Nations in Transit - Armenia (2004)

Capital: Yerevan
Population: 3,200,000
Status: Partly Free
PPP: $790
Private Sector as % of GNI: na
Life Expectancy: 72
Religious Groups: Armenian Apostolic (94 percent), other Christian (4 percent), Yezidi (2 percent)
Ethnic Groups: Armenian (93 percent), Azeri (3 percent), Russian (2 percent), others [including Kurd](2 percent)

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.

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.

Electoral Process (Score: 5.75)

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

a) February 19. b) March 5.

Source: Central Election Commission of the Republic of Armenia

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

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 eight 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.

Civil Society (Score: 3.50)

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.

Independent Media (Score: 5.25)

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 4-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 cafes. 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.

Governance (Score: 4.75)

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.

Constitutional, Legislative, and Judicial Framework (Score: 5.00)

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.

Corruption (Score: 5.75)

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.

Author

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