ARMENIA IN 2010 A YEAR OF UNCERTAINTY A Report by The Civilitas Foundation Yerevan, Armenia THE CIVILITAS FOUNDATION ARMENIA IN 2010 ARMENIA IN 2010. A YEAR OF UNCERTAINTY Copyright 2010 by the Civilitas Foundation All Rights Reserved Printed in Armenia The Civilitas Foundation One Northern Avenue, Suite 30 Yerevan, Armenia [email protected] UDC 323 (479.25): 338 (479.25) Armenia in 2010. A Year of Uncertainty / The Civilitas Foundation Yerevan, Civilitas Foundation, 2010 52 p., 21 x 29.7cm ISBN 978-99941-2-503-6 1. Armenia - History - 1991. 2. Armenia - Yearbooks. 3. Armenia - Economics. This publication has been made possible by support from the Ministry of Foreign Affairs of the Kingdom of Norway. The views expressed herein are those of the Civilitas Foundation and do not necessarily reflect the views of the Norwegian Ministry of Foreign Affairs. ARMENIA IN 2010 THE CIVILITAS FOUNDATION CONTENTS PREFACE .................................................................................................................................. 4 ARMENIA: A YEAR OF UNCERTAINTY ....................................................................... 5 A REGION IN STALEMATE .............................................................................................. 6 UNSTEADY STABILITY .....................................................................................................27 THE CRISIS AFTER THE CRISIS ....................................................................................37 THE REGION IN FIGURES .............................................................................................49 THE CIVILITAS FOUNDATION ARMENIA IN 2010 PREFACE This Report was launched three • What should the educational system offer in order to nurture identity and years ago to fill a gap – the missing also transform a small nation into a Armenian perspective to the body competitive global participant? of analysis about Armenia and the • What is the acceptable tradeoff between individual liberties and the collective region offered by the international good? community. • How far is Armenian society willing to go These end-of-year reflections are intended to help to protect the most vulnerable? grasp past policies and events, and serve as tools to • How to wisely and genuinely disentangle shape the future. politics from business interests? 2010 marked the culmination of nearly two decades • How to introduce liberal, open, of Armenia’s independence. Perhaps for that government supports for deep, reason, given independent Armenia’s level of social, sustainable, broad-reaching economic economic and political development, the reactions growth? and assessments in this report are more severe. • What price is Armenia willing to pay to The year 2011 will mark the beginning of the third protect the environment, for healthy, decade of independent statehood. This will compel ecological and economic benefit? us to examine the causes for what most indexes and • How to enable true publicly accessible ratings consider inadequate external economic and quality health care? political competitiveness and insufficient internal social and democratic transformation. • How to instill trust and hope in the justice system? Successive governments have offered neither credible big-picture visions nor genuine short-term • How to secure the integrity of soldiers implementable solutions in response to citizens’ as individuals and the armed forces as an visible and understandable dissatisfaction. Nor institution? have the drivers of civil society – media and non- • How to achieve essential Armenia- governmental organizations -- demonstrated the Diaspora cooperation? readiness, judjment and wisdom to ask and debate the profound questions. In each of the significant areas of people’s daily lives, what should be the policy objectives? The answer These are some of the urgent questions to be asked: should be the affirmation found in the Armenian • What are Armenia’s necessary security Constitution: to turn Armenia into a sovereign, requirements? democratic, social state governed by rule of law. • How to revamp Armenia’s domestic Anniversaries offer the benefit of hindsight and at political system to make it healthy and the same time, inevitably intensify expectations. inclusive? Armenia’s 20th year to come will be no exception. 4 ARMENIA IN 2010 THE CIVILITAS FOUNDATION ARMENIA: A YEAR OF UNCERTAINTY This publication is intended to be As for the Karabakh negotiation process, in 2010, it entered a phase of uncertainty, unpredictability and an annual overview of the politi- danger. cal and economic situation in Ar- Internally, Armenian society saw a growing tension menia, as well as those global and between personal freedoms taken for granted, and regional developments that affect an expectation of greater civic freedoms. The result was a growing number of home-grown citizen this country and the region. initiatives in an otherwise politically unremarkable year. The middle class searched for prosperity We had described 2009 as the year and well-being in an economically and politically of promise and reality. It was a year unpredictable and non-transparent environment. As a result, instead of middle class contentment that promised far more than it nurturing a country of optimists, middle class delivered as borne out by regional, discontent fed a growing legion of pessimists. domestic and political realities. This was further aggravated by a recognition that institutions both in the economic and public sphere – from schools to police to tax collectors – appeared In Armenia in 2010, glaring catastrophes or evident to be structurally unchanging, and therefore achievements were absent even as the economic perhaps unchangeable. Both the international and political troubles continued to take a real toll. community and the country’s own citizens began to That this sort of standstill was itself an obstacle to view this not as a very long wave of uncertainty, but economic and political progress became obvious a permanent state of capitulation. given the steps that were not taken. Economically, the government utilized all available In 2010, the region’s internal uncertainties were fiscal and monetary options to dig its way out of compounded by global uncertainties vis-à-vis the economic crisis. It succeeded to the extent the region. Whether as a result of the US-Russia that it prevented financial circumstances from resetting of the previous year, or a series of choices deteriorating further. But in 2010, the government forcibly or voluntarily made, the inclusion of the could not or would not tackle politically sensitive Caucasus in the Russian sphere of influence became reforms. As a consequence, the lack of diversity more pronounced. and competitiveness, as well as interdependence of businessmen and government officials remained the There was no improvement in Armenia’s relations fundamental impediments to economic growth. with its eastern and western neighbors. When Armenia-Turkey protocols were frozen, so were Indeed, in 2010, there were fundamental structural official Ankara-Yerevan relations. This ended up impediments to growth all around – politically, disappointing the optimists, baffling the mediators economically and socially. So, the year ended as it and vindicating the critics. began – with personal and national uncertainty. 5 THE CIVILITAS FOUNDATION ARMENIA IN 2010 ARMENIA IN 2010 THE CIVILITAS FOUNDATION A REGION IN STALEMATE Neither the ‘reset’ in the US-Russia For Russia, 2010 meant a consolidation of its position in the entire former Soviet space, not just relationship nor the policy of Zero the South Caucasus. Problems with Neighbors in Turkey With the victory of the acceptable-to-Russia Viktor transformed the environment for Yanukovych in the presidential elections in Ukraine, Armenia or the South Caucasus. the forced resignation of Kyrgyzstan’s Kurmanbek Bakiyev from the presidency and his departure from Abkhazia and South Ossetia re- the country, and its contemptuous posture toward mained a source of tension between Georgia’s Mikheil Saakashvili, Russia demonstrated that the Color Revolutions favored by the West had Georgia and Russia, the Nagorno failed. Karabakh resolution process did In the South Caucasus, too, Russia took on a more not move even a small step forward, confident and assertive presence. With Tbilisi, and the Turkey-Armenia border Russia simply took a wait-and-see approach until the next Georgian elections. But it was different remained closed. with Armenia and Azerbaijan. In Armenia, the Russian presence was accentuated by the Kremlin extending the presence of a Russian military base in Gyumri from 25 to 49 years. Russia had also signed 49-year basing agreements with Abkhazia in February and South Ossetia in April. In addition, the Russian role in Armenia’s economic and regional agenda was expanded. The two presidents met nine times during the year – an unprecedented frequency and one that left its mark, both practically – in the domestic sphere as well – and symbolically. Azerbaijan, too, tilted ever-more northward. There was a dramatic increase in the volume of gas sales by Azerbaijan to Russia, and prospects for the construction of the European Union-favored Nabucco pipeline appeared less hopeful. Turkey-Russia relations improved. When Russian President Dmitry Medvedev visited Ankara in May, numerous agreements were signed, including the elimination of the visa regime between the two 7 THE CIVILITAS FOUNDATION ARMENIA IN 2010