US embassy cable - 04YEREVAN1507

UNCLAS SECTION 01 OF 02 YEREVAN 001507 
 
SIPDIS 
 
SENSITIVE 
 
DEPT FOR EUR/CACEN, EUR/ACE, EUR/PGI, DRL, EB 
DEPT PLEASE PASS USAID AND MCC 
 
E.O. 12958: N/A 
TAGS: PREL, PGOV, EAID, AM 
SUBJECT:  ARMENIA MCA BI-WEEKLY REPORT -- JULY 2, 2004 
 
REF:  YEREVAN 1343 
 
1. (U)  Sensitive But Unclassified.  Please treat 
accordingly. 
 
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GOAM MCA BOARD MEETINGS CONTINUE 
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2. (SBU) GOAM sources tell us that the GOAM MCA Board has 
met a total of seven times to date.  This number, however, 
includes five consultative sessions in which GOAM MCA Board 
members participated as well as internal meetings of the 
Board.  According to the Prime Minister's Office, the Board 
will meet at least once per month and will likely convene 
more often in the weeks preceding submission of Armenia's 
MCA compact proposal.  MCA Board meetings have not been open 
to the press but have included press availability 
immediately following the session.  In contrast, 
consultative sessions have been open to the press and 
public.  The Prime Minister's office invited an Embassy 
representative to attend the next MCA Board meeting. 
 
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CONSULTATIVE PROCESS WILL MOVE TO REGIONS 
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3. (SBU) The Prime Minister and GOAM MCA Board instructed 
the governors of Armenia's eleven provinces, who attended 
the most recent GOAM MCA Board meeting in mid-June, to 
sponsor a series of consultative sessions within their 
respective regions within the next month.  GOAM sources told 
us that the instructions included a charge to hold meetings 
in their regions' poorest, largest and most remote cities 
and towns.  Villages and towns in border areas will receive 
special consideration as venues for these meetings.  The 
Prime Minister reportedly told governors that, in order to 
qualify as bona fide sessions, these meetings must include 
the press, be open to the public, and be properly announced 
in the local media.  The first of these meetings will be 
held during the first two weeks of July.  We plan to attend 
some of these meetings as observers. 
 
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GOAM MCA STRUCTURES TAKE SHAPE 
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4. (SBU) GOAM officials in the office of the Prime Minister 
reported that the GOAM's MCA Board, Secretariat and related 
structures have taken shape during the past two weeks 
(reftel).  Sergey Balassanyan, Chair of the Ministry of 
Finance and Economy's Poverty Reduction Strategy Paper 
(PRSP) Coordination Division, will head the Secretariat. 
Balassanyan will continue to answer to Deputy Minister of 
Finance and Economy Tigran Khachatryan, who appears to be 
doing the majority of the legwork on MCA issues for the MFE. 
Reportedly in an effort "to create internal checks and 
balances and distribute everyday responsibilities," the 
Economic Affairs Division within the Office of the Prime 
Minister will serve as MCA Board Recorder.  Division Chief 
Simon Ghonaghchyan was eager to show us volumes of notes of 
GOAM MCA Board meetings, consultative sessions and by-laws 
that have been produced to date.  While still available 
neither to the public nor in languages other than Armenian, 
the Prime Minister's Office assured us that these materials 
would shortly be available for public use and distributed 
among the international community.  The Embassy has 
requested advance copies of these materials (in particular 
GOAM MCA Board by-laws) and will forward them to MCC 
Washington when available. 
 
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PRESIDENT'S CHIEF ADVISOR ON WASHINGTON MEETINGS 
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5. (SBU) Following recent meetings in Washington, President 
Kocharian's Chief Economic Advisor and GOAM MCA Board Deputy 
Chairman Vahram Nercissiantz reported to GOAM colleagues 
that the sessions were productive and that he came away from 
meetings with the MCC Board and State Department with new 
ideas regarding the consultative process.  He told 
USAID/Armenia Mission Director (also in Washington) that the 
GOAM might push back its MCA compact proposal submission to 
August.  Nercissiantz has tentative plans to visit 
Washington in late July or early August. 
 
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MORE PREDICTIONS:  RURAL WATER AND ROADS 
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6. (SBU) In private and public statements, high-ranking GOAM 
officials told us that they predict that the GOAM's MCA 
compact proposal will involve improvement for rural water 
access and road rehabilitation.  While mindful that the 
consultative process is far from over, they point to studies 
(including the PRSP and feasibility studies by international 
donor organizations) as strong indicators that these sectors 
will offer the best use for MCA funding.  GOAM officials 
representing the urban areas in and around Yerevan have 
reportedly "given up hope" that the GOAM's compact proposal 
will include projects in the capital.  We continue to hear 
rumors that municipal leaders in Yerevan are disgruntled by 
what they perceive as an "unfair concentration on rural 
improvement." 
 
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PRESS REPORTS ON REGIONAL CONSULTS, OSKANIAN MEETINGS 
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7. (U) Recent press reports regarding MCA concentrated on 
Foreign Minister Vartan Oskanian's June meetings in 
Washington and reported that USG officials congratulated 
Oskanian regarding Armenia's MCA eligibility.  The media 
also included wide coverage of the GOAM's plans to take the 
MCA consultative process to the country's regions.  A June 
17 RFE/RL report carried by Azbarez on-line (an English- 
language newspaper related to Armenian Revolutionary 
Federation media outlets in Armenia with considerable 
distribution among Diasporan communities and expatriates in 
Yerevan) included statements by Minister of Finance and 
Economy Vartan Khachatryan that only two formal proposals by 
Armenia-based NGOs had been received by the GOAM MCA Board. 
(Note:  GOAM sources later contradicted this report but the 
MFE has not yet released clarification of the statement nor 
an update.  End Note.) 
 
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COMMENT:  GOAM INTEREST IN BEST PRACTICES 
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8. (SBU) Judging from conversations with GOAM 
representatives at all levels, there is a sense among some 
bureaucrats that the clock is ticking and that the success 
of Armenia's compact proposal could depend as much on timing 
as it does on quality.  Post continues to echo the message 
of MCC CEO Applegarth that proposal substance, including the 
consultative process, is key.  As with other foreign policy 
considerations, Armenians are extremely sensitive to where 
they stand in relation to other countries in the MCA 
process.  During discussions about what would constitute a 
successful compact proposal, GOAM contacts within the MFE, 
MFA and Prime Minister's Office have expressed interest in 
what, if any, successful practices Washington can share with 
Armenia from other MCA eligible countries. 
ORDWAY