 
reporting regarding MCA.  According to the statement, 
reportedly made to an individual journalist and not as part 
of an MCA-related meeting or press availability, Khachatryan 
previewed the GOAM's intention to rollout an MCA compact 
involving a five-year schedule of projects in multiple 
sectors totaling over USD 600 million.  Khachatryan 
reportedly told reporters that while the GOAM would support 
any "worthy" proposal suggested by the public as part of its 
MCA compact submission, the GOAM was looking primarily at 
rural water accessibility and road rehabilitation. 
(Comment:  The context of Khachatryan's reported comments 
remains unclear and Post has been unsuccessful in obtaining 
official clarification from him or his office.  End 
comment.) 
ORDWAY