OLD PROBLEMS FOR A NEW PREMIER

Armenia has learned the name of its new prime minister at the last moment of the term specified by local law. As was predicted by many in Yerevan, and not only there, President of Armenia Serzh Sargsyan offered the position of Prime Minister to Hovik Abrahamyan, now the former parliament speaker.

It became clear already in the first days after his appointment that the ministers of defence and foreign affairs, namely, Seyran Ohanyan and Eduard Nalbandyan, would retain their positions. However, the situation with the "economic bloc" remained unclear. Experts in Yerevan predicted serious changes in the composition of the new government. In particular, according to the website NEWS.am, Acting Minister of Finance David Sargsyan, Acting Minister-Chief of RA Government Staff Vache Gabrielyan, Acting Minister of Economy Vahram Avanesyan, and Acting Minister of Labour and Social Affairs Artem Asatryan were expected to leave their jobs. Rumour had it that Acting Minister of Nature Protection Aram Harutyunyan, Acting Minister of Energy and Natural Resources Armen Movsisyan, and Acting Minister of Culture Hasmik Poghosyan were also subjects to dismissal, i.e. all those who were believed to belong to the team of the former Prime Minister of the Republic of Armenia. In the meantime, it is unclear who will take on their responsibilities. It is also unclear whether the composition of the government coalition in Armenia will need to be changed as the Republican Party of Armenia (RPA) headed by Serzh Sargsyan has no social support sufficient to form a one-party government.

As soon as the new appointment of Hovik Abrahamyan was made known, Yerevan experts began to talk about possible shifts on the domestic political arena. Thus, Armenian political analyst Karen Kocharyan noted: "If Hovik Abrahamyan is appointed the prime minister, it is obvious that, speaking in terms of perestroika, there was a consensus reached between the Prosperous Armenia Party and the RPA. It is clear that his candidacy was offered in a package." He added that there might be "a common theme with the Armenian Revolutionary Federation (ARF) [also known as Dashnaktsutyun], which may come to light over time." As has been recalled in Yerevan, the daughter of Gagik Tsarukyan, the leader of the Prosperous Armenia, is married to the son of Hovik Abrahamyan.

Expert at the Armenian Centre for National and International Studies Edgar Vardanyan, in his turn, said: "Hovik Abrahamyan can come to common terms with different segments of the political elite and various clans. I think this is an important factor today, especially given that Russia needs a uniform and conflict-free political elite so that not to have problems when Armenia joins the Customs Union."

As many believe, Hovik Abrahamyan can really pass as a "compromise figure," especially taking into account the current balance of forces in Armenia, and his kinship with Gagik Tsarukyan is not the only, and perhaps even not the main reason here. He is not such a staunch pro-Westerner as Tigran Sargsyan, but he is not as pro-Moscow figure as Karen Karapetyan, the former head of ArmRosGazprom [now Closed Joint Stock Company "Gazprom Armenia"] and vice-president of Gazprombank, who was also considered as the most likely candidate for the premiership. He does not belong to the Karabakh clan, which today causes strong resentment among many residents of Yerevan, Gyumri and Vanadzor.

Seyran Ohanyan tentatively indicated his aspirations for the premiership too. Finally, those from the "Karabakh circles" apparently did not want to share power and influence with the Zangezur clan represented, among others, by notorious Suren Khachatryan, better known under his criminal nickname "Liska." As is known, the father of Serzh Sargsyan was a native of Zangezur and the inhabitants of Karabakh have seemingly not forgotten this. Against this background, Hovik Abrahamyan, who bears relation neither to the "people of Karabakh" nor to the "people of Zangezur," is clearly not the worst candidate.

And last but not least, the fact that Hovik Abrahamyan is in a sense a "premier of national consensus" has been noted by none other than Serzh Sargsyan. Introducing the new head of government, the President of Armenia expressly stated: "In recent days, we have had a very long talk with Mr. Abrahamyan about the current situation and programs for the future. I honestly presented all the concerns that had mounted even in our teammates in connection with the internal unity, relations with other political forces or possible sentiments from various sectors of society. We talked openly and honestly about everything, and I received clear assurances from Mr. Abrahamyan." But in that same speech, President Sargsyan promised that Armenia would have an "effective Prime Minister." However, few people in Yerevan seem to believe these promises. Indeed, just recently the authorities in Armenia were ready to declare all the negative assessments of the country's economic situation as the "intrigues of enemy propaganda." Now Yerevan is forced to admit though that Hovik Abrahamyan has inherited a poor "legacy" from the former prime minister. According to estimates made in Yerevan, the informal sector of the Armenian economy constitutes approximately 40 per cent. The country's external debt stands at 4.5bn dollars, which is 51 per cent of GDP. Big promises to diversify exports have remained just promises: this area is dominated by ore, copper concentrates, ferroalloys and ... brandy.

The latter perhaps requires clarification. Brandy is the traditional Armenian export commodity. However, if brandy is mentioned in the export statement together with copper ore concentrate and ferroalloys, it testifies - not to the successes of Armenian winemakers, but to a steep decline of the mining and metallurgical sectors, which were the foundation of industry in Armenia in the Soviet years. Moreover, if products of Armenia's chemical industry are unable to compete even with brandy in terms of export potential, it is an even more alarming symptom for the economy. Not to mention the fact that over-the-top indexes of poverty and unemployment are much more expressive economic statistics.

Meanwhile, Aram Manukyan, member of the National Assembly of Armenia from the opposition Armenian National Congress, presented his data at the economic forum of the oppositional "four." According to him, investments made by Azerbaijan and Turkey in Georgia are several-fold greater than all investments in Armenia. On a regional scale, Armenia simply does not exist as an economic entity in the region, he added. "Azerbaijan's investment programs in Georgia as regards gas and oil transportation have reached 35-40bn dollars," Manukyan said. The situation is the same in other sectors, he noted. According to him, Armenia shows no signs of development.

Today, no-one in Yerevan pins any hopes for improvement in the economy on the new prime minister. Not least because Hovik Abrahamyan, unlike Tigran Sargsyan, does not seem to be a bright financier or economist.

Hence, there is virtually no hope for improvement in the rotten economy of Armenia.