Publication: Eurasia Daily Monitor Volume: 3 Issue: 76

Armenia’s governing coalition is beset with fresh infighting between the two largest political parties loyal to President Robert Kocharian, which could have repercussions for next year’s parliamentary election. The Orinats Yerkir (Country of Law) Party of parliamentary speaker Artur Baghdasarian has publicly denounced Prime Minister Andranik Markarian and his Republican Party (HHK) over questionable privatization policies pursued by the Armenian government.

The move appears to mark the start of Baghdasarian’s election campaign. The 36-year-old speaker, who is one of Kocharian’s potential successors, is widely believed to be trying to enhance his populist appeal by attacking a government in which his party is represented by three ministers.

The row broke out on April 11 at the start of parliamentary debates in Yerevan on the privatization of remaining state assets from 2001 through 2004. A government report on the process was expected to be accepted by the Kocharian-controlled National Assembly without much fuss. The parliament did endorse it, but only after three days of bitter recriminations traded by the two coalition partners in front of television cameras and gloating opposition parliamentarians.

Orinats Yerkir lawmakers strongly challenged the integrity of the privatization deals handled by Armenia’s Department for State Property Management, humiliating the pro-Markarian head of the government agency, Karine Kirakosian. They pointed to the fact that 48 of 69 state-owned enterprises put up for sale during the four-year period were privatized without tenders or auctions and at knockdown prices. Most of those enterprises have long ceased to operate and were primarily of interest to private buyers as pieces of real property.

It emerged that virtually all properties located in central Yerevan were sold off at ridiculously low prices ranging from $30 to $60 per square meter. The market value of real estate in the increasingly expensive city center is at least $900 per square meter. Newspaper reports said last week that among the lucky buyers of lucrative properties were Trade and Economic Development Minister Karen Chshmaritian and a businessman whose daughter is married to Kocharian’s elder son.

Baghdasarian and his loyalists allege that the huge price disparity is the result of government corruption and nepotism. “They have appropriated millions and have to account for it,” Baghdasarian charged without naming names. He also accused the government of illegally privatizing buildings that once belonged to educational, cultural, and scientific institutions.

Markarian and HHK parliamentarians rejected the accusations, presenting them as yet another manifestation of Orinats Yerkir’s trademark populism. “All privatizations were approved at government sessions,” he told reporters on April 12. “Representatives of that party were present at those sessions. If they had questions they could ask them and be given explanations.” Markarian aides implicitly threatened to publicize “compromising material” against Orinats Yerkir in retaliation. The threats led the latter to somewhat tone down its anti-government rhetoric. “Had we gone a bit further, we would have destroyed each other,” admitted another HHK leader, Galust Sahakian.

The key question is what prompted Baghdasarian to lash out at the HHK-dominated government now, just two months after he and other coalition leaders pledged to stop embarrassing each other in public and to preserve their uneasy marriage of convenience at least until the 2007 election. “One can arrest any official who has dealt with the privatization sphere at any moment and rest assured that justice has been done,” wrote a columnist for the 168 Zham newspaper. “On the other hand, it is clear to everyone that Orinats Yerkir does not care much about state property privatized for nothing.”

What the party does care about is a strong showing in the next legislative polls. Barring the absence of personal attacks on Kocharian, the pre-election discourse of its young leader has always differed little from that of opposition leaders. Baghdasarian’s statements may be often demagogic and short on specifics, but they won him the post of National Assembly speaker and the second-largest faction in the Armenian parliament after the HHK in 2003. He is arguably the most electable member of the ruling regime, which explains the persistent speculation about his ambition to succeed Kocharian, who is expected to step down after completing his second five-year term of office in 2008.

Baghdasarian already scored more political points last October when he forced the government, reportedly with Kocharian’s blessing, to start compensating some of those Armenians whose Soviet-era savings bank deposits were wiped out by hyperinflation in the early 1990s (see EDM, October 6, 2005). (Compensation of the former deposit holders was a key Orinats Yerkir campaign promise in 2003.) So observers wonder if his latest offensive in the parliament was also agreed with the Armenian president. But it is not clear why Kocharian would want to undercut the HHK, Armenia’s number one “party of power” that has served him so well.

Some local commentators say the HHK is not 100% reliable for Kocharian and his closest associate and most likely successor, Defense Minister Serge Sarkisian. The latter ran for parliament on the HHK ticket in 2003 and promised to name in February the party with which he will team up for the 2007 vote. But Sarkisian has still not made the announcement, suggesting that he might be lacking faith in Prime Minister Markarian’s Republicans.

(168 Zham, April 13-14;, April 13; Aravot, April 13; Haykakan Zhamanak, April 12)