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Armenia: The New Prime Minister--Strong Leader Or Economic Dinosaur?

By Vahan Hovanissian

Yerevan, 25 March 1997 (RFE/RL) -- The appointment of Robert Kocharyan as Prime Minister of Armenia has touched off much speculation on the country's future economic course.

Depending on one's viewpoint, Kocharyan is a strong leader, the right person to tackle the major problems hindering Armenia's further economic development; or he is an inflexible man accustomed to running a militarized state system and without practical experience in economic reform. Which view is the more accurate?

At a press conference in Yerevan today, Kocharyan gave few real clues to his intentions. He did say the economic program of his predecessor Armen Sarkisian will stay intact, but with some corrections -- which he did not specify. And he said there would be strict control over the implementation of reforms, a reference to keeping improprieties and corruption out of such processes as privatisation.

President Levon Ter-Petrosyan appointed Kocharyan prime minister on March 20 in a move which took the international community by surprise. The 43-year-old Kocharyan had served since December 1994 as the president of the self-declared government of Nagorno Karabakh, the mountainous enclave in Azerbaijan mainly populated by ethnic Armenians. The enclave began a struggle for independence from Baku in 1988, which later became a full-fledged war in which fighting continued until 1994.

Nagorno-Karabakh's status is still undecided, and understandably Azaerbaijan is upset that Kocharyan -- technically an Azerbaijani citizen -- is the government leader of Armenia.

Skeptics inside and outside Armenia point out that Kocharyan is experienced only as the leader of a state on a war footing, where economic considerations were strictly subordinated to security concerns. Although he was earlier a member of Armenia's first post-communist parliament, he has no real contact with the reform process as it has developed in the post-soviet world in recent years.

They also note that though he is a proven leader under difficult conditions, he has not displayed any signs of knowing how to tackle the complex economic problems which confront the transition countries.

The skeptics further point out that his predecessors, Sarkisian and Hrant Bagratyan both enjoyed the confidence of international financial organizations and foreign investors, and Sarkisian had wide personal links with foreign business circles. By contrast, it's unclear what the reaction will be to Kocharyan's appointment from Western investors, the World Bank and International Monetary Fund. The international institutions have been of key importance in providing Armenia with the humanitarian assistance and preferential credits which have helped maintain of socio-economic stability.

Kocharyan's supporters take a contrary view, namely that the great advantage to Armenia is exactly that he is a tough-minded figure who can steer a straight line. They point out that Armenia's pressing problems now are how to bring fiscal discipline into the government, how to increase tax revenues, and how to haul much of the economy out of the black market's shadow into the daylight.

Sarkisian, who resigned because of ill health, recognized these massive obstructions but was not able in his short term to come to grips with them. Kocharyan might be the man to tackle them head on, to grasp full control over the independent-minded power ministries, to overcome the vested interests of the shadow economy, and to secure the revenues Armenia needs for its proper development.

Our correspondent notes there is talk of the new prime minister calling to his side the former premier Bagratyan, an economic expert of high repute who also attempted -- unsuccessfully -- to exercise control over the power ministries.

After his resignation Bagratyan became a consultant with the IMF and is now working in Moscow on Russian and Ukrainian energy reform issues.

Seen in this light, the Kocharyan era could represent an unusual opportunity for progress in Armenia: a strong-willed and decisive prime minister teamed with a clear-sighted economist with international standing.

Vahan Hovanissian is a Yerevan-based analyst who is regular contributor to RFE/RL.