Nations in Transit 2004: Armenia

[Emil Lazarian]

Freedom House
Nations in Transit 2004

ARMENIA*

NIT Ratings 2004

Electoral Process: 5.75
Civil Society: 3.50
Independent Media: 5.25
Governance: 4.75
Constitutional, Legislative, and Judicial Framework: 5.00
Corruption: 5.75


EXECUTIVE SUMMARY

Armenia's democratic development has proceeded haltingly in the 12 years
since independence. Although successive governments have established the
framework for a democratic market economy, their commitment to the
implementation and enforcement of legislation has been weak. The absence of
a system of checks and balances has resulted in rampant corruption
throughout the political hierarchy and has left the legislature powerless to
hold the executive to account. Moreover, elections have generally failed to
meet international standards, contributing to widespread public cynicism
toward the authorities and growing skepticism of the value of political
participation. Armenia's macroeconomic stabilization record has been more
successful. The average annual real gross domestic product rate has exceeded
8.5 percent since 1998, inflation has been in the low single digits since
1999, the currency is stable, and a liberal trade regime has enabled a
recovery in exports, reports the International Monetary Fund. However, the
majority of the population has yet to benefit from these macroeconomic
successes, further contributing to disillusionment in Armenia's political
and economic transition.

* Anna Walker is an analyst specializing in the Commonwealth of Independent
States at the Economist Intelligence Unit in London.


NOTE: Nations in Transit ratings are based on a scale of 1 to 7, with 1
representing the highest level and 7 representing the lowest level of
democratic development. The 2004 ratings reflect the period January 1
through December 31, 2003. The ratings reflect the consensus of Freedom
House, its academic advisors, and the author of this report. The opinions
expressed in this report are those of the author.



The presidential and parliamentary elections in February and May 2003 did
little to advance Armenia's transition toward a democratic, law-based state.
International observers noted serious irregularities in both elections and
were unable to judge them free and fair. The failure of a long-awaited
referendum on constitutional reform due to low turnout highlighted the
extent of voter cynicism toward the authorities. Despite pledges to the
contrary, the authorities failed to ensure that the country's leading
independent media organizations were able to resume broadcasting before the
elections. Media freedom was further threatened by the inclusion of strict
libel laws within Armenia's new criminal code, which came into effect in
August. International organizations continued to highlight human rights
abuses within the judicial and police systems but welcomed the abolition of
the death penalty in September. Rampant corruption and weak governance
remained serious threats to Armenia's democratic and economic development.


Electoral Process.

Presidential and parliamentary elections in 2003 provided a serious test of
the authorities' democratic credibility. However, despite pressure on the
authorities to ensure a free and fair process, international observers
judged that neither election met democratic standards. The so-called power
class retained its monopoly on political power. President Robert Kocharian
was returned to office in March, beating Stepan Demirchian, leader of the
People's Party of Armenia, in a runoff election, and the Republican Party of
Armenia (RPA) and other pro-presidential parties retained their
parliamentary majority in May. The RPA reached a power-sharing agreement
with the Armenian Revolutionary Federation and Country of Law Party to form
a coalition government. The opposition lodged several appeals with the
Constitutional Court but failed to overturn the election results. However,
the Court acknowledged that there had been serious voting irregularities.
Armenia's rating for electoral process declines from 5.50 to 5.75, owing to
the mishandling of the 2003 elections.


Civil Society.

Armenia's civil society is still in the early stages of development,
although the number of registered nongovernmental organizations (NGOs)
continues to increase and stands at more than 3,000. Poor socioeconomic
conditions in Armenia have left civil society groups heavily reliant on
external funding, particularly from diaspora-based organizations. Government
officials remain reluctant to consult with policy research groups, while
public cynicism at the effectiveness of civic activism remains a barrier to
the development of civil society. Nevertheless, in 2003, in a positive
demonstration of civil society's capacity to influence policy making, the
U.S.-based NGO World Learning supported a group of Armenian NGOs in
successfully lobbying the government for the protection of the rights of the
disabled in urban planning and construction. Domestic NGOs also played an
active role in monitoring the 2003 elections. Armenia's rating for civil
society remains unchanged at 3.50.


Independent Media.

Press freedom in Armenia suffered a series of setbacks in 2003. The country'
s leading independent broadcasting organizations, A1+ and Noyan Tapan,
failed in several bids to regain their broadcast frequencies, despite
repeated promises by the government that they would be able to resume
broadcasting. There were further incidents of violence and intimidation
against independent journalists, particularly in the run-up to the
presidential election. Combined with the country's harsh libel laws,
punishable by up to three years in prison, this reinforced the culture of
self-censorship. Although the government removed some controversial clauses
from a new Law on Mass Media, local journalists remained skeptical that the
bill would enhance press freedom. Armenia's rating for independent media
declines from 5.00 to 5.25, owing to the continued difficulties faced by
independent broadcasters and the authorities' decision to retain libel as an
offense under Armenia's criminal code.


Governance.

Armenia's long-term political stability is threatened by weak governance.
Rampant corruption, the prevalence of vested interests within the country's
power structures, and the weak rule of law remained serious obstacles to
good governance in 2003. Although Armenia's legal framework is sound in many
areas, enforcement and monitoring are still weak. A new competitive-based
recruitment system in the civil service was under way in 2003. Combined with
wage increases, this process is aimed at attracting higher-caliber staff and
raising professional standards. However, low financial resources at both
national and local government levels remain a constraint on improving
governance. Parliament approved a Law on Freedom of Information in September
2003, which classifies the failure to release information as a criminal
offense. Armenia's rating for governance remains unchanged at 4.75.


Constitutional, Legislative, and Judicial Framework.

A long-awaited referendum on constitutional reform was held in May 2003, but
low turnout rendered the ballot invalid. The proposed amendments would have
somewhat reduced the extensive powers of the presidency, which is currently
empowered to appoint and dismiss the prime minister and government and to
dissolve the Parliament practically at will. Despite constitutional
provisions guaranteeing a full range of basic human rights, Armenia
continued to attract criticism from international organizations in 2003 for
its observance record. This stems partly from the weakness of the judiciary,
which is still far from fulfilling its role as a guarantor of law and
justice. The use of so-called administrative arrests, torture within the
police system, and the imprisonment of conscientious objectors were
particular areas of concern for human rights groups. Armenia's rating for
constitutional, legislative, and judicial framework remains unchanged at
5.00.


Corruption.

Rampant corruption continues to hamper Armenia's economic and social
development. The government finalized a long-awaited anticorruption strategy
in late 2003. However, the government's past record in implementing
anticorruption measures and the continued involvement of high-ranking
officials and parliamentary deputies in business activities have resulted in
widespread skepticism from foreign investors and the Armenian public about
the authorities' commitment to eradicating corruption. The situation is
exacerbated by the lack of an independent judiciary, which is still
susceptible to pressure from the executive branch. A plethora of
bureaucratic regulations and registration requirements for businesses
increases the opportunities for official corruption. Armenia's rating for
corruption remains unchanged at 5.75.


Outlook for 2004.

The controversial mishandling of the 2003 elections has worrying
implications for the country's political stability in 2004. The opposition
will continue to challenge the authorities' legitimacy but is unlikely to
effect substantive political change owing to the consolidation of power in
the presidency and among the president's parliamentary supporters. The
authorities' past record suggests that their commitment to implementing the
recommendations of a new anticorruption strategy will be less than
wholehearted, while vested interests in the political hierarchy will prevent
substantive improvements in governance.


MAIN REPORT

I. Electoral Process

Armenia's constitutional and electoral framework enshrines the principle of
universal and equal suffrage by secret ballot and provides for the holding
of regular, free, and fair elections. Elections to the National Assembly, or
Parliament, are held every four years. Of the 131 deputies, 75 are elected
by proportional representation, on the basis of party lists, while 56 are
elected from single-mandate constituencies. Direct presidential elections
are held every five years.

Since independence, however, the authorities have consistently failed in
practice to ensure free and fair elections. This has contributed to
political tension, voter cynicism, and legislative paralysis. The
presidential and parliamentary elections held in February and May 2003 were
no exception. These elections were the first to be held since the attack on
Parliament in October 1999, when the prime minister, Speaker, and six other
deputies were assassinated. Tension was high in the year running up to the
elections, following several attempts by the parliamentary opposition to
impeach President Robert Kocharian in 2002. When these failed, 16 opposition
parties announced their intention to nominate a single candidate to stand
against Kocharian in the presidential election. The party leaders, however,
were unable to put aside their personal ambitions to agree on a common
candidate, and eight opposition figures registered to run in the first round
of the election, held on February 19, 2003.

Initial reports from the Central Election Commission (CEC) indicated that
Kocharian had won outright in the first round, prompting demonstrations by
the opposition in protest of what they regarded as blatant vote rigging. The
authorities responded by sending tanks into the streets and arrested many
opposition supporters. In an apparent attempt to allay suspicions of
electoral fraud, the CEC subsequently revised its preliminary results.
Reporting that Kocharian had secured 49.5 percent of the vote, just short of
the overall majority required to win in the first round, the CEC announced
that Kocharian would proceed to a second-round runoff against the leading
opposition candidate, Stepan Demirchian, chairman of the People's Party of
Armenia (PPA). The opposition continued to dispute the legitimacy of the
first-round result and held several demonstrations in the two-week period
between the two rounds of the election. Most of the opposition candidates
urged their supporters to back Demirchian in the runoff on March 5, but
Kocharian was ultimately reelected with 67.5 percent of the vote (according
to official data).


Presidential Election, 2003

( Percent of Total Vote)

First Round (a) Second Round (b)

Robert Kocharian 49.48 67.48

Stepan Demirchian 28.22 32.52

Artashes Geghamian 17.66 -

Aram Karapetian 2.95 -

Vazgen Manukian 0.91 -

Ruben Avagian 0.41 -

Aram Sarkisian 0.21 -

Aram Harutyunian 0.09 -

Garnik Margarian 0.06 -

Total 100.00 100.00

a) February 19. b) March 5.


Source: Central Election Commission of the Republic of Armenia,
www.elections.am


The opposition's defeat in the presidential election galvanized the parties
to present a more united front in the parliamentary election, which was held
on May 25, 2003. A total of nine opposition parties formed the Justice
Alliance bloc, headed by Demirchian, to contest the party list seats. The
National Unity Party, led by Artashes Geghamian, who came third in the
presidential election, decided to field its own candidates. However, the
opposition's hopes that a united front would enable them to strengthen their
position in Parliament were dashed. The Republican Party of Armenia (RPA)
and other pro-presidential parties retained their majority in Parliament and
subsequently reached a power-sharing agreement to form a coalition
government. Moreover, many of the single-mandate constituency seats were won
by people with connections to the government or pro-presidential parties,
further weakening the opposition's influence in Parliament.


Composition of the National Assembly by Faction/Deputies' Group
(No. of Seats)

Republican Party faction 40

Country of Law faction 19

Justice Alliance faction 15

Armenian Revolutionary Federation faction 11

National Unity Party faction 9

United Labor Party faction 6

"People's Deputy" group 17

Unaffiliated 14

Total 131

Source: OSCE/ODIHR


The extent of electoral fraud in 2003, and the subsequent failure to
prosecute those responsible for the violations, renders the authorities'
legitimacy highly questionable. Both elections were monitored by the
Organization for Security and Cooperation in Europe/Office for Democratic
Institutions and Human Rights (OSCE/ODIHR) and were found to be below
international standards for democratic elections. Many of the deficiencies
that have characterized Armenia's electoral process since independence were
repeated in 2003. Although the OSCE judged that Armenia's election code
"provides a sound foundation for the conduct of elections," implementation
and enforcement of the legislation were extremely weak.


This permitted violations at almost every stage of the electoral process.
The heavy bias of both state-run and private media in favor of Kocharian
restricted the opposition's campaigning opportunities before the
presidential election. The failure of the country's leading independent
media organizations, A1+ and Noyan Tapan, to regain their broadcasting
frequencies before the elections further hindered the opposition's campaign.
Although the state media provided equal conditions for all candidates in the
parliamentary election, the private media-most of which are financed by
wealthy businessmen with links to the political elite-failed to provide
impartial reporting.

The composition of the election commissions was an additional source of
controversy with election observers. Under Armenia's 2002 electoral code,
the president appoints three of the nine members of both the central and
local commissions, while the remaining six are appointed by the parties
represented in Parliament-most of which support the president. This gives
the presidency substantial influence over the electoral process.
International observers reported numerous instances of voting
irregularities, including ballot box stuffing, counting anomalies by local
election commissions, and evidence of voter intimidation, in particular
pressure on the military to vote for the ruling powers.

Inaccurate electoral rolls also resulted in the disenfranchisement of many
voters. Opposition appeals to the Constitutional Court to overturn the
results of both elections failed, although the Court did acknowledge that
electoral irregularities had taken place. The opposition continued to refute
the legitimacy of the elections and in September formally notified the
European Court of Human Rights of its intention to appeal the results.
However, in a setback for the opposition, the Council of Europe decided in
October 2003 not to impose sanctions on Armenia for mishandling the
elections.

Nevertheless, there were several positive developments in the 2003
elections. For the first time, a debate among the candidates was held on
public television before the second round of the presidential election,
while several private television stations organized debates among
representatives of the candidates. The use of transparent voting boxes was
also a positive step, in that it enabled electoral fraud to be detected more
easily-these were subsequently used in the Georgian parliamentary election
in late 2003. The active participation of domestic nongovernmental
organizations (NGOs) in monitoring the elections was a further positive
development.

Political parties are regulated by the Law on Political Parties and must be
registered with the Ministry of Justice. The electorate has a wide range of
parties to choose from, although political parties are generally driven more
by personality than policy. Since the introduction in July 2002 of new
registration requirements, which stipulate that political parties must have
at least 200 members and branches in at least one-third of Armenia's
regions, the number of registered political parties has fallen sharply. By
December 2003, only 45 parties had applied successfully for reregistration,
according to the Ministry of Justice, compared with 116 before the
requirements were introduced. According to the ministry, more than 50
political groups failed to apply for reregistration before the deadline of
mid-November. The ministry rejected 8 applications.

The RPA is the dominant party at both national and local levels. Headed by
the prime minister, Andranik Markarian, the RPA is the leading party in the
coalition government and controls several ministries, as well as the
majority of subministerial posts. The nationalist Armenian Revolutionary
Federation (ARF) and the center-right Country of Law Party are the other two
parties in the coalition. Each of these has two cabinet-level positions and
a smaller number of subministerial positions. The so-called power ministries
(defense, interior, national security, and foreign affairs) are headed by
presidential loyalists.

Together with leading businesspeople, these parties and ministers form the
so-called power class, whose financial and political support played an
important role in ensuring Kocharian's reelection. Of the more than 110
parties registered at the time of the election, only 6 (including the
Justice Alliance bloc) exceeded 5 percent of the vote required to win
parliamentary representation.

Overall, opposition leaders have failed to successfully challenge the ruling
parties. Even when the opposition parties present a more united front-for
example, in the parliamentary election-the political power class and
electoral fraud present serious obstacles to their active participation in
the country's political life. Nevertheless, as the 2003 electoral process
showed, the opposition is capable of mobilizing popular support. For
example, it staged several large rallies to protest the mishandling of the
election.

The repeated failure of the authorities to ensure democratic elections has
contributed to widespread voter apathy and a lack of confidence in the
electoral process. This became apparent in the turnout for the 2003
parliamentary elections. According to the CEC, turnout for the second round
of the presidential election was 68.4 percent but dropped to 52.2 percent in
the parliamentary election. The OSCE judged even these figures to be
inflated. The low turnout contributed to the failure of a long-awaited
referendum on constitutional reform, held simultaneously with the
parliamentary election. The running of the referendum was also considered
below international standards, owing to the lack of information about the
proposed amendments available to the electorate prior to the vote.

Ethnic minorities make up only about 3 percent of Armenia's population, and
their participation in the political process is correspondingly low. No
ethnic minorities are represented in Parliament. Political parties and blocs
are obliged to ensure that 5 percent of their party list candidates are
women. According to the OSCE, women accounted for just 15 percent of the
candidates on the proportional lists in the 2003 election and only 4 percent
of the majoritarian candidates (mostly allocated to unwinnable seats). Seven
women won seats in the new Parliament, up from four in the outgoing
assembly.


II. Civil Society

Public participation in civil society groups in Armenia is still low, owing
to widespread cynicism about the effectiveness of civic activism. This is
partly a result of socioeconomic conditions, as many of the country's
citizens have yet to benefit from the strong economic growth recorded in
recent years and thus feel alienated from civic and political processes.
Weak financial resources have also constrained the growth of civil society,
although the number of registered NGOs continues to increase, thanks in part
to continued financial assistance from international sources.

About 3,070 social organizations were registered with the Ministry of
Justice as of May 2003, of which about 200 were registered in the previous
six months. In practice, however, many are inoperative. Most of those that
do operate are based in Yerevan. They cover a wide range of activities,
including human rights, humanitarian assistance, youth issues, women's
rights, economic development, and politics. Armenian NGOs have also created
several regionwide NGO networks operating across the South Caucasus and the
Commonwealth of Independent States, working in areas such as refugee issues,
human rights, and the media. The state protects the rights of the civic
sector, and NGOs are generally able to carry out their work without
government interference.


Foreign organizations, mainly from the United States, have been working in
Armenia to foster the development of civil society. The U.S. Agency for
International Development (USAID) is funding several such projects. Since
late 2000, the U.S. group World Learning has been working on a four-year
USAID NGO Strengthening Program. USAID also provides most of the funding for
the NGO Training and Resource Center, founded in 1994 by the Armenian
Assembly of America, one of the largest lobbying groups in the United
States. These programs aim to raise the organizational capacity of local
NGOs, offering advice on management and financial issues and training them
to raise public and government awareness of their work. The International
Foundation for Election Systems (IFES) has also been active in Armenia since
1996 and runs the Citizenship Awareness and Participation in Armenia
program. This USAID-funded project aims to encourage civic initiatives and
advocacy and to raise citizen participation in local self-government.
Organizations such as the Eurasia Foundation and the Open Society Institute
also finance programs to develop civic society and to strengthen the
nongovernmental sector.

Media coverage of NGO activity in Armenia is generally positive. Popular
perception of NGOs is similarly favorable, although public knowledge of most
NGO activities is still limited. Generally, this is confined to an awareness
of those NGOs engaged in relief work, rather than those promoting human
rights or democracy. Participation in civil society groups is
correspondingly low. According to IFES, religious organizations have
attracted the largest number of participants, which reflects the strong
position of the Armenian Apostolic Church in society. The Apostolic Church
itself engages in charitable work, financed largely through diasporic
donations, as do other domestic and foreign religious charities.

After religious organizations, cultural and educational groups have
attracted the highest number of participants. The number of groups
representing specifically the interests of women is limited but increasing:
as of mid-2003, there were about 60 registered women's groups, according to
World Learning, up from about 50 in 2002. Issues such as domestic violence
and the trafficking of women, as well as campaigns to promote more active
participation of women in politics, are gaining greater recognition. Women's
civil society groups were particularly active in the run-up to the 2003
elections, and the Women's Republican Council was one of several domestic
NGOs fielding observers in the presidential election. A total of 29 domestic
NGOs observed the presidential election, while 28 monitored the
parliamentary election. The NGO It's Your Choice fielded the most observers
in both elections.

Parliament adopted the Law on Charity in October 2002 and the Law on
Foundations in December 2002. These regulate the establishment and
activities of charities and NGOs and have been judged by the International
Center for Not-for-Profit Law to be in compliance with international good
practices of NGO regulation. The Ministry of Justice's registration process
for NGOs is relatively straightforward. Armenian nonprofit organizations are
subject to taxation on property, vehicles, and employee wages, and NGOs must
disclose their revenue sources in order to establish their tax liability.
Under the Law on Public Organizations, they are not permitted to earn
profits. World Learning is working to change this to improve the financial
sustainability of NGOs.

Many of Armenia's most active NGOs and charities are dependent on external
funding, mainly from the large Armenian diaspora. Grants and bequests from
domestic sources are small, owing to the low income level of most Armenians.
The largest domestic charity is the All-Armenian Hayastan Fund, which raises
most of its contributions from the diaspora. Since its creation in 1992, the
charity has spent more than US$80 million on infrastructure projects in
Armenia and Nagorno-Karabakh, raising much of its funds through annual
telethons. The charity's annual revenue has fallen from more than US$10
million in the early 1990s to about US$6 million in 2003, a decline
attributed to donor concerns about the political upheavals in Armenia since
1998.

Another important diasporic charity is the Lincy Foundation, established by
the Armenian American Kirk Kerkorian. The foundation allocated US$177
million to infrastructure and cultural projects in Armenia in 2002-2003.
These included the construction of 4,000 new homes in northwestern Armenia
(devastated by an earthquake in 1988), the refurbishment of most of Armenia'
s museums and theaters, and the repair of 420 kilometers of roads. The
diasporic charities Armenian General Benevolent Union and the Armenian
Relief Society are also active in Armenia. A new organization, the World
Armenian Organization, founded by Armenian-born millionaire businessman Ara
Abrahamian, held its inaugural congress in Moscow in October 2003. The
organization aims to strengthen relations between Armenia and the diaspora.

Government engagement with civil society and policy research groups is
limited, albeit increasing. Public officials rarely canvas public opinion in
meetings or through the use of surveys. This partly reflects the fact that
most NGOs are young and have not yet developed effective advocacy and
lobbying skills. It also reflects public skepticism of the value of engaging
with the government. World Learning is active in promoting better advocacy
by civil society organizations. In 2003, it supported a group of NGOs in
successfully lobbying the government for the protection of the rights of the
disabled in urban planning and construction.

Two major private think tanks are active in Armenia, but their public
profile is low and there is little evidence to suggest that they have
influenced government policy. The International Center for Human
Development, chaired by former prime minister Armen Darbinian, focuses on
projects such as poverty reduction, regional integration, and good
governance. The Armenian Center for National and International Studies was
set up by former foreign minister Raffi Hovannisian and concentrates on
foreign and public policy issues.

Armenia's Constitution guarantees the right to establish and join trade
unions. The Confederation of Labor Unions unites about 30 individual unions,
but most of these are relatively inactive and have limited power to
guarantee workers' rights. Private sector employees enjoy little protection
against dismissal, and therefore strikes in private enterprises are rare.
Strikes in the public sector are more common, generally over issues such as
wage increases or payment of back wages. The Union of Industrialists and
Entrepreneurs represents the interests of Armenia's largest businesses.

Armenia's education system is generally free of political influence and
propaganda. According to the Ministry of Education, there are about 90
institutes of higher education in the country, of which about three-quarters
are privately run. State-run universities are perceived as more prestigious
and are considered to offer higher educational standards. The amount
allocated to education from the state budget has dropped sharply since
independence, from about 8 percent of the gross domestic product (GDP) in
the 1980s to 2.2 percent by 2002, according to the World Bank. The shortage
of funding has led to difficulties in attracting qualified staff, as average
monthly salaries for teachers remain low at about 20,000 dram (US$35). The
government is reducing the number of teachers in order to fund a raise in
salaries to 65,000 dram by 2007. The weak financial situation has also ended
free higher education, with entrance fees often required. This now restricts
access to education to those who are able to pay.


III. Independent Media

Armenia's press freedoms are guaranteed in Article 24 of the Constitution,
which asserts: "Everyone is entitled to freedom of speech, including the
right to seek, receive, and disseminate information and ideas through any
medium of information." However, this can be restricted "by law, if
necessary, for the protection of state and public security, public order,
health and morality, and the rights, freedoms, honor, and reputation of
others."

In practice, press freedom has deteriorated in recent years. The New
York-based Committee to Protect Journalists has been highly critical of
Armenia's media situation. In its annual report on global press freedom,
released in March, it accused Kocharian of "muzzling dissenting voices in
the press." Freedom House was similarly critical of the authorities'
treatment of the media. In its annual Survey of Press Freedom, released in
April 2003, it downgraded Armenia's rating from "Partly Free" to "Not Free"
"as a result of the government's repeated use of security or criminal libel
laws to stifle criticism, as well as the forced closing of the country's
leading independent television station." Freedom House also cited increased
violence against journalists in Armenia.

Armenia's main independent television station, A1+, lost its broadcasting
license in a controversial tender in April 2002 and failed to regain a
broadcasting frequency in several tenders held in 2003. The National
Commission on Television and Radio, whose members are appointed by
Kocharian, cited a variety of financial and technical reasons for its
decision not to award new frequencies to A1+ and another leading
broadcasting organization, Noyan Tapan. However, A1+ believed that the
decision was politically motivated, owing to the often critical nature of
its reporting.

The decision to strip A1+ of its license was all the more controversial in
that the entertainment company that was granted its frequency, Sharm, itself
believed to be connected to the authorities, sold its broadcasting unit in
April 2003 to a businessman and parliamentary deputy who had actively
campaigned for Kocharian's reelection. A1+ failed to regain its license in a
fourth bid in December 2003, in what was probably its last chance for the
foreseeable future, as all the available broadcasting frequencies have now
been allocated.

The failure by A1+ and Noyan Tapan to win broadcasting frequencies fueled
the suspicions of international observers about the lack of impartiality in
Armenia's media regulatory body. The Council of Europe stated that the
failure to permit the companies to broadcast "raised concern about the
pluralistic nature of broadcast media in Armenia" and warned the authorities
that it might jeopardize Armenia's further integration into Europe.

Violence against journalists continued to rise in 2003. The Paris-based
media watchdog Reporters Without Borders noted in May that it was "very
concerned about the situation of press freedom in Armenia, which has
worsened sharply in the past months." Several independent journalists and
freelance photographers were subject to intimidation and physically attacked
in the run-up to the presidential election, while other journalists
investigating corruption by state officials were assaulted.

In March 2003, Reporters Without Borders criticized the authorities'
decision to suspend an investigation into the October 2002 grenade attack on
Mark Grigorian, a prominent independent journalist. The authorities cited
the lack of suspects as the reason. By contrast, they gave high priority to
the investigation into the December 2002 murder of the head of state
television, Tigran Naghdalian. This resulted in the arrest of Armen
Sarkisian, brother of former prime ministers Aram Sarkisian, who stood
against Kocharian in the February presidential election, and Vazgen
Sarkisian, who was assassinated in October 1999. The opposition condemned
the arrest of Sarkisian as politically motivated. Following a four-month
trial in 2003, he was sentenced to 15 years in prison, while his
codefendants received sentences ranging from 7 to 15 years.

Debate over a new Law on Mass Media was the source of much controversy in
2003. The government circulated the new bill in February 2002, but the draft
legislation prompted strong criticism from domestic and international media
organizations. The government was eventually forced to amend the legislation
on two occasions, before finally pushing it through Parliament in the third
reading in December 2003. Changes included a removal of the requirement that
journalists disclose their sources of information and funding, except in
cases where judges are hearing related criminal offenses. Also dropped was
the requirement that media outlets must register with the Ministry of
Justice. Opposition deputies and journalists remained skeptical that the
legislation would enhance press freedom, as the government claimed. Two
positive developments in September, however, were the passage of a Law on
Freedom of Information and an amendment to the administrative offenses code
stating that government officials who obstruct the gathering of news can be
fined.

The state-run Armenian Public Television is the country's most influential
media outlet. Its output is overwhelmingly biased in favor of the
authorities. The leading private stations-Prometevs, Armenia, ALM, and
Shant-are owned by wealthy businessmen and are also pro-Kocharian, thereby
giving the incumbent a huge advantage over his rivals in the presidential
election. "In general," reported the OSCE, "the media's coverage of the
election demonstrated that Armenia still lacks a strong and independent
media able to provide balanced information to enable the electorate to make
a well-informed decision." The OSCE's assessment of media coverage of the
parliamentary election was more favorable. It reported that although the
private stations were still biased toward the incumbent government, public
television generally provided unbiased coverage of the campaign.

According to the OSCE, as of June 2003 there were about 45 television
stations in Armenia, of which some 20 were in Yerevan. There are also about
10 independent radio stations, which focus on entertainment and brief news
reports. The programs of Radio Free Europe/Radio Liberty and the Voice of
America are broadcast on state radio.

Armenia's 80 or so newspapers (according to official figures) offer more
diverse opinions than the broadcast media. The state-owned national daily,
Hayastani Hanrapetutyun, has a circulation of 6,000, and there are 6
privately owned national dailies. Pro-Kocharian papers include the dailies
Azg (3,000) and Hayots Ashkhar (3,500), the biweekly Golos Armenii (3,500),
and the weekly Yerkir (2,500). Offering a more liberal, pro-Western
perspective are Aravot (5,000) and Haykakan Zhamanak (5,500). The left-wing
biweekly Iravunk (15,000) is also opposed to the current authorities. The
independent dailies Orran (3,000) and Or (2,500) began publishing in 2002.

Most broadcast and print media organizations in Armenia are privately owned
and funded. However, although the country's newspapers offer a plurality of
views, their low circulation presents them with serious financial
constraints. They are dependent on private sponsors, often with significant
vested political or economic interests. More than half of Armenia's
newspapers are distributed by the Haymamul agency, which is run by a
government-appointed director. The government declared its intention to
privatize the agency in 2001 but since then has sold off only the sales
kiosks, leaving Haymamul with control over distribution.

Libel is classified as a criminal offense punishable by up to three years in
prison, while insulting a government official in the mass media is also
deemed a crime punishable by a prison sentence. The authorities have
rejected international criticism of Armenia's libel laws, justifying their
stance by noting that many other European countries regulate defamation of
character under criminal law. In practice, the laws contribute to widespread
self-censorship and stifle the development of investigative journalism.

Armenia has several press associations, but they rarely coordinate their
activities, thereby weakening their effectiveness. The passage of the new
Law on Mass Media in late 2003 highlighted the divisions among the
associations. The National Press Club (NPC), whose members are mainly
pro-opposition journalists, attempted unsuccessfully in October 2003 to
persuade Parliament to consider an alternative draft law. This prompted
accusations by the Yerevan Press Club, the Armenian Union of Journalists,
and the Internews organization that the NPC had obstructed their (separate)
efforts to place draft alternatives before Parliament.

Access to the Internet is not formally restricted, but high connection costs
render it unaffordable for most households. In April 2003, only 1.6 percent
of homes had access to the Internet, according to the NGO Internet Society.
Most users (about two-thirds are in Yerevan) have access to Internet
services at either work, educational institutions, or Internet cafés. There
are about 35 Internet service providers (ISPs) in Armenia, although only
about 10 are actually functioning. All ISPs currently rely on ArmenTel, the
national telecommunications operator, for connection to outside services.
ArmenTel was granted a 15-year monopoly on the provision of
telecommunications services in Armenia in 1998, when the company was sold to
the Hellenic Telecommunications Organization of Greece. Armenia's ISPs and
the World Bank criticized this decision, arguing that it has prevented the
development of the telecommunications and information technology sectors. In
late 2003, the government announced its intention to revoke ArmenTel's
monopoly on the grounds that ArmenTel had failed to meet its investment
commitments and to open up the sector to other providers.


IV. Governance

Armenia has experienced frequent changes of government since independence,
but all governments have generally adhered to the economic reform measures
prescribed by international financial institutions. This has ensured
continuity in macroeconomic policies and a steady improvement in many
economic and financial indicators. However, the concentration of power in
the presidency, the centralized system of government, and the lack of an
independent civil service have contributed to weak governance and widespread
corruption. Improving standards of governance will be a prerequisite for
ensuring Armenia's long-term stability.

Legislative authority is vested in the 131-member National Assembly.
Parliament is empowered by the Constitution to dismiss the government by
majority vote and to remove the president from office with a two-thirds
majority, if the Constitutional Court judges him guilty of serious offenses.
In practice, however, Parliament has few powers to hold the executive to
account and enjoys substantially less authority than the presidency,
particularly with regard to judicial and government appointments. Moreover,
Parliament's legislative agenda is determined by the government, thereby
further reducing its lawmaking capacity. The effectiveness of both the
government and Parliament is impeded by their weak financial resources.
Armenia has a poor tax collection record, due in part to the scale of the
shadow economy (estimated at 60 percent of the official GDP by the United
Nations Development Program). Tax revenue was equivalent to just 14.6
percent of GDP in 2002, according to the International Monetary Fund, and is
not likely to have increased greatly in 2003.

Parliamentary debates are widely reported in the press, and the public
generally has access to draft legislation. Knowledge of local government is
less widespread. In a survey conducted by IFES in late 2002, 65 percent of
Armenians consider themselves uninformed about the economic activities of
their local government, particularly relating to local budgets. In September
2003, Parliament approved a Law on Freedom of Information, which aims to
improve the public's access to government information. Under the
legislation, government bodies and those providing services to the public
are obliged to release information relating to their activities within 5
days of a request or within 30 days in more complex cases. They are
permitted to refuse the release of information in only a few cases, and
failure to comply with the law is a criminal offense. However, the
effectiveness of the new law will depend on the authorities' commitment to
its implementation and enforcement.

Chapter 7 of the Constitution covers issues relating to territorial
administration and local self-government. Armenia is divided into 10 regions
and the city of Yerevan, which has the status of a region. The regional
governors are appointed by the government, while the mayor of Yerevan (who
enjoys status equivalent to that of a regional governor) is appointed by the
president. Regional governors are responsible for administering the
government's regional policy, coordinating the activities of regional
agencies of state administration, mediating between central and local
government, and regulating intercommunity issues. The regions are subdivided
into rural and urban communities, while Yerevan is divided into districts.
Councils of elders and district administrators are chosen in local
elections. However, their independence is circumscribed because they can be
dismissed by the central government on the recommendation of the regional
governors. The RPA is the dominant party in local government.

The activities of local governments are regulated by the 1996 Law on Local
Self-Government. The councils of elders (which act as the representative
body for communities) are responsible for approving community budgets and
supervising their implementation. However, the central government has
authority over budgetary loans, credits and guarantees, and establishing
procedures for the collection and distribution of local taxes. Land and
property taxes are the only form of community tax revenue, and communities
also receive revenue from state duties. Although local governments in theory
enjoy fairly broad powers, their autonomy is limited by their weak financial
resources. They are therefore largely dependent on financial transfers from
the state budget, but disbursement delays are common, limiting the capacity
of local governments to meet their spending requirements.

Reform of the civil service and public administration is under way, under
the terms of legislation approved by Parliament in 2001. A seven-member
Civil Service Council, appointed by the president, is tasked with selecting
staff for government agencies on a competitive basis and monitoring the
performance of government officials. The new recruitment system came into
operation in October 2002, and by September 2003, 845 people had been
appointed to vacancies within the government, according to Manvel Badalian,
the head of the council. Badalian noted that officials at the lower levels
of the civil service were often more competent than those in senior
positions: 27 senior civil servants were dismissed during that period for
failing to meet professional requirements. Critics of the council argue that
because it is appointed by the president, it lacks objectivity and
independence.


V. Constitutional, Legislative, and Judicial Framework

Armenia's Constitution provides for the separation of powers and the rule of
law. However, it has failed to ensure an effective system of checks and
balances among the legislative, executive, and judicial branches of
government. Extensive powers are vested in the presidency, including the
power to appoint and dismiss the prime minister and government and to
dissolve the Parliament practically at will. In addition, the president
wields control over most judicial appointments, which has precluded the
development of an independent judiciary. Although the process of drafting
and amending laws is comparatively straightforward, implementation and
enforcement are still weak.

The weakness of the legislature has prevented it from holding the executive
to account, particularly on budget issues. A parliamentary Oversight Chamber
is responsible for scrutinizing the government's budgetary operations and
for overseeing its borrowing and privatization policies. Despite frequent
criticism of the government's management of public finances, the chamber
lacks the authority to influence government policies.

The imbalance of power has prompted repeated calls for constitutional reform
from the domestic opposition and international bodies such as the OSCE. In
May 2003, a long-awaited referendum on a package of constitutional
amendments was held simultaneously with the parliamentary election. However,
the ballot was deemed invalid as it failed to receive the support of the
majority of participants, who had to make up at least one-third of the
electorate. The amendments would have reduced the powers of the presidency
to some extent. For example, the president's power to dissolve Parliament
would be restricted to periods when the legislature was "inactive." The
failure of the referendum has shelved constitutional reform for the time
being.

Neither the Council of Justice (the governing body of the judicial system)
nor the Constitutional Court (which is charged with interpreting and
enforcing the basic law) is free from political influence. Of the nine
members of the Constitutional Court, four are appointed by the president and
five by the National Assembly, in which pro-president deputies predominate.
Moreover, access to the Constitutional Court is restricted to the president,
one-third of the members of the National Assembly, and election candidates.
Neither lower-level courts nor ordinary citizens are empowered to lodge
appeals.

The flawed elections of 2003 resulted in several appeals to the
Constitutional Court by the opposition. Both Demirchian, who lost to
Kocharian in the second-round runoff, and Geghamian, the third-place
candidate, appealed to the Court to rule on the validity of the presidential
election, while the opposition Justice Alliance bloc lodged an appeal
against the result of the parliamentary election. None of these appeals was
successful. Although the Court acknowledged that there had been
irregularities, it concluded that these did not amount to sufficient
evidence to annul the elections.

In its ruling on the presidential election, the Court endorsed the
opposition's proposal that a referendum vote of confidence in the president
should be held in 2004, then subsequently backtracked from this position.
This further contributed to the perception that the Court enjoys little
independence from the executive branch. The OSCE nevertheless concluded that
the Constitutional Court had given the two cases appealing the outcome of
the presidential election "rigorous, public, and thorough examination." The
opposition intends to take its appeal to the European Court of Human Rights.

Although chapter 2 of Armenia's Constitution provides for the observance of
basic human rights, in practice there are substantial barriers to the
effective protection of said rights. These stem largely from the weakness of
the judiciary, which is still far from fulfilling its role as a guarantor of
law and justice. The Council of Justice, which has a supervisory and
disciplinary role within the judiciary, is appointed and chaired by the
president, who also has the authority to appoint and dismiss judges. Public
confidence in the judiciary is low. When questioned by IFES in late 2002,
three-quarters of Armenians surveyed felt that the judiciary was influenced
by political figures, while almost 80 percent disagreed that the judicial
system protects the population from unjust treatment by the state.

Armenia's judicial system guarantees the presumption of innocence, the right
of persons not to incriminate themselves, and access to a public hearing by
a fair and impartial court. Police officials are permitted to keep suspects
in custody for up to 72 hours before filing criminal charges but require a
court decision to turn detention into an arrest. A legal requirement stating
that only the courts are permitted to authorize searches is often violated.
Although Armenia's procedural justice code sets a one-year maximum for
criminal inquiries, delays in the criminal justice system are common, owing
partly to a shortage of qualified judges.

International human rights groups have continued to highlight abuses within
the police system, which is reported to use force and psychological pressure
to secure confessions. In its annual report released in January 2003, Human
Rights Watch (HRW) was highly critical of Armenia's judicial and law
enforcement bodies, reporting that the judiciary rarely rules against the
state and that police torture is "widespread and routine." Furthermore, fear
of the consequences leaves many victims of abuse reluctant to press charges.
HRW also criticized the use of so-called administrative arrests. This
Soviet-era practice permits courts to detain people without legal counsel
for 15 days and to sentence defendants in closed hearings. The legislation
was used against opposition demonstrators in the run-up to the second round
of the presidential election.

The classification of libel as a criminal rather than a civil offense-with
all that implies for the freedom of expression-has proved a particular
source of controversy with international observers. Armenia's treatment of
religious minorities has also come under scrutiny. The Armenian Constitution
and laws guarantee freedom of religion but also provide for the legal
authority of the Armenian Apostolic Church, which enjoys a privileged
status. As such, the church uses its influence over the government to press
for restrictions on nontraditional religious groups. In October 2003, Prime
Minister Andranik Markarian reaffirmed the primacy of the Apostolic Church's
place in Armenian society and announced that a new government department was
to be established to manage the state's relations with the church.

Under the terms of its membership in the Council of Europe, Armenia is
committed to ensuring freedom from discrimination for nontraditional
religious groups, of which about 50 are officially registered. Jehovah's
Witnesses have repeatedly been denied registration as a religious group,
though primarily because of their opposition to compulsory military service.
As of October 2003, 23 Jehovah's Witnesses were serving prison sentences,
while a total of 150 conscientious objectors had been sentenced since late
2000 to prison terms of between one and two years, according to Forum 18.

The government has said that it will permit Jehovah's Witnesses to register
once a new law providing for alternative service, approved by Parliament in
December 2003, comes into effect in July 2004. European legal experts
criticized the initial draft of the legislation, because the alternative
service described was not civilian: those objecting to military service
would still have been forced to serve in the army but could opt to join
unarmed noncombat units. The new law provides for civilian service, but
those choosing this option will have to serve for 42 months-almost twice as
long as those carrying out military service. The legislation also permits
every male to opt for alternative service, not just those objecting on
religious grounds.

The right to own and inherit property is guaranteed in Article 28 of the
Constitution, which also states that no one can arbitrarily deprive a
citizen of his property. Article 36 guarantees intellectual property rights.
Noncitizens are prohibited from owning land, except under special
circumstances. A lack of training for judges in commercial issues has left
many investors disillusioned with the court system as a viable legal
recourse. Moreover, government connections are still an important factor in
the successful conduct of many forms of business, putting foreign investors
without political links at a disadvantage.

Legislation to enable the appointment of a human rights ombudsman was under
discussion by Parliament in 2003. Under the terms of the bill, the ombudsman
would be appointed by the president, raising concerns that the office will
be subordinate to the executive. Opposition deputies and NGOs urged
Parliament to delay passage of the bill until the Constitution has been
amended, thus allowing the appointment to be Parliament's prerogative.
Although the Council of Europe is opposed to presidential appointment of the
ombudsman, it has said that passage of the legislation should not be further
delayed and that the appropriate constitutional amendments can be made
subsequently.

Armenia's new criminal code, adopted by Parliament in April 2003, came into
effect in August 2003. The new code formally abolished the death penalty but
contained a loophole that would have allowed those convicted of the October
1999 attack on Parliament to be sentenced to death. The Council of Europe
ruled that this was unacceptable and set a six-month deadline for Armenia to
repeal the death penalty in all circumstances. After being granted a
six-month extension of the deadline, Parliament eventually approved the
complete abolition of the death penalty in September 2003. Those convicted
of the parliamentary assassinations were sentenced in December 2003 to life
imprisonment, although the case remained controversial, amid allegations
that those responsible for actually plotting the attack had not been
apprehended.


VI. Corruption

Rampant corruption at all levels of government remains a substantial
obstacle to Armenia's political and economic development. Not only has it
caused widespread public cynicism toward the authorities, it has also
deterred foreign investors. Nevertheless, in its 2003 Corruption Perceptions
Index, Transparency International rated Armenia 78th out of 133 countries,
well above its neighbors in the Caucasus, Georgia, and Azerbaijan and among
the least corrupt of the former Soviet Republics. Armenia's score improved
from 2.5 in 2000 to 3 in 2003, with 0 being the most corrupt and 10 the
least.

It is questionable to what extent government policies can take credit for
the improvement in the score. Tackling corruption has long been one of the
government's stated aims, but despite repeated pledges to address the issue,
the authorities have failed so far to implement effective anticorruption
initiatives. The authorities have come under growing pressure from donors to
tackle the problem. Virtually no senior government officials have been
dismissed or prosecuted on corruption charges.

An Anticorruption Resource Center opened in Yerevan in July 2003, supported
by the Center for Regional Development, an affiliate of Transparency
International. The center aims to raise public awareness of corruption by
organizing anticorruption programs and hopes to establish five regional
branches by 2004. In addition, President Kocharian has appointed a special
adviser with responsibility for combating corruption.

The focus of policy efforts is an anticorruption strategy that the
government has been working on since 2001 with the assistance of a
US$340,000 grant from the World Bank. After many delays, the strategy was
finalized in late 2003. Details of the strategy had not been released to the
public by the end of 2003, but the government announced that the strategy
set out measures to combat corruption in the political sphere, the state
bureaucracy, law enforcement agencies, and the judiciary. There is already
widespread doubt among local observers that the strategy will be effective
or that the government is in fact committed to eradicating corruption. This
is in part due to Armenia's legislative framework, which places few
limitations on the participation of government in economic life and enables
officials at all levels to develop extensive business interests. Moreover,
parliamentary deputies enjoy immunity from prosecution, leading many wealthy
businessmen to stand for election.

Numerous bureaucratic regulations, registration requirements, and other
controls on business have increased the opportunities for official
corruption. The perception exists that it is impossible to legally run a
successful business. Often, the payment of bribes and the use of personal
connections are the only way to circumvent excessive regulations.
Establishing a legal entity requires registration with several state
authorities, creating opportunities for corruption at every stage of the
process as well as being time-consuming and costly.

Corruption among the tax authorities has proved a particular impediment to
the development of small businesses, which frequently come under pressure to
pay tax on their profits and revenue in advance, despite the fact that this
is prohibited by law. The situation is exacerbated by the absence of an
independent judiciary. As a result, businesses with political connections
have an advantage over those without, while judges are reported to be
susceptible to bribery in exchange for a favorable ruling in disputes.

Armenia's financial disclosure laws are insufficient to combat corruption.
The 2001 Law on Financial Disclosure requires some 3,000 senior government
officials, including the president and government ministers, to annually
declare revenue and property belonging to themselves and their families. The
law came into effect in 2002, but many observers dismissed the income
declarations made by officials as unrepresentative and far too low. As in
other areas of Armenian legislation, although the legislative framework is
in place, enforcing the law is difficult. The law neither requires the tax
authorities to verify the financial statements nor provides for strict
punishment for providing false information. Gaps in the legislation enable
officials to register property in the name of relatives, thereby providing
another means of tax evasion.

Corruption is also pervasive within the civil service, where the focus on
inspections and audits as the main tools of enforcement of legislation has
increased the opportunity for bribe taking. Since mid-2003, the government
has begun to raise salaries among the civil service to reduce the incentive
for bribery. In particular, those in the state taxation service and the
customs department now earn at least 70,000 dram (US$120), compared with
previous monthly salaries of about 22,000 dram. Nevertheless, average wages
are still insufficient to attract and retain high-caliber staff and to deter
them from seeking bribes. Bribery is also commonplace when dealing with the
traffic police, universities, and other areas where official salaries are
low. Securing a place at state-run universities often requires paying a
bribe to the relevant officials.

The lack of independent media organizations has prevented unbiased press
coverage of official corruption, although the extent of official corruption
is a constant theme of the opposition parties and was also a key element of
ARF's 2003 parliamentary election campaign. However, as long as most of the
print media are sponsored by wealthy business individuals, they have little
incentive to draw attention to the scale of corruption in a system in which
they play a part. The risks of criticizing the government are high: A1+'s
failure to win a new license is attributed to the investigative nature of
its reporting, contend observers.

The public's attitude toward official corruption is damning. A survey
carried out by IFES in late 2002 revealed that 68 percent of Armenians
considered corruption to be a serious problem, while an additional 20
percent believed it to be very serious. The prevalence of official
corruption and the government's poor record in addressing it has led to
widespread public cynicism and an acceptance that corruption is too deeply
entrenched to be eradicated: 84 percent of those questioned in the survey
believed that Armenians accept corruption as a way of life. These findings
corroborate those of a previous survey conducted in April-May 2002 by an
affiliate of Transparency International, the Yerevan-based Center for
Regional Development. Of 1,000 people questioned in the survey, two-thirds
believed that the scale of corruption had increased over the previous five
years, while less than one-third believed that the authorities were
committed to addressing the problem. Government officials also acknowledged
the scale of the problem. Most of the 200 officials surveyed admitted that
corruption had not lessened in recent years.

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The full Nations in Transit report is available online at:
www.freedomhouse.org/research/nattransit.htm

From: Emil Lazarian | Ararat NewsPress