Armenian Government Pressed to Rein-In Lawless Oligarchs

The Jamestown Foundation
Eurasia Daily Monitor

By Emil Danielyan

Friday, February 18, 2005

The Armenian authorities have been under domestic pressure in recent
weeks to end what many see as the virtual impunity enjoyed by the
country’s tiny class of millionaire businessmen with close government
ties. The Armenian version of post-Soviet “oligarchs” are widely hated
— and feared — for their utter disregard of laws and conspicuous
wealth that contrasts with the country’s widespread poverty.

The ruling regime has heavily relied on the oligarchs to manipulate
elections and bully its political opponents, making it doubtful that
any serious action will be taken to rein them in.

Still, the authorities had to do something after a late-night gunfight
in a Yerevan suburb on February 4 between two criminal groups left at
least one person dead and several others seriously wounded. It was the
most massive shootout reported in the Armenian capital in a decade,
involving, according to newspaper reports, hundreds of gunmen. Some of
them were said to be personal bodyguards of several of the oligarchs
who hold seats in parliament.

The incident reportedly stemmed from a dispute over control of a local
minibus service, a highly lucrative business activity that is the
exclusive domain of senior government officials, their cronies, and
loyal businessmen. It seems to have raised President Robert
Kocharian’s eyebrows, with police making dozens of arrests and
confiscating large quantities of weapons. Yet the key question of
whose business interests were behind the mafia-style clash remains

Local newspapers were quick to draw grim conclusions. “Much of the
political power in Armenia is concentrated in the hands of criminal
business . . . and illegal armed groups belonging to it,” the
pro-opposition daily Aravot wrote on February 9. Golos Armenii, a
paper that staunchly backed Kocharian during the last presidential
election two years ago, was even more outspoken: “The
semi-presidential form of governance in Armenia is coming to an end
and will be replaced by absolute oligarchy, the rule of a few
individuals . . . The executive and legislative branches are, in
essence, already intertwined with the oligarchs and controlled by the

Armenian tycoons are typically individuals with a high school-level
education who made fast money during the turbulent 1990s and now have
extensive business interests dependent on government support. For
example, one of them, Samvel Aleksanian, enjoys a de facto monopoly on
imports of sugar and flour to Armenia, while Russian citizen Mikhail
Baghdasarov has the exclusive grip on fuel supplies. Both men are
believed to operate under the “tutelage” of Defense Minister Serge
Sarkisian, Kocharian’s most trusted lieutenant.

The oligarchs like to flaunt their wealth, living in ridiculously big
villas and roaming the streets in motorcades made up of several SUVs
with almost identical license plates. Many Armenians would agree that
traffic lights are essentially non-existent for them.

In fact, just one week before the infamous shootout, one such
behemoth, the hugely expensive civilian version of the U.S. army’s
Humvee vehicles, crashed into three other cars on a busy street
intersection near downtown Yerevan at a high speed, killing two
people, and injuring several others. The police have reported no
arrests so far and are reluctant to name the Hummer’s real owner.
There are only 11 such cars in Armenia.

What makes the oligarchs particularly important for the regime is the
fact that they usually hold sway in a particular area of the country
through their businesses and local quasi-criminal elements. They are
able to bribe and intimidate local voters and resort to other election
falsification techniques. Ballot box stuffing was commonplace during
the 2003 presidential election, which Western observers described as
undemocratic. But the criticism did not prevent many tycoons from
themselves getting “elected” during the equally disputed parliamentary
polls held a few months later.

Another common feature of the Armenian super-rich is the burly and
mostly unarmed “bodyguards” that accompany them at every turn. The
men’s most visible characteristic, a shaven head or a short haircut,
has brought a new political meaning to the word “skinhead” in Armenia.

The authorities needed their services last spring when the Armenian
opposition tried unsuccessfully to force Kocharian to resign with a
campaign of street protests. Scores of riot police stood by and
watched as two dozen well-built thugs smashed photojournalists’
cameras after trying to disrupt an opposition rally in Yerevan on
April 5, 2004. Opinion differed only on which powerful individual
employed them.

Two of the assailants subsequently received a slap on the wrist when a
Yerevan court fined them after a parody of a trial. One of the
defendants was also a key participant in the February 4 gunfight,
according to media reports. This man is now reportedly under arrest
pending trial. His possible imprisonment would touch only the tip of
the iceberg, however, as none of the big fish is likely to end up
behind bars.

“Everybody is scared,” Golos Armenii noted alarmingly. “The oligarchy
controls everything and as the [next] elections approach it will
increasingly tighten its stranglehold on political forces in order to
avoid surprise developments.”

(Golos Armenii, February 12; Haykakan Zhamanak, February 12; Aravot,
February 9).