Government Institutions

As is typical for presidential systems in non-democratic countries, power is heavily concentrated in the presidency.[1] According to RA’s constitution, the head of state who is directly elected for a 5-year term with a two-term

limit appoints and dismisses the prime minister and individual members of the cabinet upon recommendation of the prime minister, dissolves the parliament, appoints and dismisses judges and prosecutors, is the commander-in-chief of the armed forces and can issue orders and decrees and declare a state of emergency. The prime minister, as head of government, is primarily responsible for overseeing the implementation of laws and presidential orders and decrees and coordinates the work of the ministries. While prime ministers were frequently appointed and dismissed throughout the 1990s, since 2000, two prime ministers were in office for 6 and 7 years, respectively, indicating a stable working relationship between government and president (Armenian Constitution 1995).

Two ministries are of special importance for RA’s mining industry. The Department of Mineral Resources within the Ministry of Energy and Natural Resources issues licenses for the exploration of mining sites and the extraction of mineral resources. It also monitors the operation of mining companies in RA. The Ministry of Nature Protection is responsible for assessing and monitoring the potential and actual environmental impact of mining operations in the country. In the unofficial hierarchy of ministries, the Ministry of Nature Protection ranks very low, which is reflected by the lack of funding the ministry receives; it is notoriously understaffed and underequipped (Barker, Amirkhanian 2013 interviews).

The 131-seat National Assembly is currently dominated by two progovernment parties, the Republican Party of RA whose leader is President Sargsyan and Prosperous Armenia whose leader is one of the richest businessmen in RA. Together, these two parties occupy 106 seats. Some of the richest entrepreneurs in RA occupy a significant number of pro-government seats. Being a member of parliament does not only grant these so-called oligarchs immunity, but also access to important policy-making forums and government agencies (Aghajanian 2012). In contrast, the opposition plays a negligible role in the parliament. Of the opposition parties, the Heritage Party has been an outspoken critique of mining practices in RA (Ishkanian 2013). Yet Heritage only holds 5 seats (Global Security 2013).

The court system is formally independent. However, the authority of the president over the appointment and dismissal of judges limits the

independence of the courts. Moreover, judges are notorious for accepting bribes. According to a 2013 report by the Human Rights Ombudsman of RA, “bribe-taking is so rampant in Armenian courts that judges even use an unofficial price list for kickbacks” (Shoghikian and Bulghadarian 2013). In general, corruption is widespread in RA. Transparency International puts RA in 94th place of 175 countries in its widely published Corruption Perception Index (Transparency International 2013).

RA is divided into 11 regional administrations, headed by governors who are appointed by the central government and are tasked with the implementation of the governments’ regional policies. Below the regional level, 654 local governments exist whose members are directly elected. The budgets and formal authorities of the regional and local governments are very limited. Moreover, the dominance of the ruling party in the national parliament extends to the local and regional assemblies. Given the dominance of the Republican Party in the regions, limited funds, and their dependence on the central government for the allocation of these funds, local and regional governments play a limited role in regulating RA’s mining industry. In general, they have overwhelmingly supported mining projects in their localities (Freedom House 2012).

The Armenian government has been very supportive of expanding mining operations in RA. It considers the mining sector “a key contributor to the national economy.” Accounting for over half of the country’s exports, it is RA’s “most important economic driver.” The government lauds RA for being a “mining friendly” country and promises to maintain and enhance legislation that could attract even more investors (Armenia-Canada Chamber of Commerce n.d.). In short, the government argues that mining serves the public interest of RA. This claim will be further investigated below. At this point, it should be emphasized though that the mining industry also serves the pecuniary interests of individual parliamentarians and government officials. As Liana Aghajanian states in Foreign Policy magazine:

Armenia is rich in molybdenum and gold, and that has led to considerable

competition among the oligarchs to grab their shares of the resulting

profits. National Assembly Chairman Hovik Abrahamyan and member of parliament Tigran Arzakantsyan are both shareholders in one leading mining company. One of the most prominent tycoons linked with mining is former Minister of Environmental Protection, Vardan Ayvazyan, who was in charge of regulating large parts of the industry during his stint in government. In September, a U.S. court ordered Ayvazyan to pay $37.5 million in damages to a U.S. mining company that accuses him of corruption relating to his own business interest in the sector. (Aghajanian 2012)

As most interviewees for this study, including the two government representatives, argue, corruption in the mining industry is ubiquitous. Government officials and parliamentarians as well as close relatives have direct stakes in mining companies, most of which are registered offshore to hide the ownership (Aghalaryan, Ayvazyan 2013 interviews). Articles 65 and 88 of the RA constitution explicitly states that members of the government and parliament must not engage in entrepreneurial activities (Armenian Constitution 1995). Moreover, bribes are frequently taken for issuing licenses and determining the tax and fee rates for mining operations, which are by international standards extremely low. This personal stake of public officials in the mining industry seriously compromises its regulation.

  • [1] At the end of December 2015, a constitutional referendum will be held in Armenia which thevoters will most likely approve, turning the regime from a presidential to a parliamentary form ofgovernment with power shifting from the president to the prime minister.
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