Publication: Eurasia Daily Monitor Volume: 3 Issue: 65

The United States has officially committed itself to providing $235.65 million in additional economic assistance to Armenia, in a further indication of its deepening ties with the South Caucasus country. The sum, substantial by Armenian standards, is to be provided over the next five years under the Bush administration’s Millennium Challenge Account (MCA) program aimed at promoting good governance and economic reforms around the world.

The administration included Armenia on the list of 16 developing countries eligible for MCA funding when it unveiled the program two years ago. The cash-strapped government in Yerevan jumped at the opportunity to meet some of its pressing socio-economic needs. The MCA compact that was signed by senior U.S. and Armenian officials in Washington on March 27 is the product of Yerevan’s lengthy negotiations with the Millennium Challenge Corporation (MCC), a U.S. government agency handling the scheme.

Speaking at the signing ceremony, U.S. Secretary of State Condoleezza Rice described the agreement as a “testament to the hard work and dedication of the Armenian people and their elected government.” Rice stressed that provision of the aid is conditional on the proper conduct by the Armenian authorities of parliamentary and presidential elections due in 2007 and 2008 respectively. “These are important commitments and the United States stands ready to help Armenia to ensure that its upcoming elections are free and fair,” she said.

Armenian Foreign Minister Vartan Oskanian assured her that his government would do its best to honor those commitments. “Our task until then is to partner with the United States and European governments to implement the necessary corrective steps to improve the conditions necessary for an honest and fair expression of people’s voices,” he said.

The large-scale aid will be channeled into rural regions of Armenia that have seen little development despite a decade of nationwide economic growth. The main segment, worth $146 million, will be spent on upgrading the country’s malfunctioning irrigation networks, which date to Soviet times. Another $67 million will be used for capital repairs of about 1,000 kilometers of battered rural roads. U.S. and Armenian officials say these two infrastructure projects will directly benefit 75% of the approximately one million Armenians dependent on farming. The first major installment of the aid is expected to be disbursed early next year.

Interestingly, Armenia has already been one of the world’s leading per-capita recipients of U.S. economic assistance, which is approved by Congress and has totaled $1.6 billion since 1992. The size of this “regular” aid is commonly attributed to the strength of the Armenian-American lobby on Capitol Hill. But finding an explanation for Armenia’s inclusion in MCA, which is single-handedly decided by the Bush administration, is a more difficult task. Unlike neighboring Georgia (the only other former Soviet state covered by MCA), Armenia has no ambition to join NATO and maintains close military and political ties with Russia.

Many Armenian observers regard the promised MCA funds as a further incentive for President Robert Kocharian and his most likely successor, Defense Minister Serge Sarkisian, to accept a compromise solution to the Karabakh conflict. U.S. officials say a framework peace deal may still be achieved this year despite the collapse of a crucial Armenian-Azerbaijani summit in France last February. In this regard, local observers consider very significant Rice’s remark that Armenians have an “elected government.” (The State Department strongly criticized the 2003 Armenian presidential and parliamentary elections.) Haykakan Zhamanak, a pro-Western Yerevan daily critical of the ruling regime, editorialized on April 1 that Washington is thereby “removing all questions about Robert Kocharian’s legitimacy.” A commentator for another paper, 168 Zham, went further, speculating that the Americans are disinterested in Armenia’s democratization because “our society is overwhelmingly pro-Russian.”

The United States was quite cautious in criticizing reports of serious fraud during last November’s constitutional referendum in Armenia (and parliamentary elections in Azerbaijan) — a far cry from its tough reaction to the disputed presidential ballot in Belarus on March 19. MCC chief executive John Danilovich expressed concern at the Armenian authorities’ handling of the referendum but promptly lauded their “commitment to sustaining the democratic reforms” after receiving relevant assurances from Kocharian last January. In a March 27 speech at a conference organized by the Armenian Assembly of America, U.S. Assistant Secretary of State Daniel Fried said Washington is “taking at face value assurances from the Armenian government” that the 2007 and 2008 elections will be democratic. Many Armenians are far more skeptical on this score.

By providing extra aid to Armenia Washington may also be rewarding the government’s ongoing efforts to forge closer security links with NATO and America in particular. “We do support Armenia’s efforts to strengthen its relations with the Euro-Atlantic community,” Fried said, commending the Kocharian administration for seeking greater “balance in its relations with the West and the Russians.” Fried’s deputy Matthew Bryza welcomed “considerable progress made in this regard over the past year” after holding talks with Armenian leaders in Yerevan on March 7. “I don’t think that the government of Armenia can move at a pace that for us is too quick,” Bryza told a news conference. “But we are very happy with the level of cooperation. This has been a significant year for U.S.-Armenian security cooperation.”

(Haykakan Zhamanak, April 1; 168 Zham, March 30-31; RFE/RL Armenia Report, March 7, 28; Text of Daniel Fried’s address to the Armenian Assembly of America, https://www.state.gov/p/eur/rls/rm/63791.htm)