AAA: Armenia This Week – 05/07/2004

Friday, May 7, 2004

The United States this week found Armenia and fifteen other countries
eligible for new U.S. assistance from the Millennium Challenge Account
(MCA), an initiative launched two years ago by President George W. Bush and
chaired by Secretary of State Colin Powell. In a congratulatory statement to
the selected countries, President Bush noted that “these countries have met
the high standard of this groundbreaking program by governing justly,
investing in their people, and promoting economic freedom.”

Congress has appropriated $1 billion in MCA assistance in Fiscal Year 2004.
The Bush Administration requested an additional $2.5 billion for the same
purpose in Fiscal Year 2005 and hopes the funding will reach $5 billion by
2006. To receive the funds the eligible countries will first have to present
sound project proposals to the U.S. and negotiate a “Compact” on how the
money will be spent.

Armenia’s proposal is likely to center on the Poverty Reduction Strategy
approved last year by the country’s coalition government that aims to reduce
the number of people who are living below the poverty line from the 49
percent estimated in 2002 to under 35 percent in 2007 through job creation
and higher spending on social programs. In 1996, 55 percent of Armenia’s
population was estimated to live in poverty, but there has been some
improvement as a result of strong economic growth of recent years.

The MCA program initially considered 63 countries with good political ties
with the U.S. and with the gross domestic product (GDP) per capita of under
$1,415. Following the review, Armenia and Georgia were the only two former
Soviet Republics that were deemed eligible for the MCA funding on the basis
of data provided by the World Bank, the International Monetary Fund,
Washington-based Freedom House and the Heritage Foundation and others.

Armenia scored above the median in 14 out of 16 performance indicators, with
investments in health and education being the two exceptions. Armenia scored
highest on quality of economic regulation and trade policy (both 100%),
government effectiveness (80%) and on how many days on average it takes to
start a business in Armenia – 25, compared to 30 in Georgia, 106 in
Azerbaijan and the average of 61.

Azerbaijan, which was also a candidate, failed to meet the eligibility
requirements because of worse than average scores on political rights, civil
liberties, corruption, government effectiveness, rule of law, voice and
accountability and quality of economic regulations. (Sources: ;
Armenia This Week 7-25-03, 2-6, 3-12; Reuters 5-3)

This week marks the tenth anniversary of what may be the longest-running
self-regulated cease-fire in the world. The agreement, signed by Parliament
Speakers and Defense Ministers of Armenia, Azerbaijan and Nagorno Karabakh
in May 1994, with mediation by Russia and Kyrgyzstan, has marked a watershed
in the conflict that broke out in 1988. While no peacekeepers have been
deployed between Armenian and Azeri forces, and shooting occasionally
occurs, the parties have largely adhered to the 1994 agreement despite the
lack of progress on a comprehensive settlement.

Presidents of Armenia and Azerbaijan, Robert Kocharian and Ilham Aliyev,
resumed their consultations last week during a European forum in Warsaw,
Poland. This was their second tête-à-tête meeting since Aliyev took over the
presidency from his dying father Heydar Aliyev last October. The two
countries’ foreign ministers are expected to meet next week. But the sides
are seen as pursuing divergent goals and no progress is expected any time

Armenia and Nagorno Karabakh are seeking Azerbaijan’s recognition of
Karabakh’s separation and eventual reunification with Armenia, in exchange
for most of the Azeri districts Armenian forces control outside Nagorno
Karabakh. The late Heydar Aliyev gave a tentative agreement to such a
resolution at talks in France and the United States in 2001, before backing
off. In addition, Armenia has long argued for confidence-building measures,
including joint economic and humanitarian projects to lessen tensions, which
Azerbaijan continues to oppose.

The new Azerbaijani President Ilham Aliyev appears averse to risking
possible political backlash at home and has said publicly that he is “not in
a hurry” to settle the conflict. Instead, Azerbaijan is trying to revitalize
the 1997 proposal for the so-called “step-by-step” settlement: unilateral
Armenian withdrawals from areas adjacent to Karabakh in exchange for
reopening communications and no commitments on Karabakh status. (Last month,
Aliyev got Turkish support for the proposal and, as a return favor, pledged
to recognize the Turkish-occupied northern Cyprus as an independent state.
Aliyev then backed away from the pledge drawing the ire of Turkish

Azeri officials make no secret of their hope to use such unilateral
concession to put more pressure on Armenia. It is not surprising, therefore,
that Armenia is strongly opposed to such a plan. Most Armenian experts
believe that territorial concessions are possible only in return for similar
Azeri withdrawal from parts of Karabakh or in a package with determination
of its status. (Sources: Arminfo 4-29, 30, 5-5, 6; Zerkalo 5-3)

The Armenian government this week welcomed a swift and largely bloodless end
to the standoff between Georgian authorities and the local leader in
Georgia’s Ajarian autonomy, which threatened to undermine Armenia’s access
to a key Black Sea port. Ajaria’s long-time leader Aslan Abashidze resigned
under popular and apparent Russian pressure, and left Georgia for Russia. A
spokesman for the Armenian Foreign Ministry Hamlet Gasparian praised
Georgian President Mikhail Saakashvili’s handling of the crisis and called
the outcome “another important step towards establishing peace and stability
in Georgia and therefore in the entire South Caucasus.” Chairman of the
Parliament’s Foreign Relations Committee Armen Rustamian also welcomed the
resolution as “the best solution.”

Abashidze wielded great influence in Ajaria, a traditionally Muslim but
ethnically Georgian autonomous republic, striking a power sharing agreement
with Georgia’s former President Eduard Shevardnadze. Last year, Saakashvili
led popular protests that resulted in the ouster of Shevardnadze. Following
his election as Georgian President, Saakashvili has been at loggerheads with
Abashidze, threatening prosecution against him. In the end, Abashidze and
his family were allowed to leave Georgia unimpeded in exchange for ordering
his security forces to disperse and not to oppose the government forces. New
elections in Ajaria are due next month.

Speaking at a Johns Hopkins University conference in Washington, DC this
week, regional expert Richard Giragossian noted that the Georgian
leadership’s strategy in the crisis had been to mobilize the local Ajarian
discontent with Abashidze, and realization that a military intervention and
resultant bloodshed could in fact empower him. In the end, the strategy had
paid off with tens of thousands of locals holding continuous protests
calling for Abashidze’s resignation. Russian President’s National Security
Advisor Igor Ivanov arrived in Ajaria to seal the Saakashvili-Abashidze
compromise deal. (Sources: Armenia This Week 1-16, 3-19; BBC 5-3, 6; Civil
Georgia 5-5, 6; R&I Report 5-5; RFE/RL Armenia Report 5-6)

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AAA Note: On May 6, 2004 President George W. Bush announced his intention to
nominate John Marshall Evans, of Virginia, to be Ambassador Extraordinary
and Plenipotentiary of the United States of America to the Republic of
Armenia. The nomination is to be confirmed by the Senate.

John Evans will take over from Ambassador John M. Ordway, who has worked in
Armenia since June 2001 and will next serve as U.S. Ambassador to
Kazakhstan. Below is John Evans’ biography as posted on the web site of the
Mississippi State University’s Radvanyi Chair in International Security
Studies in February 2002 (please note that since 2002 to date Evans has
served as Director, Office of Russian Affairs in the Bureau of European and
Eurasian Affairs with the rank of Minister-Counselor):

John M. Evans, Director, Office of Analysis for Russia and Eurasia, Bureau
of Intelligence and Research, U.S. Department of State

A native of Williamsburg, Virginia, and a graduate of Yale College, with
study toward the Ph.D. at Columbia, Evans joined the U.S. Foreign Service as
a political officer in 1971. He has served in diplomatic missions in Iran
(1971-74), Czechoslovakia (1975-78), the Soviet Union (Moscow, 1981-83), at
NATO Headquarters, 1983-86), the Czech Republic (as Deputy Chief of Mission,
1991-97). He has also represented the United States as deputy head of
delegation to a number of experts meetings of the Conference on Security and
Cooperation in Europe, and headed the OSCE Mission to Moldova, an
international mediation and peacekeeping operation, 1997-99. In the State
Department, he has served as a special assistant to Secretaries Vance and
Muskie, as Deputy Director of the Soviet Desk, and, since July 1999, as
Director of the Office of Analysis for Russia and Eurasia.

Evans is married to the former Donna Chamberlain, executive director of the
World Affairs Council of Washington. They have a daughter who lives in New
York City.