Publication: Eurasia Daily Monitor Volume: 2 Issue: 186

Armenia’s ambitious parliament speaker, Artur Baghdasarian, has solidified his positions this week by exploiting an issue that touches a raw nerve in Armenian society and is a major ingredient of his populist discourse. Baghdasarian, who is seen as one of President Robert Kocharian’s potential successors, appears to have succeeded in forcing the government to start compensating Armenian citizens whose Soviet-era savings bank deposits were wiped out by hyperinflation of the early 1990s.

Local commentators note the fact that he owes the tactical victory to Kocharian. Some have even suggested that the 36-year-old politician now stands a better chance in the unfolding tussle for the Armenian presidency.

Armenia boasted one of the highest per-capita rates of bank savings among the 15 Soviet republics. But what had for decades been accumulated by the population effectively evaporated in the economic chaos that followed the Soviet collapse. The depreciation of the bank deposits made transition to the market economy particularly painful for hundreds of thousands of Armenians. Many of them — especially elderly people mired in poverty – remain embittered by the enormous loss.

And there has been no lack of politicians keen to capitalize on their fury. Baghdasarian has been the most successful of them. Compensation of the former deposit holders was a key campaign promise of his Orinats Yerkir (Country of Law) party in the run-up to Armenia’s last parliamentary election held in May 2003. The tactic proved highly effective, with Orinats Yerkir now having the second-largest faction in the National Assembly and three ministers in Prime Minister Andranik Markarian’s cabinet.

That Orinats Yerkir’s vague promise is unrealistic became evident early last year when the party introduced a bill that calls for an equivalent of $83 million to be paid to the former deposit holders within the next ten years. The sum pales in comparison with billions of Soviet rubles that Armenians used to have on their bank accounts. It was clear that the proposed compensation would be largely symbolic. At the same time $83 million is a lot of money by current Armenian standards and is comparable to the cash-strapped Armenian government’s annual spending on social security or health care.

The government, backed by the International Monetary Fund and the World Bank, was quick to point out that the Orinats Yerkir scheme would therefore be a serious waste of scarce public resources. Not surprisingly, Markarian’s Republican Party (HHK), the biggest parliamentary force, blocked the Orinats Yerkir bill. Opposition lawmakers added to Baghdasarian’s embarrassment last December when they forced a high-profile parliament debate on the issue and challenged him to honor his pledge. Kocharian had to give the speaker a face-saving cop-out the next month, forming an ad hoc commission tasked with looking into possibilities of deposit compensation.

The commission never made public any reports and was thought to have buried the matter until an October 1 meeting between Kocharian and leaders of Orinats Yerkir, the HHK, and the third party represented in his government, the Armenian Revolutionary Federation. The meeting was followed by the Orinats Yerkir bill’s inclusion on the parliamentary agenda. Baghdasarian said on October 4 that the move was part of a deal cut by Kocharian and his coalition allies. “I hope that the political agreement will be honored by the Republican Party and other political forces that joined this initiative,” he told reporters.

What that agreement specifically means is not clear, however. Some HHK leaders have hinted that Baghdasarian’s bill will not even be debated on the parliament floor. Markarian, for his part, announced on October 5 that his government’s draft budget for next year would earmark only $2.2 million for compensating the poorest deposit holders. But even this meager sum would allow Baghdasarian to claim that he has remained true to his word. The Armenian speaker will also tell voters that his efforts to achieve a more far-reaching solution were blocked by more powerful government factions.

The key question here is why Kocharian decided to revive the issue at this juncture. Some analysts say he is keen to woo impoverished voters ahead of the November 27 referendum on his package of amendments to the Armenian constitution. Others believe that Kocharian, who is obliged to resign after completing his second term in office in 2008, made it clear that he continues to view Baghdasarian as one of his possible successors. Defense Minister Serge Sarkisian, Kocharian’s most powerful lieutenant, has been regarded as the top candidate for that role until now. But the Armenian press speculates periodically that relations between the two Karabakh-born men are not as cordial as is widely assumed. The Yerevan daily Haykakan Zhamanak suggested that the “drastic change” in the Armenian president’s position on the Soviet-era savings deposits was “not only in favor of Artur Baghdasarian but also against Serge Sarkisian.”

For Kocharian, a good thing about the young speaker is that he is arguably the most electable member of the ruling regime. (Sarkisian is a far more divisive figure not least because of his grip on lucrative sectors of the Armenian economy and involvement in vote rigging.) Baghdasarian knows how to make the most of his strongest weapon, populism, in a country where civic consciousness has experienced a serious decline over the past decade. His party also boasts the most effective grassroots structure, cannily targeting specific groups of the population such as schoolteachers, doctors, and even disabled persons. For many of them, it is tempting to ignore the fact that Orinats Yerkir is an increasingly important component of Armenia’s leadership.

(Aravot, October 6; Haykakan Zhamanak, October 5; RFE/RL Armenia Report, October 3-4; Armenian Public Television, October 2)