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ARMENIAN GOVERNMENT PRESSED TO REIN-IN LAWLESS OLIGARCHS

The Armenian authorities have been under domestic pressure in recent weeks
to end what many see as the virtual impunity enjoyed by the country's tiny
class of millionaire businessmen with close government ties. The Armenian
version of post-Soviet "oligarchs" are widely hated -- and feared -- for
their utter disregard of laws and conspicuous wealth that contrasts with the
country's widespread poverty.

The ruling regime has heavily relied on the oligarchs to manipulate
elections and bully its political opponents, making it doubtful that any
serious action will be taken to rein them in.

Still, the authorities had to do something after a late-night gunfight in a
Yerevan suburb on February 4 between two criminal groups left at least one
person dead and several others seriously wounded. It was the most massive
shootout reported in the Armenian capital in a decade, involving, according
to newspaper reports, hundreds of gunmen. Some of them were said to be
personal bodyguards of several of the oligarchs who hold seats in
parliament.

The incident reportedly stemmed from a dispute over control of a local
minibus service, a highly lucrative business activity that is the exclusive
domain of senior government officials, their cronies, and loyal businessmen.
It seems to have raised President Robert Kocharian's eyebrows, with police
making dozens of arrests and confiscating large quantities of weapons. Yet
the key question of whose business interests were behind the mafia-style
clash remains unanswered.

Local newspapers were quick to draw grim conclusions. "Much of the political
power in Armenia is concentrated in the hands of criminal business . . . and
illegal armed groups belonging to it," the pro-opposition daily Aravot wrote
on February 9. Golos Armenii, a paper that staunchly backed Kocharian during
the last presidential election two years ago, was even more outspoken: "The
semi-presidential form of governance in Armenia is coming to an end and will
be replaced by absolute oligarchy, the rule of a few individuals . . . The
executive and legislative branches are, in essence, already intertwined with
the oligarchs and controlled by the latter."

Armenian tycoons are typically individuals with a high school-level
education who made fast money during the turbulent 1990s and now have
extensive business interests dependent on government support. For example,
one of them, Samvel Aleksanian, enjoys a de facto monopoly on imports of
sugar and flour to Armenia, while Russian citizen Mikhail Baghdasarov has
the exclusive grip on fuel supplies. Both men are believed to operate under
the "tutelage" of Defense Minister Serge Sarkisian, Kocharian's most trusted
lieutenant.

The oligarchs like to flaunt their wealth, living in ridiculously big villas
and roaming the streets in motorcades made up of several SUVs with almost
identical license plates. Many Armenians would agree that traffic lights are
essentially non-existent for them.

In fact, just one week before the infamous shootout, one such behemoth, the
hugely expensive civilian version of the U.S. army's Humvee vehicles,
crashed into three other cars on a busy street intersection near downtown
Yerevan at a high speed, killing two people, and injuring several others.
The police have reported no arrests so far and are reluctant to name the
Hummer's real owner. There are only 11 such cars in Armenia.

What makes the oligarchs particularly important for the regime is the fact
that they usually hold sway in a particular area of the country through
their businesses and local quasi-criminal elements. They are able to bribe
and intimidate local voters and resort to other election falsification
techniques. Ballot box stuffing was commonplace during the 2003 presidential
election, which Western observers described as undemocratic.  But the
criticism did not prevent many tycoons from themselves getting "elected"
during the equally disputed parliamentary polls held a few months later.

Another common feature of the Armenian super-rich is the burly and mostly
unarmed "bodyguards" that accompany them at every turn. The men's most
visible characteristic, a shaven head or a short haircut, has brought a new
political meaning to the word "skinhead" in Armenia.

The authorities needed their services last spring when the Armenian
opposition tried unsuccessfully to force Kocharian to resign with a campaign
of street protests. Scores of riot police stood by and watched as two dozen
well-built thugs smashed photojournalists' cameras after trying to disrupt
an opposition rally in Yerevan on April 5, 2004. Opinion differed only on
which powerful individual employed them.

Two of the assailants subsequently received a slap on the wrist when a
Yerevan court fined them after a parody of a trial. One of the defendants
was also a key participant in the February 4 gunfight, according to media
reports. This man is now reportedly under arrest pending trial. His possible
imprisonment would touch only the tip of the iceberg, however, as none of
the big fish is likely to end up behind bars.

"Everybody is scared," Golos Armenii noted alarmingly. "The oligarchy
controls everything and as the [next] elections approach it will
increasingly tighten its stranglehold on political forces in order to avoid
surprise developments."

(Golos Armenii, February 12; Haykakan Zhamanak, February 12; Aravot,
February 9).

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