All The Prime Minister’s Men:

All The Prime Minister’s Men:

What can Armenia’s New Cabinet Achieve?

Everything you need to know about Armenia’s new Prime Minister, surprisingly appointed this September, the new cabinet, its challenges and perspectives.

Text: Mikayel Zolyan / Photos: PAN Photo

An Efficient Manager

In early October many Armenians were discussing a recently surfaced YouTube video that shows newly appointed prime minister Karen Karapetyan playing the drums in a cover of “Superstition”, Stevie Wonder’s famous funk hit. Social network users remembered that at least two of the previous Armenian prime ministers Hrant Bagratyan and Tigran Sargsyan were known for their musical hobbies; they played the guitar. A new Internet meme appeared, the image of a fictional band ‘the Varchapets’ (the prime ministers): a photo shopped image of the Beatles, featuring the faces of Karapetyan, Bagratyan and Sargsyan, as well as Karapetyan’s predecessor Hovik Abrahamyan (even though the latter is not known to possess any musical talent). Whatever the musical skills of Karapetyan’s predecessors, neither of them were able to bring about a major economic breakthrough to Armenia. Will Karapetyan be more successful? That is the question that interests most Armenians.
To many, the credentials of the new prime minister are a source of optimism. Unlike his predecessors, Karen Karepetyan came to government from a top management business background. And not just any business, but from one of Russia’s leading companies, Gazprom. Karapetyan spent the last five years working as senior management of various structures affiliated with GazProm; as First Vice-President of Gazprombank, as Deputy Director General for Strategy and Development at Gazrpom Mezhregiongaz company, and Deputy Director General for International Projects of Gazrpom Energo-holding.
Prior to this, Karapetyan worked as the Mayor of Yerevan for less than a year (December 2010 – November 2011). The previous mayor of Yerevan, controversial Gagik Beglaryan, had to resign as a result of a scandal that made headlines all over the world: Beglaryan had physically assaulted a presidential administration official who, in his opinion, had insulted his wife at a Placido Domingo concert. Karapetyan, who had previously worked as the head of ArmRosGazProm, a joint company formed by the Armenian government and Russian Gazprom, had a better public image than his predecessor, and many inhabitants of Yerevan were quite optimistic about his plans to modernize the city. When Karapetyan soon left his post to commence working for the Russian company Gazprom, the reasons behind his departure were never openly discussed, but part of the public were convinced that Karapetyan’s plans to modernize the capital had clashed with vested interests of the local ‘oligarchs’.

Why a New Cabinet? Why Now?
It is no coincidence that someone with the image of an ‘efficient manager’ has been selected to head the cabinet precisely at this time. Even though Armenia is still a presidential republic, the cabinet reshuffle is quite a significant step, especially given the current political context. Most likely, the resignation of the previous cabinet is the government’s strategic response to the events of this July, when a group of armed men calling themselves ‘the Daredevils of Sasoun’ seized a police station and street protests ensued in support . The public reaction to the actions of ‘the Daredevils’ demonstrated that the level of dissatisfaction with government policies had reached a dangerous level. While some public figures condemned the actions of the armed group, many others directly or indirectly supported them, pinning the major part of blame for the situation in the country on the government. It became clear that, given such public dissatisfaction, the emergence of new, equally or even more radical protests were only a matter of time. Hence, there was a need to diffuse the negative attitudes and to show that the government was capable of implementing changes. The fact that a small armed group was able to seize a police station and had managed to occupy it for over two weeks, also signified a crisis within the Armenian governmental institutions. Finally, ‘the four-day war’ in April showed the need for mobilization and effective management of Armenia’s resources in order to help Nagorno-Karabakh to withstand another possible confrontation with Azerbaijani forces.
Given this context, the creation of a new cabinet can be quite strategic. On the one hand, it can help mitigate public discontent. On the other hand, it could restore the consensus between different interest groups and factions within the government camp and eliminate the danger of a rift within the elites. Finally, a new prime minister with his own team may have a chance to pursue necessary economic reforms, tackle issues of corruption and inefficient management in the government structures whilst attracting investment.
In this situation, the choice of Karen Karapetyan as the new prime minister seems almost perfect. Karapetyan’s predecessor, Hovik Abrahamyan has been one of the most influential figures in the ruling Republican Party for years. He has also been the target for accusations of corruption by opposition politicians and the media. In contrast to Abrahamyan, Karapetyan has the image of an ‘outsider’. Not only has he not been part of the government for the last five years, he became a member of party only in late November. However, he is still perceived as someone.who is not a member of the Republican “old guard”. Thus, the choice of the new prime minister was meant to send a clear signal to the public; the new cabinet will be technocratic, rather than a political one that will offer a fresh start.

Other changes in the cabinet also reflected this logic, as several unpopular ministers were replaced. Among the dismissed were ministers who have an image of being part of the ‘oligarchs’ – Gagik Khachahtryan, minister of finance, and Gagik Beglaryan, minister of communications (and the former Yerevan mayor who had to resign after the Placido Domingo incident). Another controversial figure to be dismissed soon after the introduction of the new cabinet was the regional governor of Syunik region, Suren Khachatryan. Khachatryan had been accused of corruption and criminal activities in the past, but has managed to survive numerous scandals and even criminal investigations. His dismissal was perceived by many in Armenia as a sign that the new cabinet is serious about cleaning up the government structures.
Overall, there were eight new ministers appointed: minister of health Levon Altunyan, minister of agriculture Ignati Arakelyan, minister of economy Suren Karayan, minister of energy and natural resources Ashot Manukyan, minister of culture Armen Amiryan, minister of transport and communication Vahan Martirosyan, minister of finance Vardan Aramyan, and minister of defense Vigen Sargsyan. Most of these appointees are technocrats with no immediately obvious political connections, who have not been in the public spotlight before. An exception to this rule is the minister of defense Vigen Sargsyan (no relation to the president) who, as the head of the presidential administration, has been one of the most influential people in Armenia’s government. However, Sargsyan, who has a reputation of a Western-educated intellectual and a skilled manager, is to a certain extent immune from the negative stereotypes associated with the so-called ‘oligarchs’ and ‘old-school’ Republicans.

While these personal changes have created a largely positive atmosphere around the new cabinet, serious challenges lie ahead. There are high expectations surrounding Karapetyan’s cabinet and it will require a lot of effort to fulfill these. Although Armenia, which has no significant hydrocarbon resources, has suffered less from the recent recession than some other countries in the region, it still has serious economic problems. Armenians suffer from a high level of poverty and unemployment, the growing state debt and the significant predominance of imports over exports are a particular cause for concern. Economic troubles have led to mass migration, as hundreds of thousands of Armenians have become seasonal workers, mostly in Russia, even despite the economic recession there. However, the recession in Russia and other post-Soviet countries also means that Armenia’s gains from joining the Eurasian Economic Union are limited. Perceptions of widespread corruption and the lack of the rule of law have hindered foreign investments. Karapetyan’s cabinet will have to deal with all of these issues and it does not have much time to demonstrate that it is on the right track. In April 2017, parliamentary elections will take place and given the process of transition to a parliamentary republic, these elections will be crucial in determining Armenia’s future. Karapetyan’s cabinet will be expected to demonstrate enough achievements in order to secure the support of the electorate.
In addition to internal politics and socio-economic issues, a question that interests many observing Armenian politics is whether the changes in the government could influence Armenia’s foreign policy. There has been quite a lot of speculation in this regard, especially as Karapetyan, having spent several years working in Gazprom, is sometimes perceived as a pro-Russian figure. On the other hand, Sargsyan (the new minister of defense), is often considered a pro-Western politician, mostly due to the fact that he has studied in the USA, at the Fletcher School of Law and Diplomacy, Tufts University. This view, however, ignores the fact that Sargsyan has also graduated from a university in St. Petersburg, and what is more important, he was responsible for communication with the Kremlin when he was the chief of the presidential administration. Similarly, while Karapetyan’s background could certainly enable him to work efficiently with Moscow, his image as a ‘technocrat’ and an ‘outsider’ can be helpful in terms of fostering relations with the West, especially in the economic sphere.
In any case, the influence of personalities on Armenia’s foreign policy should not be overestimated. In Armenia, at least before the constitutional changes are enacted, foreign and security policies are the prerogative of the president, rather than of the cabinet. The fact that Eduard Nalbandyan, who has held the post of Minister of Foreign Affairs since 2008, was reappointed to his post shows that the country’s leadership are not looking for major changes in this respect. Due to geopolitical realities, any Armenian government will strive to preserve a certain balance in relations between Russia on the one hand and the West on the other. Armenia has been conducting this policy for a while and it should not be expected to abandon it, no matter which particular personalities are in government.