Nations in Transit - Armenia (2006)

Capital: Yerevan
Population: 3,000,000
Status: Partly Free
PPP: $950
Private Sector as % of GNI: na
Life Expectancy: 71
Religious Groups: Armenian Apostolic (94 percent), other Christian (4 percent), Yezidi (2 percent)
Ethnic Groups: Armenian (93 percent), Azeri (1 percent), Russian (2 percent), Kurd and others (4 percent)

Executive Summary

Armenia's democratic development has proceeded unevenly in the 14 years since independence. Although Armenia was one of the first Soviet republics to end Communist rule, the absence of an effective system of checks and balances, the concentration of power in the presidency, the centralized system of government, and the lack of an independent civil service have fostered weak governance and widespread corruption. This has been exacerbated by the close links between the country's political and business elites, which have impeded the development of a more transparent political system. Elections have generally failed to meet international standards, contributing to public cynicism toward the authorities and skepticism about the value of participating in political and civic activities. The unresolved conflict with Azerbaijan over the disputed territory of Nagorno-Karabakh remains a potential source of instability in the region and has deterred foreign investors and hampered trade diversification. However, the country's progress in macroeconomic stabilization has been relatively successful. Successive governments have generally adhered to the economic reform measures prescribed by international financial institutions, ensuring continuity in macroeconomic policies and a steady improvement in economic and financial indicators. Nevertheless, though poverty rates are declining, the popular perception is that most Armenians have yet to benefit from these macroeconomic successes. This has contributed to disillusionment in Armenia's political and economic transition.

Tension between the government and the opposition remained a defining feature of Armenia's political scene in 2005, when the opposition continued to question the legitimacy of the current authorities, elected in flawed elections in 2003. Debate over amendments to the Constitution, aimed at balancing the distribution of power more evenly, dominated political discussion throughout the year. The amendments were approved in a nationwide referendum in November 2005, although local observers and the opposition questioned official data reporting high turnout. The prosecution of officials for corruption remained rare. Fewer assaults on journalists were reported, but independent media were dissatisfied that constitutional changes relating to the composition of the industry's regulatory body were insufficient to ensure the body's independence from the executive.

National Democratic Governance. Weak governance and ongoing disputes between the authorities and the opposition continued to test Armenia's political stability in 2005. A long-awaited constitutional referendum was held in November 2005, with the aim of ensuring a more even distribution of the balance of power between the president, Parliament, and judiciary. Official results showed that turnout was sufficient to render the vote valid and that a majority of participants had approved the proposed amendments, which the Council of Europe had assessed as generally favorable. However, the opposition parties had urged their supporters to boycott the referendum and consequently asserted that the official turnout figures were grossly inflated – a stance backed by local observers. Armenia's rating for national democratic governance remains at 5.00. Although the changes to the Constitution endorsed by a nationwide referendum will usher in a more even distribution of powers, the conduct of the referendum, in particular doubts over the official turnout figures, prevents an improvement in the rating.

Electoral Process. The failure of authorities to ensure democratic elections has contributed to a lack of public confidence in the electoral process and Armenia's progress toward a functioning democracy. The Parliament approved revisions to the electoral code in May 2005, with the aim of addressing some of the flaws that have characterized Armenia's elections. These include a reduction in the number of presidential appointees on election commissions and an increase in the number of parliamentary seats allocated by proportional representation at the expense of those contested under the single-mandate system, with a view to reducing opportunities for vote buying. A new national voters register has also been compiled. Armenia's rating for electoral process remains unchanged at 5.75. Although the revised electoral code improves the legal framework for elections, its success will depend on its implementation, particularly with regard to the authorities' commitment to identify and take measures against those guilty of electoral violations.

Civil Society. Civil society groups are becoming more active in public life but remain hampered by financial constraints and a reliance on external funding, mainly from diasporic groups. Under discussion in 2005 was a new Law on Lobbying, which aims to regulate lobbying of state institutions by organizations and private individuals; unofficial lobbying practices have in the past tended to benefit those with privileged access to state institutions. A change to the structure of university governing boards, half of whose members are now appointed by the government, and pressure on teachers to promote the government's constitutional amendments raised concerns about growing political influence in the education system. Armenia's rating for civil society remains at 3.50 owing to evidence of increased politicization of the education system, which offsets the positive steps toward regulating lobbying activities.

Independent Media. Coverage of the constitutional referendum campaign in late 2005 confirmed the bias by the broadcast media (Armenia's most influential news source) in favor of the authorities that has characterized earlier election campaigns. Newspapers continued to offer more diverse opinions, but total circulation remains low, at just 60,000 in 2005. A1+, Armenia's main independent television station until it lost its broadcasting license in 2002, has been ordered to leave its state-owned premises in Yerevan in what it believes is a further attempt by the authorities to curtail its activities. Fewer attacks on journalists were reported in 2005, but self-censorship from fear of prosecution remains widespread. Local media associations pressed unsuccessfully for the revised Constitution to exclude the president entirely from the process of appointing the industry's regulatory body. Armenia's rating for independent media remains at 5.50 owing to the absence of reform efforts.

Local Democratic Governance. Although the Constitution and national legislation provide a framework for local self-government, there has been little real decentralization of authority. The autonomy of local governments is limited by their weak financial resources, and they remain reliant on the national budget for much of their funding. A local nongovernmental organization (NGO), Choice Is Yours, gave the conduct of the local elections in September-October 2005 a negative assessment, reporting that candidates had been hindered in their campaign, that the voter lists remained inaccurate, and that the campaign was marred by bribery. Council of Europe observers, by contrast, judged that the elections were an improvement on previous years. A survey carried out by a local think tank in September 2005 found that 60 percent of the 1,000 respondents questioned were unfamiliar with the activities of their local self-governing bodies. With the passage of the constitutional amendments, responsibility for choosing the mayor of Yerevan passes from the president to an as yet unformed municipal council. Armenia's rating for local democratic governance remains unchanged at 5.50. The positive assessment by international observers of the 2005 local elections and a provision for an indirectly elected mayor of Yerevan notwithstanding, the accountability and effectiveness of local government bodies remains weak.

Judicial Framework and Independence. Despite constitutional provisions guaranteeing a full range of basic human rights, in practice there remain substantial barriers to effective protection of said rights. The judiciary enjoys little independence and has been unable to fulfill its role as a guarantor of law and justice. The constitutional amendments go some way toward increasing the impartiality of the judiciary, as the right to appoint the Council of Justice (which oversees the judicial system) passes from the president to the General Assembly of Judges. Similarly, the Office of the Human Rights Ombudsman becomes a parliamentary rather than a presidential appointment. However, the executive has reduced the legal powers of the ombudsman to request documents from the courts. Armenia's rating for judicial framework and independence improves to 5.00. The lessening of presidential influence over judicial appointments has, on balance, outweighed the negative implications of the attempts by the executive to reduce the ombudsman's authority.

Corruption. Corruption remains a substantial obstacle to Armenia's political and economic development. The close links between the political and economic elite and the lack of effective law enforcement procedures have fostered official corruption. Government efforts to address the issue are focused on an anticorruption strategy adopted in late 2003. However, although the number of corruption crimes solved by law enforcement structures increased in 2005, prosecutions remained rare. Doubts remain whether the authorities have sufficient political will to make genuine inroads into reducing corruption. Armenia's rating for corruption remains unchanged at 5.75.

Outlook for 2006. Tension between the government and the opposition will remain high in 2006, particularly toward the end of the year as the next general election, due in mid-2007, approaches. Vested interests in the political hierarchy are likely to prevent substantive improvements in governance, but ongoing reforms should result in an increase in tax revenue. This will enable increased spending in sectors such as health care and education, which will go some way toward ensuring that the benefits of Armenia's strong economic growth of recent years are spread more widely – essential if public belief in the country's progress toward democracy is to be restored.

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 regular, free, and fair elections. Since independence, however, the authorities have failed to ensure free and fair elections, as vested interests within the political and business elites have sought to preserve their privileges. This has contributed to a lack of public confidence in the electoral process and Armenia's progress toward a functioning democracy.

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. Of the more than 110 parties registered at the time of the May 2003 parliamentary election, only 6 exceeded the 5 percent vote threshold required to win parliamentary representation. The number of registered parties has dropped sharply since the introduction in July 2002 of new registration requirements that stipulate political parties must have at least 200 members and maintain branches in at least one-third of Armenia's regions. According to the Ministry of Justice, there were 49 parties in December 2003.

The Republican Party of Armenia (RPA) is the dominant party at both national and local levels. Headed by Prime Minister Andranik Markarian, the RPA is the leading party in the coalition government, controlling several ministries and the majority of subministerial posts. Under a power-sharing agreement concluded after the May 2003 parliamentary election, the nationalist Armenian Revolutionary Federation and the center-right Country of Law Party make up the other two parties in the coalition. Each of these has two cabinet-level positions and several subministerial posts. The Ministries of Defense, the Interior, and National Security are headed by presidential loyalists. Together with leading businesspeople, often termed oligarchs, these parties and ministers form the so-called power class.

As in other former Soviet republics, political and economic circles are closely linked in Armenia. This stems partly from inadequate party funding legislation, which leaves parties heavily reliant on private financial sources and therefore susceptible to donor influence. The immunity from prosecution enjoyed by parliamentary deputies has also encouraged business monopolists to seek election.

Direct presidential elections are held every five years; elections to the 131-member Parliament are currently held every four years, but the legislature will move to a five-year term on the expiry of its current mandate in 2007. The most recent presidential election was won by the incumbent, Kocharian, who beat Stepan Demirchian in a second-round runoff on March 5,2003, winning 67.5 percent of the vote, according to the Central Election Commission. A total of nine opposition parties formed the Justice Alliance bloc, headed by Demirchian, to contest the parliamentary election held on May 25,2003. However, the RPA and other pro-presidential parties retained their majority in the Parliament, with the Justice Alliance and the opposition National Unity Party of Artashes Geghamian (who secured third place in the first round of the presidential election) winning just 24 seats.

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, although international monitors judged the flaws insufficient to negate the results. Turnout for the 2003 parliamentary election was 52.2 percent, according to the Central Election Commission, down from 68.4 percent in the second round of the presidential election, indicating declining public confidence in the electoral process.

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. Seven women won seats in the new Parliament, up from four in the outgoing assembly. 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 the Parliament.

With the aim of addressing some of the flaws in the electoral process, revisions to Armenia's electoral code were enacted in May 2005. The Council of Europe's Venice Commission gave these revisions a generally positive assessment. Under the revised code, the number of parliamentary deputies elected by proportional representation on the basis of party lists rises from 75 to 90, while 41 deputies will be elected from single-mandate constituencies, down from 56. This could help reduce electoral fraud by lessening the potential for bribery.

Other changes include increased rights for candidate proxies and stricter rules for the summarization and publication of voting results – delays in publicizing results in previous elections increased the scope for fraud. Areas of concern remain, including insufficient safeguards for the filing of election complaints and appeals, although in a positive move, in September 2005 a Yerevan court upheld an appeal by an independent candidate against the decision by a local election commission to annul his election result. This suggests that the appeals procedure is improving. Nevertheless, government critics remain skeptical that the new code will improve the electoral process, arguing that in the past the shortcomings in Armenia's electoral process stemmed from the implementation of the electoral framework rather than the framework itself.

The revised electoral code also alters the composition of election commissions, aimed at reducing presidential influence over the electoral process. The number of presidential appointees on the central commission and each of the 56 territorial election commissions has been reduced from three to one: Each party faction in the Parliament will nominate a commission member, and two members of the judiciary will now be included. The judicial members will not be permitted to preside over any case involving electoral irregularities. Given the dependence of the judiciary on the executive, however, concerns remain over the impartiality of the new commissions.

The revised code aims to address flaws in the voter registration procedure. This is now the responsibility of the police rather than local governments. New passports have been issued, replacing Soviet-era identity documents, and the data have been used to compile a national voters register. Observers of the September-October 2005 local elections noted that old identity papers were still being used in some constituencies, but the authorities asserted that the new register marked an improvement over the old system.

Civil Society (Score: 3.50)

The number of civil society groups in Armenia grew rapidly following the breakup of the Soviet Union. However, their effectiveness was hampered by deteriorating socioeconomic conditions due to the war with Azerbaijan over Nagorno-Karabakh and the collapse of the country's economic base. The result is that public participation in civil society activities has not been as high as the number of groups would suggest, although improving macroeconomic conditions in recent years have enabled public involvement to increase.

As of September 2005,4, 350 NGOs were registered with the Ministry of Justice, of which over 1,000 were registered during the previous year. Over the past decade, the focus of NGO activities has moved from humanitarian assistance to democracy building and broader development programs in sectors such as education, public policy, and health care, as well as ethnic minorities and the disabled. 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, and domestic groups such as Choice Is Yours actively monitor the country's elections.

NGOs are well established throughout Armenia, with some participating in regionwide networks across the South Caucasus and Commonwealth of Independent States. Most civil society groups remain dependent on international funding, as the income level of most Armenians is insufficient to permit charitable donations. According to a survey of 347 NGOs and 61 experts carried out in 2004 by the U.S. organization World Learning, 87 percent of the NGOs surveyed relied entirely on foreign donors. Domestic charities, such as the Hayastan All-Armenian Fund, and the U.S.-based Lincy Foundation successfully raise funds from the Armenian diaspora. The dependence of most NGOs on foreign donations has led to concerns that this practice weakens the civic sector's incentive to establish strong links with Armenian society. Nevertheless, the financial viability of NGOs is strengthening, owing partly to legislative improvements and more effective preparation of requests for funding by NGOs.

Media coverage of civil society activity is generally positive, although it tends to be limited to isolated initiatives and is often dependent on personal contacts. Popular perception of NGOs is similarly favorable, although public knowledge of most NGO activities is still limited: 45.8 percent of adults questioned in the 2003 Citizens' Awareness and Participation in Armenia survey could not name a single NGO. Nonetheless, NGOs reported a growing level of public participation in private voluntary activity. Religious organizations attract the largest number of participants, reflecting 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.

The state protects the rights of the independent civic sector, and civil society groups are generally able to carry out their work without interference either from the government or from extremist organizations. The Law on Charity (October 2002) and the Law on Foundations (December 2002) 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, although implementation of the legislation is at times patchy. The Ministry of Justice's registration process for NGOs is relatively straightforward.

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. The Law on Public Organizations (different from the Law on Foundations mentioned above) prohibits direct income generation, and public organizations are not permitted to participate in government tenders. This has serious implications for the financial sustainability of nonprofit organizations. The establishment of limited liability companies is one way in which NGOs are able to generate income, but these are subject to taxation in the same way as businesses. Armenia's tax legislation does not contain provisions for charitable donations, which inhibits private sector philanthropy.

Officials rarely canvass public opinion in meetings or through surveys, but government engagement with civil society and policy research groups has increased in recent years. This is partly attributable to an improvement in the organizational capacity and advocacy skills of civil society groups, which have benefited from expanded training programs. NGOs are increasingly lobbying the government, with some success. In 2005, environmentalists succeeded in persuading the government to reroute part of a new road linking Armenia with Iran to protect a nature reserve. Debate was under way in 2005 on a draft Law on Lobbying that would regulate lobbying of state institutions by organizations and private individuals. Unofficial lobbying practices have hitherto tended to benefit those with privileged access to state institutions. NGO members are also participating increasingly in the drafting and monitoring of government initiatives (for instance, the Poverty Reduction Strategy Paper), and the establishment of a Civil Society Monitoring Board in 2004 has opened up the prison service to public scrutiny.

Several private policy think tanks are active in Armenia, but their influence on government policy is limited. They include the International Center for Human Development, which focuses on projects such as poverty reduction, regional integration, and good governance; and the Armenian Center for National and International Studies and the Armenia International Policy Research Group, which concentrate on foreign and domestic public policy issues.

Armenia's Constitution guarantees the right to establish and join trade unions, although this right can be restricted for those serving in the armed forces and law enforcement agencies. 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 – this combined with the high rate of unemployment has meant that 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.

The low level of budget revenue has weakened the education system. Access to education in rural areas remains poor, and students report that bribery is frequently needed to secure a university place and to obtain good marks. In November 2005, students protested against structural reforms to university governing boards, half of whose members will now be appointed by the government, in effect strengthening government control over universities. Moreover, in the run-up to the November 2005 constitutional referendum, the government urged teachers to promote the proposed amendments among their students and staff, which raises concerns about the politicization of the education system.

Independent Media (Score: 5.50)

Armenia's press freedoms are guaranteed in Article 27 of the Constitution. However, in practice, press freedom has come under threat in recent years, prompting Freedom House to downgrade Armenia's press rating in its annual survey of press freedom from "Partly Free" in 2002 to "Not Free" in 2003. This rating was unchanged in 2004, a year in which several assaults on journalists highlighted the dangerous working conditions faced by the independent media, and in 2005. In that year, independent journalists continued to come under attack, although there were fewer incidents than in earlier years. For example, in April 2005 a car belonging to the editor of a regional newspaper was vandalized, an incident he attributed to the paper's critical coverage of local government issues.

Armenia's libel laws have created a difficult legal environment for investigative journalists and have contributed to widespread self-censorship, particularly where corruption or national security is concerned. Libel is classified as a criminal offense punishable by a fine, while insulting a government official in the mass media is also deemed a criminal offense. This seems to contradict the provisions of the Council of Europe's February 2004 Declaration on Freedom of Political Debate in the Media – to which Armenia is a signatory – which recognizes the media's right to "disseminate negative information and critical opinions concerning political figures and public officials."

Other media-related legislation is more favorable. This includes the Law on Freedom of Information, which was passed in 2003, and an amendment to the Code of Administrative Offenses that states that government officials who obstruct the gathering of news can be fined. Since December 2003, when the Law on Mass Media was approved, media outlets have no longer been required to register with the Ministry of Justice. The law also rescinded the need for journalists to disclose their sources of information and funding, except in cases where judges are hearing related criminal offenses.

According to the Yerevan Press Club, as of November 2005 there were just over 60 private television stations in Armenia, of which 28 were based in Yerevan. As well as the state-owned public radio broadcaster, there were about 12 private 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, while international news channels such as CNN are also available.

The state-run Armenian Public Television is the country's most influential media outlet. Its output is clearly biased in favor of the authorities. In the run-up to the November 2005 constitutional referendum, the majority of coverage in the broadcast media, including on public television, promoted the authorities' "yes" campaign, with the opposition largely unable to gain media access. The output of Armenia TV, one of the leading private stations, is also perceived as biased toward the authorities because it provided more coverage for Kocharian than other candidates during the election and has a non-critical news coverage tendency not to antagonize the ruling authorities. Shant, another leading private station, is perceived as being more objective in some circumstances. However, a new private television channel, Yerkir Media, established in 2004, often provides critical coverage of government policy in its news reports.

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 many subsequent tenders. The National Commission on Television and Radio (NCTR), whose members are currently appointed by Kocharian and hence have faced criticism from international observers at their lack of impartiality, cited 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 investigative nature of its reporting. Although the company has continued to make programs for regional television and operates an online news service, it has been unable to resume broadcasting. In early 2005, it failed to win a license for a radio frequency and in July was ordered to leave its premises (which are state-owned) in central Yerevan and to move to smaller offices.

In 2005, local press associations lobbied unsuccessfully for constitutional amendments to change the way the NCTR is appointed. The final version, as endorsed by the Council of Europe and approved in a referendum in November, envisages that the Parliament and the president will each appoint half of the members, once the term of the current members expires. Local media associations had wanted to exclude the president entirely from the appointment process, effective immediately.

Armenia's 70 or so newspapers (data from the Yerevan Press Club) offer more diverse opinions than the broadcast media. Total circulation is extremely low, however, at about 60,000 in 2005, although this was up by about 20,000 compared with 2003. The state-owned national daily is Hayastani Hanrapetutyun, and there are 5 privately owned national dailies. Pro-Kocharian papers include the daily Hayots Ashkhar, the biweekly Golos Armenii, and the weekly Yerkir. Offering a more liberal, pro-Western perspective are Aravot and Haykakan Zhamanak.

Most broadcast and print media organizations in Armenia are privately owned and funded. Although the country's newspapers offer a plurality of views, including in their coverage of the 2005 referendum campaign, their low circulation presents them with serious financial constraints. They are dependent on private sponsors, often with significant vested political or economic interests, and this affects their objectivity. 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 (and hence able to influence circulation).

Access to the Internet is not formally restricted, but high connection costs render it unaffordable for most households; about 5 percent of the population had access to the Internet in September 2005, according to the company World Internet Stats. There are about 30 Internet service providers (ISPs) in Armenia, although only about one-third are actually functioning. Development of and access to Internet services have been hampered by a lack of competition in the sector. Compared with print and broadcast media, however, a greater diversity of opinions is available on the Internet, with companies such as A1+ able to use this medium. Although as of mid-2005 competing providers have offered mobile telephone services, all ISPs are still reliant on a monopoly provider, Armentel, for connection to outside services. The government does not attempt to control the Internet directly, although the fact that there is still only one company providing connection to outside services is an impediment to both Internet users and other service providers.

Judicial Framework and Independence (Score: 5.00)

Chapter 2 of Armenia's Constitution provides for fundamental political, civil, and human rights, but there are substantial barriers to protecting them effectively. These stem largely from the weak judiciary, which enjoys little independence and inadequate funding. This has led to low public confidence in the capacity of the judicial system to protect the population from unjust treatment by the state. Nevertheless, the passage of constitutional amendments in November 2005 goes some way toward enhancing the independence of the judiciary.

Under the revised document, responsibility for appointing the Council of Justice, which has a supervisory and disciplinary role within the judiciary, passes to the General Assembly of Judges. The president and the Parliament will each appoint two legal scholars to the Council of Justice; previously, the president appointed the entire council. Critics of the changes have argued that even though the president has lost the right to appoint the Council of Justice, he retains some control over judicial appointments. Another important reform is that access to the Constitutional Court (which interprets and enforces basic law and ensures the constitutionality of legislation) has been broadened to enable ordinary citizens to appeal. Access to the Constitutional Court had previously been restricted to the president, one-third of members of Parliament, election candidates, and, in limited cases, the government.

Reform of the legal and judicial system is being carried out with assistance from, among others, the American Bar Association and the World Bank. A Chamber of Advocates was inaugurated in January 2005 as part of measures to improve judicial independence, although the election of its chair was marred by allegations of fraud. However, the continued bias in the legal system toward prosecutors has hampered the chamber's ability to protect the independence of the judiciary. Some World Bank funding has been used to renovate court infrastructure, with a view to increasing the efficiency of judicial services.

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, and a court decision is required to turn detention into an arrest. Prosecutors' requests for arrests are rarely refused. However, in April 2005 the Office of the Prosecutor General experienced a rare setback when the Court of Appeals overturned its decision not to prosecute a businessman accused of fraud.

About 20 percent of some 1,450 human rights violations reported to the Office of the Human Rights Ombudsman in the first half of 2005 related to the courts, police, and prosecutors' offices, in particular to court bias in favor of the prosecution. A lack of training for judges in commercial issues has left many investors disillusioned with the court system as a viable legal recourse. However, a positive trend is apparent in the Economics Court, which reported that of 274 lawsuits lodged by businesses against the tax authorities in 2004,178 were successful. The State Tax Service nevertheless prevailed when bringing tax evasion cases to court, winning about 650 out of 800 such cases in 2004.

In 2005, witnesses continued to have no right to legal counsel while being questioned in police custody. The 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 in part to a shortage of qualified judges. A Civil Society Monitoring Board was established in 2004 to increase civil supervision over the prison service. In June 2005, the board reported that conditions in prisons remain overcrowded and unsanitary, problems attributable in part to a shortage of funding, according to the Ministry of Justice, which assumed control of the prison service from the police in 2002.

The police system is reported to use force and psychological pressure to secure confessions. According to the annual report of the human rights ombudsman, presented in April 2005, citizens had reported the use of torture to extract testimonies that were later used in court. Victims of abuse are often reluctant to press charges for fear of the consequences. Human Rights Watch has also criticized the Code of Administrative Offenses, whose Soviet-era provisions permit courts to detain people without legal counsel for 15 days and to sentence defendants in closed hearings. This was used to arrest up to several hundred opposition demonstrators in 2004, but there were fewer reports of its use in 2005, probably because there were no such large-scale public protests.

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. 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 56 were officially registered as of November 2005. This is generally observed, although some incidents of anti-Semitism were reported in 2005, including the defacing of a Holocaust memorial in January.

Jehovah's Witnesses were finally permitted to register in October 2004, having previously been denied registration because of their opposition to compulsory military service. The July 2004 Law on Alternative Military Service provides for civilian service, but those choosing this option must serve for 42 months – almost twice as long as those carrying out military service. As of June 2005,14 Jehovah's Witnesses remained in prison for refusing to carry out the alternative service on the grounds that it was overseen by the military. The legislation 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 the Constitution, which also states that no one can arbitrarily deprive a citizen of his property. In 2005, the eviction of some residents from central Yerevan to make way for the development of new housing and streets prompted criticism from local lawyers and NGOs that people's property rights were not being respected. Chapter 2 of the Constitution guarantees intellectual property rights. Amendments approved in October 2005 to the Law on Copyright and Associated Rights increase the penalties for infringement of intellectual property rights. Noncitizens are prohibited from owning land, except under special circumstances.

The Constitution enshrines the freedom of assembly, but this has not been fully observed. The Law on Demonstrations, approved in April 2004 shortly after the opposition had staged a series of demonstrations in protest of the 2003 elections, was criticized by the OSCE for leaving no room for spontaneous mass events, thereby in practice restricting freedom of movement. The legislation did remove an earlier requirement that demonstration organizers secure permission, replacing it with a need simply to notify the authorities; however, most large public places in Yerevan were placed off limits to protesters.

The OSCE's criticism of the legislation resulted in some changes to the document in May 2005. These included an amendment limiting the right of law enforcement bodies to disperse a demonstration only if it poses a threat to public and state security, rather than simply for violations of the law, as in the original document. The authorities retain discretionary powers to restrict demonstrations, however.

Larisa Alaverdian, formerly a member of the presidential human rights commission, was appointed Armenia's first ombudsman by the president in February 2004. In 2005, she criticized the government for its decision to evict residents from central Yerevan to make way for new residential developments, on the grounds that this violated their property rights. She also reported in May that people who had lodged complaints against government officials were being harassed by the security services, following the confiscation of a computer from her office. Alaverdian's critical stance was regarded by local observers as one factor behind a government decision to remove the ombudsman's right to request documents from judges. The Parliament enacted amendments to the Law on the Ombudsman to this effect in late 2005.

Under the revised Constitution, the Parliament assumed the right to appoint the ombudsman, as recommended by the Council of Europe. While this in theory is a positive step, the way in which the election was organized – with Alaverdian expected to step down from office in January 2006, one month before the election of her successor – raises questions as to the Parliament's commitment to the independence of the Office of the Human Rights Ombudsman.

A new criminal code, adopted by the Parliament in April 2003, came into effect in August 2003. Most prison sentences were shortened under the new code, which also formally abolished the death penalty, providing instead for life imprisonment. Prisoners receiving the life sentence are entitled to apply for parole after 20 years, compared with the maximum prison sentence under the previous criminal code of 15 years. In 2005, the maximum prison sentence (other than life) was 15 years.

Corruption (Score: 5.75)

Armenia ranks well in international corruption surveys, but corruption at all levels of government continues to impede the country's political and economic development. Not only has this fostered public cynicism toward the authorities, it has impeded the development of a competitive business environment.

Armenia has signed on to several international anticorruption initiatives, including the Council of Europe's Group of States Against Corruption, which it joined in 2004. An evaluation of its progress will be carried out in mid-2006. The focus of the government's anticorruption policy is a strategy adopted in late 2003 that sets out measures to combat corruption in the political sphere, the state bureaucracy, law enforcement agencies, and the judiciary. A Council for Combating Corruption was inaugurated in June 2004, headed by the prime minister and other high-ranking officials; a coordinating committee oversees implementation of the strategy.

Armenia's score in the Transparency International 2005 Corruption Perceptions Index deteriorated to 2.9 from 3.1 in 2004 (with 10 being the least corrupt), although it was still the best scoring of the former Soviet republics. The worsening score adds some justification to the skepticism among local and international observers that the government's anticorruption strategy will be effective. This stems from doubts over the government's political will to tackle corruption and the lack of independence of the strategy's implementation bodies.

The Center for Regional Development (CRD), an affiliate of Transparency International, operates a National Anticorruption Resource Center, with offices in Yerevan and five provinces, that aims to raise public awareness about corruption. The CRD published an assessment of Armenia's anticorruption institutions in October 2004, based on 2003 analyses, and concluded that none of the institutions evaluated is functioning effectively. Factors influencing this finding included the absence of political will, the lack of institutional autonomy, poor law enforcement, and the low level of public participation in policy making.

Public officials encounter few limitations to economic participation. The state's formal involvement in the economy is low in comparison with that of other transition countries: The European Bank for Reconstruction and Development (EBRD) estimates that the public sector contributed 25 percent to GDP in 2005. However, public officials at all levels, including parliamentary deputies, have extensive business interests. This has adversely affected government attempts to reduce economic corruption: In March 2005, the Parliament rejected proposals to increase the prison sentence for tax evasion from two years to a maximum of seven years. The revised Constitution explicitly bans parliamentary deputies and government members from engaging in business interests; however, as of late 2005 it was too early to judge whether this prohibition was being observed.

Armenia's financial disclosure laws are insufficient to combat corruption. The 2001 Law on Declaration of Incomes and Assets requires senior government officials, including the president and government ministers, to annually declare revenue and property belonging to them 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. Although amendments to the law in 2003 broadened the number of officials covered by the declaration requirement, they removed the provision that declarations be published. The law does not require tax authorities to verify the financial statements and imposes only relatively lenient fines for reporting false information. Moreover, gaps in the legislation enable officials to register property in the names of relatives. Few officials have been punished for corrupt practices, and the lack of legal protection for whistle-blowers acts as a strong disincentive to report corruption.

A focus on inspections and audits as the main tools of legislation enforcement has increased the opportunity for bribe taking in the civil service. Despite progressive salary raises since mid-2003, average monthly civil service wages, at 60,000 dram (US$130) in 2005, are still insufficient to attract and retain high-caliber staff or deter them from seeking bribes. Bribery is also commonplace when dealing with traffic police, universities, and other areas where official salaries are low, such as health care.

In 2005, there was an increase in the number of identified corruption crimes, although prosecutions remained rare. Law enforcement structures solved 227 corruption crimes (mainly embezzlement and misuse of government funds) in the first half of 2005, according to the president's anticorruption aide, up from 198 in the same period of 2004. However, just seven people were prosecuted for taking bribes. In February, a former head of the Ministry of Finance oversight department was arrested on fraud charges.

Armenia's business-related legislation is relatively sound. The country performed well in the Heritage Foundation/Wall Street Journal 2005 Index of Economic Freedom, scoring 2.58 (the only member of the Commonwealth of Independent States to be rated "Mostly Free"), which places it 42nd out of 155 countries. However, weak implementation of the legislation has increased the opportunities for official corruption. There is a perception that it is difficult to run a successful business legally or without personal connections to public officials. The situation is exacerbated by the absence of an independent judiciary, and judges are reported to be susceptible to bribery in exchange for a favorable ruling in disputes. Kocharian singled out the State Customs Committee for particular criticism in 2005 for its preferential treatment of some importers in return for kickbacks. Conflicts of interest also exist in the State Tax Service, whose head admitted in 2005 that about 200 employees had business interests.

Nevertheless, some positive steps to reduce corruption have been implemented, including the streamlining of property registration procedures in 2004. In its 2005 Business Environment and Enterprise Performance Survey, the EBRD found that although the share of businesses' annual sales paid in bribes had increased from 0.92 percent in 2002 to 1.17 percent in 2005, the frequency of bribery had decreased from 14.28 percent of respondents in 2002 to 10.1 percent in 2005.

The lack of independent media has precluded unbiased press coverage of official corruption. As long as most print media are sponsored by wealthy business individuals, they have little incentive to draw attention to the scale of corruption in a system where they play a part. Moreover, attempts to expose official corruption carry risks for the media. The effective closure of A1+ as a broadcasting outlet is attributed to the investigative nature of its reporting, contend observers.

Public perceptions of official corruption are highly negative. According to the International Foundation for Election Systems, 71 percent of those questioned in its 2003 survey considered corruption to be a serious problem (up from 68 percent in 2002), although the number believing it to be very serious had fallen from 20 percent to 16 percent. There is a widespread perception that corruption is too deeply entrenched to be eradicated: 81 percent of those questioned in the survey believed that Armenians accept corruption as a way of life. Another survey, conducted in September 2004 by ACNIS, revealed that 62 percent of respondents believed that corruption exists at all levels and that health care institutions, followed by the courts, were the most corrupt structures. Corruption within the political sphere is also widespread: 63 percent of those surveyed were offered a bribe in the 2003 presidential or parliamentary elections, while evidence of vote buying, in the form of promises to upgrade local infrastructure, was reported in the 2005 local elections.

Author

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

Local Governance (Score: 5.50)

Armenia's Constitution and national legislation provide a framework for local self-government, but in practice the authority and activities of the local administrations are circumscribed by the presidency and the central government, which wield extensive control over local issues.

Chapter 7 of the Constitution covers issues relating to territorial local self-government. Armenia has a two-tiered administrative structure. It is divided into 10 regions, which are subdivided into more than 900 communities. The country's 10 regions are administered by governors appointed by the central government, who in turn appoint their own staff. Regional governors are responsible for administering policy in a wide range of fields (including finances, public utilities, and urban development), coordinating the activities of regional agencies of state administration, mediating between the central and local governments, and regulating intercommunity issues. A Ministry of Local Government, created in 2005 following the merger of several government agencies, exercises control over the regional governors.

The mayor of Yerevan, which has the status of a community under the revised Constitution, is currently appointed by the president, but the constitutional amendments approved in November 2005 provide for the election of the mayor by a new municipal council. Opposition parties had pushed for direct election of the mayor by the city's residents; according to a survey carried out by the Armenian Center for National and International Studies (ACNIS), a local think tank, in September 2005,62 percent of respondents would have preferred to elect the mayor directly, with a view to increasing accountability.

Community heads (equivalent to a mayor) and Councils of Elders, made up of 5 to 15 members, are chosen for three-year terms on the basis of universal, equal, and direct suffrage by secret ballot. The community head is accountable to the Council of Elders but can be dismissed by the central government on the recommendation of the regional governor (under the revised Constitution, the Constitutional Court has to approve any such dismissal). The community head also sits on a regional council with the regional governor to coordinate regional policy.

Political parties do not play a major role in local elections, although they are entitled to nominate candidates. More commonly, citizens are nominated as independent candidates through civil initiatives, but they can state their party affiliation on the ballot. The most recent local elections were held in September-October 2005. As in previous years, the opposition largely boycotted the elections, regarding the process as deeply flawed. Although the elections were to a certain extent competitive, in that multiple candidates took part, these tended to be rival pro-government figures vying for influence over local resources. Reports of vote buying and indirect bribery of voters by candidates – for example, promises of repairs to local infrastructure – remained a defining feature of the 2005 local elections.

Assessments of the elections varied. A local election-monitoring group, Choice Is Yours, reported that candidates had been hindered during the campaign and that voter lists remained inaccurate. A small observation mission sent by the Council of Europe judged that the electoral process and voter lists had improved compared with previous elections and stated, "The local elections were generally in keeping with the Council of Europe's electoral standards. The electoral process was generally satisfactory."

Local governments are regulated by the 2002 Law on Local Self-Government. Their autonomy is limited by their weak financial resources. The Council of Elders (which acts as the representative body for communities) is responsible for approving community budgets and supervising their implementation. However, the central government has authority over budgetary loans, credits, and guarantees and establishes procedures for the collection and distribution of local taxes.

Land and property taxes are the only form of community tax revenue, but even these must be collected by regional branches of the state treasury. Communities also receive revenue from state duties. They are therefore heavily dependent on financial transfers from the state budget, but disbursement delays are common, limiting the capacity of local governments to meet their spending requirements or ensure the timely payment of staff salaries. Moreover, the distribution of financial resources from central to local government is uneven and poorly targeted.

The autonomy of local governments is further circumscribed by the powers of regional governors, who often use administrative resources as a means to influence local authorities. In theory, local authorities have the courts to protect their powers and defend the rights of the local community, but because of the judiciary's dependence on the executive, its impartiality in such cases is questionable. Local governments have the right to form associations to protect and promote their interests. As of 2005, there were three main local government associations: the Community Union of Armenia, the Union of Yerevan Elders, and the Community Finance Officers Association. International organizations are working with local government associations to strengthen the capacity of local government (for example, through more effective budget mechanisms and increased decentralization).

Citizens are entitled to submit draft resolutions to local governments, and most meetings of the Council of Elders are open to the media and the public. The public is entitled to full access to information concerning the activities and decisions of regional and local governments, but a lack of funds restricts the capacity of these governments to publicize the information.

In practice, citizen participation in local government decision making is low, owing in part to the limited authority of local administrations. This has contributed to a correspondingly low awareness of the activities of local bodies. According to a survey of 1,000 citizens, carried out nationwide (excluding Yerevan) by ACNIS in September 2005,60 percent of respondents were unfamiliar with the activities of their local self-governing bodies, while 44.8 percent believed that their local council played no role. Just 22.8 percent expressed satisfaction with their community leaders' work, while 63.5 percent said that they would like to elect their regional governor and 36.7 percent expressed the opinion that this would make the governor more accountable to the people.

National Governance (Score: 5.00)

The Constitution enshrines the principle that Armenia "is a sovereign, democratic state, based on social justice and the rule of law" and provides for the separation of powers. However, it has so far failed to ensure an effective system of checks and balances among the branches of government, owing to the extensive powers vested in the presidency.

Following pressure from the Council of Europe, a nationwide referendum on constitutional amendments to rectify the imbalance of power was held in November 2005. (An earlier referendum, held in May 2003, was deemed invalid owing to insufficient turnout.) In July 2005, the Council of Europe's Venice Commission gave the draft amendments a generally favorable assessment, regarding them as a positive step toward Armenia's integration into European structures. Most notably, they include the removal of the president's right to dismiss the prime minister virtually at will; the election of the mayor of the capital, Yerevan, by an elected council rather than the president; and the election of the Council of Justice by members of the judiciary (rather than its appointment by the president).

Official turnout in the 2005 referendum was 64 percent, according to the Central Election Commission, with just over 93 percent of voters approving the amendments. The official referendum results have exacerbated the tension between the opposition and the authorities that has tested Armenia's political stability over the past two years. This stems from the flawed parliamentary and presidential elections in 2003 – whose results the opposition have continued to dispute – and the subsequent constitutional debate. Since the 2003 elections, the opposition has kept up a parliamentary boycott and has also attempted to force the authorities to hold a vote of confidence in the president, staging a series of street demonstrations in 2004. Rejecting the government's draft constitutional changes as insufficiently far-reaching, the opposition parties urged their supporters to boycott the referendum, leading the opposition – along with local referendum observers and the few international observers monitoring the process – to question the apparently high official turnout. Some members of the government also expressed concern at the official turnout figures. Artur Baghdasarian, leader of the Country of Law Party and parliamentary chairman, reported examples of ballot box stuffing and other fraudulent practices to the prosecutor general. However, the prosecutor's office took no action, citing the absence of specific evidence. Another issue of concern surrounding the conduct of the referendum was the bias of the broadcast media in favor of the authorities in the run-up to the ballot.

Legislative authority is vested in the Parliament, which 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 actuality, however, the Parliament has little power to hold the executive to account and enjoys substantially less authority than the presidency, even after the constitutional referendum. The government has substantial influence over the Parliament's legislative agenda, which is a major constraint on its lawmaking capacity, and most government-sponsored initiatives tend to be approved. Although the process of drafting and amending laws is comparatively straightforward, implementation and enforcement are weak.

The effectiveness of both the government and Parliament is impeded by their weak financial resources. Armenia has a poor tax collection record, owing in part to the scale of the shadow economy (estimates range from 33 percent to 53 percent of the official gross domestic product [GDP] in 2004, depending on the methodology used). Central government tax revenue was equivalent to just 13.2 percent of GDP in 2004, according to data from the National Statistical Service, but is estimated to have risen to 13.7 percent in 2005, thanks in part to the implementation of measures to reduce tax evasion.

A parliamentary Oversight Chamber audits government budget performance, assesses its compliance with budget targets, and evaluates its borrowing and privatization policies. The chamber submits annual reports to the Parliament and has frequently criticized the executive's handling of public finances. However, its role as a watchdog over the government is limited owing to the legislature's weakness relative to the executive branch. In addition, the existence of other audit and investigative bodies within ministries creates a duplication of functions and the absence of clearly separated roles, further reducing the effectiveness of the chamber as an oversight body.

Citizen participation in decision making is limited, although civil society groups are becoming increasingly involved in political processes (for example, in the monitoring of elections). The Parliament has a Web site, debates are usually open to the public and are widely reported in the media, draft legislation is generally made available to the public, and all legislation approved by the Parliament is published in an official bulletin. In December 2005, the Ministry of Justice launched a new Web site containing a database of legislation, government decisions, and Constitutional Court rulings.

The Law on Freedom of Information, adopted in September 2003, aims to improve public access by obliging government bodies and public service providers to release within 30 days official information relating to their activities. 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, imperfect enforcement of the legislation has hampered its effectiveness.

Reform of the civil service and public administration is under way. The civil service is a professional body, in theory independent of the executive and legislative branches of power, and is not subject to change after general elections. A seven-member Civil Service Council is charged with selecting staff for government agencies on a competitive basis and monitoring the performance of government officials. Critics of the council argue that because it is appointed by the president, it lacks independence and is vulnerable to political influence. Moreover, although adoption of the Law on Civil Service in 2001 was a first step toward improving the quality of state institutions, enforcement of the legislation has been problematic. Issues such as low wages have prevented the civil service from attracting and retaining skilled staff, although periodic wage increases are addressing this concern.

The National Police and National Security Service are responsible for Armenia's domestic security, intelligence activities, border control, and police force. Several parliamentary committees are responsible for defense and security policy, but the legislature's weakness relative to the presidency and government results in its having little control over the country's military and security services. The president is the supreme commander of the armed forces and is entitled to deploy the army without seeking parliamentary approval. The defense minister, the head of the police, and the head of the National Security Service are all presidential appointees. Armenia's security and military doctrines are classified documents and therefore unavailable for public scrutiny. Nevertheless, issues such as corruption in the police force and poor conditions in the armed forces, including mistreatment of conscripts, are frequently covered in the media. A two-year reform of the armed services is due to start in 2007, with the assistance of NATO, as part of which a new national security strategy will be devised.

The ongoing territorial dispute with Azerbaijan over Nagorno-Karabakh remained a potential source of instability in 2005, although peace negotiations continued at both presidential and foreign ministerial levels. The unresolved conflict has had wide-ranging economic repercussions on the region as a whole, and for Armenia specifically it has proved a deterrent to foreign investors. In addition, the dispute has led to substantial expenditures for defense (the military is set to receive the largest share of budgetary spending in 2006, at 15 percent) to the detriment of other sectors such as health care and education.

One legacy of the 1988-1994 war with Azerbaijan over the area of Nagorno-Karabakh has been that the armed forces and security services have played a large role in the country's political development. Military leaders, through the Yerkrapah parliamentary faction of Nagorno-Karabakh veterans, were instrumental in forcing the resignation of President Levon Ter-Petrossian in 1998, having rejected his apparent willingness to negotiate a stage-by-stage resolution of the conflict with Azerbaijan. The influence of military leaders has lessened since then, and in 2005 Yerkrapah lost members to a new organization, Test of Spirit, whose founders were dissatisfied at Yerkrapah's support of Robert Kocharian's administration.