AGBU Magazine Cover for November 2009


Armenia's third president took office at a time when the republic's domestic life had never been so threatened. Citizens were dead and wounded from the unrest that followed Serge Sargsyan's disputed election, United States' aid was withheld, and Armenia's seat at the Council of Europe was in question over the detainment of "political prisoners."

Tensions were so high on Inauguration Day, April 9, 2008, that no one was allowed inside the yard of the Opera House while the new president stood alone to review a military parade on what should have been his day of adulation.

Serge Sargsyan faced a divided republic with the apparent determination that the only means to crack the wall of total disappointment and distrust was to bring about changes.

In the evening after the inauguration, Sargsyan demonstrated his willingness to make those changes by appointing Tigran Sarkisian, head of the Central Bank at that time, to head the government as Prime Minister.

Sarkisian, 49, with no political party affiliation, was a new face in the government and, to many, his appointment signalled hope for a non-partisan regime.

"The reforms will be extremely revolutionary, and the tenure will be long," said Sarkisian after taking up the premiership in a speech that dared criticize the faults in Armenia's public administration.

"I have been a tough and demanding manager at the Central Bank, and that is going to continue," promised Sarkisian, who had managed Armenia's regulatory bank for 10 years.

President Sargsyan and Prime Minister Sarkisian started their offices with promises to fight against, as they put it, the "number-one enemy in the sphere of public administration," corruption.

The custom of corruption

Calling for "self-purification," the new administration immediately targeted the State Customs Committee, in which, as the president said, "bribery was thriving."

In a public denouncement captured on state television, Sargsyan dismissed Customs head Armen Avetisian. During the same month, the government initiated a number of changes in the tax code adopted eight years ago.

The government publicized, for the first time, the price list for some of the imported goods, thus depriving customs officials of the chance to set prices as they wished and extort money from importers.

The most important change was the optimization of the customs licensing system and the introduction of an online service through which importers are now allowed to obtain their licenses on their own, meaning that they do not have to meet customs officers, reducing the chances for demanding bribes.

These reforms were immediately felt in Armenian pocketbooks.

Martin Minasyan imports and sells cars. "I've been importing cars for four years now and not once have I seen such tariffs," he says. He used to pay from about $3,000 to $5,000 per car; however, with the new format of customs clearance, he has paid only $2,500 since June 2008.

"Before, I'd have to pay at least twice that amount for each car's customs clearance, whereas now I am paying only the set amount of money which really goes to the State Budget and not to some people's pockets," says Minasyan with confidence.

Another reform aimed at developing small and medium businesses contributing to the growth of export is the reduction of bureaucratic paperwork. For example, instead of the 15 various documents a businessman had to submit for exporting agricultural products before the reform, only three are mandatory now.

Financial-economic reforms are linked to RA Minister of Finance Tigran Davtian, who took the office on April 1, 2008. He says that reforms have to be systemic "in order for the process to be irreversible and irrevocable."

"For a manager to forbid taking bribes or to demand proper fulfillment of duties is a temporary solution," says Davtian. "Rather than looking for punitive means against taking bribes we have to find ways to lessen the opportunities for bribery."

According to him, an important principle for reforms in public administration is the involvement of the younger generation. "We have to inject fresh blood into the not-so-clean system," says the minister.

"New personnel, introduction of a system for encouragement, motivation and reward, introduction of an electronic system, and risk management—the application of these four basic principles will give results with time," assures Davtian.

Another new member of the government, Minister of Economy Nerses Yeritsian, who has acquired a reputation as a radical reformer during his tenure, says that "we are very good at drafting and passing laws, but the issue of enforcing them, analyzing to see to what extent that law has actually been introduced, is complicated and unresolved."

The minister, 38, has changed not only the way the ministry operates by setting demands and difficult tasks for working out an economic development policy, but also, as ministry employees say, he has changed the institution's mentality.

"The changes were big and even risky," Yeritsian says, now that he can point out the results of those changes. "The number of employees has not grown; on the contrary it's been reduced, but the functions have doubled. I reduced some 30 percent of the staff and replenished it with new, young professionals without whom we would not have had the opportunity to implement many new and highly ambitious projects."

The most positive step pointed out by businessmen is the project aimed at easing the procedure of registering businesses, according to which all the processes from start to end are done at the same spot.

"It truly is a positive step which put an end to the delay with establishing a company charter, acquiring the stamp and different documentation," says the chairman of the Union of Manufacturers and Businessmen Arsen Ghazarian. He also says that plans are underway for all the registrations to be completed at one agency and one window.

OVIR in the crosshairs

The next target of reform was the Passport and Visa Department of RA Police (OVIR), a nest of dirty deals that drew sharp criticism from Sarkisian during a government meeting on June 26, 2008.

"It is obvious that we have serious problems in this sphere, when service is provided on behalf of the state, but tariffs are set by people pocketing money," said the PM.

Ten days later, the head of OVIR Alvina Zakarian was dismissed after 15 years on the job. Four months later, the new head of OVIR Norayr Muradkhanian submitted a comprehensive list of reforms.

Getting a passport was a complicated and expensive process, as even 6-year-old Narine remembers. In order to be issued a passport, she had to be present at OVIR with her parents, which meant she had to wait with hundreds of others since passports for children were issued only at OVIR and only with the child's presence.

The year before the reforms, she spent two days in OVIR's yard with her parents and a number written with a pen on her hand indicating their turn in the long waiting line.

"We were number 136 in that endless line and so we wrote the number on the child's palm not to forget it, but the line took two days and she wouldn't allow us to wash her hand so that it wouldn't get erased," recalls Narine's mother Liana Sirekanian.

They were, of course, offered the easiest option—to get the passport within a day by paying a bribe.

"They asked for $300. I had the money but wouldn't pay it as a matter of principle," says the mother. "I couldn't understand why I had to pay a bribe for something that I have a right to receive as provided for by law."

Her account is not a unique case, as OVIR was broadly perceived as being run according to a system of bribes rather than process. Subsequent experiences at OVIR since last year have proved that changes have indeed been enforced.

Starting this year, passports to children as well as adults are issued at all passport departments within five working days instead of the two- to three-week period before the reform.

And: "If before people paid $100 or $200 illegally to get a passport within a day, there is an official payment envisaged by the law which will go to the State Budget instead of certain people's pockets," says Muradkhanian.

The fee to obtain a passport within five working days is 1,000 drams (about $3). If, however, someone wants to have it done in one day, the fee is 20,000 drams (about $60), and to receive it in up to four days the fee is 10,000 drams (about $30).

Another change is that exit visas for those planning a visit to foreign countries are issued in a day instead of the seven days it required before.

"This is the kind of reform that could have been done much earlier. All it took was a will to do it and a determination to take radical steps for fundamental changes in order to clean the sphere," says RA Ombudsman Armen Harutiunian.

Equal under the law?

From minor traffic infractions to felonies, certain privileged citizens have always been above the law in Armenia.

Against this phenomenon a "new sheriff came to town" in May 2008 when Alik Sargsian was appointed Chief of Police of the Republic of Armenia, replacing Hayk Harutiunian, who had held the post for nine years.

Vowing that scrutiny would start at the top, Chief Sargsian announced that even drivers with "gold number" license plates (referring to the practice in Armenia of oligarchs buying sequenced numbers) would be liable before the law.

"In the future, the names of trespassers will be made public, photographs of incorrigible offenders will appear on cover pages of newspapers," the chief promised, predicting a future that, however, has not arrived more than a year later.

Traffic police, who have symbolized bribery since Soviet times, fell under the government microscope as President Sargsyan himself acknowledged the literal highway robbery that has plagued drivers. The practice of selectively stopping some cars while allowing others (usually more expensive ones) to pass is a practice the president publicly called "impermissible," adding, "I demand to eliminate recklessness and unlawful behavior in our streets."

Chief of Traffic Police Margar Ohanian says that the president's statement was absolutely necessary, as it was a message not only to the police but to officials as well.

"If previously a policeman would turn a blind eye on a violation committed by some official's son, now those officials themselves know that they won't get away with that and are more careful," says Ohanian.

Numbers demonstrate to what degree police have become more courageous. In the first month after the president's imposed order, 22,310 citations were issued in Yerevan—8,000 more than previous monthly averages.

"All this speaks of one thing," says Ohanian. "The previously ignored cases of violation now do not miss the traffic police's attention."

Eduard Hovhannisian, head of Achilles, a Non Governmental Organization that defends drivers' rights, says his organization has seen positive results of the traffic enforcement crackdown.

"If six months ago 70 percent of calls to our hotline were connected to bribery and demands of money for no good reason, now those make less than 10 percent," says the NGO head.

Reforms aimed at the police, especially the anti-corruption struggle, are qualified as "a positive step" by the head of Transparency International's Armenian office Amalya Kostanian, who sees progress in a sense that "systemic steps have been taken in some spheres."

The fight against corruption in Armenia is divided into two phases: Pre-Sargsyan, and current government.

"The latter [the new government] has started to condemn corruption, and the process started from tax and customs structures. Reform attempts were made in the police, and even in education. To some extent, this can be called progress; however, the most important part is yet ahead," says Kostanian.

The anti-corruption campaigner's reserved praise is measured by the perception (and oft-demonstrated reality) that government-friendly oligarchs and authorities mostly remain untouchable. Reforms will not be totally effective, says Kostanian, as long as the political pool and the "big sharks freely swimming in it" are not subject to punishment.

"Public arrests and condemnation of a few low- or mid-ranking officials is far from being enough to affect the whole anti-corruption situation," she says. "Unfortunately, targets in this are low-level officials. The highest bribe they have taken was $5,000, which is not considered major corruption.

"The fight centers on lower circles, including small businessmen and public servants, whereas corruption is systemic in Armenia, both among citizens and in the system of public administration. It [the anti-corruption reform] mustn't have started from low circles, the fight should have started from the top."

Exerting control

The RA Control Chamber last year made attempts to clean the top circle from corruption.

Citizens of Armenia could hardly believe their ears when on September 17, 2008 RA Control Chamber Chairman Ishkhan Zakarian declared that at some of the ministries a few million dollars had been stolen from the State Budget.

The surprising part was not that the money was stolen (the State Budget had been misused more than once); what was surprising was that it was openly talked about.

The Control Chamber, operating since 1996, had never before made such disclosures.

In 2007 the former Control Chamber of the National Assembly became the Control Chamber of the Republic of Armenia and is accountable only to Parliament and the President of Armenia.

The Chamber, as it is, is the highest control body in the country and oversees who, how and how efficiently state money is spent.

Survey results investigating the urban heating project carried out by the ministries of Urban Development and Agriculture with the support of World Bank showed that the state had suffered a huge loss to the amount of $3.5 million during the first quarter of 2008 as a result of misuse.

The disclosures revealed that the missing money was "mostly payments for work not done, which is a major violation, and that money has to be returned to the State Budget," said Zakarian.

The Prosecutor General's office filed nine cases; however, they are still being processed, and 90 percent of the stolen money, according to Zakarian, has been returned to the budget.

Last year's disclosures were followed this spring by revelations that more than half a million dollars had been unaccounted for or improperly used.

The year's most serious violation was registered at the Ministry of Culture, where $570,000 was misused or spent without proper documentation from the general budget of the ministry. About $180,000 was misspent, according to Zakarian who also says that the ministry is obliged to return some $330,000.

Much of the money in question concerned the administration of the Committee for the Protection of Historical Monuments.

A week before the disclosure, Deputy Minister of Culture Gagik Gyurjian, in charge of the committee, had been released from his duties by decree of the Prime Minister. However, Zakarian did not confirm that Gyurjian's dismissal was connected to the violations. In fact, sources familiar with the operations defend Gyurjian as a "fall guy" for the ministry.

Government oppositionists treat these events with mistrust, pointing out that no high-ranking official has been called to account so far: "But, one thing is obvious: at least some steps are being taken to restrain officials' appetite," says Heritage party Assembly Deputy Anahit Bakhshian.

Originally published in the November 2009 ​issue of AGBU Magazine. Archived content may appear distorted on your screen. end character

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AGBU Magazine is one of the most widely circulated English language Armenian magazines in the world, available in print and digital format. Each issue delivers insights and perspective on subjects and themes relating to the Armenian world, accompanied by original photography, exclusive high-profile interviews, fun facts and more.