Anti-Corruption and Integrity Systems in Armenia: Targeted Literature Review and Field Research

Ant i-Corruption and Integrity Systems in Armenia: Targeted Li terature Review and Field Research

Development Transformations (DT) in Response to ME.EE.Asia TO #3 Activity 3, USAID/OTI Armenia Technical Assistance and Procurement

FINAL REPORT

Submitted to: Development Transformations on July 15, 2019.

Contractor: New-Rule LLC

Technical Team Matthew Murray Dr. Molly Inman

Disclaimer This report is made possible by the support of the American People through the United States Agency for International Development (USAID). The contents of this document are the sole responsibility of New-Rule LLC and do not necessarily reflect the views of USAID or the United States Government. ARMENIA ANTI-CORRUPTION AND INTEGRITY SYSTEMS

TABLE OF CONTENTS ACRONYMS ...... i EXECUTIVE SUMMARY ...... ii 1 INTRODUCTION ...... 1 2 LITERATURE REVIEW ...... 2 2.1 Combatting Corruption Among Civil Servants: Interdisciplinary Perspectives on What Works, USAID Research and Innovation Grants Working Papers Series (2017) ...... 3 2.1.1 Findings and Conclusion 1: Strategic Approaches ...... 5 2.1.2 Findings and Conclusions 2: Practical Interventions ...... 6 2.2 Practitioner’s Guide for Anticorruption Programming, USAID (2015) ...... 7 2.2.1 Assessment and Diagnostics ...... 8 2.2.2 Design and Planning ...... 10 2.2.3 Monitoring and Evaluation ...... 10 2.2.4 Findings and Conclusion 1: Developing New Strategic Objectives for Armenia ...... 11 2.2.5 Findings and Conclusion 2: Designing and Executing New Programming for Armenia ... 12 2.3 Analysis of USAID Anticorruption Programming Worldwide: 2007-2013 (2014) ...... 14 2.3.1 Findings and Conclusion 1 ...... 15 2.4 International Standards and Treaties ...... 17 2.5 Armenia Specific Documentation: Anti-Corruption Reforms in Armenia, 4th Round of Monitoring of the Istanbul Anti-Corruption Action Plan, OECD (2018) ...... 20 2.5.1 Anti-Corruption Policy and Strategy ...... 20 2.5.2 Corruption Prevention and Coordination Institutions ...... 22 2.5.3 Findings and Conclusion 1: Building Integrity in the Civil Service ...... 24 2.5.4 Findings and Conclusion 2: Building Integrity in Civil Society ...... 27 2.5.5 Findings and Conclusion 3: Civil Service, Civil Society and Media: Increasing Transparency, Accountability and Trust ...... 28 2.6 Fourth Action Plan of Open Government Partnership Initiative of the Republic of Armenia; Approved by Prime Minister Nikol Pashinyan, November 15, 2018 ...... 29 2.6.1 Findings and Conclusion 1 ...... 30

USAID.GOV Table of Contents July 15, 2019 ARMENIA ANTI-CORRUPTION AND INTEGRITY SYSTEMS

3 FIELD RESEARCH—DATA COLLECTION AND ANALYSIS ...... 33 3.1 Evaluation Methods and Limitations ...... 34 3.2 Accountability ...... 34 3.2.1 Transitional Justice...... 35 3.2.2 Civil Service ...... 36 3.2.3 Media ...... 36 3.2.4 Civil Society ...... 37 3.2.5 Local Government ...... 38 3.2.6 Findings and Conclusion 1: Transitional Justice ...... 38 3.2.7 Findings and Conclusion 2: Civil Service ...... 38 3.2.8 Findings and Conclusion 3: Media ...... 38 3.2.9 Findings and Conclusion 4: Civil Society ...... 38 3.2.10 Findings and Conclusion 5: Local Government ...... 39 3.3 Transparency ...... 39 3.3.1 Civil Service and Public Service ...... 39 3.3.2 Freedom of Information ...... 39 3.3.3 Media ...... 40 3.3.4 Civil Society ...... 40 3.3.5 Findings and Conclusion 1: Civil Service and Public Service ...... 41 3.3.6 Findings and Conclusion 2: Freedom of Information ...... 41 3.3.7 Findings and Conclusion 3: Media ...... 41 3.3.8 Findings and Conclusion 4: Civil Society ...... 41 3.4 Trust ...... 42 3.4.1 Findings and Conclusion 1: Political Will ...... 43 3.4.2 Findings and Conclusion 2: Local Integrity Systems ...... 43 3.4.3 Findings and Conclusion 3: Judicial Reform ...... 43 3.5 Other Issues ...... 43 3.5.1 Party Membership ...... 43 3.5.2 Corruption in Closed-Systems ...... 44 3.5.3 Findings and Conclusion 1: Party Membership ...... 44 3.5.4 Findings and Conclusion 2: Corruption in Closed Systems ...... 44

USAID.GOV Table of Contents July 15, 2019 ARMENIA ANTI-CORRUPTION AND INTEGRITY SYSTEMS

ANNEX 1: Refined Research Objectives ...... 45 ANNEX 2: Governmental Experts List ...... 49 ANNEX 3: Field Research Interview List ...... 50 ANNEX 4: Literature Review Bibliography ...... 51

USAID.GOV Table of Contents July 15, 2019 ARMENIA ANTI-CORRUPTION AND INTEGRITY SYSTEMS

ACRONYMS

Anti-Corruption Agency (ACA) Anti-Corruption Council (ACC) Anti-Corruption Network for Eastern Europe and Central Asia (ACN) Armenia Mobilizing Action against Corruption (MAAC) Civic Engagement in Local Governance (CELoG) Civil Society Organizations (CSOs) Commission for Prevention of Corruption (CPC) Commission of Ethics for High Ranking Officials (CEHRO) Democracy, Human Rights, and Governance (DRG) Ethics Commission for High-ranking Officials (ECHO) Freedom of Information (FOI) Freedom of Information Center of Armenia (FOICA) Group of States Against Corruption (GRECO) Law and Civil Service (CSL) Law and Public Service (PSL Monitoring & Evaluation (M&E) Nongovernmental Organization (NGO) Organization for Economic Co-operation and Development (OECD) Open Government Partnership (OGP) United States Agency for International Development (USAID) UN Convention Against Corruption (UNAC) Union of Informed Citizens (UIC) Vulnerability to Corruption Assessments (VCA)

USAID.GOV Final Report, pi July 15, 2019 ARMENIA ANTI-CORRUPTION AND INTEGRITY SYSTEMS

EXECUTIVE SUMMARY The Velvet Revolution that occurred in the Spring of 2018 opened a window of opportunity for Armenia to transform society through reforms that mainstream integrity-building and anti- corruption. This New-Rule Final Report is intended to help USAID pursue this opportunity by tapping a rich vein of material in the literature that helps apply basic lessons-learned from both global anti-corruption programming and past programming in Armenia to Armenia in 2019 and into the future. The Final Report highlights the importance of high-level national political will and civil society activism to address the systemic roots of corruption. Based on the Literature Review and Field Research that New-Rule conducted, conditions for programming in Armenia are ripe for an innovative and strategic approach. There is an openness to systemic solutions. USAID can apply the findings and conclusions to both government reformers and civil society leaders addressing both the supply and demand-side of corruption.

The Literature Review identifies opportunities for Armenia to apply lessons learned from the global fight against corruption over the past two decades. In particular, the literature helps frame Armenia’s strategic choice as whether to treat corruption as a “collective action” or a “principal- agent” problem. By focusing on how to build integrity systems, this report provides content for treating it as a collective action problem that is addressed through shaping a new social reality that improves the lives of citizens. From a programming perspective, the literature shows how government work optimally with civil society as a partner and society will respond with maximum citizen participation.

Importantly, in both the Literature Review and Field Research, the need for a strategy and game plan that aims to root out the causes of systemic corruption is evident. Stakeholders in Armenia’s future as a stable and sovereign democracy are concerned by fundamental questions: “How long do the reformers led by Prime Minister Pashinyan have? How does one define and unpack the term ‘political will’ to achieve a transformative approach to governance? How can political will be translated into a whole of society approach to creating integrity systems that introduce change management and align values with institutions, strengthen reforms, and prevent ‘deforming”?

Furthermore, in the Field Research, New-Rule found a robust debate and discussion in the public square in Armenia regarding how to institutionalize the government’s ownership of anti-corruption strategy. Should there be a single anti-corruption agency (ACA) that is responsible for both punishment and prevention? This is a welcome debate and a sign of a maturing civil society, in which the citizenry is seeking a systemic solution. It may also reveal a post-Soviet legacy bias towards the notion that government can manage the anti-corruption process. The Literature Review helps demonstrate why a top-down approach to addressing the roots of corruption will not be sustainable. Both a top-down and bottom-up approach are required. Top-Level Key Findings and Conclusions are summarized in the table below.

USAID.GOV Final Report, pii July 15, 2019 ARMENIA ANTI-CORRUPTION AND INTEGRITY SYSTEMS

TOP-LEVEL FINDINGS AND CONCLUSIONS

Issue Findings and Conclusions Risk and § Anti-corruption strategies should be based on needs and risk assessment Vulnerability and include ambitious measures targeting actual corruption risks and key Assessment areas that are vulnerable to corruption and require reform as a matter of priority. Approach § Reforms must be based on a collective action approach that seeks a transformation in behavior across social groups rather than seeking to punish corruption as a matter of social deviance. This approach requires the identification of a plausible principal, some political actor or group that stands to gain from control of corruption—for example, professional groups—and working with them to build an endogenous demand for reform. Strategy § The government needs to lead the effort to develop a long-term strategy to improve integrity systems based on evidence about the causes of corruption both currently and in the recent past, engaging all stakeholders. Transparency § Transparency measures must be accompanied by activities that leverage Linked to the additional information made available. Activities designed to increase Accountability transparency and accountability must promote civic monitoring of government by civil society, media, or joint initiatives. Horizontal § This time of political transformation in Armenia represents an opportunity and Vertical for a broad array of programming. This includes programs to strengthen Accountability vertical accountability driven by citizen demand and horizontal accountability focused on state institutions on the supply side. Integrity § When building integrity systems, it is critical to increase the sense of citizen Systems control over outcomes. Increasing people’s sense of control can cause them to take action against an issue which they previously felt they could do nothing about. Transitional § There is a strong desire for transitional justice among the population and Justice many stakeholders, but there is little agreement about what that exactly means and to what degree it should go. Any process or set of transitional justice processes must be seen as appropriate and fair by all segments of society and be inclusive in its development. Civil Service § As there has been so much change in terms of policy and personnel throughout the government and civil society, both need to work together to establish and institutionalize the new set of relationships between government and non-governmental such as CSOs, NGOs, and think-tanks and the roles of each in ensuring transparency and accountability. Media § The situation of the media in Armenia is not sufficient for it to be able to play the role of holding the government accountable. Biased media outlets, a weak market for mainstream journalism, poor quality journalism education, and general lack of media literacy are significant challenges to be addressed. Civil Society § The civil society sector and its supporters face the challenge of remaining grounded and connected to grassroots supporters while also being sustainable and effective in accomplishing their goals. All involved need to pay heed to the unique development of civil society in Armenia.

USAID.GOV Final Report, piii July 15, 2019 ARMENIA ANTI-CORRUPTION AND INTEGRITY SYSTEMS

1 INTRODUCTION

When Armenians took to the streets in 2018, a genuine grassroots political transition began. Nikol Pashinyan’s “My Step” protest involved a peaceful walk across Armenia that grew into a national protest for democratic change. The political back and forth that ensued led to what Pashinyan termed a “Velvet Revolution,” which resulted in his narrow election to the Office of Prime Minister. USAID has supported Armenia’s emergence from the Soviet Block for decades, and consequently, Armenia enjoys a vibrant network of civil society organizations (CSOs) and an educated population that are ready to engage in moving this transition forward. At the same time, divisions within the Armenian political class, ineffective governance, and endemic corruption could threaten ongoing progress. New-Rule responded to Development Transformations (DT)’s Request for Proposals (RFP) issued under their USAID Office of Transition Initiatives (OTI) task order to help inform future USAID activities with a firm understanding of the context and tools available in Armenia. In accordance with the RFP, New-Rule conducted a targeted Literature Review combined with focused Field Research. For New-Rule, Mr. Matthew Murray led the Literature Review, and Dr. Molly Inman led the Field Research. Upon completion, New-Rule worked with them to produce this integrated report.

After award on May 6, 2019, the New-Rule team engaged with DT and USAID on a regular basis. During the course of this engagement, New-Rule received further clarification of the RFP objectives under the DT Task Order, USAID/OTI Armenia Technical Assistance and Procurement Support. As described in the May 29, 2019, Updated Refined Research Objectives submitted to DT (see Annex 1), New-Rule refined the focus to address the USAID Mission’s goal of assessing systemic causes of corruption and building “integrity systems” that help address such causes.

With the Literature Review, New-Rule focused on key issues for USAID to consider when addressing systemic corruption through a “whole-of-society” strategy that engages the government and citizens. This approach implies programs should strengthen governance and build integrity systems across sectors to help government supply and citizen demand for public services on an honest, transparent, accountable and cost-effective basis that builds trust. Section 2 summarizes the relevant literature and offers key findings and conclusions.

Between May 20 and June 1, 2019, New-Rule conducted Field Research in Yerevan with a host of government officials, members of parliament, NGOs, think tanks, foundations, academic, journalists, and political part representatives. The Field Research provides a contextual analysis of Armenia’s integrity systems through a broad spectrum of perspectives on accountability, transparency, and trust within the Armenian society. During the course of this research, New-Rule identified prospective opportunities and priorities for USAID to consider when supporting Armenia in the period of reform and transitional justice. Section 3 summarizes the key informant interviews (KIIs) and offers key findings and conclusions. Furthermore, notable synergies between KIIs and the Literature Review are footnoted in Section 2.

USAID.GOV Final Report, p1 July 15, 2019 ARMENIA ANTI-CORRUPTION AND INTEGRITY SYSTEMS

2 LITERATURE REVIEW As noted in the Updated Refined Research Objectives, this Literature Review is intended to supplement other literature reviews recently conducted for USAID Armenia. For these purposes, the subject of this review is: USAID strategic guidance from anti-corruption programming across the globe; international legal agreements and standards applicable to Armenia; and documents specific to Armenia’s policies and institutions. Specifically, we review the following:

I. USAID General Guidance: USAID: Combatting Corruption Among Civil Servants (2017); USAID’s Practitioner’s Guide for Anticorruption Programming (2015); Analysis of USAID Anticorruption Programming Worldwide (2014); II. International Standards and Treaties: United Nations Convention Against Corruption; and the UNODC Technical Guide to the United Nations Convention Against Corruption (2009); and III. Armenia Specific Documentation: Republic of Armenia 4th Round Monitoring Report prepared for the Anti-Corruption Network for Eastern Europe and Central Asia (ACN) of the Organization for Economic Co-operation and Development (OECD) (2018); Republic of Armenia Fourth Action Plan of Open Government Partnership Initiative (OGP) (2018).

As also stated in the Updated Refined Research Objectives, to further refine this Literature Review for USAID’s purposes, we focus on the guidance that these documents offer regarding following sectors of anti-corruption reform:

I. Civil Service Sector – Capacity of civil service to implement Integrity Systems. II. Civil Society Sector – Focus on key aspects of systemic corruption and Integrity Systems in this sector and fill gaps in the existing research. III. Media Independence and Professionalism – Build on and fill gaps in existing research.

This Literature Review covers three major USAID reports on the lessons learned from past anti- corruption programming across the globe that have been published since 2014: Combatting Corruption Among Civil Servants (2017); USAID’s Practitioner’s Guide for Anticorruption Programming (2015); and Analysis of USAID Anticorruption Programming Worldwide (2014).

All three reports help USAID Armenia assess the programming opportunity based on the premise that corruption in Armenia is systemic – a “captured” society within a “captured” state. As stated in a USAID Rule of Law/Anti-Corruption Assessment of Armenia in 2004, corruption in Armenia “permeates all levels of government and affects all segments of society. It is multifaceted and multi-dimensional and runs the spectrum from bribery and theft of state property to clientelism, political corruption and conflict of interest.”1

Each of the reports reviewed below should be understood in the context of the USAID Anticorruption Strategy (2005), a key foundational document that provides practical guidance to program officers on how to incorporate anticorruption objectives into USAID programming. The Strategy establishes a multi-sectoral framework for combating corruption “that incorporates political competition, economic competition, social factors, and institutional and organizational performance across all sectors.” (p.16) It calls for integrating anticorruption initiatives into all

1 USAID Anti-Corruption/Rule of Law Assessment (2004) as quoted in Mid-term Evaluation of the Mobilizing Action Against Corruption (MAAC) Project, USAID Armenia, 2010, p. 3.

USAID.GOV Final Report, p2 July 15, 2019 ARMENIA ANTI-CORRUPTION AND INTEGRITY SYSTEMS sectoral programs that may be affected by corruption and focusing democracy and governance and economic growth resources more explicitly on anticorruption targets.

Anticorruption activities also form a key component of USAID’s 2013 Democracy, Human Rights and Governance (DRG) Strategy. One of the four key Development Objectives in the DRG Strategy is to “Foster greater accountability of institutions and leaders to citizens and the law.” (p.14). Accordingly, USAID programming should address gaps on the demand side by supporting civil society efforts and the supply side by partnering with specific government entities that demonstrate the political will to implement anti-corruption measures. Implementing partners should coordinate or jointly undertake efforts with respective government bodies.2 Significantly, for purposes of this Literature Review, under this Development Objective, the following areas are prioritized:

2.2 Support the ability of civil society and independent and open media to provide oversight and an informed critique of government; … 2.4 Assist state institutions at all levels in delivering on the mandates of their offices, fulfilling the public trust, and providing public goods and services through transparent and responsive governance. (p. 14)

The literature also provides updated guidance that, by contrast with USAID Armenia programming in the past, today, fighting corruption can be addressed explicitly as a goal. Further, there are opportunities to introduce global innovations and new best practices. Integrity building can be designed for “purposeful transparency” and “social accountability”. Both of these approaches are intended to create conditions in which citizens can access information to demand more honest and efficient public services and economic growth. Programming can be based on new metrics and the reduction of perceptions as a performance measure approach. Significantly, based on New-Rule’s Field Research, the issue of whether and how citizens can apply information and data for purposes of accountability has captured great interest, 3.2 Accountability3.

2.1 Combatting Corruption Among Civil Servants: Interdisciplinary Perspectives on What Works, USAID Research and Innovation Grants Working Papers Series (2017) This 2017 USAID report, Combatting Corruption Among Civil Servants: Interdisciplinary Perspectives on What Works (Civil Service Report), addresses the challenge of how to prevent corruption and build integrity in the civil service sector. The Civil Service Report adopts an interdisciplinary approach to defining metrics and examining data and evidence regarding the success of anti-corruption programs in this sector. It synthesizes scholarship bearing on this question from diverse research perspectives in a team of economists, political scientists, sociologists, and anthropologists.

2 Field Research: “[T]he fear among many is that the government lacks vision for the future and is merely reactive. While it is easy for those out of government and in the opposition to criticize the government’s perceived inaction, lack of vision and strategy does appear to hinder systemic reform.” 3 Field Research: “[A]ccording to UIC, to date there has been no actual data collected on the way that people consume data, and that both media outlets and CSOs alike have been operating based on assumptions and hunches. These data will allow UIC and its partners to make programing decisions based on data.”

USAID.GOV Final Report, p3 July 15, 2019 ARMENIA ANTI-CORRUPTION AND INTEGRITY SYSTEMS

For purposes of USAID programming for Armenia, the Civil Service Report captures the benefits of several current trends with respect both to diagnosing and modeling of solutions for systemic corruption. First, it starts by posing the difficult question of why anti-corruption reforms and programs have not met with more success, especially in countries where citizens register strong condemnation of official corruption. When citizens of countries where corruption is rampant see it as reproducing inequality, why do reformers struggle so much with anti-corruption reforms? This question thereby frames the key challenge facing anti-corruption reform as whether there is sufficient “endogenous demand”. Unless the condemnation of corruption is matched by endogenous demand for reform by critical segments of society, then it less likely to succeed.

Second, the Civil Service Report discusses increasing evidence that contrary to traditional diagnostics, corruption in certain countries is not an “individual deviance” from a social order. Rather, it is an “alternative social order”. This finding reflects a general trend in academic research on the question of why anticorruption reforms do not often work as designed or expected.

In particular, the Civil Service Report applies the modeling of Alina Mungiu-Pippidi4, which is increasingly popular among anti-corruption experts, especially in the Eurasian region. Mungiu- Pippidi assesses what she views as the broad failure of the anti-corruption reforms of the 1990s and 2000s and argues that anti-corruption interventions have failed because they proceed from the assumption that corruption is deviance and should be treated like crime, i.e., with individual rewards and punishment. She argues—as do many other authors—that in societies where corruption is an alternative political order, reforms that focus on the individual level (such as rewards for good behavior and punishment for bad behavior) will fail, because those tasked with enforcing the rewards and punishments are themselves likely to be corrupt.

The Civil Service Report then discusses how to develop anti-corruption strategies and reforms. Following from the two premises described, the authors recommend a fresh approach that both assesses the challenges as systemic and requires better data and evidence to recommend solutions. Mungiu-Pippidi and others who have adopted this approach argue that where corruption is an alternative political order, reform stands a greater chance of success if two conditions are met. First, it is helpful if the predicate for reform is a specific moment of opportunity, such as a time of political transition or crisis. Second, reforms must be based on a collective action approach that seeks a transformation in behavior across social groups rather than seeking to punish corruption as a matter of social deviance. In turn, this approach must then identify a plausible principal, some political actor or group that stands to gain from control of corruption—for example professional groups or business groups—and work with them to build an endogenous demand for anti- corruption reform. In contexts where these conditions are not present, they argue, anti-corruption reforms are unlikely to succeed, and donors should seek to build civil society instead.

By framing the challenge of anti-corruption reform as an endogenous demand problem, the Civil Service Report argues that is necessary to have better data regarding why corruption persists among both civil servants and ordinary people. Generally, the Civil Service Report argues, people engage in everyday corrupt practices for three main reasons: “because it is necessary to do so to survive in a broken state system; because the distinction between a corrupt act and a non-corrupt

USAID.GOV Final Report, p4 July 15, 2019

ARMENIA ANTI-CORRUPTION AND INTEGRITY SYSTEMS act is unclear in a given context; and in response to pressure from ethnic or kin groups. These factors can undermine endogenous demand for anti-corruption reform even where corruption is condemned in the abstract.” (p.1)

The Civil Service Report discusses how data can help diagnose causality and documents how certain countries have moved from a social order in which corruption is sanctioned, to one in which it is not. The overarching lesson for Armenia is that successful, long-term corruption reform requires that research be performed with the goal that a control group or groups can be identified. Although the historical cases of successful corruption reform differ in which groups played the crucial role, they all identify an endogenous group that benefited from control of corruption. The general pattern is of historical circumstances changing (often because of crisis) such that one group emerges to benefit from, and champion, control of corruption.

The Civil Service Report finds that historical scholarship on corruption as a system-level problem leads to one of three potential types of solutions geared towards social transformation: (i) a big bang approach that attacks all dimensions of the system at once; (ii) navigating state bureaucracy approach, that emphasizes helping citizens obtain basic public services without requiring the help of intermediaries who drive up levels of corruption; and (iii) given the difficulties of attacking corruption at the level of a whole country, seek to address corruption organization by organization, by conducting a “big push” inside one organization at a time.

2.1.1 Findings and Conclusion 1: Strategic Approaches Based on the assessment of causality discussed above, USAID Armenia would be in a stronger position to examine which of these three anti-corruption strategies (or which combination) are most pertinent to the goal of social transformation in the nation today. As this framing is pertinent to a whole-of society approach under consideration and should be carefully considered for Armenia, below is a more detailed description of each:

(i) Big Bangs: Some scholars suggest that if there is a collective action problem regarding corruption—that is, a problem that transcends individual actors—then strategies that focus on individuals will not work, and only a “big bang” approach can work, that is, an approach in which multiple changes occur at the same time. For example, Collier (2000) argues that corrupt states end up in a corrupt equilibrium as multiple elements— like the moral legitimation of corruption, reduced risks of punishment, and self-fulfilling expectations— reinforce one another. Corbacho et al. (2016) show in an experimental framework that corruption indeed is a “self-fulfilling prophecy,” in that leading participants to believe that others are corruptible increases participants’ own willingness to engage in corruption. Authors making this argument suggest that once this self-fulfilling prophecy has been realized and a high-corruption equilibrium has been established, a “big push” or “big bang” strategy is the only way to accomplish a lasting shift to a lower corruption equilibrium. (p. 37)

(ii) Helping Engage the State: An important insight of the ethnographic literature in particular is that citizens often need help navigating the bureaucracies of the state. In this vein, a nascent literature has emerged that investigates the role of intermediaries who structure the practice of corruption. The category of intermediaries most often refers to brokers who negotiate particular actions for civilians vis-à-vis civil servants or government officers. Ethnographic and qualitative work has shown that brokers help accelerate procedures; navigate complex bureaucratic systems; and ensure proper networks, formalities, or etiquette is followed. However, the outcomes are not necessarily positive, as brokers and intermediaries often prey on their clients as much as they provide honest access to bureaucracies, and increase the overall level of corruption. … In this situation, an effective anti-corruption strategy needs to focus on citizens’ need for help in navigating state bureaucracies. The kind of intermediaries that currently exist could be replaced with a corps of civic

USAID.GOV Final Report, p5 July 15, 2019

ARMENIA ANTI-CORRUPTION AND INTEGRITY SYSTEMS

advocates who facilitate citizens’ access to the state (the danger here would be in ensuring that these civic advocates are not themselves corrupt, and do not facilitate corruption) or with strategies such as websites that are easy for citizens to navigate. (pp. 38-39)

iii. Organizational-Level Strategies: Finally, a third area of scholarship focuses on the possibility of attacking cultures of corruption at the level of specific organizations. Noting both the need to address multiple issues at once as in the “big bang” arguments, and the difficulty of doing so at the level of whole nations, Mungiu-Pippidi (2013) suggests trying to control corruption at the level of organizations. This has the benefit of addressing the problem on multiple fronts as the “big bang” scholars argue, but on a more manageable scale. Mungiu-Pippidi observes that some of the most successful cases of corruption control have been small islands. She then asks if we can create metaphorical small islands of corruption control inside larger contexts where corruption is rampant, such as organizations with strong cultural proscriptions against corruption… The observation that corruption-free bureaucracies exist even in countries where corruption is widespread turns the question of controlling corruption from one of the creation of non-corrupt bureaucracies to the diffusion of non-corrupt bureaucracies. (pp. 39-40)

Finally, the Civil Service Report recommends that in order to make the assessment as to which of these three solutions (or what combination) would work optimally, it is advantageous to conduct research on the outcomes of anti-corruption policies and programs that have been pursued previously. As USAID and other donors have conducted several such interventions over the past two decades in Armenia, there is much evidence and data that could be mined. In the sector that is the focus of the Civil Service Report, the authors provide several illustrations of how data can be found from policies that have been pursued, with a particular focus on proving positive and negative incentives for the behavior of civil servants and what kinds of interventions are most effective at reducing the propensity of civil servants to engage in corruption?

2.1.2 Findings and Conclusions 2: Practical Interventions Based on this approach, further data could be obtained on the impact to-date of Armenian programs on: e-governance, educational campaigns, organizational-level strategies, and strategies for helping citizens navigate the state, strategies of simplification of bureaucracies, and programs for increasing salaries and conducting more transparent and competitive hiring, recruitment and screening.

With respect to e-governance, while digitization is not a panacea, the Civil Service Report draws on a UN e-governance index measuring the scope and quality of online services, telecommunication infrastructure, and human capital, and finds that “the introduction of more e- governance is on average followed by lower levels of perceived corruption. They find that e- governance leads to a substantial decrease in financial outlays, even while participants in the workfare program reported no decline in earnings—evidence of decreased leakage resulting from fraud or other forms of corruption.” (p. 15)

The Civil Service Report recommends that particular attention be given to whether increase in payment for civil servants may be helpful in the Armenian context or not. As it states, “although adequate wages may be necessary for reducing corruption, qualitative and macro-level quantitative studies indicate they are often insufficient.” (p. 9)

USAID.GOV Final Report, p6 July 15, 2019

ARMENIA ANTI-CORRUPTION AND INTEGRITY SYSTEMS

The Civil Service Report also recommends a data-driven approach to whether creating an Anti- Corruption Agency (ACA) will be fit for purposes in the context of Armenia.5 ACAs have only been successful in situations where there is political will to reduce corruption, and a favorable policy context. Where they have been tried without those conditions, they have failed.

The Civil Service Report provides helpful guidance on how to establish data on the benefits of re- structuring bureaucracies as a way to help build integrity systems in the civil service. It examines seven strategies to “shift incentives faced by civil servants is to alter the structure of bureaucracies in which they work through 1) decentralization, 2) bureaucratic discretion, 3) bureaucratic competition, 4) staff rotation, 5) whistleblowing, 6) streamlining regulation, and 7) educational campaigns.” (pp. 15-16)

To further refine the demand role played by civil society, the Civil Service Report considers evidence with respect to whether mechanisms that facilitate the role of a citizen to report instances of bribery have worked. Certain evidence suggests that such mechanisms trigger the possibility of a low-probability audit and reduces the willingness of those playing the role of public officials to request a bribe by a substantive and statistically significant amount.

With respect to media independence, the Civil Service Report shows ample evidence that links freedom of the press to lower levels of perceived corruption, as found in a number of cross-national regression analyses. They recommend seeking further evidence of specific ways in which social media reporting can have immediate impacts on corrupt actors, such as the fall in stock returns following social media postings by anti-corruption activists.

2.2 Practitioner’s Guide for Anticorruption Programming, USAID (2015) This USAID Practitioner’s Guide for Anticorruption Programming (Guide or Practitioners’ Guide) offers strategic and practical programming advice for USAID field missions to support development of effective anti-corruption interventions based on lessons-learned from past programming by USAID, other donors, and host governments. In the case of USAID Armenia, the Guide helps address whether there are new and innovative ways to effectively design a comprehensive whole-of-society strategy that entails engagement of representatives across government and civil society.

As a matter of strategy, USAID supports a broad array of programming. This includes programs to strengthen vertical accountability driven by citizen demand and horizontal accountability focused on state institutions on the supply side. As the Guide states:

Programs to strengthen horizontal accountability work on the supply side of reform. They foster the rule of law and checks and balances among branches of government along with public sector reforms that reduce opportunities for corruption, increase transparency, and realign incentives. Public sector reforms include civil service, public expenditure management and service delivery reforms, as well as reforms of state-owned enterprises, market regulations, property rights, banks and other economic structures. Programs to strengthen vertical accountability foster competitive multiparty systems along with the ability of civil society, business

5Field Research: “[O]ne issue that the government has struggled with in formulating this strategy is whether there ought to be a unified, independent anti-corruption body or whether law enforcement and prevention ought to be separate.”

USAID.GOV Final Report, p7 July 15, 2019

ARMENIA ANTI-CORRUPTION AND INTEGRITY SYSTEMS

and independent media to provide oversight and an informed critique of government. Such programs work on the demand side of reform. (p. 6)

The Guide provides a comprehensive approach to designing anti-corruption programs that will achieve the highest impact based on current political and economic realities in a country. It recommends that practitioners follow a five-phase approach for anticorruption program planning:

First, assess the environment for corruption vulnerabilities. Second, with the help of the assessment, the program officer should define and prioritize goals and strategies that target the greatest opportunity. Third, the officer will need to select entry points for anticorruption initiatives. Fourth, practical and appropriate programming options need to be identified and applied in context. Lastly, a monitoring and evaluation (M&E) plan needs to be designed and implemented that focuses specifically on the anticorruption outcomes and impact of the particular programs pursued. (p. 2)

Below is a summary of each major step in this process from design to execution: (i) Assessment and Diagnostics; (ii) Design and Planning; (ii) Monitoring and Evaluation, including key findings pertinent to planning for Armenia in 2019.

2.2.1 Assessment and Diagnostics The Practitioner’s Guide begins with a discussion of different diagnostic tools that can help practitioners identify the highest areas of risk of corruption based on dynamics that are driving the nation’s development. Tailoring anticorruption strategies and interventions to the specific context is paramount for effective programming and the right diagnostic approach should help obtain granular information regarding the corruption issues that are most problematic, institutional weaknesses, political-economic dynamics that promote system weaknesses, and opportunities and challenges to reform.

The Guide emphasizes that USAID has adopted the practice of starting with a political economy assessment (PEA). Fundamentally, a PEA should assess the concentration of political and/or economic power and how it shapes the environment for corruption As the Guide states:

Where political power is concentrated in undemocratic regimes, government leaders may act with impunity and put state power to personal use (often referred to as state predation). Similarly, when economic power is concentrated, business oligarchs may capture state laws and policies through payoffs (often called state capture). Thus, reforms that increase competition in political and economic structures are critical elements in a comprehensive strategy to reduce corruption. (p. 7)

While there is much discussion regarding the nature and extent of political will to confront systemic corruption, it is important to unpack this concept. During New-Rule’s Field Research, many parties interviewed indicated that they believe Armenia’s new political will must be converted into new institutions, laws, and regulations that could counter corruption on a more sustainable basis6. As stated in the Guide, a PEA helps assess the level of anticorruption readiness of a country:

6 Field Research: “While some have questioned the political will of the new government, there is substantial optimism about the possibility for reform and change in Armenia. While the PM remains very popular and has significant leeway in pursuing policy, the time of relying on the individual and good will should be phased out in favour of institutionalized reform.”

USAID.GOV Final Report, p8 July 15, 2019

ARMENIA ANTI-CORRUPTION AND INTEGRITY SYSTEMS

First, the political will and commitment of governmental and nongovernmental leaders defines only one aspect of a country’s readiness to deal effectively with the problem of corruption. Second, the capacity to act effectively is the other element that determines a country’s readiness level. Third, there needs to be a basic framework of anticorruption laws, regulations and institutions in place that serve as the prerequisites or preconditions for all initiatives. Fourth, government officials and civil society, mass media, and business leaders must have the training, resources, and capacity to act effectively and with meaningful resolve over the long haul if anticorruption initiatives are to be adequately implemented. (p. 11)

The Guide warns practitioners that anticorruption initiatives and programs often fail because of very large “design-reality gaps.” That is, there is too great a mismatch between the expectations built into their design as compared to on-the-ground realities in their deployment. These gaps are typically a product of a design approach that is not predicated on a PEA.

Significantly, the Guide repeatedly cites USAID’s Armenia Mobilizing Action Against Corruption (MAAC) (2007-11) as a program that was not effectively designed given the political economy at the time. MAAC explicitly targeted reduction of corruption as its primary goal and experienced many Armenia MAAC Example obstacles including lack of host government cooperation “While designing the MAAC project, USAID that minimized the project’s impact. For further obtained assurances from key Armenian reference, the Guide discusses lesson-learned from governmental institutions of their interest MAAC in detail. and support. … Despite pre-project consultations between USAID and the GOAM, MAAC was perceived suspiciously As a next step in performing diagnostics, the Guide by the government which resulted in weak recommends applying the PEA to conduct a detailed cooperation from several governmental agencies…. Attempts to switch the focus to corruption risk assessment that provides a map of the other agencies were unsuccessful. Several actors and institutions that support or oppose anti- factors contributed to these challenges. corruption reforms and to determine what the priority The mid-term evaluation pointed to deficiencies in the project design, as well issues are in light of political feasibility. When designing as to implementation shortcomings. At the new programs, corruption risks should be assessed same time, growing citizen unrest against systematically so that initiatives are properly targeted to corruption in neighboring countries…likely impacted GOAM’s attitude towards foreign reduce corruption challenges. programs working in the DRG area, particularly those supporting civil society.” A global best practice that is increasingly being utilized is (p.32) to identify areas of high risk of corruption and then assess the business processes in this area in search of granular data and evidence. The result is a corruption risk map that can be used to target programming. Sector-focused assessments should uncover key vulnerabilities that may arise in institutional authority and capacity, patronage networks that reduce independence, internal controls, and complaint/enforcement mechanisms.

USAID.GOV Final Report, p9 July 15, 2019

ARMENIA ANTI-CORRUPTION AND INTEGRITY SYSTEMS

In summary, the Guide advocates a methodical approach to diagnostics that can be summarized as follows:

The assessment includes five analytical steps and practical tools to implement each one: (1) analysis of the legal-institutional framework, (2) political economy analysis, (3) stakeholder mapping, (4) in- depth diagnostic analysis of corruption vulnerabilities in key sectors and government functions or institutions, and (5) a review of anticorruption programming track records to assist in making and prioritizing specific programming recommendations. (p. 2)

2.2.2 Design and Planning Based on the findings of the diagnostics, the next step is to develop an overarching country strategy for countering corruption and strengthening governance. While the ultimate goal is to identify useful entry points for programming interventions, it is important to take a careful calibrated approach to strategy. There are a multitude of possible programming options, many cross-sectoral, that can be selected and the Guide offers a range of tips and illustrative examples.

First, a key design issue is whether a program should identify fighting corruption as an explicit goal or whether to integrate anticorruption interventions into sectoral programs. According to the Guide, explicit anticorruption programs will work optimally depending on a host of factors, including whether: government institutions have independence and resources; active citizen engagement in anticorruption initiatives can add to program success; and public awareness campaigns generate understanding of corruption costs and promote citizen advocacy.

Programs that have as their principal goal increasing transparency and accountability can incorporate preventing corruption as an implicit goal. To assess this strategic approach requires considering whether: streamlining and standardizing government processes reduce corrupt behaviors; civil service reforms can balance positive and negative incentives; patronage systems in government are strong or weak; transparency and access to information can be purposeful; civil society can engage as a partner; and social accountability mechanisms can work as tools for citizen engagement.

A critical issue facing practitioners is how to prioritize and sequence anti-corruption interventions. The Guide provides useful recommendations for choosing programming goals and strategies, entry points for program design and implementation, including where the greatest opportunities for change lie. A good sequencing strategy should avoid creating the problem of there being too many issues to address, all appearing to have the same urgency. Instead, to achieve optimal results, practitioners should target the areas where corruption is most damaging as identified in the diagnostic stage. According to the Guide:

[P]rioritizing interventions should also reflect the likelihood of success. This likelihood will be higher where political will is strong and opposition is weak and where the programming aligns with government priorities. The presence of champions both within and outside government can be a key factor in the decision to target specific sectors, functions or institutions. (p.15)

2.2.3 Monitoring and Evaluation Finally, to be effective in attacking corruption, strategies need to create conditions for effective monitoring and evaluation (M&E). To assess the impact of anticorruption initiatives, explicit M&E needs to be designed before projects are implemented. This starts with deconstructing the

USAID.GOV Final Report, p10 July 15, 2019

ARMENIA ANTI-CORRUPTION AND INTEGRITY SYSTEMS corruption problem into manageable and targetable components. Setting sub-goals that are supported by detailed corruption assessments and are actionable, realistic and measurable is critical for success. Experience shows that the best indicators are those that directly measure specific anticorruption interventions through to their outcomes and results. With the use of modern technology, there are new ways to expand data collection to achieve greater granularity. Tools, such as crowdsourcing, engage a wide array of potential beneficiaries and can be employed to measure various aspects of change in real time.

2.2.4 Findings and Conclusion 1: Developing New Strategic Objectives for Armenia The Practitioner’s Guide provides several useful guideposts for developing and planning strategy in Armenia. First, as a threshold, the Guide highlights a key contextual consideration -- the nature and extent of government buy in to addressing corruption as a systemic issue. Political transition such as the 2018 Velvet Revolution often creates the opportunity for strategic initiatives. The election of Prime Minister Pashinyan may coincide with changes in the equilibrium of political power. Reformers can leverage the social and political influences to implement anticorruption interventions in areas that were causing social stress.

Second, a PEA as well as other diagnostic tools could help assess whether Armenia is poised to address the systemic drivers of corruption and whether programming defines and encourages a cultural shift that helps demonstrate a way forward without corruption. According to the Guide, “Almost 90% of the USAID projects that tackled corruption and were deemed to be successful reported strong or acceptable levels of political will and cooperation of the government.” (p.19)

The Practitioners’ Guide recommends that nations not shy away from strategies that tackle grand corruption. This entails exposing high level officials and large financial rewards, such as public procurement fraud, voter fraud, kickbacks, extortion, and patronage. The difference between success and failure in such programming is the degree of political will and commitment from the host government. According to the Guide: “75% of all USAID anticorruption programs that targeted grand corruption achieved successful anticorruption outcomes.” (p. 63)

An important takeaway from the Practitioners’ Guide is that in Armenia in 2019 the conditions may exist for pursuing both heightened law enforcement and more comprehensive prevention at the same time. While exposure and punishment of high-level bad actors is critical, prevention of corruption is ultimately more important for purposes of delivering the highest impact and sustaining the fight against corruption. Generally, according to the Guide, programs oriented toward prevention have consistently higher success rates: “When the program intervention is focused on corruption prevention, either by promoting greater government transparency or strengthened government accountability, success in achieving anticorruption goals is more likely (in 73% of preventive initiatives conducted by USAID).” (p. 40)

Third, nevertheless, even in positive circumstances, political will may not be consistent at all levels or across the government. It is not prudent to rely solely on high-level reform champions to build support around reforms. The Guide illustrates several factors to consider when assessing government-readiness for reform in Armenia, including: whether key government actors have identified the costs and benefits, and independently accepted to act; consulted multiple

USAID.GOV Final Report, p11 July 15, 2019

ARMENIA ANTI-CORRUPTION AND INTEGRITY SYSTEMS stakeholders and engaged them to mobilize support participate in the implementation of the program; allocated sufficient resources to accomplish their announced goals; established well- defined metrics to monitor progress and adapt the reforms as circumstances change.

The following box highlights core considerations for USAID as they define new objectives and strategy for Armenia:

Practitioner’s Guide Core Considerations for Armenia Strategy “• Multipronged, multi-sector and whole-of-government strategies are key to effective anticorruption efforts. • Do not shy away from grand corruption strategies, even if strategies that address administrative corruption appear more achievable. • Comprehensive programs that integrate both supply- and demand-side anticorruption initiatives may be most effective. • The political will to fight corruption is critical,but may change over time. • Diplomatic incentives can boost political will for anticorruption reforms. • Strong political will encourages civil society and government stakeholders to work together for effective program results. • Secure and maintain stakeholder commitment to achieve anticorruption goals. • Seize the opportunity to initiate anticorruption activities at times of political-economic transformation.” (p. 79)

2.2.5 Findings and Conclusion 2: Designing and Executing New Programming for Armenia The Practitioners Guide also provides several useful guideposts for converting strategy into new programing in Armenia across all sectors of society. This includes programs in the sectors that are the principal focus of this Literature Review: Civil Service, Civil Society, and Media Professionalism and Independence.

First, according to the Guide, anticorruption programs to increase transparency and accountability in the Civil Service that have the greatest chance of long-term success are those that ‘change the rules’ of the game. As government officials respond to incentives, such change of the rules must address this factor as a fundamental. Incentives that invite or support the abuse of public authority for private gain must be changed. Incentives are influenced by rules of conduct, rewards for integrity, effective penalties for abuse, and systems for detecting abusive practices. As the Guide states:

These policy interventions aim to change either an aspect of the government system itself by creating fewer opportunities or reasons to engage in corruption. Rule-changing programs bypass the risk that the monitors themselves may become corrupt or that the bureaucrats will find ways to skirt the newly instituted monitoring and incentives procedures. By attempting to align the bureaucrats’ own incentives with those of society, rule- changing programs have the potential to be more sustainable in the long term. (p. 39)

USAID.GOV Final Report, p12 July 15, 2019

ARMENIA ANTI-CORRUPTION AND INTEGRITY SYSTEMS

Significantly, New-Rule’s Field Research found that there is increasing awareness among government officials that changing the incentive structure is a prerequisite for eradicating the systemic nature of corruption.7

Second, standardizing government processes helps to reduce corrupt behaviors and build a culture of integrity and compliance. Such programs can include open budgets, open hearings, and access to information. Accountability mechanisms can include codes of conduct, asset declarations, administrative/procedural simplification, audits, and complaints management, and legal drafting.

Third, transparency measures must be accompanied by activities that leverage the additional information made available. Activities designed to increase transparency and accountability must simultaneously promote civic monitoring of government by civil society, media, or joint initiatives to contribute to this objective.

Importantly, Armenia is positioned to advance a number of transparency-enhancing measures to generate and provide broader access to information. Financial asset disclosure forms, internal audit reports, and published judicial decisions and dockets are examples of transparency measures. But the goal should be to achieve “purposeful transparency” that facilitates citizens using the information to hold government more strictly accountable. As the Guide states:

But merely expanding access to information can be seen as superficial and does nothing to address the corruption issue if there are no accompanying processes, whether internal or external, for reviewing/validating the information. For example, it is important to combine asset declaration directives with verification provisions and public access to the information needed to test veracity of the disclosures. Likewise, when hotlines and citizen complaint mechanisms are promoted, it is also important to ensure that there is visible follow-up to these complaints or else rising expectations will be quickly squashed. (p. 43)

New-Rule’s Field Research also found that Armenia citizens are interested in taking steps to expand the use of official asset declarations as a tool of accountability.8

7 Field Research: “Changing the narrative and status quo of corruption by changing the incentives the system it creates is important. One MP mentioned that it was important for people to experience and internalize reforms rather than just having a democracy on paper. The reformed system needs to make it better for people to follow the rules and laws rather than making it easier to pay a bribe and go around the system. One effort she mentioned that is underway is the digitization of government administrative processes with the goal of not only increasing efficiency but also decreasing the number of government-citizen interactions on administrative issues to reduce the opportunities for bribes and other corrupt acts.” 8 Field Research: “While the laws for asset declaration at all levels of the civil service and public service are largely in place, they need some tweaking by specialists working with the agencies. The bigger issue is that of enforcement when these declarations reveal ethics or criminal violations, which does not appear to be the clear responsibility of any agency.”

USAID.GOV Final Report, p13 July 15, 2019

ARMENIA ANTI-CORRUPTION AND INTEGRITY SYSTEMS

Third, an important lesson for building integrity systems in Armenia can be distilled from prior programming in the region, including Georgia9 and Ukraine10, which is to increase sense of citizen control over outcomes. Increasing people’s sense of control can cause them to take action against an issue which they previous felt they could do nothing about. This can be achieved by making people aware of initiatives they can take to prevent corruption or offering alternative behavior. Behavior change campaigns should clearly outline the alternative that is expected.

Finally, Armenia should consider ways to introduce and expand the use of “social accountability mechanisms,” which are increasingly popular and critical tools for citizen engagement. There are several social accountability approaches that citizen groups use to monitor and oversee the delivery of public services that are often vulnerable to corrupt practices. The Guide recommends that Practitioners consider making wider use of such mechanisms as:

Practitioner’s Guide Recommendations on Social Accountability Mechanisms • Public Expenditure Tracking surveys, when linked to public information campaigns, can contribute to reducing leakages in service sector budgets locally. • Citizen report cards can identify consumer complaints about the corrupt delivery of public services. Similarly, social audits and community oversight can contribute to exposure of corruption and effectiveness in program implementation. Community scorecards can point to corruption vulnerabilities and contribute to more responsive service delivery and greater user satisfaction. • Complaint mechanisms can contribute to the reduction of corruption by linking citizens directly to systems that can hold managers to account. • Community-based information campaigns can have positive impacts on the level of citizen engagement in accountability initiatives with school systems, for instance.” (p. 43)

2.3 Analysis of USAID Anticorruption Programming Worldwide: 2007-2013 (2014) The Analysis of USAID Anticorruption Programming Worldwide: 2007-2013 (Programming Analysis) is a comprehensive report on the agency’s anti-corruption programming from 2007-2013 that assesses results and distills lessons learned. This report is also intended to inform and bolster USAID’s Strategy on Democracy, Human Rights and Governance (DRG) (2013) referenced above, which treats corruption as an issue that must be addressed across all sectors. The Strategy prioritizes initiatives to foster greater accountability, promote citizen participation and inclusion, and enhance the integration of these DRG principles and practices throughout USAID’s portfolio.

9 While not perfectly analogous, the Guide provides insights into how the Rose Revolution in Georgia created conditions to design and execute a comprehensive anti-corruption reform program, that could be applied selectively to Armenia. These included sweeping reforms in the justice sector, economy, education and other areas that made significant progress on both institutional and administrative levels. 10 The Guide also distills programming lessons from Ukraine, where public outrage with widespread corruption was among several key factors for ousting the president in late 2013 and placed anticorruption at the top of the presidential and parliamentary election agenda. The donor community, while pledging strong support to the new Ukrainian administration, conditioned its assistance on the passage of anticorruption reforms and government commitments to implementing them quickly. Nevertheless, the post-Maidan leadership has been voted out of power in part due to widespread citizen dissatisfaction with pace and extent of reform.

USAID.GOV Final Report, p14 July 15, 2019

ARMENIA ANTI-CORRUPTION AND INTEGRITY SYSTEMS

A principal objective of the Programming Analysis is to help missions fulfill the DRG objective to integrate anticorruption initiatives into all sectoral programs that may be affected by corruption, including by focusing resources for strengthening democracy, governance, human rights, health, education and economic growth and trade and countering climate change more explicitly on anticorruption targets. Further, to achieve maximum impact, this integration of anti-corruption objectives should be performed evenly across sectors.

The Programming Analysis provides a helpful summary of the principal categories of USAID’s direct programming that explicitly aimed at countering corruption between 2007-2013. Such programming was largely focused on a pragmatic approach of supporting established independent agencies and helping them develop and implement policies, procedures and systems to enhance government accountability and control corruption. These interventions included support for income and asset declaration management systems, political party and election finance monitoring systems, corruption complaint management systems, and conflicts of interest management systems, among others.

Sectoral projects that included countering corruption as one element were also designed to implement systems to improve efficiency and transparency of government operations and service delivery. Particularly, e-government systems (e-procurement, e-customs, e-trade, etc.) were typical interventions for strengthening governance and institutionalizing citizen participation in decision making processes.

USAID civil society and media projects evolved from supporting public awareness campaigns to more sophisticated activities including citizen watchdog and advocacy initiatives. Government accountability to the public was promoted by involving citizens in policy development and decision-making processes, for example, through public consultations on major legislation, public councils affiliated with various governmental agencies, and public oversight of budgeting and procurement decisions.

2.3.1 Findings and Conclusion 1 The Programming Analysis supports the conclusion of other literature reviewed for this report that indicates that Armenia is ripe for innovative and strategic programming that addresses the systemic elements of corruption. According to the Analysis, this ripeness is due to several considerations:

First, as described in detail Section II of this Literature Review, Armenia has not only joined international instruments, including the UN Convention Against Corruption (UNCAC), Group of States against Corruption (GRECO), and the OECD’s Anti-Corruption Network for Eastern Europe and Central Asia (ACN), it has been subject to regular and intensive peer reviews under these instruments. This provides USAID with several well-defined entry points for programming in which the Government will have the added incentive of demonstrating full compliance with an international obligation.

Second, as also discussed in detail in this Literature Review, Armenia is demonstrating political will to adopt a comprehensive strategy to root out corruption. As USAID considers its strategy for a whole-of society approach to countering corruption that focuses in integrity-building across government and society, the Programming Analysis provides several useful benchmarks.

USAID.GOV Final Report, p15 July 15, 2019 ARMENIA ANTI-CORRUPTION AND INTEGRITY SYSTEMS

Reflecting the state of debate over how to build and sustain support for anti-corruption interventions, the Programming Analysis provides key recommendations that reinforce the findings of the other two USAID reports including:

• Secure commitments of the key counterparts and identify ‘champions’: Champions should be involved or consulted on program design and should assume specific obligations and responsibilities for cooperating and contributing to the programs once launched. To ensure sustainability, tie the initiatives to a local “champion of reform” or to an institution interested in reform, either within or outside the government, such as business associations that can carry out reforms over time.

• Use supply/demand approach: Use supply and demand approaches for programming to engage both government and non-governmental sectors. Experience shows that a combination of top-down and bottom- up approaches in anticorruption projects is very effective for ensuring government accountability to reforms, as well as sustainability of the reforms. When the supply/demand approach is applied to sectoral projects the work on the demand side should be reinforced to a meaningful level. If separate supply and demand projects are implemented, they should be coordinated with each other. For example, a project in the health sector working on the supply side should be complemented with a civil society project focused on health issues that monitors other deliverables. (p. 8)

Third, the Programming Analysis provides useful data and insight that the USAID Armenia could consider as part of a strategy to support Anti-Corruption Agencies (ACAs). A key area of public debate in Armenia today is whether to create a new anti-corruption agency that would be responsible for both prevention and punishment. The Programming Analysis discusses USAID’s track record between 2007-2013 of increasing support for viable anticorruption and other accountability institutions, including Ombudsmen, Supreme Audit Institutions, and similar independent oversight agencies.

Fourth, USAID has also increasingly aided governments in building integrity-based compliance cultures. It has helped government agencies develop integrity plans. It has helped them perform better diagnostics aimed at mapping government business processes for corruption risk. This has included support for governments to perform Vulnerability to Corruption Assessments (VCA) to detect gaps and deficiencies. In addition, programs often assisted these agencies by strengthening their public communication efforts and enhancing their interagency cooperation.

Fifth, the Programming Analysis also provides a useful roadmap for the USAID Armenia mission to support the demand side sectors of civil society and media. More than half of the projects identified for the Programming Analysis were focused on the demand-side. As described in in the Analysis, these programs:

promoted civil society and media participation in the anticorruption agenda, organizing civil society around anticorruption reforms and providing support to Civil Society Organizations (CSOs) and the media to conduct advocacy, watchdogs, legal assistance, and public awareness and education activities. Some projects worked exclusively with the mass media to stimulate and support investigative reporting. Sectoral projects with civil society components most typically involved CSOs in conducting public awareness and education activities, although some supported watchdog activities as well. Overall, CSOs became proactive and effective in monitoring public budget formulation and expenditures, procurement, the judiciary, public service delivery, and other governmental operations. These activities demonstrated success in advocating for anticorruption reforms and participating in policy decision processes. (p.7)

USAID.GOV Final Report, p16 July 15, 2019 ARMENIA ANTI-CORRUPTION AND INTEGRITY SYSTEMS

Sixth, for purposes of planning the future of programming in Armenia, unlike projects working with the government, the impact of civil society projects was often measured by changes in societal behavior. This includes changes in citizen tolerance for corruption and a reduction in initiating bribery or exchange of favors, among others. The Programming Analysis describes a center in Armenia which has been directly supported by USAID under the Armenia Against Corruption project. This center provided legal support in more than 3000 cases between 2008 and 2013 of bribery or exchange of favors, among others.

2.4 International Standards and Treaties In general, when designing anti-corruption policies, strategies and action plans, nations seek to link them to implementation of international legal obligations. In the case of Armenia, these include the United Nations Convention Against Corruption (UNCAC), Group of States Against Corruption (GRECO), and Council of Europe Criminal Law Convention on Corruption and Council of Europe Civil Law Convention on Corruption. Donors such as USAID often provide countries assistance to support such implementation and tie programming to achieving specific targets the nation has set to demonstrate compliance. The program that result focuses on all different types implementation, including: drafting of laws and regulations to assure the domestic law fulfills international obligations; assuring enforcement of these laws; and adopting international standards for prevention of corruption in areas of financial disclosure, freedoms of access to information, whistleblower protection, conflicts of interest, and public procurement.

For purposes of this Literature Review, New-Rule has reviewed the principal international legal instrument which shapes Armenia’s obligations for punishment and prevention of corruption, which is the United Nations Convention Against Corruption (UNCAC). The Convention, which Armenia adopted in 2007, ranks high in the nation’s legal hierarchy, just below the Constitution but above other laws. Accordingly, UNCAC provisions supersede any other contrary provision in domestic law. Currently, Armenia is strengthening implementation of UNCAC by adopting actions to criminalize and punish many forms of corruption, including not only bribery but trading in influence, money laundering and embezzlement. The focus of New-Rule’s Literature Review is on UNCAC’s requirements that Armenia strengthen prevention of corruption, in particular in the three sectors that are the focus of this Review: Civil Service, Civil Society, and Media.

UNCAC’s requirements on prevention are set forth in Chapter II (“Preventive Measures”), which provides that Armenia will act in accordance with the fundamental principles of its legal system to: “develop and implement or maintain effective, coordinated anti-corruption policies that promote the participation of society and reflect the principles of the rule of law, proper management of public affairs and public property, integrity, transparency and accountability.” (Article 5(1)). To assure compliance with Article II, Armenia must establish and promote effective practices aimed at the prevention of corruption. Accordingly, “Each State Party shall endeavor to periodically evaluate relevant legal instruments and administrative measures with a view to determining their adequacy to prevent and fight corruption.” (Article 5(3)).

USAID.GOV Final Report, p17 July 15, 2019 ARMENIA ANTI-CORRUPTION AND INTEGRITY SYSTEMS

Importantly for USAID purposes, Armenia recently began its second round of UNCAC Implementation Review11 by the United Nations Office on Drugs and Crime, which will focus on Chapter II on Prevention and Chapter V on Asset Recovery. The Implementation Review is a peer review process that assists State parties to effectively implement the Convention. It is a timely opportunity for Armenia to exchange good practices and define specific needs for technical assistance and to promote and facilitate the provision of such assistance. Armenia is being reviewed by Serbia and the Dominican Republic and has recently named the government officials who will participate in this review (see Annex 2).

It is important to note that Armenia’s obligations to prevent corruption under UNCAC are reinforced by the voluntary commitments that it has undertaken under international initiatives to promote best practices, including the OECD’s Anti-Corruption Network for Eastern Europe and Central Asia (ACN) and Open Government Partnership (OGP). As discussed in detail in Section III below, the OECD and OGP require regular per reviews and self-assessment processes that are aligned with the UNCAC implementation. As a result, Armenia has been conducting reporting in several key preventive categories, including:

Key Armenia International Reporting Requirements • Preventive anti-corruption body or bodies, their mandate and powers, independence and accountability and capacity1; • Public Sector integrity-building through efficient, transparent and objective systems for recruitment, hiring, retention, promotion and retirement of public officials, • Transparency and prevention of conflicts of interest; • Codes of conduct for public officials as eff tools for promotion of integrity; honesty and responsibility among public officials; • Reporting by public officials of acts of corruption; • Asset disclosure systems; • Public procurement and the management of public finances; • Public reporting, including access to information concerning decision making on public administration through the Freedom of Information Legal Framework; and • Role of civil society in prevention of corruption.

2.4.1 Findings and Conclusion 1 Armenia has established a solid track record of facing the many long-term and technical challenges posed by Chapter II of UNCAC. The Technical Guide to Implementation of the Convention, which the Conference of Parties produced in 2009, recommends the following with respect to preventive anti-corruption policies and practices:

Many countries may put emphasis on control measures in such fields as legislation, investigation and prosecution. Such an approach is only a part of effective anti-corruption policies; it is also expensive and focuses on the failings of and abuse of rules, procedures and public funds. Emphasis should be given to prevention because it not only safeguards the integrity of government and the political system and ensures

11 The first cycle of the Review Mechanism started in 2010 and covered the chapters of the Convention on Criminalization and Law Enforcement and International cooperation. The United Nations Office of Drugs and Crime oversees the Review. For further refence see, United Nations Conference of the States Parties to the United Nations Convention against Corruption Implementation Review Group, Sixth session, 2015, Review of Implementation of the United Nations Convention against Corruption – Armenia.

USAID.GOV Final Report, p18 July 15, 2019 ARMENIA ANTI-CORRUPTION AND INTEGRITY SYSTEMS

the application of rules, procedures and funds, but has wider benefits in promoting public trust and managing the conduct of public officials. (Chapter II.1)

For example, Armenia has made a concerted effort to comply with the UNCAC requirement to establish specialized bodies to address the prevention of corruption. In Armenia, there currently are a number of institutions or units that specialize in the fight against corruption. Many of these operate in the realm of law enforcement, including the Police of Armenia, the Prosecutor-General’s Office, the National Security Service, customs, and tax authorities. Apart from law enforcement, the institutional framework also includes the Anti-Corruption Council, the Ethics Commission of High-Ranking Officials (CEHRO) and the Commission on the Prevention of Corruption (CPC)12.

Armenia’s reporting to the UN on compliance has also demonstrated that the nation seeks to adhere this recommendation through coordinated policies. Thus, Armenia has dedicated significant effort to developing and implementing its Anti-Corruption Strategy and implementation Action Plan for 2015-2018. This Strategy aspired towards a framework that moves from general principles to clear and realistic strategies, action plans and procedures, and regular monitoring of implementation of measures to apply the strategy. The current government of Armenia, led by Prime Minister Pashinyan, is now revising and updating the Strategy. This is an opportunity to expand and deepen implementation of the Technical Guide’s recommendations for state parties to approach prevention in a comprehensive and coordinated manner. According to the Technical Guide, such an approach should lead Armenia:

to systematic collection and collation of quantitative and qualitative information on the basic situation in the country, to a strategy that sets overall goals that are then translated into objectives and action plans in order to enable comparison with the results achieved and enable adjustments to the policies and their implementation. The processes of drafting, adoption, implementation and monitoring and assessment of the strategy should be planned, led and coordinated among all relevant stakeholders (public and private sectors, civil society) and cover the full range of sectors or areas where corruption might occur. (Article II.2)

Finally, as recommended by the Technical Guide, Armenia is endeavoring to fulfill prevention goals through raising public awareness on corruption. As the Guide recommends:

The promotion of the participation of society. An effective strategy would include means for awareness- raising in the general public of the impact of and threats posed by corruption. Active participation of society in supporting such a strategy in its development and subsequent implementation has to be ensured by its active and early involvement. Therefore, the policy has to envisage specific ways in which representatives of society will be included in all processes of its design, content, development, endorsement, implementation, and review – issues discussed in article 13 – as well as the means to measure progress. (Article II.3)

As discussed in more detail in the Field Research section, during their recent peer reviews of Armenia’s anti-corruption performance, the OECD ACN and OGP found that it has taken several steps to promote public awareness and participation in recent years. These include steps to: promote the contribution of the public to decision-making processes; institute the freedom to seek,

12 Armenia’s institutional arrangement for corruption prevention and coordination has changed fundamentally with the 2018 adoption of the Law on Commission for the Prevention of Corruption establishing an independent body known as the CPC. The CPC will replace the CEHRO and will have broad preventive powers related to promotion of integrity, development of policy, raising public awareness and training.

USAID.GOV Final Report, p19 July 15, 2019 ARMENIA ANTI-CORRUPTION AND INTEGRITY SYSTEMS receive, publish and disseminate information concerning corruption; and raise public awareness on anti-corruption bodies, public access to information and anonymous reporting of corruption.

2.5 Armenia Specific Documentation: Anti-Corruption Reforms in Armenia, 4th Round of Monitoring of the Istanbul Anti-Corruption Action Plan, OECD (2018) Armenia is a member of the OECD’s Anti-Corruption Network for Eastern Europe and Central Asia (ACN), which was established in 1998 to support countries in this region in their efforts to prevent corruption through sharing best practices, know-how, and peer-learning programs. The OECD conducts periodic reports on Armenia as a member carrying out anti-corruption reforms and implementing recommendations of the ACN’s Istanbul Anti-Corruption Action Plan (IAP). For this Literature Review, we reviewed Anti-Corruption Reforms in Armenia, 4th Round of Monitoring of the Istanbul Anti-Corruption Action Plan (OECD Report) covers the 4th round of monitoring, a period of four years, and was adopted on July 4, 2018.

The OECD’s 4th Round evaluation is benchmarked to OECD third-round recommendations. The OECD team evaluates how Armenia has performed in various sectors over a four-year period (2014-2018). Based on this analysis, the OECD then introduces new benchmarks and develops new, more specific and granular recommendations on priority areas for attention. The OECD Report provides a timely and relevant assessment of the nation’s progress to prevent corruption. Given that the Velvet Revolution was particularly focused on rooting out corruption, the OECD Report underscores the importance of the historical moment:

Civil society of Armenia actively supported the protests referred to as confrontation between the existing autocratic corrupt regime and the hope for democracy” The new Prime Minister Pashinyan pledged that There will be no privileged people. There will be no fraudulent elections. Bribes will not be given. There will be no artificial economic monopolies. All will be able to engage in whatever business they want. Corruption in the country will be rooted out’. (p. 20)

While the 2018 Velvet Revolution created a democratic change and placed the trust in the new regime, the OECD is concerned that this trust may be lost without “real action against corruption.” (p. 29) The OECD urges the Government to leverage the momentum of massive popular support and turn the promises into consolidated actions against corruption. Building on three prior rounds of reporting, the OECD Report identifies several concrete opportunities for Armenia to capture and build success and innovate to address recurring challenges.

Below is a summary of pertinent parts of the 4th Round OECD Report focused on Armenia’s progress executing policies and strategies and building institutions aimed at prevention of corruption. Given the sector-focus of this Literature Review, we then discuss key Findings and Conclusions of the OECD Report as they pertain specifically to building integrity in the Civil Service, Civil Society, and Media.

2.5.1 Anti-Corruption Policy and Strategy According to the OECD Report, Armenia initiated several corruption prevention reforms at the policy level between 2014 and 2018, including strengthening institutions and laws. At the same time, it has not shown significant resolve to address corruption:

USAID.GOV Final Report, p20 July 15, 2019 ARMENIA ANTI-CORRUPTION AND INTEGRITY SYSTEMS

Armenia adopted a comprehensive legal framework for civil service and for public service integrity, including regulations on ethics and conflict of interests. It criminalized trading in influence and illicit enrichment, introduced the laws on whistleblower protection and the Commission for the Prevention of Corruption, as well as enhanced the legal provisions on asset declarations and public procurement. Armenia also introduced various e-governance tools and services, the system for publication and verification of asset declarations and expanded e-procurement. These efforts however had only limited impact so far and corruption remained a significant problem in critical areas of public administration, such as the judiciary, tax and customs, health, education, military, and law enforcement. (p.8)

The Report favorably cites the fact that Armenia adopted an Anti-Corruption Strategy and implementation Action Plan for 2015-2018 through public consultations and NGO participation. It discusses how this Strategy focuses on prevention in four priority sectors, a health, tax, education and service delivery by police, and was improved through inputs from civil society.

Generally, however, the OECD is concerned that Armenia is not engaging the public as a partner in corruption prevention. It recommends that opinion surveys be carried out regularly and that they be used in both developing anti-corruption policy and monitoring implementation. They should be designed to measure the level of corruption, public trust and the impact of anti-corruption measures, including at sector level. Further, the results of the surveys should be publicized and used in the anti-corruption policy development, implementation and monitoring.13

Moreover, the OECD finds that Armenia’s Strategy is not based on sufficiently robust diagnostics to prioritize preventing corruption in the areas of highest vulnerability to corruption. The OECD Report further recommends that Strategy be “based on needs and risk assessment and include ambitious measures targeting actual corruption risks and key areas that are vulnerable to corruption and require reform as a matter of priority.” (p. 8)

The OECD Report highlights the fact the Government is currently developing a new anti- corruption strategy to replace the 2015-2018 Strategy as an opportunity. The OECD recommends that the Government engage even more widely with civil society and the public on new priorities focus on the key areas that are most vulnerable to corruption in Armenia. New-Rule’s Field Research found that civil society leaders are keenly interested in holding the government accountable through new mechanisms.14 Below is a list of the OECD recommendations in this regard:

1. Ensure that the anti-corruption policy documents are developed with wide stakeholder engagement and are based on needs and risk assessment. 2. Include ambitious measures to target actual corruption risks, key areas vulnerable to corruption requiring reform as a matter of priority.

13 Significantly, according to the OECD, “The budget for the implementation of the anti-corruption policy documents was provided by the USAID direct grant to the state budget (749 110 USD). However, only 15% of these funds have been used implying poor financial planning or the lack of proactivity to implement the policy documents.” (p. 8) 14 Field Research: “Civil society also has a role to play in holding the government accountable, and one interviewee asserted that the government understands the value of CSOs but needs to develop a strategy to make use of civil society. Another interviewee asserted that the multiple stakeholders have different understandings of what accountability means and that the government and civil society need to determine jointly the functions, terms, and limits of what each will do and how.”

USAID.GOV Final Report, p21 July 15, 2019 ARMENIA ANTI-CORRUPTION AND INTEGRITY SYSTEMS

3. Ensure participatory implementation and regular monitoring of the strategy. Systematically publish the results of monitoring to ensure accountability. 4. Carry out public opinion surveys to measure the level of corruption, public trust and impact of anti-corruption measures, including at sector level. Publish the results of the surveys and use them in anti-corruption policy development, implementation and monitoring. 5. Promote internal integrity action plans in public bodies based on risk assessments. 6. Ensure that anti-corruption policy documents are realistic, affordable and enforceable, accompanied by necessary budget for implementation. Include financial reports in the reports on implementation. (p. 27)

In short, following the OECD guidance, Armenia is in position to adopt a “whole-of-society” strategy for countering corruption that engages the public as a partner. This will require more strategic engagement and communications, leading to structured and systemic awareness raising. This engagement should be targeted to the sectors with the highest risk of corruption using methods and activities adapted to each target group.

2.5.2 Corruption Prevention and Coordination Institutions The OECD Report analyzes the progress that Armenia has made over the past four years in building the institutional architecture of anti-corruption. First, it reviews the activities of the Anti- Corruption Council (ACC), which is attached to the Office of Prime Minister and was established a body to convene the government and coordinate implementation of the 2015-2018 Strategy. At the time of the third round of monitoring, the ACC was not active, and the functions of its secretariat were entrusted to a Government unit, which was not staffed. Anti-corruption capacity in the state bodies was limited, and they did not receive any methodological or analytical guidance from the ACC. Reforms starting in 2015 envisaged increased powers and revised composition of the ACC, an Expert Task Force (funded by the USAID), and a permanent secretariat to support its work.

During the 4th round, the OECD found that the ACC held more regular sessions and is more open to media. The ACC is now chaired by the Prime Minister. NGOs are now represented in the ACC as members or observers and actively participate in its sessions, contributing constructively to new laws and programs on illicit enrichment, whistleblowing and the institutional framework.

Though the ACC has been elevated, the OECD critiques the institution for lack of specialized and skilled staff to analytically and administratively support its work. In particular, the OECD does not have high confidence in the Anti-Corruption Programming and Monitoring Department and the Expert Task Force both of which are intended to support the ACC. While trusted with coordinating and monitoring implementation of anti-corruption, they have not been proactive. According to the OECD, both the development of the action plans and the M&E has been weak:

It took three years to finalize the adoption of the action plans for the four chosen sectors, which according to the Government is due to the extensive public consultations conducted on these action plans. The annual reports on implementation (for 2015 and 2016) have been prepared and published on the Government website containing brief information on selected, but not all, measures of the action plan. Likewise, the implementation report for 2017 is a description of actions in relation to selected measures of the action plan presented in a chart, without any analysis, evaluation of the effectiveness or impact. (p. 25)

The OECD encourages Armenia to provide the ACC with “the resources that are necessary for the efficient exercise of its mandate, including dedicated staff specialized in anti-corruption and ensure that its secretariat is proactive and engaged with state bodies to guide and boost their anti-

USAID.GOV Final Report, p22 July 15, 2019 ARMENIA ANTI-CORRUPTION AND INTEGRITY SYSTEMS corruption performance.” (p. 9) Importantly, during meetings that New Rule conducted with staff of the Prime Minister’s Anti-Corruption Programming and Monitoring Department, we found that they are vitally interested in strengthening their skills and capacity to conduct both coordination, M&E and strategic communications on behalf of the Government.15

The OECD also discusses recent progress with the Commission of Ethics for High Ranking Officials (CEHRO), commenting that generally its mandate, budget and resources have been enhanced. The OECD Report cites several developments that CEHRO has been able to implement across government both horizontally and vertically. In particular: ethics commissions are in place in state bodies; the position of an “integrity affairs organizer” has been established.

Moreover, according to the OECD, a number of progressive steps have been made to enhance CEHRO’s system of monitoring asset declarations. As stated in the Report:

The CEHRO was granted the powers and tools to verify declarations, including access to relevant databases and the mandate to impose administrative sanctions, or refer a case to the law enforcement in case elements of a criminal offence are identified. The electronic verification system developed with the support of the World Bank is connected to the relevant databases and is operational. In addition, a new criminal law provision on illicit enrichment enables law enforcement to pursue cases against public servants in connection with their unjustified wealth revealed through asset declarations. (p. 52)

At the same time, the OECD is concerned that CEHRO has been perceived as not very proactive in applying its powers on asset declarations and conflicts of interests to MPs in Parliament. Potential conflict of interests, although regulated, have not even once been declared in practice and the MPs continued to vote for laws in a conflict of interest situation. New-Rule’s interviews with CEHRO officials indicated that they have a number of reforms that they would like to make to enhance enforcement of laws and regulations applicable to asset declarations.16

The future mandate and capacity of both the ACC and CEHRO will depend on how other corruption prevention institutions take shape. The OECD Report cites Armenia’s adoption of new legislation providing for an independent corruption prevention body, Commission for Prevention of Corruption (CPC). This CPC is purportedly intended to replace CEHRO. It commends this institutional reform as aligned with international anti-corruption standards, included UNCAC and GRECO, and it recommends that steps be taken to assure the objective and transparent selection of commissioners of the CPC free from undue influence.

15 Field Research: “The Prime Minister’s Anti-Corruption Programming and Monitoring Department is also interested in being transparent about their work and activities and that of the government. They have established a web-based platform to interact with the public and share information. However, they admitted that it had not been very successful in attracting interest or traffic and that the platform was not very enticing. They asked for advice and assistance in spicing up both the content and the interface.” 16 Field Research: “The work of the Ethics Commission for High-ranking Officials (CEHRO) has been highlighted as a model for transparency in declaration of assets, conflicts of interest, and other financial assets, although the institution itself asserts improvements in the law are necessary regarding threshold amounts and ability to act of the information gained in an enforcement capacity. Elected officials must declare assets but these data are only releasable to some media and only with approval of the declarer.”

USAID.GOV Final Report, p23 July 15, 2019 ARMENIA ANTI-CORRUPTION AND INTEGRITY SYSTEMS

As discussed further below, however, as Armenia moves forward with forming a new institutional architecture, it should carefully calibrate the role of the CPC with the ongoing activities of the ACC and CHERO. Regardless of how the institutional architecture is formed, the OECD encourages Armenia to improve the Government’s monitoring and evaluation (M&E) function by adopting a range of new systematic procedures and tools to track the progress, evaluate impact, and boost performance of the responsible agencies. The metrics should include identifying points of accountability with a clear division of tasks, regular meetings, interactions with the responsible agencies and guidance provided to them. M&E should require regular publication of reports to boost the timely implementation.

2.5.3 Findings and Conclusion 1: Building Integrity in the Civil Service The above section summarizes the OECD Report’s assessment of Armenia’s 4th Round progress on corruption prevention policy, strategy and institution-building. Based on this framework, below is a discussion of key Findings and Conclusions of the OECD Report as they pertain to building integrity in the Civil Service, Civil Society, and Media.

The OECD cites several constructive developments since the third monitoring round that indicate that Armenia is laying the foundation of integrity-building in the civil service in line with European standards. Certain of these developments have been corroborated by the Field Research.17 The push for public service reform started in 2015 with the support of the European Union and SIGMA. In 2018, Armenia passed two new laws setting principles and rules for civil service management and integrity in public service – the Law on Civil Service (CSL) and the Law on Public Service (PSL). The new CSL institutes merit-based recruitment. The new PSL considerably improves the integrity framework for public officials, including the regulations on conflict of interest, codes of ethics, asset declarations and ethics commissions.

Since the OECD’s third round, Armenia has also adopted a standalone law on whistleblowing, the introduction of performance evaluation in the legislation on civil service, and the abolition of so- called attestation procedure for civil servants. The OECD commends the fact that Armenia’s civil service recruitment procedure is now fully merit-based.

Based on these legislative achievements, Armenia has laid the “macro-foundation” for integrity- building in the public service. The new CSL and PSL, however, have not entered fully into force, and there are inconsistencies and gaps calling for further micro-reforms and secondary legislation. The OECD report provides several helpful insights into the next steps required to address operational gaps and weaknesses in the legal framework. Further, to push through to advanced levels of civil service reform, Armenia should adopt a more evidence-based and risked-based approach. Armenia should conduct risk assessments or other studies to target its policy solutions to specific risks and challenges.

17 Field Research: “Additionally, all civil servants are subject to asset declaration requirements. When asked about the buy-in from civil servants themselves, one interviewee stated that while they were initially concerned, the organizations representing civil servants have participated in the reform process and the Union of Armenian Government Employees has contributed research about guidelines for civil servants and public administration.”

USAID.GOV Final Report, p24 July 15, 2019 ARMENIA ANTI-CORRUPTION AND INTEGRITY SYSTEMS

While both the legislative and institutional reforms for integrity building discussed above are promising, the OECD Report highlights how important it will be for Armenia to establish accountability for implementation, enforcement and – given the nature of these reforms – self regulation. One of the key issues facing the Prime Minister and his team is how to assure that government responsibility and accountability for anti-corruption is established vertically and horizontally and in a streamlined manner.

Generally, the OECD Report reflects a concern that is widely shared among the stakeholders interviewed by New-Rule that the further anti-corruption reforms that are widely supported as specific, logical, and realistic are nevertheless caught in procedural limbo. Presently, the situation is very fluid, or as Transparency International Armenia put it in a recent note, “there is certain institutional chaos.”(Anti-Corruption Agenda for Armenia, Transparency International Anti- Corruption Center, p.12) As discussed above, Armenia’s institutional arrangement for corruption prevention and coordination has changed fundamentally with the 2018 adoption of the Law on Commission for the Prevention of Corruption establishing an independent body known as the Commission for the Prevention of Corruption (CPC). The CPC will replace the Ethics Commission of the High-Ranking Officials (CEHRO) and will have broad preventive powers related to promotion of integrity, development of policy, raising public awareness and training. While the establishment of the CPC will align Armenia more closely to UNCAC and other international anti- corruption standards, the practical results of this institutional change and impact on other existing bodies is uncertain.

Importantly, the new law creating the CPC would give the agency certain financial and institutional independence, expanded authorities, and powers to reach all levels of corruption through enforcement and implementation. The CPC is chartered to examine violations of the rules on asset declarations, conflict of interests, and other violations of the ethics rules and provide recommendations on resolving them to the respective state bodies or public officials, who are obliged to report back about the follow up on these recommendations. In addition, the CPC has a clear mandate to promote integrity in public service, provide methodological guidance and coordination to ethics commissions, and serve as an appeals body for their decisions.

Thus, while the OECD as well as other stakeholders support Armenia’s aspiration to create the CPC as an independent prevention body, they caution that this organizational shift risks discontinuity and loss of accumulated expertise and data. As the OECD Report states: “It must be underlined that the CPC will only be able to make change in practice if its setting up and exercise of its mandate are free from political interference as pointed out in the chapter 1 of the report. At the same time, the monitoring team is concerned that this change, although positive, may adversely affect the continuity of the good work of the CEHRO that took many years to start, and will most certainly, further delay the impact in practice.” (p. 39)

Regardless of the institutional architecture that is established to manage prevention, the OECD recommends several steps that should be taken to build on Armenia’s progress in building integrity in the Civil Service. Below is a discussion of each of the areas of the “micro reform mechanisms” and “secondary legislation” will be required to create both horizontal and vertical accountability and standards of enforcement.

USAID.GOV Final Report, p25 July 15, 2019 ARMENIA ANTI-CORRUPTION AND INTEGRITY SYSTEMS

First, the OECD recommends steps be taken to ensure that the ethics commissions that have now been established in public institutions function properly. Thus, while the new CSL lays the foundation for creating a strong mechanism responsible for the enforcement of common civil service standards throughout the public service, this area of reform faces a confusing organizational chart. While Ethics Commissions have been set up to help regulate behavior in most state bodies, their activities are not well-defined in terms of scope of authority and competence; they do not have a standardized approach to regulating civil servants and political officials across government Moreover, there is no uniform code of conduct for public service to help the Ethics Commissions preform this role.

Thus, at this stage, to assure the standardization of integrity-building processes, the OECD recommends designating a body responsible for co-ordination of the activity of ethics commissions and for monitoring their effectiveness. This body should also co-ordinate the human resources management departments, the integrity affairs organizers and the anti-corruption focal points in each state agency. Further, this body should ensure that ethics commissions have necessary capacities, guidance and tools to perform their functions in practice.

Second, while the OECD commends the progress Armenia has made with respect to requiring public officials to disclose their assets, it recommends actions be taken to assure that “verification is carried out without political interference or bias, alleged violations are followed up, proportionate and dissuasive sanctions are imposed and the results of enforcement are made public.” (p. 10)

Third, Armenia is making steady, but halting, progress in an area fundamental to integrity- building, which is the creation of an actionable set of regulations and practices around conflicts of interest. The OECD recommends that more stringent requirements around the declarations that public servants should sign and execute. Disclosure requirements should be enforced with respect to not only actual but potential conflicts of interest. The definition of how to include parties related to the public servants should be expanded in scope. There should be clear sanctions for failure to declare or follow the rules. These rules should be particularly active in high risk sectors such as public procurement and there should be clear provisions for how to address the activities of the highest ranked public servants, who do not have supervisors.

Fourth, the OECD recommends that, to support the CPL and PSL goals to build ethical organizations, it will be necessary to adopt secondary legislation with respect to government codes of conduct. Codes of conduct should be a basic tool for self-regulation both vertically and horizontally throughout government. While they should contain certain standard provisions, separate ethics codes should be adopted to address the risks faced in different sectors. Particular attention should be given to requiring MPs to adopt codes of conduct. Moreover, Armenia should provide training, consultations and guidance for their practical application and ensure proactive, systematic and consistent enforcement of the existing codes without undue interference.

Finally, OECD recommend that to assess the implementation of the new CSL and PSL, civil service reform policy that is evidence-based and supported by the relevant data, risks, and impact assessments. Integrity-building requires a strategy for continuous improvement in civil service ethics performance. This goal requires Armenia to make better use of data and evidence regarding

USAID.GOV Final Report, p26 July 15, 2019

ARMENIA ANTI-CORRUPTION AND INTEGRITY SYSTEMS the nature and scope of risks to integrity in government. Human resources departments in government agencies should establish comprehensive data bases to analyze integrity risks and provide guidance on how to mitigate those risks.

2.5.4 Findings and Conclusion 2: Building Integrity in Civil Society The OECD notes several positive trends in terms of the increasingly active role of civil society in anti-corruption and good governance in Armenia. Since the third monitoring round, the Government has expanded and deepened dialogue with civil society through various platforms. NGOs are now represented in the ACC as members or observers and actively participate in its sessions. Selection of NGO participants in the ACC is more transparent and is based on a competitive procedure. A call for membership is posted on-line, applications are reviewed against the criteria and lots are drawn in the end, in the presence of applicants. The rotation of members is envisaged every 2 years.

Another new platform for NGO participation is the Ministry of Justice. A civil society- Government partnership was launched in September 2015 where the Government is represented by the Ministry of Justice and civil society is represented by the Freedom of Information Centre of Armenia (FOICA) and the Anti-Corruption Coalition of NGOs (representing 90 NGOs). Several NGOs regularly provide reports on the implementation of the Istanbul Action Plan recommendations to the OECD.

The OECD also found that the Government and civil society cooperated effectively in practical ways, including through working groups on illicit enrichment and whistleblowing that led to new legislation. On various occasions of NGOs presenting their research findings with recommendations to the ACC followed by assignments to the line ministries to address them.

According to the OECD, Armenia has also made commendable progress to reform the whistleblower protection system. A stand-alone law on whistleblower protection was adopted, an electronic system of reporting developed, and a wide-ranging awareness campaign launched to boost reporting.

The OECD Report makes recommends key steps to expand civil society’s role as a partner. This includes giving NGOs a stronger voice in choice of government priorities for action. As discussed in detail in other sections of this Literature Review, Armenia also requires a more systemized approach to obtaining data and evidence from Armenian citizens for purposes of assessing corruption risk and conducting M&E on the results of implementation of corruption prevention reforms.

To implement the new law on whistle-blowing, the OECD encourages Armenia to put in place clear procedures for submitting, reviewing and following up on whistleblower reports and providing protection and start their application in practice. Effective implementation of whistleblowing policy and law will require increased trust from society that they this practice will be safe and treated with genuine interest. “Thus, Armenia should conduct an initiative to further heighten public awareness on whistleblowing channels and protection mechanisms to promote and incentivize whistleblowing; and ensure proper functioning of the IT system and that the anonymity is observed in practice.“ (p. 26)

USAID.GOV Final Report, p27 July 15, 2019

ARMENIA ANTI-CORRUPTION AND INTEGRITY SYSTEMS

2.5.5 Findings and Conclusion 3: Civil Service, Civil Society and Media: Increasing Transparency, Accountability and Trust The OECD Report highlights a lack of trust between the Government and society. As the issue of trust cuts across the Civil Service, Civil Society, and Media sectors, we summarize the OECD’s Fourth Round findings and conclusions on this issue below.

Generally, the OECD found that the citizens of Armenia did not have high trust in the Government’s anti-corruption reforms and that this trust had not improved in the reporting period. Citizens generally viewed the Governments reforms as “cosmetic” and “imitating” the fight against corruption. Citizens cited a lack of progress in areas of high corruption risks in including the judiciary, economic monopolies, education and procurement.

The Government responded to OECD queries on this subject suggested that this lack of trust may be a result of lack of proper communication and indicated plans to launch active campaigns using a new communication strategy. Critically, strategic communications should support implementation of prevention measures by raising awareness of citizens of their rights and duties and engaging them to be active in enforcing those rights in order to drive practical actions and solutions. This could include raising awareness on ongoing reforms by regularly publishing the implementation reports, organizing public discussions, informing about on-going and finalized criminal cases on corruption, creating platforms for cooperation with CSOs, and launching e- consultations on the draft normative acts.

While it would be helpful for the Government to conduct better strategic communications, this responsibility is currently the responsibility of the Anti-Corruption Programming and Monitoring Department of the ACC, and it does not have the capacity or resources to perform this function. Thus, this issue of where this responsibility lies should be addressed carefully in Armenia’s new anti-corruption strategy and institutional arrangements.

The OECD notes that over the past four years, Armenia has considerably improved the freedom of information (FOI) legal framework by adopting the long-awaited secondary legislation. FOI officers have been appointed and provided training. The e-requests portal has been launched with a module generating statistics.

At the same time, however, both the OECD and the civil society leaders interviewed by New- Rule18 pointed out that an oversight body has not been designated to ensure uniform application of the law, collection of data and guidance to the agencies. There is no procedure for government agencies to pro-actively publish the information that is provided in response to FOI requests.

18 Field Research: “While these efforts to promote citizen engagement in submitting requests has been relatively successful, the rate of response could be improved, especially with regard to sensitive corruption cases. One interviewee asserted that while each ministry has a FOI officer, there was no real system to speak of and that the process is too decentralized. The interviewee recommended establishing a strong FOI oversight body that would support responding to requests for information in a timely manner. There appears to be a new draft law on FOI, but the interviewee stated that as the content currently stands, it would be a step backward.”

USAID.GOV Final Report, p28 July 15, 2019 ARMENIA ANTI-CORRUPTION AND INTEGRITY SYSTEMS

OECD Armenia FOI Recommendations 1. Analyse and subsequently review the FOI Law to bring it in line with international standards, in order to ensure clarity of existing regulations and eliminate existing shortcomings, among other issues reflect the public interest test and e-requests; adopt necessary secondary legislation for implementation of FOI. 2. Ensure proactive publication of information by state bodies, clarify records management and classification system and introduce the registries of public information in state bodies; consider establishing a unified portal for proactive publication of information. 3. Ensure efficient supervision and oversight of enforcement of the right of access to information as well as adequate powers and resources to issue binding decisions and ensure designation of FOI officers in each agency as required by article 13 of the Law. 4. Raise awareness of public officials to foster the culture of openness and transparency in Government and carry out systematic training of information officers and of other public officials dealing with access to information issues. 5. Ensure implementation in practice of the provisions related to transparency of the entities using public resources (article 1.2 of the Law). (p. 95)

According to leading NGOs, a new draft of the FOI law designed to address these issues was drafted by the Ministry of Justice without consultation and significantly worsens the existing regulations.

Given the importance of the FOI legal framework to increasing openness and integrity of government, the OECD recommendations to Armenia to strengthen it are set forth below in detail: The OECD Report cites Armenia’s progress in introducing e-governance tools as a means of reducing customer contact between public servants and citizens in areas that are vulnerable to corruption. In particular Armenia developed numerous e-portals introduced since the third round of monitoring, including: e-civil system; e-petition; e-bankruptcy; www.azdarar.am; e-court; e- hotline; www.e-license.am; e-penitentiary; e-visa; e-consul; e-request.am; e-drafts and others. Importantly, most of these websites are linked to e-government website www.e-gov.am. In addition, most of the tax services have been digitalized, and the same process is ongoing for customs. The OECD urges Armenia to consider further innovations to maximize the impact of electronic services as tools for ensuring transparency in the use of public funds and minimizing corruption risks in delivery of public services.

The OECD supports Armenia’s Action Plans as a member of the Open Government Partnership (OGP) and encourages the country to make the OGP a more efficient national platform for building trust. This should include more inclusive discussion of policy and strategy initiatives and closer monitoring of implementation of e-governance, transparency and accountability initiatives.

2.6 Fourth Action Plan of Open Government Partnership Initiative of the Republic of Armenia; Approved by Prime Minister Nikol Pashinyan, November 15, 2018 The Open Government Partnership (OGP) is a global initiative launched in 2011 for government leaders and civil society advocates to act in partnership to promote accountable, responsive, and inclusive governance. Seventy-nine countries, including Armenia, are now members of the OGP. Armenia joined the OGP in 2011 and has implemented the organization’s principles through three action plans that have generally helped the country increase the openness and

USAID.GOV Final Report, p29 July 15, 2019

ARMENIA ANTI-CORRUPTION AND INTEGRITY SYSTEMS transparency of government and create conditions for more accountable and responsible government decision-making and allocation of resources. The OGP provides Armenia a robust set of international standards to drive anti-corruption and integrity-building goals through openness and transparency of governance. The OGP platform helps Armenia bring together representatives of government and civil society to work in parallel to build inclusive and participatory government and to make the system of governance transparent and accountable. Following the Velvet Revolution, the Government adopted the Fourth Action Plan of Open Government Partnership Initiative of the Republic of Armenia.

Armenia’s Fourth Action Plan on the OGP is further evidence that Armenia is maturing in the fight against corruption. To develop the Plan, the OGP Armenia team met with representatives of regional non-governmental organizations, educational organizations and the media and collected over 40 proposals. The National Assembly adopted the Fourth Action Plan in June 2018. In the spirit of the Velvet Revolution, the Government’s key objectives under the Action Plan are to “fight against corruption, establish rule of law, make the government transparent and accountable, strengthen democratic institutions and civil society and create equal competitive conditions for economic and political role-players.” (p. 2) The Fourth Action Plan is intended to affirm the Government’s political will to overcome the obstacles through high-level commitment in these areas.

2.6.1 Findings and Conclusion 1 For purposes of this Literature Review, the most important elements of the Fourth Action Plan are actions aimed at “Ensuring Transparency and Accountability” and “Promoting Access to Information”.

Under the category of “Ensuring Transparency and Accountability” in the OGP Fourth Action Plan, Armenia commits to fill gaps and rectify inconsistencies in the laws and regulations requiring public servants to disclose their assets. In particular, it affirms the principle of “open data” and states its intention to improve the electronic system for declaration of property and income by high-ranking officials and persons affiliated with them. The threshold of property that should be declared under the Armenia Public Service Law, AMD 8 million, is too high and should be lowered. The donors of gifts to the public servants and their relationships, e.g., when they are not close relatives, should be disclosed. Finally, the OGP plan seeks to enforce this principle at a local level by extending disclosure requirements to the heads and councils of elders of the communities with a population of less than 15,000.

To help render the officials’ asset declarations more useful as a tool for the prevention of corruption, under the Fourth Action Plan, the Government also commits to expand the amount of data of declarations subject to publication. As stated in the Fourth Action Plan:

By introducing the declarations registry interactive (searchable and user friendly) instrument, the Commission expects to receive from the interested groups of civil society more substantiated recommendations and applications in relation to alleged violations by declarant persons of the requirements set under the Law of the Republic of Armenia ‘On public service’. (Section I.1)

Significantly, under the rubric of “Assuring Transparency and Accountability”, Armenia makes a major commitment to become aligned with the new international best practice to open a public

USAID.GOV Final Report, p30 July 15, 2019

ARMENIA ANTI-CORRUPTION AND INTEGRITY SYSTEMS beneficial ownership register. This initiative has been pushed by civil society organizations led by the Freedom of Information Center of Armenia (FOICA), Transparency International, and the Armenian Lawyers' Association. The main objective is to open information on companies’ real owners to prevent and identify the misuse of company ownership for corruption offenses. The registry will be open to and accessible by the public.

Such a registry fills a large gap in the ability of Armenia to enforce policies and laws that prohibit public officials from being engaged in business. The publication of ultimate beneficial owners of legal entities will help the Government and civil society monitor abuses of company ownership for illegal purposes. The publication will also support tax and law agencies to enforce the laws and regulations more effectively and carry out their functions and activities. The transparency of such information will promote the engagement of citizens in the fight against corruption and can increase trust in government.

To implement this initiative, the Government commits to the following specific actions:

Armenia OGP Commitments on Beneficial Ownership 1. Development of a legislative package that establishes the framework necessary to meaningfully advance on beneficial ownership transparency and implement an open register of ultimate beneficial owners. 2. This legislative package will be based on a comprehensive analysis of international experiences on issues such as the Beneficial Ownership Data Standard, the definition of beneficial owners, verification and registration mechanisms, and the range of required documentation. 3. Development of a database (using the Beneficial Ownership Data Standard) of ultimate beneficial owners of all companies operating in Armenia within the State Registry which will be responsible of the technical implementation and discussions with civil society and the private sectors. The database will be open and freely accessible to the public and ensure adequate use and search capabilities. 4. Piloting the register by entering data of ultimate beneficial owners of companies in the metal mining industry operating in Armenia. This includes collecting, verifying, publishing, and resolving system problems which are encountered during the pilot. (Section I.3) Armen

Under the category of “Promoting Access to Information” in the OGP Fourth Action Plan, Armenia commits to take specific steps to increasing the public trust through increasing public participation in government. Among other actions, it will establish a “Dashboard: Citizen feedback on public services” to provide an online direct communication platform to collect citizens’ perceptions and ratings of public services and to use those in the evidence-based policy-making planning. Specifically, under this commitment, the Government will:

Develop a human-oriented and user-friendly interface which will encourage citizens to participate in the design and evaluation of public services. Combine quantitative and qualitative feedback channels. Integrating/creating a tool for collecting, sorting and analyzing citizens' assessments on one of the current online platforms. (Section II.11)

This component of the Fourth Action Plan is integral to strengthening Armenia’s monitoring and evaluation of corruption prevention. The commitment includes two elements: (i) citizens will have an accessible “direct democracy tool” to evaluate public services; (ii) the government obtains a more complete picture of citizens’ concerns about public services through visualized data, which

USAID.GOV Final Report, p31 July 15, 2019

ARMENIA ANTI-CORRUPTION AND INTEGRITY SYSTEMS will help them be better informed and make evidence-based decisions. The government will responsible for responding and providing appropriate solutions to the raised issues with respect public services.

USAID.GOV Final Report, p32 July 15, 2019 ARMENIA ANTI-CORRUPTION AND INTEGRITY SYSTEMS

3 FIELD RESEARCH—DATA COLLECTION AND ANALYSIS

The data collection was conducted between May 20th and June 1st 2019 in Yerevan with a broad spectrum of government officials, members of parliament, NGOs, think tanks, foundations, academics, journalists, and political party representatives. The goal was to obtain a robust understanding of the integrity systems landscape in terms of current activities and future opportunities and priorities from a range of perspectives. (Annex 3)

Several themes came up in multiple meetings: having a vision for the future, transitional justice, and unified versus a decentralized anti-corruption body. The fear among many is that the government lacks vision for the future and is merely reactive. Robert Kocharyan’s release in May on bond and the Prime Minister (PM)’s call to bar to doors of the courts is a prime example. Vetting and lustration of judges has been an important topic since the Velvet Revolution in 2018, and yet, little to no action has been taken to reform the judiciary. Now that there is a high-profile issue, the government wants to act quickly to put reforms in place. While it is easy for those out of government and in the opposition to criticize the government’s perceived inaction, lack of vision and strategy does appear to hinder systemic reform. The ministers and PM himself often make statements and Facebook posts that seem at odds with established policy and that frequently have to be retracted, which is also likely a product of lack of unified vision.

The anti-corruption strategy is one area in which the government’s indecision is apparent. As one interviewee in the development and governance community stated, “we are all just waiting for them to release something. We can’t comment on it until we see the draft.” The estimate for the release of the draft was late June 2019, but it is unclear if that will be public or for expert comment only. One issue that the government has struggled with in formulating this strategy is whether there ought to be a unified, independent anti-corruption body or whether law enforcement and prevention ought to be separate. This sticking point seems to be related to the lack of analysis and diagnosis of the problems both historically and going forward. Without a rigorous understanding of what the sources and incentives for corruption in the system were, it seems unlikely that they can be resolved going forward. In deciding on a unified versus decentralized or disaggregated approach to integrity systems and fighting corruption, again, the perceived lack of vision seems to be a substantial part of the problem. The decision concerning what form the body or bodies take largely depends on the goals for the system and how they are most likely to be achieved.

Time and again, interviewees stated that just wanting to reform the system was not enough to make it happen. There was near universal recognition that those in the government were honest and well- intentioned and that this was a significant improvement over previous regimes. However, their lack of experience in governing and developing and implementing policy limits their capacity to act. Additionally, since many cabinet officials and their deputies as well as MPs came from the activist community, they are skilled at identifying and articulating problems, but they have little experience formulating solutions. Ironically, many of those activists in the government relished the anarchy of the movement atmosphere and intentionally resisted organization in the pre- revolution period. They are now responsible for making the government work. Many resigned soon after being appointed, reportedly because they had a hard time working within the system and felt that they could do more from the outside.

USAID.GOV Final Report, p33 July 15, 2019 ARMENIA ANTI-CORRUPTION AND INTEGRITY SYSTEMS

The PM and others have also brought up the issue of transitional justice, but without communicating a clear message about what they mean. Opinion among interviewees varied on the issue of transitional justice and on the balance between holding those most culpable accountable and allowing the society to move on. Most felt that there needed to be a balance between accountability and reconciliation. While recovering stolen assets would be desirable, few felt that expending significant time and energy on this endeavour would be fruitful. Some suggested a form of truth commission or process in which those who stole substantial amounts could return the funds and apologize in exchange for amnesty. Others, particularly in the human rights field, had a more retributive approach. Regardless, all agreed that any sort of special process should only apply to corruption that happened before the revolution and that corruption since the revolution must be vigorously pursued according to the law to clean up the system and deter future corruption. One human rights defender suggested that a ‘naming and shaming’ campaign would be effective in Armenia in particular, given the closeness and relatively small size of the society and the importance of reputation, adding that she had used it successfully in her own work.

3.1 Evaluation Methods and Limitations Given the desire to have actionable information without undue delay, the Field Research was conducted over a period of less than two weeks. The main sources of data were interviews with a wide range of officials, civil society activists, journalists, MPs, think tank staff, and academics, with preparatory reading. (Annex 4) However, there were undoubtedly more people who could have contributed to a more nuanced and richer understanding of the situation with regard to corruption in Armenia. The researchers also reviewed recent survey data from the International Republican Institute19 and focus group data from the National Democratic Institute20 on attitudes of people toward corruption and the new government and did not find significant or substantial inconsistencies with the data collected in the interviews for this report. Additionally, the interviews were all conducted in Yerevan with interviewees living and working in the capital. It is possible that New-Rule missed perspectives from the local and rural level. Again, the survey and focus group data can help here as does the reporting of interviewees who had recently spent time working outside of Yerevan including in Nagorno-Karabakh. While there are likely subtle differences in perspectives that we have overlooked, we feel confident that we have captured the major themes.

3.2 Accountability A whole of society approach to accountability means that stakeholders at all levels do what they say they will do and that others evaluate their performance and whether they have fulfilled their commitment. At the level of the government, this means that it develops and implements the policies it promised regarding ridding the system of corruption and/or provides the public with evidence for why they have or have not made progress. Many interviewees and regular people acknowledge that change does not happen rapidly, and they are willing to be patient to some extent. However, if there does not appear to be effort and progress toward the anti-corruption goals, they

19 International Republican Institute, Center for Insights in Public Survey Research. “Public Opinion Survey: Residents of Armenia, October 9–29,” 2018. https://www.iri.org/sites/default/files/2018.11.23_armenia_poll.pdf 20 National Democratic Institute, “After the Revolution: Armenian Citizens’ Priorities and Expectations of the New Government.” August 2018.

USAID.GOV Final Report, p34 July 15, 2019

ARMENIA ANTI-CORRUPTION AND INTEGRITY SYSTEMS will grow impatient. One political party that is not currently in the national assembly stated that there will and should be new parliamentary elections in about one year as a referendum on the progress of the reforms thus far. Elections are the ultimate accountability mechanism, but they are also often contentious and can introduce uncertainty and instability into a transitioning system.

3.2.1 Transitional Justice The issue of accountability is intimately tied to the concepts of justice and reconciliation which are often considered the goals of transitional justice mechanisms. These can range quite broadly and it does seem the term has been used ambiguously by stakeholders in Armenia. Unlike traditional justice, the intent of a transitional process is to take the society from one place to another. While perpetrators rights require protection, the goal of transitional justice mainly focuses on the needs of the society more broadly.

Interviewees suggested the following concrete recommendations for transitional justice mechanisms:

Interviewee Transitional Justice Recommendations 1) Writing of the definitive history of politics and society in Armenia since 1991. While documenting the history can produce controversy, having a rigorous, unambiguous, nationally accepted account of what happened can contribute to reconciliation and learning going forward. 2) Community-level non-judicial conflict resolution committees. There are innumerable local issues related to the misdeeds and corruption of the previous regimes at the micro-level in communities throughout the country. Establishing non-judicial mechanisms for resolving these disputes would accelerate the reconciliation process rather than allowing resentments to linger and hinder transformation. 3) Vetting of judicial system. This is an essential element of the reform process in Armenia. While some interviewees acknowledged that there are many competent and honest judges, the public has little to no confidence in the judiciary and, according to many, assume they are all corrupt. 4) Asset recovery amnesty program. For those who took advantage of the system that was in place before the revolution, several interviewees mentioned a voluntary payback option with acknowledgement of wrong doing in exchange for amnesty from prison time. The exact details of such a plan would need to be carefully thought out for the Armenian context with clear guidelines for who is eligible and the exact requirements to qualify. It would also be important to get public input and buy-in so that it is perceived as legitimate and not as a slap on the wrist for those who fleeced the country. 5) High level tribunal for high level crimes. Some suggested that some very high-ranking elected officials like former presidents or those who were the most culpable may need to face some form of retributive justice for their corruption.

The goal is to allow the society to move on and accept the past as a chapter that may have been painful, but which is now closed. It is also important for the government to be clear and unified in the messages it is projecting about the transitional justice process. For instance, one interviewee said that many oligarchs are willing to come forward and pay back at least some of their ill-gotten gains in exchange for no prison time, but that the government has waffled on its plan on asset recovery. It is also important that the former transgressors feel the process is fair. One interviewee said very directly that in many cases these people still have a lot of power and resources and if the transitional justice process humiliates them and strips them of all ability to continue their lives, it

USAID.GOV Final Report, p35 July 15, 2019

ARMENIA ANTI-CORRUPTION AND INTEGRITY SYSTEMS will incentivize vengeance and could create nefarious actors who work against progress in the country. Many see this as the way previous regimes operated and want to break the cycle.

3.2.2 Civil Service Accountability going forward is a very different matter. The approach of the PM’s office on civil service is to prevent ethics violations by educating civil servants and then to identify those that continue to commit violations. Several mechanisms for holding public servants accountable are in place and should be supported and improved as necessary and possible. The new Commission on the Prevention of Corruption (CPC) is supposed to support, consult with, and assist ethics officers in each of the ministries and agencies in developing codes of conduct and ethics codes for each of their organizations. Under the new regime, the government is requiring job descriptions be written for all positions and submitted to the PM’s Civil Service Office. All new applicants for civil service positions starting most likely next year will take a test and undergo an interview by committee. Under the previous regime, there were no legitimate performance evaluations, needs-based training, or tools for insuring integrity. As a result, the civil service is weak and weakly institutionalized. The new performance management system for civil servants will focus on process instead of outputs and will connect personal performance to institutional goals and outcomes. Additionally, all civil servants are subject to asset declaration requirements. When asked about the buy-in from civil servants themselves, one interviewee stated that while they were initially concerned, the organizations representing civil servants have participated in the reform process and the Union of Armenian Government Employees has contributed research about guidelines for civil servants and public administration. The current head of the PM’s Civil Service Office is also the president of the civil service employees’ union, which likely encourages efficiencies in the near-term transition but may not be sustainable in the long-term.

While the Commission on Ethics for High-ranking Officials (CEHRO) has made great strides in terms of transparency in asset declaration and other financial issues for high-ranking officials, they do not have the ability to take any enforcement action to hold those who have illicit assets or conflicts of interest accountable. Additionally, the description of conflict of interest is not up to international standards in the current law.

3.2.3 Media The media is often described as playing the role of the fourth branch of government in terms of holding officials accountable. There are several problems with them playing this role in Armenia, however. First, many of the news outlets are owned or substantially tied to oligarchs and political parties and thus they cannot report independently. Second, the quality of education in journalism in Armenia is not considered adequate for developing a strong core of journalists. Additionally, the wide-spread use of Facebook and other social media where sensational and often- unsubstantiated news proliferates has further depressed the already weak demand for mainstream legitimate journalism. The Union of Informed Citizens (UIC) conducted a large nationally representative survey in Spring 2019 and at the time of interview was anticipating the results at any moment. According to UIC, to date there has been no actual data collected on the way that people consume data, and that both media outlets and CSOs alike have been operating based on assumptions and hunches. These data will allow UIC and its partners to make programing decisions based on data.

USAID.GOV Final Report, p36 July 15, 2019

ARMENIA ANTI-CORRUPTION AND INTEGRITY SYSTEMS

3.2.4 Civil Society Civil society also has a role to play in holding the government accountable, and one interviewee asserted that the government understands the value of CSOs but needs to develop a strategy to make use of civil society. Another interviewee asserted that the multiple stakeholders have different understandings of what accountability means and that the government and civil society need to determine jointly the functions, terms, and limits of what each will do and how. It might be advisable to start small in a specific sector and gain confidence and experience before scaling up. The current participation of environmental organizations in reviewing mining permits was mentioned as a potentially useful model.

However, capacity and sustainability are two main concerns with regard to civil society. Several interviewees made the distinction between formal NGOs and civil society movements that have less structure, are more anarchic, and have often been issue oriented, like the “Electric Yerevan” movement against the electricity rate hikes in 2015 which prompted mass protests. One interviewee noted that the undercurrent of these protests was that people assumed the reason for the hikes was corruption somewhere in the system, whether from direct embezzlement or mismanagement due to cronyism. The grassroots nature of these movements has been a powerful asset, but it also makes sustainability challenging. There is an ongoing tension in the development of the civil society sector between organization and professionalization of civil society into NGOs and the maintenance of independence and grassroots orientation.

Prior to the revolution, professional NGOs were seen as “grant eaters,” merely chasing foreign money to implement donor-driven initiatives. It remains to be seen whether NGOs and CSOs can alter their reputations in this regard and connect with the public regarding their work. Another interviewee suggested that there be some public funding for non-profit organizations, whereby citizens could elect to have 1-2% of their taxes go to the organization of their choice. Such a mechanism would help to address the problem of sustainability by giving organizations access to some funding that is domestic and not tied to specific programs and would encourage them to publicize their good works to encourage people to select them as beneficiaries of their taxes. When the funders are primarily foreign, the incentive for NGOs to publicize their activities is weak and thus regular citizens may not have information to evaluate their work and form accurate opinions. Others recommended that the government release RFPs to outsource relevant work to NGOs/CSOs where appropriate to decrease reliance on foreign funding.

When asked for any cautionary advice, one interviewee stated directly “don’t crush the NGOs” and several others echoed this sentiment less directly. Specifically, he meant that with the renewed international enthusiasm for liberalization in Armenia, he did not want to see the NGOs subsumed into large high-dollar projects in which they essentially become subcontractors or local branches of the donors. He and others mentioned that this seemed to be the pattern of the early 1990s in Armenia when hopes were also high for democratization that fizzled. Lots of money flowed into NGOs and they lost themselves a bit and then the money dried up, leaving them even more vulnerable to chasing money, creating “dirty competition” among the NGOs, and making them even less effective at pursuing a mission. Any programing employing NGOs and CSOs to implement activities should take a systemic view and consider not only the best way to accomplish

USAID.GOV Final Report, p37 July 15, 2019

ARMENIA ANTI-CORRUPTION AND INTEGRITY SYSTEMS the program goals but also how the relationships with between the donors and NGOs/CSOs can contribute to the latter’s long-term sustainability and the sustainability of the civil society sector as a whole.

3.2.5 Local Government Several interviewees mentioned the need to develop local accountability mechanisms for local, specific contexts. A consortium has been working with local information houses to encourage the public to monitor local government processes through the USAID-funded Civic Engagement in Local Governance (CELoG) project which focuses on civic engagement and oversight of local government.

3.2.6 Findings and Conclusion 1: Transitional Justice People generally want a process of reconciliation in which some form of accountability for corruption is acknowledged. While there are a number of options that could be pursued consecutively or simultaneously at different levels or government and society, whatever options are pursued need to take into account public opinion and be perceived as transparent and fair by stakeholders.

3.2.7 Findings and Conclusion 2: Civil Service While the laws for asset declaration at all levels of the civil service and public service are largely in place, they need some tweaking by specialists working with the agencies. The bigger issue is that of enforcement when these declarations reveal ethics or criminal violations, which does not appear to be the clear responsibility of any agency.

3.2.8 Findings and Conclusion 3: Media Addressing the issue of independence of the media is a difficult one given the weakness of the media market in Armenia and the close ties of political parties and other powerful people to them. None of the interviewees to whom we talked offered solutions to this problem. With regard to the problem of quality of journalists, however, several organizations are delivering trainings on various issues related to the government and accountability. Strengthening some or all of the four journalism departments at the universities in terms of curriculum and faculty could be of benefit. Additionally, offering specialized courses outside of the university setting on topics that go beyond short, one-off workshops could also improve the quality. Finally, it might be possible to engage organizations such as the well-respected investigative news service Hetq 21that are recognized for their investigative journalism to participate in journalism education.

3.2.9 Findings and Conclusion 4: Civil Society Finding the balance between professionalization of civil society and grassroots mobilization is a main challenge in civil society having the capacity and legitimacy to hold the government accountable. Any engagement with the civil society sector needs to be sensitive to this balance and take cues from those on the ground to allow for the development of the sector in a way that makes the most sense for Armenia. All approaches should also not only pursue grounded programming

21 https://hetq.am/en.

USAID.GOV Final Report, p38 July 15, 2019

ARMENIA ANTI-CORRUPTION AND INTEGRITY SYSTEMS but should also take a systemic view with an additional goal of sustainability of the sector in the medium and long-term.

3.2.10 Findings and Conclusion 5: Local Government While the fieldwork was not able to pursue interviewees outside of Yerevan in any meaningful way, several interviewees in New-Rule’s sample did mention the need to engage with local civil society and local government, which is consistent with a whole of government and whole of society approach to addressing the problem of corruption.

3.3 Transparency 3.3.1 Civil Service and Public Service The work of the Commission Ethics for High-ranking Officials (CEHRO) has been highlighted as a model for transparency in declaration of assets, conflicts of interest, and other financial assets, although the institution itself asserts improvements in the law are necessary regarding threshold amounts and ability to act of the information gained in an enforcement capacity. Elected officials must declare assets but these data are only releasable to some media and only with approval of the declarer.

With regard to transparency in the National Assembly, the law on concession management should contain strict rules about third party management of assets, including that no one asset manager can have more than 20% (or so) of its portfolio coming from one person and that these asset managers be official and transparent. For instance, in the current NA, one of the MP’s assets is being managed by another MPs father. Citizens Decision has done a lot of thinking about how this process should work. CEHRO also agrees that there needs to be a regulation of trustees.

One MP from Civil Contract emphasized that maximum transparency is their goal, even at the expense of some privacy. She mentioned that the previous government in responding to accusations of election fraud published the names of every person who voted and whose vote was counted. She said that while this may seem appalling to Western human rights advocates as a violation of the right to privacy, the legacy of communism has reduced expectations of privacy among Armenians and that transparency is more important at this critical juncture. That said, if the government does end up collecting and storing a lot of personal data on citizens, she mentioned the government could use help is making sure it is safe and secure. On the other hand, being a public official is a privilege and should require more openness about connections, interests, and sources of income.

The PM’s Deputy for Anti-corruption’s office is also interested in being transparent about their work and activities and that of the government. They have established a web-based platform to interact with the public and share information. However, they admitted that it had not been very successful in attracting interest or traffic and that the platform was not very enticing. They asked for advice and assistance in spicing up both the content and the interface.

3.3.2 Freedom of Information Access to accurate and abundant public information in Armenia is more important now than ever, with the advent of widespread misinformation communicated through social media. The opportunity is also greater than ever before with the new government committed to transparency

USAID.GOV Final Report, p39 July 15, 2019

ARMENIA ANTI-CORRUPTION AND INTEGRITY SYSTEMS in general. However, the same lack of institutionalization and strategy that plague other areas of its anti-corruption work also apply to FOI issues. Armenia has had a FOI law for over fifteen years and has had lawyers and journalists working to promote FOI though the Freedom of Information Center Armenia and other organizations. While these efforts to promote citizen engagement in submitting requests has been relatively successful, the rate of response could be improved, especially with regard to sensitive corruption cases. One interviewee asserted that while each ministry has a FOI officer, there was no real system to speak of and that the process is too decentralized. The interviewee recommended establishing a strong FOI oversight body that would support responding to requests for information in a timely manner. There appears to be a new draft law on FOI, but the interviewee stated that as the content currently stands, it would be a step backward. Additionally, lack of robust journalism hampers the ability to make use of the access to the information that is available.

3.3.3 Media With regard to the media, as mentioned above, while those who are educated and civically engaged may be aware of the bias in the media because of ties to particular parties or oligarchs, regular citizens may have less awareness. While UIC has fact-checking and propaganda-checking programs, a more robust platform like allsides.com in the U.S. that presents news from the left, the right, and the center side-by-side and can be viewed in Facebook could be one, relatively low- cost tool for combatting the biased reporting in Armenia. While several organizations are working on media literacy, it is a pervasive problem. UIC has posted several videos online and done public service announcement-type segments on TV about how to evaluate content and sources of news media.

3.3.4 Civil Society While civil society has a substantial role to play in holding government accountable, CSOs also have a duty to be transparent about their activities, sources of funding, and spending. The law on NGOs requires reporting to the government, but organizations can do better by posting this information annually on their websites. One interviewee did remark about the substantial burden government and international donor audit requirements place on organizations, costing several thousand dollars and making documenting and transferring very small amounts of money tedious. These requirements make it very difficult for small grassroots organizations to comply and to be eligible for public or international funds, when they are the ones who likely need them most.

In post-revolution Armenia, there is another rather unique issue of transparency facing civil society: many of their former members are now MPs and government officials, including the PM himself. This has made for an interesting set of relationships for both civil society and those new government and elected officials to navigate. They have close relationships and much of the communication from the civil society sector is based on personal relationships and not established institutional mechanisms. Several interviewees noted that while this is a natural result of the way the revolution happened, both sides need to be a part of creating institutional mechanisms that allow for inclusion and transparency in communication between civil society and the government and the National Assembly. Otherwise, the current ad hoc, connection-based communication could breakdown into non-transparent cliques that exclude new, emerging, and dissenting perspectives.

USAID.GOV Final Report, p40 July 15, 2019

ARMENIA ANTI-CORRUPTION AND INTEGRITY SYSTEMS

In terms of think tanks specifically, another challenge exists: the fear of being labeled “GONGOs” if perceived as too close to the government. Prior to the revolution, if an NGO was working with the government, it was automatically assumed to be working for the government or in some way captured by the government. For actual NGOs and think tanks this was horrifying. One think tank leader interviewed complained bitterly of having received this label under the previous regime. The new situation is chaotic, and in some cases, think tanks are censoring themselves rather than engaging with the government. There is also an issue of being critical of those with whom they have close relationships and not giving the full amount of critique warranted. One interviewee mentioned that the new government does not take criticism very well, either. As the new norms of the system are established, institutional mechanisms for expert consultation need to also arise. One interviewee asserted that the current government does not seem to seek consultation on an issue until it has already reached a decision which does not leave much room for think tanks to offer information to shape policy. While it may be that the government wants to appear confident and resolute, not engaging in true consultation with outside experts reduces the full range of policy considerations and risks the government enacting policies which are not fully thought through and require remediation on the back end which is counterproductive to establishing public confidence. One example that a think tank mentioned is that the government took one of its policy recommendations and tried to unilaterally implement it without consulting with the stakeholders to get buy-in and tweak the nuances. The stakeholders rejected the policy strongly and the government had to abandon it.

3.3.5 Findings and Conclusion 1: Civil Service and Public Service Many reforms have been put into place in accordance with international commitments and agreements. Monitoring their implementation is the challenge in this area, especially since many of them were agreed to in letter only by previous regimes and now need to come into force. These findings could be amplified if referenced as supportive of OECD recommendations.

3.3.6 Findings and Conclusion 2: Freedom of Information Again, while the legislation exists, the institutionalization answering of requests is lacking. An oversight body that supported responding to requests for information could substantially improve the ability of the government comply with the law. These findings could be amplified if referenced as supportive of USAID’s Practitioner’s Guide for Anticorruption.

3.3.7 Findings and Conclusion 3: Media The ability of journalists to report accurately on issues of transparency and disclosure could be improved through training and generally improving the quality of journalism schools. However, media literacy among the public remains an important problem as well. These findings could be amplified if referenced as supportive of USAID’s 2007-2014 programming worldwide recommendations.

3.3.8 Findings and Conclusion 4: Civil Society The relationship between civil society and the government has substantially changed in the post- revolution period. Many of those who were in civil society are now in government and their relationships with civil society are close but ad hoc and not institutionalized. Both sides need to determine how this new relationship can be institutionalized, how they can work together, and what government transparency should look like. These findings could be amplified if referenced

USAID.GOV Final Report, p41 July 15, 2019 ARMENIA ANTI-CORRUPTION AND INTEGRITY SYSTEMS as supportive of recommendations and findings from USAID’s 2007-2014 programming worldwide.

3.4 Trust To a great extent, trust is the target outcome of all the systemic efforts at accountability and transparency. If these things work, the public trusts in the system. If they fail or even if they succeed but fail in their communication of the work and accomplishments, public trust is at risk. Armenia is in a relatively unique position of public optimism right now, which can offer the government some leeway but could be dangerous if expectations are not managed and fulfilled. Even critics interviewed felt that there was a significant chance that the new government could fulfill many of its promises and that even if it failed on some front, there was no returning to the previous system, at least in the near term. As one interviewee put it, “the political will is with the people, is from the people, and belongs to the people. They have been awakened to their ability to be agents of change and that they are the drivers of the revolution, not the government.” The government and the PM have been invested with their confidence.

However, by the same token, the PM is extremely popular and influential at present. When he talks, people listen. For instance, several interviewees told me that there had developed a cultural value of being sneaky and cunning that had come to be seen as a virtue and was promoted in entertainment and other venues. Pashinyan has pushed against that and has held up honesty and integrity as virtuous and people have responded, shifting the norm. Whether this is lasting will likely depend on institutionalizing integrity systems in the government, civil society, business, and other sectors at all levels. For instance, one interviewee asserted that children learn corrupt practices long before they learn about integrity when their parents have to bribe the school to have the child enter kindergarten. As long as these kinds of practices remain, the system will be at risk of regressing and trust not fully attained.

One way to promote trust is to address corruption not only at the highest levels as mentioned above, but also at the lowest, local levels as well. Changing the narrative and status quo of corruption by changing the incentives the system creates is important. One MP mentioned that it was important for people to experience and internalize reforms rather than just having a democracy on paper. The reformed system needs to make it better for people to follow the rules and laws rather than making it easier to pay a bribe and go around the system. One effort she mentioned that is underway is the digitization of government administrative processes with the goal of not only increasing efficiency but also decreasing the number of government-citizen interactions on administrative issues to reduce the opportunities for bribes and other corrupt acts. She mentioned the establishment of offices in each of the administrative regions or “marzs” that could help citizens navigate the administrative systems but that would not be empowered to take decisions or offer services directly. Additionally, German Organization for International Cooperation (GIZ) has had a project on administrative justice and pointed out that only four marzs outside of Yerevan have administrative courts which means those in other marzs must come to Yerevan for administrative court procedures. Not only is this inefficient and an injustice towards those in less populated areas, it again incentivizes people to look for other ways of addressing their administrative justice needs rather than use the burdensome legal system. One interviewee stated that there is a real lack of capacity regarding integrity systems at the local level and lack of knowledge about what the duties and role of an integrity officer might be. Additional work and assistance in terms of local access

USAID.GOV Final Report, p42 July 15, 2019 ARMENIA ANTI-CORRUPTION AND INTEGRITY SYSTEMS to administrative justice and integrity systems would be welcomed and be helpful in addressing trust from the bottom up and behavioral aspects for everyday corruption.

Reform and vetting of the judiciary was mentioned above, but it crucial to creating trust among the public for the judicial system. Several interviewees stated that the public generally views the whole judiciary as corrupt, which means there is little incentive for judges to act with integrity other than their own conscience. For people to trust the judiciary, there needs to be a fair and public process of reviewing judge’s records, actions, and interests before allowing them to continue in their capacities on the bench.

3.4.1 Findings and Conclusion 1: Political Will While some have questioned the political will of the new government, there is substantial optimism about the possibility for reform and change in Armenia. While the PM remains very popular and has significant leeway in pursuing policy, the time of relying on the individual and good will should be phased out in favour of institutionalized reforms. The political party system must become more competitive and represent a broader spectrum of perspectives to be able to hold the government accountable.

3.4.2 Findings and Conclusion 2: Local Integrity Systems While corruption at the top grabs headlines, petty corruption at the local level actually effects everyday life and how much people feel the system has changed. Some of the ways for reducing opportunities for corruption involve technological solutions which reduce opportunities for either requesting bribes or offering them. While many government agencies in Armenia have online transparency platforms and more administrative functions particularly at the local level could shift to electronic formats. Other solutions, however, lie in creating integrity systems at the local level and encouraging monitoring.

3.4.3 Findings and Conclusion 3: Judicial Reform While not an explicit target of this review and not a novel to this research, the issue of utter lack of trust in judiciary came up in too many interviews not to include here. While there are varied opinions and options for vetting and reform, the public must have confidence in the legitimacy of the process.

3.5 Other Issues 3.5.1 Party Membership One MP mentioned that they are discouraging the idea of party membership among the electorate. While this might be counter intuitive at first, it has direct implications for corruption and nepotism and is important for potential donors to consider in programing. Under communism and into the post-communist era, being a party member was either required or highly encouraged for professional and social advancement. The party was a sort of social elevator. In the transitioning democratic period, it might be more appropriate to encourage citizens to engage in political discussion without promoting the norm of mass-based party membership.

USAID.GOV Final Report, p43 July 15, 2019 ARMENIA ANTI-CORRUPTION AND INTEGRITY SYSTEMS

3.5.2 Corruption in Closed-Systems In an interview with Journalists for Human Rights, the issues of corruption in closed systems came up. Much of their work has focused on exposing corruption in the correctional system and the military. While many may not be interested in reforming the prisons on behalf of the convicted, Armenia has mandatory conscription for all able-bodied males. Another interviewee said that mismanagement and corruption in the military was widely known and generally problematic. She said that conscripts often did not have access to appropriate nutrition and provisions and that money sent by families to conscripts was regularly confiscated illegally. Journalist for Human Rights has been focusing on more serious outcomes of corruption and mismanagement in the military, namely deaths in peace time. When deaths happen, they are nearly always ruled suicides and the families are not given information about the circumstances. Journalists for Human Rights have conducted several investigations and uncovered serious negligence and cover ups. Their reporting on these issues has won them several internationally sponsored awards. They emphasized that any transitional justice process should also include the military.

3.5.3 Findings and Conclusion 1: Party Membership Encouraging mass party membership may be counterproductive in changing the political system and promoting true civic engagement, given Armenia’s political history.

3.5.4 Findings and Conclusion 2: Corruption in Closed Systems Closed systems such as the military and corrections should also be included in reforms related to integrity systems.

USAID.GOV Final Report, p44 July 15, 2019 ARMENIA ANTI-CORRUPTION AND INTEGRITY SYSTEMS

ANNEX 1: Refined Research Objectives

Background

Below is an updated statement of the Refined Research Objectives that New Rule submitted on May 14, 2019, for the contracted literature review and field research. This update is based upon further dialogue conducted with, and feedback received from, U.S. Agency for International Development (USAID) and DT personnel during discussions held in Armenia from May 21-24 regarding the May 14 Refined Research Objectives. While our best efforts will be made to satisfy these targets, New-Rule would note that the literature review and fieldwork data collection covering certain original target categories commenced prior to these clarifying conversations.

This updated statement of Refined Research Objectives reflects USAID’s goals to assess systemic causes of corruption in Armenia and to build “Integrity Systems” that help address such causes at this historic time in the nation’s development. To achieve these goals, USAID seeks a broader and more systemic approach to assessing the nature of corruption across government and civil society. This assessment will provide information for USAID to engage the government and citizens of Armenia to develop a strategy and define programming opportunities that helps strengthen governance. Integrity Systems could be built across sectors of government and civil society to help deliver public services on an honest, transparent, accountable and cost-effective basis that builds trust.

To complete a “whole-of-society” approach to assessing systemic corruption and building Integrity Systems, at this stage, the review should include the following overarching categories: Civil Service, Rule of Law/Justice, Civil Society, Media Independence and Professionalism, Private Sector and Education. Research on these sectors will provide a sufficiently broad foundation to develop a strategy and generate programming recommendations that are actionable in the short- and long-term based on state-of-art tools and proper sequencing. However, our team would note that this “whole-of-society” approach includes the work other contractors.

In particular, New-Rule draws attention to the USAID assessment work that has already been contracted for in these categories: (i) The Rule of Law/Justice Sector assessment has been completed based on a separate USAID contract. (ii) The Civil Society sector has been partially completed under a separate USAID contract.

The Media and Independent Press sector has been largely completed under a separate USAID contract and is otherwise analyzed adequately in other USAID studies and reports.

Where relevant, our team may reference materials that USAID has provided covering these sectors, but we would note that a complete synthesis of these materials is beyond the scope of this contract and would be performed under a separate contract.

Regarding the scope of our current contract, New-Rule will organize the literature review and fieldwork to address several overarching categories as follows:

(i) Civil Service Sector – Capacity of civil service to implement Integrity Systems.

USAID.GOV Final Report, p45 July 15, 2019 ARMENIA ANTI-CORRUPTION AND INTEGRITY SYSTEMS

(ii) Civil Society Sector – Focus on key aspects of systemic corruption and Integrity Systems in this sector and fill gaps in the existing research. (iii) Media Independence and Professionalism – Build on and fill gaps in existing research.

In light of the clarifying input from USAID, New-Rule has identified several categories of research, which while outside the scope of the current contract, would be important for a “whole-of-society” approach to Integrity Systems. New-Rule stands ready to assist in addressing the following categories:

(i) Private Sector – Identify systemic roots of corruption in the private sector and assess how Integrity Systems are being built to facilitate competition. (ii) Education Sector -- Identify systemic issues in governance of the education sector that leads to corruption and examine efforts to build Integrity Systems to address them. (iii) Synthesize the assessments made under separate USAID contracts and the New-Rule contracts and distill these into recommendations for USAID short term and long-term strategy, identifying tools and techniques that could be considered.

Refined Research Objectives of Current Contract

Based on the considerations discussed in the Background section above, below for further reference please find the updated Refined Research Objectives for New-Rule’s current contract.

The further refined literature review objectives include:

• USAID General Guidance: USAID’s Practitioner’s Guide for Anticorruption Programming (2015); Analysis of USAID Anticorruption Programming Worldwide (2014); Combatting Corruption Among Civil Servants (2017). • International Standards and Treaties: United Nations Convention Against Corruption; and the UNODC Technical Guide to the United Nations Convention Against Corruption (2009). • Armenia Specific Documentation: Republic of Armenia Fourth Action Plan of Open Government Partnership Initiative (OGP)(2018); Republic of Armenia 4th Round Monitoring Report prepared for the Anti-Corruption Network for Eastern Europe and Central Asia (ACN) of the Organisation for Economic Co-operation and Development (OECD)(2018), and the Non-Judicial Legal Framework affecting transparency and accountability issues.

Our team proposes the following Refined Research Objectives as the targets and organizing themes around which data collection and analysis under the current contract will be conducted. Given the very limited scope of this assignment, the New-Rule team would like to caveat that the data collection and analysis will not be quantitative, nor will it be exhaustive, but rather, it will be focused on providing actionable information and insight into the Armenian context that could inform international development programming.

The further refined fieldwork categories include:

USAID.GOV Final Report, p46 July 15, 2019 ARMENIA ANTI-CORRUPTION AND INTEGRITY SYSTEMS

Civil Service -- Increasing Transparency and Trust

• Freedom of Information Legislation and Regulation. While Armenia has had freedom of information legislation for many years, the research will determine any deficits in the laws and implementing regulations and any problems with implementation. o Actors/Contacts: Journalists; anticorruption civil society organizations (CSOs); government offices addressing requests; activists (citizens and organizations who have made requests); and parliamentarians who are championing transparency. o Literature Review: Armenia FOIA laws; agency guidance (ministry regulations that guide how civil servants should respond to requests); government reporting; and CSO reporting on best practices for FOIA implementation in high-risk markets and from international actors, such as Article 19 and Transparency International.

• Financial and Asset Disclosure Requirements and Practices of Elected Officials and Civil Servants. Corruption in Armenia is characterized by strong informal networks among the elected officials and wealthy business owners and the corrupt practices that flow from them. This research will examine both the law and practices designed to regulate official’s disclosure of finances and assets and other mechanisms intended to prevent keep illegal money from influencing official conduct. o Actors/Contacts: Government offices responsible for collecting the disclosure forms and pertinent data; CSOs tracking the public disclosure; activists; and government officials on their experience with the process; Literature Review: Armenia’s laws on financial disclosure and implementing information; reports on trends and results of disclosure to date; and international best practices. • Rebuilding of Public Trust and Civic Engagement. One of the most damaging results of decades of poor governance and corruption in Armenia is the erosion of trust in the government and engagement in political life. Despite the promise of real change in Armenia under the new administration, voter turnout in December 2018 was relatively low and citizens are waiting to see whether the administration can deliver on its anti-corruption promises. The current research will briefly examine how the government is working with the public to increase trust through providing access for and engaging civic participation, developing and implementing a strategic communications policy, providing whistleblower protection and other steps. o Actors/Contacts: Activists; CSOs monitoring anti-corruption and government officials responsible for anti-corruption policy and communications. o Literature Review: Reports on Armenia’s post-Soviet political engagement of citizens; and best practices for building citizen trust in government.

Civil Society – Increasing Accountability

• CSO Willingness and Capability to Monitor Government Compliance with Anti- Corruption and Integrity Principles. While Armenia has substantial civic activity, years of repression by the previous government and the emigration of those who could seek opportunity in more prosperous economies has likely eroded the capacity and willingness of CSOs to hold the government accountable on issues regarding corruption. The current research will examine

USAID.GOV Final Report, p47 July 15, 2019 ARMENIA ANTI-CORRUPTION AND INTEGRITY SYSTEMS

the capacity of CSOs and what needs, they have in terms of increasing their ability to hold the government accountable and being seen as legitimate actors by the public. A key issue is whether CSOs can use the results of investigative journalism and other reporting on cases of corruption to demand and obtain legal action by local law enforcement. o Actors/Contacts: CSOs; activists; and government officials. o Literature Review: Armenian legislation on CSOs and their operation. • Media Independence and Professionalism. Press independence and professionalism are essential for developing and maintaining a high degree of accountability in the fight against corruption. This element of the research will begin to examine the question of who owns the media and how it may be under political/private sector controls that undermine the fight against corruption. When reporting on anti-corruption, the media has a high standard of responsibility to report honestly based on evidence on the facts and not resort to inaccurate or misleading reporting. The current research will examine the extent to which the press holds itself accountable for professionalism in reporting; and whether major media outlets have been captured by financial and industrial groups. In addition, we will analyze the state of investigative journalism in Armenia, including protection of whistleblowers. We will examine whether journalistic standards for reporting on anti-corruption are improving such that the reporting is fact-based rather than driven by political agendas. o Actors/Contacts: Journalists; the Union of Armenian journalists, CSOs monitoring media capture and whistleblower protection; owners of media (if possible); and knowledgeable international experts. o Literature Review: Laws regulating freedom of press and whistleblowing; reporting from Armenian sources about state of the profession; and best practices.

USAID.GOV Final Report, p48 July 15, 2019 ARMENIA ANTI-CORRUPTION AND INTEGRITY SYSTEMS

ANNEX 2: Governmental Experts List

Country Family Name(s) First Name(s) Present Position

Armenia Kromyan Suren Deputy Minister of Justice, Ministry of Justice

Galstyan Mariam Head of the Anti-Corruption Policy Development Division, Ministry of Justice

Harutyunya Nane Chief Specialist at the Anti-Corruption Policy Development Division, Ministry of Justice

Pertrosyan Artur Head of internal audit department, Ministry of Foreign Affairs Hovhannisyan Arman Head of UN division, Ministry of Foreign Affairs Goyunyan Ani Head of international relations department, Financial Monitoring Center, Central Bank Khudaverdyan Armen Commissioner, Deputy Head, Commission of Ethics of High-Ranking Officials Shatiryan Edgar Commissioner, Commission of Ethics of High –Raking Officials Petrosyan Lilit Commissioner, Commission of Ethics of High –Raking Officials Amyan Margarit Head of International Relations Department, Judicial Department Margaryan Anna Associate Professor at the Chair of Criminal Law, Yerevan State University Movisyan Hayk Deputy Head, Department of Combating Corruption and Economic Crimes, Prosecutor General’s office Karapetyan Hayk Acting Chief of the Anti-Corruption and Monitoring Department, First Deputy, Prime Minister’s Office Grigoryan Anna Acting Leading Specialist of the Anti-Corruption and Monitoring Department, Department of the First Deputy Prime Minister’s Office Manukyan Hasmik Tax Service of the Republic of Armenia, State Revenue Committee of Armenia

ARMENIA ANTI-CORRUPTION AND INTEGRITY SYSTEMS

ANNEX 3: Field Research Interview List

Country Family Name(s) First Name(s) Present Position

Armenia Karapetyan Vazgen Associate Director, Eurasia Partnership Foundation Khudaverdyan Armen Commissioner, Deputy Head, Commission of Ethics of High-Ranking Officials Kalashyan Vache President, Civil Service Employees’ Union Karapetyan Maria Member of Parliament, Civil Contract Gorgisyan Gevorg Secretary, Bright Armenia Poghoshyan Tevan President, International Center for Human Development Paturyan Yevgenya Assistant Director of Turpanjian Center for Policy Analysis, American University Armenia Manasyan Heghine CEO, Caucasus Research Resource Center Armenia Isayan Shake Member of Parliament, Prosperous Armenia Khachatryan Anjela Vice-President, Free Democrats Nahapetyan Miqayel President, Citizen’s Decision Ioannisyan Daniel Programs Coordinator, Union of Informed Citizens Alexanyan Zhanna President, Journalists for Human Rights Avagyan Vahagn Member of Secretariat; Varuzhan Avetisyan, Coordinator of Secretariat; and Garegin Chugaszyan, Member of Secretariat; Sasna Tzrer Mejlumyan Avetiq Director; Hovannes Galstyan, Research Fellow; and Anna Gevorgyan, Education Programs Coordinator; Institute for Public Policy Poghosyan Mariana President, Veles Yamaloyan Hrach Regional M&E Coordinator, GIZ

ARMENIA ANTI-CORRUPTION AND INTEGRITY SYSTEMS

ANNEX 4: Literature Review Bibliography

1. “Anticorruption Agenda for Armenia.” Transparency International—Armenia. 2019. 2. “Asset Recovery Policies in Post-Revolution Armenia.” Transparency International— Armenia. 2019 3. “Civil Society Strategizing Event, August 24-26, 2018, Tsakhkadzor, Armenia.” Civil Society Organizations Development Program (CSOdepo). Slides. 4. “Public Opinion Survey: Residents of Armenia.” International Republican Institute, Center for Insights in Survey Research. October 9-29, 2018. 5. “After the Revolution: Armenian Citizens’ Priorities and Expectations of the New Government.” National Democratic Institute and Caucasus Research and Resource Center. August 2018. 6. “Anti-corruption Reforms in Armenia.” OECD ACN Armenia 4th Round Monitoring Report July 2018. 7. “Anti-Corruption Strategy of the Republic of Armenia.” Government of the Republic of Armenia. 2015. 8. “Assessment of the Armenian Civil Service Law.” Support for Improvement in Governance and Management. 2011. 9. “Baseline Measurement Report: The Principles of Public Administration, Armenia.” SIGMA. March 2019. 10. “Improving Co-operation between Tax Authorities and Anti-Corruption Authorities in Combating Tax Crime and Corruption.” OECD and the World Bank. 2018. 11. “State of the Nation: Corruption in Armenia.” Foreign Policy Armenia. October 2013. 12. Charter of My Step. Unofficial Translation. 2018. 13. Christensen, Tom and Per Lægreid. “The Whole-of-Government Approach to Public Sector Reform.” Public Administration Review. Nov. /Dec. 2007. 14. Dr.Valts Kalniņš. “Multi-purpose and Multiple Anti-Corruption Agencies: Considerations for Institutional Design.” Transparency International—Armenia. April 2019. 15. Edwards, Maxim. “Armenia’s Revolution Will Not Be Monopolized.” Foreign Policy. December 13, 2018. 16. Hoellerbauer, Simon. “Armenia and the Velvet Revolution: The Merits and Flaws of a Protest-based Civil Society.” Foreign Policy Research Institute. February 19, 2019. 17. Iskandaryan, Alexander, Hrant Mikaelian, and Sergey Minasyan. “War, Business and Politics: Informal Networks and Formal Institutions in Armenia.” Caucasus Institute. 2016 18. Iskandaryan, Alexander. “The Velvet Revolution in Armenia: How to Lose Power in Two Weeks.” Demokratizatsiya. Vol. 26, no. 4. 2018 19. Law of the Republic of Armenia on Non-governmental Organizations. HO-22-N. April 2, 2017. 20. McDevitt, Andrew. “The state of corruption: Armenia, Azerbaijan, and Moldova.” Transparency International-Armenia. July 2, 2015.

USAID.GOV Annexes, p51 July 15, 2019 ARMENIA ANTI-CORRUPTION AND INTEGRITY SYSTEMS

21. Mejlumyan, Ani. “In the new Armenia, media freedom is a mixed bag.” Eurasianet. February 6, 2019. 22. Paturyan, Yevgen and Armine Bagiyan. “NGOs and Civic Activism in Armenia: Four Case Studies.” Armenian Review. Vol. 55, no. 3-4. 2017. 23. Republic of Armenia Law on Amending and Supplementing the Republic of Armenia Law on Public Service. June 9, 2017. 24. Vartanyan, Olesya. “’Velvet Revolution’ Takes Armenia into the Unknown.” International Crisis Group. April 26, 2018.

USAID.GOV Annexes, p52 July 15, 2019