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Armenian Government Vows Major Reforms After Karabakh Escalation


Armenia - Prime Minister Hovik Abrahamian speaks in the parliament, Yerevan, 27Apr2016.

Armenia - Prime Minister Hovik Abrahamian speaks in the parliament, Yerevan, 27Apr2016.

Citing “new challenges” emanating from the unresolved Nagorno-Karabakh conflict, the Armenian government pledged on Thursday to streamline its expenditures, step up its declared fight against corruption and improve the domestic business environment.

Prime Minister Abrahamian announced a push for major reforms as he opened a weekly session of his cabinet. He said that the increased risk of a full-scale war with Azerbaijan is forcing the government to “review” its policies.

“Are we developing?” Abrahamian told ministers. “Are we combatting corruption? Do we have a strong army? The answer is yes. But is that enough for us to confront the new challenges? I think I will express everyone’s view if I say no, it’s not.”

“We must redouble, multiply our efforts to become a more efficient state,” he said. To that end, the government will downsize many of its agencies through staff cuts and thus be able to spend more on the country’s more urgent needs, he said, hinting at defense and national security.

Abrahamian went on to promise a tougher fight against corruption which he said will be evaluated by ordinary Armenians’ perception of the scale of the chronic problem. The government, he said, will target widespread conflicts of interest among Armenian officials.

“We need to very quickly introduce tough mechanisms that would preclude the participation of individuals holding public posts and their relatives in state procurements,” declared the premier.

Armenia’s problematic business environment will be another focus of reforms promised by Abrahamian. The government, he said, will specifically make tax administration less arbitrary and investigate de facto monopolies.

“I admit that the government has not been consistent enough in getting to the bottom of this problem and not initiated an open public dialogue in a timely manner,” he added. “It’s time to rectify this shortcoming.”

Abrahamian told the Ministry of Economy and state anti-trust regulators to “analyze” within the next three weeks the monopolies’ impact on economic competition in Armenia.

“The key challenge is to ensure that all markets are open [to any entrepreneur,]” Economy Minister Artsvik Minasian told reporters after the cabinet meeting. He suggested that the regulators could be given more legal powers for that purpose.

As recently as in February, Minasian’s predecessor Karen Chshmaritian declared that the authorities in Yerevan are not seeking to eliminate the monopolies because their existence is inevitable in a country like Armenia.

Some lucrative forms of business in Armenia, notably imports of fuel and foodstuffs, have long been controlled by large companies belonging to government-linked individuals. Local and foreign economists say the resulting lack of competition in those sectors hampers faster economic growth.

Abrahamian as well as President Serzh Sarkisian have repeatedly pledged to tackle corruption and create a level playing field for all businesses in the past. Armenian businesspeople, economists and civil society members have reported no fundamental improvements in those areas so far.

Sarkisian has been facing growing calls for sweeping political and economic reforms since the April 2 escalation of the Karabakh conflict that nearly led to a full-scale war with Azerbaijan. Many think that Armenia needs such changes in order to be able to counter further Azerbaijani attempts to end the conflict militarily.

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