US embassy cable - 05YEREVAN83

C O N F I D E N T I A L SECTION 01 OF 02 YEREVAN 000083 
 
SIPDIS 
 
DEPT FOR EUR/CACEN, EUR/ACE, EB 
 
E.O. 12958: DECL: 01/18/2015 
TAGS: PREL, PGOV, ECON, AM 
SUBJECT: MORE WORDS OF WARNING FOR OLIGARCHS -- OR FODDER 
FOR SKEPTICS? -- DURING INTERNATIONAL CONFERENCE 
 
REF: YEREVAN 52 
 
Classified By: DCM A.F.Godfrey for reasons 1.4 (b,d). 
 
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SUMMARY AND COMMENT 
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1. (C) A strongly-worded January 15 speech by Chief 
Presidential Advisor for Economic Issues Vahram Nercessiantz 
raised eyebrows during the recent Armenia International 
Policy and Research Group (AIPRG) Conference in Washington 
but did little to convince skeptics that real efforts by the 
GOAM to crack-down on tax evading oligarchs would soon 
follow.  Nercessiantz and other GOAM representatives pointed 
to recent statements by Kocharian (reftel) as further 
evidence that the GOAM had "finally turned the corner8 and 
was now ready to tackle corruption in Armenia,s tax and 
customs regimes.  Attendees, including World Bank and other 
donor community representatives, were upbeat about Armenia's 
economic progress during the meetings but were open about 
their suspicions that both Kocharian's and Nercessiantz' 
comments were meant to appease the international community 
rather than warn Yerevan's most powerful oligarchs. 
 
2. (C) Nercessiantz and others, while doing their best to 
paint a picture of a more reform-minded, corruption-averse 
Kocharian, do not appear to fully appreciate the 
well-entrenched skepticism of the donor community and 
Diaspora.  Genuine reform will have to quickly follow or this 
latest speech could actually further damage the credibility 
of Kocharian's economic team and throw doubt on his 
willingness to confront corruption  End summary and comment. 
 
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NERCESSIANTZ:  GOAM READY TO TACKLE/CUSTOMS PROBLEMS 
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3. (SBU) Chief Presidential Advisor for Economic Issues 
Vahram Nercessiantz raised eyebrows during his strongly 
worded January 15 keynote address at the recent Armenia 
International Policy and Research Group (AIPRG) Conference in 
Washington.  (Note:  The Embassy has obtained a copy of the 
speech and has forwarded a text to the Desk for dissemination 
to interested offices.  End Note.)  Nercessiantz spoke of the 
need for the GOAM to crack-down on tax evading oligarchs and 
re-vamp the country's flawed customs regime.  Straying from 
his text, Nercessiantz hinted repeatedly that the GOAM was 
prepared to look at ways to combine tax and customs 
authorities under one roof but stopped short of offering a 
timeline or concrete steps for making such a change. 
 
4. (C) Nercessiantz and other GOAM representatives (including 
those from the Central Bank, Ministry of Finance and Economy 
and others who attended the proceedings via video link from 
Yerevan) pointed to recent statements by Kocharian (reftel) 
as further evidence that the GOAM had "finally turned the 
corner" and was now ready to tackle corruption in Armenia's 
tax and customs regimes.  Nercessiantz told conference 
attendees that Kocharian was finally convinced that he could 
no longer ignore the "smoking guns," incriminating the 
biggest of the country's oligarchs in blatant tax and customs 
violations.  Armenian diplomats including outgoing Armenian 
Ambassador to the U.S. and soon-to-be Deputy Foreign Minister 
Arman Kirakossian made similar statements to Diaspora 
organization representatives.  During a reception hosted by 
the Armenian Embassy, working level GOAM officials (including 
a representative from the Central Bank) said the comments 
were the clearest indication to date that the GOAM was not 
afraid of powerful business interests and would pursue a more 
strident path toward tax and customs reform. 
 
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ATTENDEES NOT CONVINCED 
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5. (C) Attendees, including World Bank and other donor 
community representatives, were mostly upbeat about Armenia's 
economic progress during the meetings but were fairly open 
about their suspicions that both Kocharian's and 
Nercessiantz' comments were meant to appease the 
international community more warn Yerevan's most powerful 
oligarchs.  World Bank Resident Representative Roger Robinson 
congratulated Nercissiantz in front of the group but 
privately classified his words as merely another attempt to 
look progressive.  Robinson and others reminded Diaspora 
representatives of Armenia's need to appear committed to 
fight corruption in advance of the GOAM's upcoming Millennium 
Challenge Account (MCA) proposal submission.  (Note:  Per 
reftel, corruption and tax and customs reform has been part 
of numerous conversations between donor community and GOAM 
representatives )- including during the most recent sessions 
of the U.S.-Armenia Task Force -- but has found little 
traction within affected GOAM agencies.  End Note.) 
EVANS