Nations in Transit
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Democracy Score(1 = best, 7 = worst)
Electoral Process(1 = best, 7 = worst)
Civil Society(1 = best, 7 = worst)
Independent Media(1 = best, 7 = worst)
Judicial Framework and Independence(1 = best, 7 = worst)
Corruption(1 = best, 7 = worst)
Governance(1 = best, 7 = worst)
Eleven years after gaining independence and stepping onto the path of reform, Armenia remains a struggling nation with enormous socioeconomic difficulties, unresolved security issues, and a deeply flawed political order. Its decade-long transition to democracy and the free market has not yet lived up to the expectations of the majority of Armenians. Although Armenia has built the main institutions of state and avoided long periods of instability, a host of factors have hampered the country's development, including the reversal of political reform in the early 1990s and the failure of Armenia's leaders to establish the rule of law. Equally devastating has been the persisting effects of the post-Soviet slump in living standards. Mass impoverishment is having a negative impact on the process of democratization and is undermining civic consciousness. Those who enthusiastically put an end to Communist rule in 1990 no longer feel that political participation and civic activism can help resolve their problems. They simply do not see democratization as the key to prosperity.
This fact makes it easier for government authorities to maintain Armenia's oligarchic political system. Although basic civil liberties are in place and the press is relatively free, the right of citizens to change their government has been severely, and at times brutally, restricted. Most elections held since 1995 have fallen short of international standards. These problems are compounded by a highly insecure geopolitical environment in the South Caucasus, stemming from the unresolved conflicts in Nagorno-Karabakh and elsewhere in the volatile region. The bitter territorial disputes preclude the reopening of traditional trade routes and a greater influx of foreign investment--a necessary condition for quick economic recovery in Armenia as well as neighboring Azerbaijan and Georgia. At least, the stalled Karabakh peace process, sponsored by France, Russia, and the United States, saw little progress in 2002.
Armenia's greatest reform achievements since 1990 are confined to the macroeconomic front. In 1992 and 1993, at the height of the war in Nagorno-Karabakh, the country suffered hyperinflation and a tremendous fall in living standards. Since 1994, the macroeconomic policy of successive Armenian governments has largely followed the prescriptions of the International Monetary Fund and the World Bank, resulting in eight consecutive years of economic growth averaging 5.5 percent annually. The annual inflation rate has been among the lowest in the former Soviet Union since 1997. Most state assets have been privatized, and the country has adopted one of the most liberal trade regimes in the Commonwealth of Independent States. Gross domestic product (GDP) was on track to grow by over 8 percent in 2002 under 3 percent inflation.
However, Armenia's relatively strong macroeconomic performance has not yet translated into tangible improvements in living standards for most of the country's citizens, a phenomenon that a senior World Bank official termed an "economic paradox" in 2001. Indeed, economists agree that only a small segment of the population, made up of relatively young entrepreneurs and top government officials with business interests, has really benefited from the growth. So widespread is tax evasion among private businesses that the Armenian government's tax revenues make up only 15 percent of GDP, a very low figure even by former Soviet standards.
Tax evasion results from rampant government corruption and other serious problems with the rule of law, and Western donors are placing growing pressure on the authorities to improve the business environment in the country. Although Armenian authorities took steps in that direction by enacting a number of relevant laws and improving tax collection in the course of 2002, their commitment to serious microeconomic reform remains in doubt. In particular, there was little hope that a comprehensive anticorruption program, which the government had promised to unveil in late 2002, would remedy the situation.
Armenia's political life during the period covered by this report was shaped by preparations for presidential and parliamentary elections due in February and May 2003, respectively. President Robert Kocharian, who will seek another five-year term in office, had effectively launched his reelection campaign by the middle of 2002. As the year drew to a close, he made more and more public appearances across the country designed to persuade Armenians that things are getting better despite persisting hardship.
In an effort to scuttle Kocharian's reelection plans, the president's hitherto divided political opponents moved to form a united front against the 48-year-old incumbent. In September, 16 political parties representing virtually the entire opposition spectrum announced the creation of a loose coalition whose aim would be to put forward a single presidential candidate for the February 2003 vote. However, there was widespread skepticism about the group's ability to put aside long-standing differences, and subsequent developments proved the skeptics right. In time it became evident that these diverse opposition parties could hardly agree on who their common candidate should be. Some opposition leaders were even suspected by their allies of secretly cooperating with the regime.
It is no wonder, then, that Kocharian sounded untroubled by the opposition's unification efforts and let it be known that he expected to win a landslide victory by garnering more than 50 percent of the vote in the first round. He also argued that a second round, like the one held in 1998, would hurt the Armenian economy by prolonging political tension and uncertainty. But the opposition shrugged off that argument, saying that the president is simply looking for an easier way to falsify election results. Some independent observers likewise feared that government officials who are in a position to affect the election results may have received a clear signal to make every effort, both legal and illegal, to ensure Kocharian's first-round victory.
A number of events in 2002 gave cause for these alarming predictions. In April, Armenia's leading independent television station, A1+, was forced off the air by the authorities after losing a competitive but dubious tender for its air frequency. The de facto closure of A1+, the only national channel to have aired criticism of Kocharian regularly, was a big blow to press freedom in Armenia and was condemned by local and international media watchdogs, the United States, and the Council of Europe (COE).
The Parliamentary Assembly of the Council of Europe (PACE) mentioned the A1+ closure in a resolution on September 26 that criticized Armenia for failing to fulfill some of its membership obligations. The PACE also warned that Yerevan would risk facing serious sanctions if it failed to unconditionally abolish the death penalty in peacetime by June 2003. Armenia's new criminal code, approved by Parliament in December 2002, scraps capital punishment but has a special clause allowing death sentences for the perpetrators of the October 1999 terrorist attack on the Parliament building, in which Prime Minister Vazgen Sarkisian, Speaker of Parliament Karen Demirchian, and six other officials were murdered. The five gunmen remained on trial in 2002.
While strengthening his hold on power, Kocharian continues to rely on a shaky support base made up of senior civil servants, wealthy businesspeople with strong government connections, and several loyal parties represented in the government--notably the Armenian Revolutionary Federation (ARF) and the Republican Party of Armenia (RPA), led by Prime Minister Andranik Markarian. Despite their shared interest in seeing Kocharian stay in power, these groups often squabbled over government posts and other power levers in 2002. The ARF and other pro-Kocharian groups were increasingly jealous and unhappy with the RPA's growing influence, which came to light during the latter's landslide victory in the October 2002 local elections. The outcome of these elections reinforced Markarian's position and enhanced the Republicans' significance in the eyes of Kocharian, who was widely expected to become even more reliant on the RPA in his bid to win a second term in office.
Unlike Georgia and Azerbaijan, the other two states in the Caucasus, Armenia has avoided long periods of strife since independence. The country's political stability has been threatened on two occasions: in the wake of the 1996 presidential elections and after the 1999 shootings in Parliament. In both cases, though, the country did not slide into chaos. In addition, the population as a whole and most of the leading political groups have been unwilling to engage in radical forms of political participation.
Nevertheless, Armenia's long-term political stability will remain in question as long as legitimate, democratic mechanisms for changing the government are not respected by its elite. The repeated failure of authorities to hold free and fair elections is a serious hindrance to the establishment of a democratic, stable, and predictable political order. Endemic voting irregularities heighten political tensions, and political groups and actors spend most of their energy manipulating elections (if they are in government) or ensuring their freedom and fairness (if they are in opposition). As a result, political debate is often diverted from pressing issues facing Armenia, and voter apathy and cynicism are only deepened.
Although the most recent national elections, held in May 1999, were largely democratic, the events that have followed have given political observers cause for concern. Ever since the 1999 killings in Parliament, for example, President Kocharian has used his sweeping constitutional powers to strengthen his position and neutralize his political opponents. The presidential and parliamentary elections of 2003 will be a serious test for Armenia's democratic credentials.
In fact, preparations for those elections were already under way for much of 2002. The Armenian opposition sought to scuttle Kocharian's reelection plans first by trying, though unsuccessfully, to bring impeachment proceedings against him and then by joining forces for the forthcoming presidential ballot. In June, the opposition disrupted the session of Armenia's Azgayin Zhoghov (the National Assembly, or Parliament) by occupying the main Parliament rostrum and protesting Speaker Armen Khachatrian's refusal to place the issue on Parliament's agenda. Parliament's pro-Kocharian majority responded by empowering the Speaker to punish unruly lawmakers.
On August 29, 2002, 16 leading opposition parties announced the creation of a united preelection front against Kocharian. In a joint declaration, they vowed to transform their loose coalition into an electoral alliance and "participate in the presidential elections with a joint candidate and platform." They also pledged joint action to preclude electoral fraud. However, rivalry among several opposition leaders stood in the way of agreement on a single candidate. One of them, National Unity Party leader Artashes Geghamian, made it clear afterward that he will run for president even if he is not endorsed by the other 15 parties. At least two other opposition heavy-weights, Stepan Demirchian (son of the slain Speaker) of the People's Party of Armenia (PPA) and Vazgen Manukian of the National Democratic Union (NDU), were also expected to go it alone.
Kocharian, meanwhile, surprised observers in September when he stated that he would prefer to face a common opposition contender in the first round of voting, arguing that this would lessen the likelihood of a politically and economically costly runoff ballot. The announcement came amid opposition allegations that the incumbent is determined to secure his reelection at any cost. In particular, the opposition pointed to controversial amendments to Armenia's Law on Elections that Parliament passed in April 2002. The amendments transfer authority from the government to the president to appoint three of the nine members on election commissions at various national and subnational levels in the country. Six parties represented in Parliament, three of which support Kocharian, have the authority to fill the remaining seats on election commissions, thereby giving the president de facto control of the electoral process.
Kocharian's efforts to win another five-year term in office enjoy the backing of the so-called power class, which is made up of senior government officials, businesspeople with government ties, and three major political groups: Prime Minister Markarian's Republican Party of Armenia, the Armenian Revolutionary Federation, and the Country of Law Party. The RPA has the largest faction in Parliament and, like the ARF, controls several government ministries.
Although the so-called power ministries are headed by presidential loyalists, the status of the ministers of defense, interior, national security, and foreign affairs is the same as that of other cabinet members under the Armenian Constitution. All are nominated by the prime minister and appointed by the president. The president must reckon with Parliament, which can unseat the entire government with a vote of no confidence. Nevertheless, parliamentary majorities have rarely been at odds with the head of state in post-Soviet Armenia, not least because of the president's right to dissolve the legislature. One such standoff, which was sparked by the October 1999 massacre in Parliament, ended in May 2000 in a victory for Kocharian.
RPA backing will be vital for Kocharian's electoral victory. Throughout 2002, the prime minister's party quietly enhanced its clout by recruiting more top bureaucrats and widening its control of many local government bodies. However, its relations with the ARF and other pro-presidential factions are far from cordial, and this could prove damaging for the Kocharian campaign.
There were more than 100 registered political parties in Armenia as of November 2002. Over time, though, that number is expected to fall considerably owing to toughened registration requirements that Parliament introduced in July 2002. The new law requires parties to have at least 200 members and have branches in at least one-third of Armenia's regions. Only a dozen parties play a role in the nation's political life, but even they are not strong enough to affect governance, not least because of the sweeping powers that the Constitution vests in the office of the president.
The May 2003 legislative elections should increase the importance of the parties. Under amendments to the Law on Elections that Parliament also passed in July 2002, parties will fill 76 of the 131 Parliament seats under the system of proportional representation. During previous polls, only 56 seats were contested on the party list basis. The increase to 76 will come at the expense of single-mandate constituencies. Most Armenian parties have long argued that proportional representation makes vote rigging more difficult and fosters development of a multiparty democracy. They have denounced the RPA and nonpartisan deputies for opposing an increase in the share of seats filled by party lists.
The last legislative elections occurred on May 31, 1999. The Organization for Security and Cooperation in Europe (OSCE), which sent a 200-member mission to monitor the elections, characterized the vote as a "relevant step toward [Armenia's] compliance with OSCE standards" and concluded that it had been "conducted in a generally peaceful and orderly manner which was free of intimidation." The Unity bloc, formed by Soviet-era Communist chief Karen Demirchian and then Defense Minister Vazgen Sarkisian in the run-up to the elections, capitalized on Demirchian's populist appeal and won a landslide victory.
At the time, Demirchian and Sarkisian were the leaders of the PPA and RPA, respectively. The bloc, which fell apart less than a year after their assassination, won 41.7 percent of the proportional vote and took about half of the singlemember districts. It won 61 seats in the 131-member Parliament and enjoyed the backing of about 25 ostensibly independent deputies that have strong governmental ties. The Armenian Communist Party (ACP) finished a distant second, with 12 percent of the proportional vote and 9 seats in Parliament. Two nationalist groups, the ARF and the Right and Accord bloc, each won 8 seats. Two center-right parties, the Country of Law Party and the opposition NDU, also cleared the 5 percent threshold needed to gain seats under the system of proportional representation. Each party won 6 seats. None of the elected deputies represented an ethnic minority, and only 4 seats were held by women. Two women's groups that participated in the election failed to receive a mandate. Most political opponents accepted the legitimacy of Unity's victory, despite their criticism of the election's handling.
The most recent presidential election, which took place in March 1998, was far more controversial. Kocharian's main challengers were Karen Demirchian, then a factory director, and NDU leader Vazgen Manukian. Kocharian won 38.76 percent of the vote and Demirchian 30.67 percent, according to official results. Since neither contender won a majority, a runoff election was held on March 30. Kocharian won this round with 59.48 percent of the vote. Demirchian received 40.52 percent. Demirchian and his supporters refused to accept defeat and charged that massive vote fraud had occurred. The OSCE, which had sent a monitoring mission, declared that the election "[did] not meet OSCE standards" but noted "improvements in some respects" over the serious fraud in the previous presidential election held in September 1996.
Voter turnout has varied considerably since independence but tends to be higher during presidential elections. The record high figure, 70 percent, was registered in the 1991 presidential elections. Turnout for legislative polls has hovered between 50 and 55 percent.
Armenia entered the post-Communist period with strong prerequisites for a vibrant civil society, with hundreds of nongovernmental organizations (NGOs) emerging after the first democratic elections in 1990. However, subsequent developments have taken a heavy political and socioeconomic toll on the country and resulted in deindustrialization, mass impoverishment, and a decline in civic consciousness. Social polarization and the absence of a strong middle class have weakened the country's nascent civil society, thereby easing public pressure on the ruling oligarchy. The year 2002 saw little positive change in this regard.
According to the Ministry of Justice, there were some 2,800 registered NGOs in Armenia as of November 2002. Of these, approximately 1,000 were registered over the previous year. Only a fraction, though, actually operate in practice. The scope of NGO activities is very broad and includes areas such as politics, human rights, benevolence, labor, business, and social and women's affairs. Many groups exist thanks to Western (mainly American) grants and financial assistance from the diaspora. This is particularly true of Armenian charities. On paper, there are hundreds, but few manage to operate without external sources of funding. Locally funded philanthropy is confined largely to wealthy individuals, as most Armenians are too poor to help others.
The largest domestically based charity, the All-Armenian Hayastan Fund, raises the bulk of its funds from diaspora communities. It has spent over $75 million on various projects in Armenia and Karabakh since its creation in 1992. Of that, $10 million was spent on the rebuilding in the mid-1990s of a strategic 80-kilometer highway linking the Armenian-controlled disputed region to Armenia proper. In 2000, Hayastan launched a $25 million project to link the northern and southern parts of Karabakh with a modern road. In November 2002, it raised $5 million at an annual "telethon" in the United States. Fund officials said the money would allow them to complete half of the 170-kilometer highway in 2003.
Other leading diaspora charities such as the Armenian Benevolent Union, the Lincy Foundation, and the Armenian Relief Society are active in Armenia as well. On its own, Lincy, founded by Armenian American billionaire Kirk Kerkorian, has set aside $165 million for various projects in Armenia. A large part of the Lincy funds go to pay for the repair of 420 kilometers of highways across Armenia as well as the construction of two major mountain tunnels. Some $43 million is to be spent by 2004 on the construction of 4,000 new apartments in the country's northwestern regions, which were devastated by a catastrophic earthquake in 1988. Lincy also has allocated $17 million for the renovation of virtually all Armenian museums and theaters and $14 million for the refurbishing of the main streets in central Yerevan.
Even religious groups that engage in benevolence rely on external funding. The largest and most influential of them, the Armenian Apostolic Church, finances most of its charitable activities with diaspora donations. The small Armenian Evangelical Church does the same. Other foreign religious charities that are present in Armenia include the United Methodist Committee on Relief and the Catholic Relief Societies.
There are more than 50 registered women's organizations, but few of them are active. In September 2002, several women's NGOs agreed to form a nationwide coalition to promote women's political participation. According to Svetlana Aslanian, chairwoman of the Center for Civil Society Development, the NGO network will be particularly concerned with boosting female representation in local governments.
Two long-running projects funded by the U.S. Agency for International Development (USAID) have enabled many Armenian NGOs to receive funding and training. In early 2001, the American group World Learning began implementing a four-year USAID project to assist Armenian NGOs that specialize in "advocacy, coalition building, and networking." USAID also provides the bulk of funding for the NGO Training and Resource Center, which the Armenian Assembly of America created in 1994 with the stated aim of promoting "positive social, political, and economic transformation in Armenia." In October 2000, the center won a $2.2 million grant from USAID to continue its activities.
Despite these opportunities, the impact of NGOs on government policies remains quite limited. And even though World Learning has launched grants in the fields of advocacy, Armenian civic groups have not been very active in lobbying the government or Parliament for passage of legislation. The activities in 2002 of an NGO called Havat (Faith) provided a rare example of successful policy advocacy. Havat succeeded in urging Parliament to pass amendments to the Law on Social Security of Handicapped People aimed at better integrating the disabled into society. Another NGO, Antenna, likewise lobbied for changes in the controversial Law on TV and Radio in collaboration with other media associations.
Also worth mentioning is a new group set up in April 2002 by Raffi Hovannisian, Armenia's U.S.-born former foreign minister, apparently with private diaspora funding. The National Citizens' Initiative, whose leadership comprises several prominent public figures, has the stated goal of promoting civic activism and public participation in the country's political life. For much of the year it was busy organizing roundtable discussions and seminars that attracted considerable media coverage. Those efforts were widely seen as being part of Hovannisian's growing involvement in active politics. (In December 2002, he announced plans to contest the February 2003 presidential elections.) Also furthering Hovannisian's agenda was the daily newspaper Orran, which he set up in early 2002.
The public's attitude toward the NGO sector is generally positive, and the media's coverage of NGOs is equally so. However, the government's attitude is rather indifferent. Only one nominally apolitical organization has received strong government attention: the Yerkrapah Union of veterans of the Nagorno-Karabakh war. The authorities have in the past used the paramilitary group, which comprises some top army commanders, for suppressing the opposition. However, Yerkrapah's political influence has declined substantially since the assassination of its founder, Vazgen Sarkisian, in the 1999 Parliament massacre.
The registration of Armenian NGOs with the Ministry of Justice is a fairly easy process. Nonprofit organizations are subject to taxation on property, vehicles, and employee incomes. NGOs must disclose revenue sources in order to establish their tax liability. They may collect cost recovery fees and earn income, but they cannot make a profit.
Armenia has several moribund trade unions that show little sign of activity. Strikes have largely been confined to the public sector when employees demand payment of back wages. Strikes in the private sector are extremely rare because workers are generally not protected against arbitrary dismissal and, thus, fear losing their jobs. Far more active are business associations. The largest, the Union of Industrialists and Entrepreneurs, unites many of Armenia's wealthy individuals. Two other groups represent the interests of small businesses.
Most Armenian businesspeople further their interests by exploiting extensive government connections. Lobbying is not regulated or defined by the law. Unofficial business groups, which are often referred to as clans, act largely behind the scenes. By law, only parties may engage in political activities.
There are two major private think tanks in Armenia: the International Center for Human Development (ICHD) and the Armenian Center for National and International Studies (ACNIS). The ICHD is controlled by former Prime Minister Armen Darpinian, the ACNIS by Raffi Hovannisian. Each has its own publications and periodically holds conferences and seminars. The ACNIS focuses on international geopolitical developments affecting Armenia, while the ICHD specializes in projects aimed at strengthening civil society, poverty alleviation, good governance, and free market institutions. Projects implemented by the ICHD have examined, among other things, licensing requirements for doing business and the role of women in Armenia. However, there is no evidence to assert that either institution has a serious impact on government policies yet.
Armenia depoliticized its education system when Communist rule ended in 1990. According to the Ministry of Education, there are around 90 institutions of higher education in the country. Over 80 percent of them are private. However, state-run universities continue to maintain higher educational standards. Their curriculums are free of political influence and propaganda.
The relative press freedom in Armenia, which provides some hope about the future of democratization, was dealt a major blow during the period covered by this report when the authorities effectively shut down the country's leading independent television station. It was also threatened by a highly controversial draft Law on Mass Media that prompted a wave of condemnations by most media organizations. The media continued in 2002 to offer a wide variety of opinions, including harsh attacks on the authorities and President Kocharian in particular, but remained hamstrung by financial constraints and a lack of professionalism.
The year bore out the most pessimistic forecasts fueled by the passage in late 2000 of a new Law on Broadcasting. In accordance with one of its most controversial provisions, Kocharian appointed in January 2002 all nine members of the newly created National Commission on Television and Radio, empowered to issue and revoke broadcasting licenses by administering biddings for air frequencies. The first such tender, held on April 2, resulted in the closure of the popular A1+ channel, which had often aired criticism of the authorities. The commission awarded the A1+ frequency to an entertainment company reportedly linked to Kocharian, saying that it submitted a stronger bid.
However, the A1+ staff, backed by local and international media watchdogs, believed that the decision was politically motivated, arguing that the commission was appointed by and is therefore dependent on the president. (Incidentally, the chairman of the commission, Grigor Amalian, was the deputy chief of Kocharian's staff before holding the current post.) They also argued that the move was part of an effort by Kocharian to ward off any criticism ahead of his reelection campaign. The U.S. embassy in Yerevan said in a statement that the outcome of the bidding "raises serious questions about the future of free and independent media in Armenia," while the New York-based Committee to Protect Journalists accused Kocharian of "blatantly abusing the frequency licensing system in an attempt to silence a critical media voice." The closure of A1+ also triggered a series of opposition demonstrations in Yerevan that in turn heightened political tensions in the country.
Responding to domestic and international criticism, the authorities promised to hold another tender before the end of 2002, in which A1+ would stand a good chance of winning a new air frequency and resuming its broadcasts. However, the bidding, scheduled for November 2002, was postponed under dubious circumstances, stripping A1+ of its last chance to cover the 2003 presidential and parliamentary elections.
Compounding the media's woes was a new draft Law on Mass Media that the government put into circulation in February 2002. The proposed legislation would, among other things, require journalists to pay for interviews with officials and create a government agency to "monitor" the media. It is no wonder, then, that the legislation drew strong criticism from the overwhelming majority of media organizations, including those usually supporting the authorities.
The government eventually withdrew the bill before introducing an amended version to Parliament in November. The amended bill did not contain most of the controversial provisions. It also allowed for the launch of media outlets without an official registration. Nonetheless, local journalist groups remained unhappy with the proposed legislation.
The legal framework for the functioning of the Armenian media was already flawed and inadequate. Article 24 of the Armenian Constitution guarantees to everyone "the right to freedom of speech, including, independent of state borders, the right to seek, receive and disseminate information and ideas by any means of information communication." But freedom of speech can be restricted "by law, if necessary, for the protection of state and public security, public order, health and morality, and the rights, freedoms, honor, and reputation of others."
The Soviet-era criminal code (still in use in Armenia in 2002) provides criminal liability for defamation of character. Thus, in Armenia libel is a criminal, not a civil, charge. If defamation is made in writing or through broadcasting, it can lead to a three-year prison term. Defamation does not have to be malicious and deliberate to be deemed a crime. The 1991 Law on Press and Mass Media also permits libel suits against journalists and media organizations publishing "false and unverified reports."
There was only one major libel suit in 2002. In March, Nikol Pashinian, the young editor of the independent Haykakan Zhamanak daily, was formally charged with insulting Hovannes Yeritsian, then head of the government's civil aviation agency, facing his second criminal prosecution in just over two years. Yeritsian sued the paper after it put his picture on its front page with the following caption: "Degenerate officials recruited for the civil service." State prosecutors unexpectedly dropped the case in April.
More alarmingly, 2002 saw increased violence against journalists. In October, for example, a well-known independent journalist, Mark Grigorian, was seriously wounded in a grenade attack in central Yerevan. Nobody was arrested or prosecuted in the official inquiry that followed. The year ended with the mysterious murder of Tigran Naghdalian, head of state television and radio and a figure close to President Kocharian. The motives for the killing are unknown.
The overwhelming majority of media organizations in Armenia are privately owned and funded. There are dozens of private television stations across the country. A1+ was the only major channel that provided objective and impartial news coverage. This fact made its closure all the more alarming. Other national private networks such as Prometevs and Armenia TV are owned by wealthy businesspeople who are reluctant to challenge the authorities. They are much better equipped and have been quite successful with entertainment programs. The state-run Armenian Public Television is the main mouthpiece of government propaganda. It is extremely hostile and biased toward Kocharian's opponents and rarely airs criticism of the regime.
Government pressure on electronic media is much stronger in areas outside Yerevan, where TV channels are periodically harassed by local government chiefs and their cronies. In August 2002, for example, the managers of a private TV station in the city of Abovian were attacked and beaten up by a group of young men allegedly linked to the city's mayor. Law enforcement authorities pledged to investigate the incident but never charged anyone.
There are at least eight independent FM radio stations based in Yerevan and one such station in the second largest city of Gyumri. They confine their programming largely to music and brief newscasts. State radio retransmits the daily programs of Radio Free Europe/Radio Liberty and the Voice of America.
According to official figures, 82 newspapers were published in Armenia as of April 2002. Of these, the government owns only a handful. The only state-owned national daily, Hayastani Hanrapetutyun, has a circulation of 6,000 copies per issue. There are also six privately owned national dailies that offer a wide variety of opinions. Only one of them, Azg (3,000), is affiliated with a political party.
The daily paper Hayots Ashkhar (3,500), the biweekly papers Iravunk (17,000) and Golos Armenii (3,500), and the Yerkir weekly (2,500) tend to cover events from a leftist, and somewhat nationalist, perspective. Azg, Hayots Ashkhar, Golos Armenii, and Yerkir, which is controlled by the ARF, normally support Kocharian. The dailies Aravot (5,000) and Haykakan Zhamanak (3,500) have a liberal, and usually pro-Western, orientation. Like Iravunk, these two papers are very critical of the current authorities. Two new independent dailies, Orran (3,000) and Or (2,500), began publishing in early 2002. All papers regularly use information provided by Armenia's five news agencies.
Print media in Armenia are, for the most part, unprofitable and financially dependent on sponsors and/or patrons who are often intent on promoting their own political or economic interests. Low living standards limit newspaper sales, and low circulation rules out major advertising revenues. The quality of news reporting is hampered because many newspapers depend on subsidies instead of earned income and, therefore, are vulnerable to manipulation by government officials, parties, and wealthy individuals. Broadcast media are more financially viable, thanks to larger audiences.
The absence of freedom of information legislation enables the government to hamper newsgathering by continuing to withhold important facts from the public. Much information comes to light only through information leaks. In 2002, the government again failed to privatize the Haymamul agency, which distributes more than half of the nation's publications, despite promising to do so for the past several years. While most Haymamul kiosks across the country were sold off in the course of 2002, the agency is still run by a government-appointed director. This fact played a major role in a scandal that broke out in October 2002 after unknown individuals bought up the entire daily print run of Aravot before it reached newsstands. The issue of the newspaper that disappeared carried an article accusing close associates of Prime Minister Markarian's of corruption. Not surprisingly, the Aravot staff pointed the finger at Markarian, who denied any involvement. Markarian placed the blame with Haymamul and ordered the sacking of the agency's sales manager.
There are several press associations in Armenia, but none of them represents the majority of local journalists. There is generally little coordination among the press associations, even though they sometimes issue joint statements in the face of unacceptable government actions. No code of ethics binds the Armenian journalistic community.
The Internet is not subject to formal restrictions, but poverty is so widespread in the country that only a small percentage of private households are actually connected to it. Instead, regular users generally have access at work, at universities, or in increasingly popular Internet cafes. There are a dozen Internet service providers in Armenia, all of which rely on the ArmenTel national telecommunications operator for Internet connection with the outside world. These providers contend that ArmenTel's 15-year legal monopoly on telecom services, which the government granted in March 1998 during the group's takeover by Greece's Hellenic Telecommunications Organization, has slowed the development of Armenia's information technology sector.
Armenia's post-Soviet Constitution, which was enacted in 1995, has clearly failed to put in place a system of checks and balances among the branches of government. Instead, a disproportionately large set of powers has been vested in the presidency. The president of the republic acts as a supreme judge overseeing executive, judicial, and legislative authority and is able to dodge responsibility for any policy failure. This constitutional order has precluded the emergence of a strong and independent judiciary and made effective parliamentary oversight of the executive virtually impossible. This in turn has had a negative impact on the rule of law, problems with which remain among the most acute in Armenia.
A promised major reform of the Constitution, which many hoped would render the country's government system more democratic, was due to occur in 2002 but was shelved for political considerations. Initially, President Kocharian had planned to call a nationwide referendum on a package of constitutional amendments that would curtail his sweeping powers to a certain degree. However, the draft amendments, unveiled in 2001 by a special presidential commission, faced unexpectedly strong opposition in Parliament, where opposition factions proposed their own alternative Constitution that would turn Armenia into a parliamentary republic.
The six opposition parties represented in Parliament announced in January 2002 the creation of a joint "constitutional movement" aimed at enabling voters to choose between the two variants of constitutional reform at the referendum. And although the pro-presidential parliamentary majority rejected such an option, the opposition succeeded in complicating Kocharian's efforts to push his proposals through the National Assembly. Kocharian publicly admitted that his constitutional amendment package would not be backed by the majority of voters if it were put on the referendum along with the more radical opposition proposals. He eventually abandoned his plans to hold the referendum in the spring of 2002 in an apparent effort to avoid what would have been a costly battle with the opposition ahead of the 2003 presidential election.
Kocharian's constitutional package envisaged some major curbs on presidential authority. The president, for example, would need Parliament's consent to appoint a prime minister; would no longer be able to approve or veto government decisions; and would be allowed to dissolve the legislature only in six specific cases. The amendments would also abolish the death penalty; introduce a separate article on press freedom; allow noncitizens to vote in local elections; and lift the ban on dual citizenship. Nevertheless, Kocharian's proposal was not as far-reaching as many Armenian politicians would like. The president would remain the most powerful official in the nation, and the government's executive authority would remain rather limited.
Armenia's Constitutional Court is the main body charged with interpreting and enforcing the basic law. Only the president of the republic, one-third of Parliament's deputies, and election candidates can make appeals to the Court. This fact renders the Court virtually inaccessible to ordinary Armenians. Not surprisingly, appeals to the Court have been rare. There were only two such reported cases in 2002. In June, the Court annulled the results of a parliamentary by-election in northern Armenia after an opposition candidate lodged a complaint about alleged vote irregularities. And in October, the body ruled that one of the amendments to the election law that were passed in July is unconstitutional. The amendment would have barred any changes to voter lists less than 48 hours prior to an election. Kocharian's proposed constitutional amendments would make the Court far more accessible by allowing ordinary citizens to appeal to it directly.
The Constitutional Court has never been perceived as independent of the executive. In 1996, for example, it certified the results of what many believe was a fraudulent presidential election. The Court has never handed down rulings that threatened the power held by Kocharian or his predecessor, Levon Ter-Petrossian.
The 1995 Constitution, which introduced a new judicial system, guarantees the presumption of one's innocence, the rights of persons to not incriminate themselves, and access to a "public hearing by a fair and impartial court." In December 2002, Parliament passed in the second reading a new criminal code that formally abolishes the death penalty--a key condition for Armenia's accession to the Council of Europe. However, lawmakers left a loophole in the code, allowing courts to sentence to death the five jailed gunmen who perpetrated the October 1999 attack on Parliament. Council of Europe officials rejected the clause as unacceptable. The organization's Parliamentary Assembly warned in September that Armenia could face serious sanctions unless it completely and unconditionally scraps capital punishment by June 2003.
Under Armenian law, police officers may detain and keep suspects in custody for up to 72 hours before leveling criminal charges. They need a court decision to turn detention into an arrest. Article 18 of the Constitution states that a person "can be arrested [pending trial] only by the decision of the court." Only prosecutors may authorize searches, but this legal provision is violated frequently. Armenia's post-Soviet code of procedural justice sets a one-year maximum period for criminal inquiry. However, excessive delays in the criminal justice system remain a problem, with many judges complaining about having to deal with several court cases at a time.
The police still frequently abuse suspects and prisoners--a fact that international human rights groups continued to highlight during the period covered by this report. In its annual report released in January 2002, Human Rights Watch charged that "the willingness of judges to admit coerced evidence abetted the routine police practice of extracting confessions through beatings and other forms of torture." A similar report in May by Amnesty International pointed to the widely held belief that official investigations into the allegations of police brutality "were not adequate." In July 2002, for example, a pro-government member of the Armenian Parliament was reportedly beaten up in police custody after a verbal argument with the then Yerevan police chief, Ashot Gizirian. The incident was never thoroughly investigated.
Prison conditions in Armenia remain harsh, owing mainly to a lack of public funds. The authorities say that about 300 inmates, or 5 percent of the entire prison population, suffer from tuberculosis. It is hoped, though, that the opening in October 2002 of a special tuberculosis ward at the country's main prison hospital, constructed with help of the International Committee of the Red Cross, will help improve the situation. The PACE noted in its September 26, 2002, resolution on Armenia that prison conditions improved somewhat after most Armenian prisons were transferred from the jurisdiction of the Interior Ministry to that of the Justice Ministry in October and November 2001.
Chapter 2 of the 1995 Constitution guarantees a full range of civil and political rights, including the right to life, confidentiality, privacy, freedom of movement and residence, freedom of emigration, freedom of speech and thought, freedom of association, choice of employment, and the right to vote. There are also guarantees for health care, education, and an adequate standard of living. The Venice Commission has concluded that Kocharian's constitutional amendments would "significantly strengthen constitutional guarantees for human rights protection."
Article 28 of the Constitution guarantees the right to own and inherit property, and Article 36 guarantees intellectual property rights. The state may seize private property "only under exceptional circumstances, with due process of law, and with prior equivalent compensation." Noncitizens may not own land except under special circumstances, but the Kocharian proposals would abolish the restriction. Rampant corruption in the government and the judiciary is a serious obstacle to the rule of law. Government connections are important for some forms of economic activity, and the government does not enforce fair business competition properly. No wonder that in recent years the authorities have faced numerous calls from Western governments and lending agencies to improve Armenia's business environment.
Ethnic minorities, including Yezidi Kurds, Russians, Ukrainians, Assyrians, and Jews, make up less than 5 percent of Armenia's population, and their role in the country's political life is negligible. Most of their cultural organizations operate under the umbrella structure called the Union of Nationalities of Armenia. Article 37 of the Constitution guarantees the rights of national minorities. It says, "Citizens belonging to national minorities are entitled to the preservation of their traditions and development of their language and culture."
Armenia's Constitution and laws also guarantee religious freedom. At the same time, they uphold the legal superiority of the Armenian Apostolic Church, with which over 90 percent of Armenians are thought to be affiliated. The Apostolic Church, one of the world's most ancient Christian denominations, is widely credited with preserving Armenians' national identity and cultural heritage during centuries of foreign oppression. The government underscored the privileged status of the church in August 2002 when it decided to introduce the church's history as a mandatory subject in secondary schools.
In line with the conditions for membership in the Council of Europe, Armenia has formally committed itself to ensuring that nontraditional religious communities are allowed to practice their faith without discrimination. Such communities are among the 50 officially registered religious groups. However, the government continues to deny registration to one group, the Jehovah's Witnesses, because of its opposition to compulsory military service. As of October 2002, 23 young men affiliated with the group were serving prison sentences for refusing to be drafted into the armed forces on religious grounds. The PACE resolution condemned the continuing prosecution of conscientious objectors, saying it runs counter to Armenia's Council of Europe obligations. It demanded that the authorities legalize Jehovah's Witnesses and enact a law on alternative service. The Armenian Parliament was scheduled to debate such legislation in December 2002.
Armenian courts are still far from being independent and free of corruption, and they rarely resolve sensitive political cases against the state. In almost all cases, they allow state prosecutors to keep suspects in detention pending investigation. In February 2002, for instance, a Yerevan court effectively endorsed an apparent cover-up in the official investigation into the September 2001 murder of a man in a popular Yerevan cafe. According to some eyewitness accounts, Poghos Poghosian, an ethnic Armenian from Georgia, was beaten to death there by several of President Kocharian's bodyguards. Only one of them was prosecuted, and he eventually got off with a one-year suspended jail sentence.
Under the Armenian Constitution, the president appoints an overwhelming majority of judges for life. The president can remove all judges, excluding members of the Constitutional Court, practically at whim. Those judges are nominated by the presidentially appointed Council of Justice, which includes two legal scholars, nine judges, and three prosecutors. The council also acts as a supervisory and disciplinary body for the judiciary. Under the constitutional changes proposed by Kocharian, the right to dismiss the judges would become the exclusive prerogative of the Constitutional Court. The amendments also aim to complicate the president's ability to appoint judges.
Rampant government corruption remains one of the main obstacles to Armenia's transformation into a democratic and rule-of-law state. It is also a huge hurdle to economic development. During the period covered by this report, corrupt practices in the country continued unabated despite repeated government pledges to reduce their scale. Several laws enacted in 2001 and before in order to tackle the problem did not markedly change the situation on the ground.
Armenian law places few limitations on the participation of government officials in economic life. Ownership or sponsorship of businesses by various-level officials is commonplace. One of Kocharian's closest confidants, Defense Minister Serge Sarkisian, epitomizes this phenomenon, controlling (both directly and indirectly) some sectors of the economy, including lucrative imports of fuel and exports of scrap metal. Just about every other government minister has extensive business interests. Besides, Kocharian and other Armenian leaders give privileged treatment to a circle of wealthy businesspeople whom local media began to describe as "oligarchs" in 2002. The latter were widely expected to provide hefty financial support for Kocharian's reelection bid.
The long-awaited entry into force in 2002 of an Armenian Law on Financial Disclosure turned out to be a disappointment. The law, adopted in 2001, obliges some 3,000 high-ranking government officials, including the president and government ministers, to declare revenues and property every year for themselves and their family members. The first such statements were filed to the Ministry for State Revenues in February and made public in June 2002.
However, the content of the income declarations led many local observers to dismiss the whole undertaking as a farce. Kocharian claimed to live on about $500 a month, less than the declared monthly income of his 21-year-old son. A house with the total area of 148 square meters was the president's sole declared private property, and its location and date of construction were not specified in the official documents. Defense Minister Sarkisian, for his part, stated that his official monthly salary of about $250 was his main source of income. Prime Minister Markarian put his annual income at about $4,500. His officially unemployed wife, by contrast, reported $10,000 in hard-currency revenues without disclosing their source.
Even wealthy businessmen holding seats in Parliament posted modest revenues. For example, Khachatur Sukiasian, one of Armenia's richest men, claimed to have earned only about $40,000 in 2001. Sukiasian, who has a collection of luxury limousines, also claimed to own no cars at all.
The law in question, touted by the government as an important instrument in its stated crackdown on corruption, does not require tax authorities to check the veracity of financial statements. Nor does it envisage strict punishment for providing false information. Worse still, the law effectively enables top officials to get away with registering expensive property under the names of their relatives, a practice that is widespread in Armenia. National Security Minister Karlos Petrosian, for example, declared that his wife owns their expensive new villa in Yerevan.
Government experts, meanwhile, claimed to have completed work on a comprehensive anticorruption program. The effort was funded by a $345,000 grant released by the World Bank in May 2001, but the promised program had not been publicized as of November 2002. According to a survey conducted by an Armenian NGO, the Democratic Forum, two out of three Armenian businesspeople believe that the authorities are not committed to combating widespread bribery, nepotism, and unfair competition. They also admitted paying bribes to government officials.
Not surprisingly, entrepreneurs generally have little faith in Armenian courts because judges reportedly ask for bribes in exchange for favorable rulings in civil and commercial cases. Difficulties with competitors or state agencies are frequently resolved by means of appeal to patrons with political connections. Trials begin less than six months after papers are filed, and the execution of a final judgment takes from seven months to one year. The Court of Economic Arbitration, which was formed in April 2001, adjudicates commercial disputes.
Skepticism about the government's seriousness of purpose was not confined to the business community. Even Vahan Hovannisian, chairman of the Parliament Committee on Defense and Security and a leader of the pro-presidential ARF, admitted that corruption in Armenia has been just as endemic under Kocharian as it had been under Ter-Petrossian, his predecessor. U.S. Ambassador to Armenia John Ordway complained that the Armenian government has yet to come up with "an effective plan as to how to begin to go about reducing corruption," despite its "general acceptance that something has to be done about it."
In 2002, there were no reported prosecutions of high-ranking policy makers on graft charges. Until now, major corruption cases have involved mainly members of Ter-Petrossian's administration who are at odds with the current regime. Among them are former Interior Minister Vano Siradeghian and former Education Minister Ashot Bleyan. Siradeghian, who was charged with contract killings and abuse of power, fled Armenia in April 2000 and remains on the run. The controversial former chief of Armenia's prisons, Mushegh Saghatelian, was sentenced to six years in prison in July 2002 on a string of charges, including abuse of power and mistreatment of detainees. Critics say Saghatelian would not have been arrested in October 2001 and put on trial if he had not publicly accused Kocharian of master-minding the October 1999 bloodbath in Parliament.
The Armenian energy sector remains one of the main sources of government corruption. It continues to incur huge losses, mainly as a result of the widespread theft of electricity by various-level energy officials. According to various estimates, total losses exceeded $50 million in 2001. The state-run low-voltage power grids were merged into a single company, the Armenian Electricity Network (AEN), and sold to a British-registered private firm called Midland Resources Holding in August 2002 for $37 million. The government assured the public that the AEN's privatization will remedy the situation. Western donors, however, disapproved of the deal, saying that Midland Resources lacks the experience and expertise to reform the network.
Corruption is also widespread in the civil service, and citizens frequently pay bribes for services. Extremely low salaries in the public sector, averaging $35 per month, are not conducive to its eradication. Wages are much higher in the military and law enforcement agencies. The president of the republic, ministers, deputy ministers, and judges are by far the highest-paid civil servants in Armenia. In a controversial move, their salaries were doubled in December 2002. Starting from July 2003, the president will receive roughly $700 a month, or 20 percent more than senior parliamentarians, government ministers, and top judges. Other beneficiaries of the drastic pay increase were approximately 3,500 employees of the government's tax and customs departments. Their average monthly salary was doubled to $120. The government argued that the measure would discourage those officials from engaging in corrupt practices.
Bribing traffic police and customs and tax officials is routine. Paying bribes to gain enrollment in prestigious programs at state universities is also a common phenomenon that has continued unabated since the Soviet period. Corruption in the health care system has declined since the early 1990s because most medical services are no longer free of charge. Still, doctors and other medical personnel at state-run hospitals continue to extort illegal payments from patients beyond the official medical fees. Kickbacks for telephone installations virtually disappeared with the privatization of the national telecommunications company in 1998.
Some forms of business still require a government license, which is frequently obtained with a bribe. A new Law on Licensing passed in August 2001 reduced from over 50 to 22 the number of economic activities that require a license. In most cases, the government's licensing agency must approve or reject a license application within three days.
The Armenian Parliament has an Oversight Chamber for auditing government revenue collections and expenditures and assessing compliance with budget targets. The chamber is also charged with evaluating the government's borrowing and privatization policies. In annual reports submitted to lawmakers, the body has frequently criticized the executive's handling of public finances. That seems to be a major reason why its longtime chairman, Ashot Tavadian, was discharged and replaced by a close ally of Prime Minister Markarian's in September 2002.
In 2002, Armenia was again not covered by the annual global Corruption Perceptions Index of Transparency International. The antigraft watchdog attributed Armenia's exclusion to a lack of information from the country certified by at least three different local surveys of corruption. One such study, however, was conducted by a Transparency International affiliate, the Yerevan-based Center for Regional Development, in April-May 2002. Two-thirds of 1,000 people randomly interviewed by the center found that the magnitude of corruption has increased in Armenia in the last five years. Less than a third of respondents said that the authorities are committed to tackling the problem. Most of the 200 government officials that the center surveyed separately accepted the blame and admitted that corruption has not diminished in recent years.
The study thus confirmed strong public discontent with corrupt practices. Most Armenians appear to have lost faith in their government's ability and willingness to enforce the rule of law. This feeling has manifested itself in voter cynicism and apathy, which in turn makes it easier for the authorities to resist Armenia's democratization.
Despite frequent changes of government--Armenia has had 10 prime ministers since 1990--Armenia has shown continuity in its macroeconomic policies by sticking to fiscal and monetary austerity measures prescribed by Western lending institutions. This, in turn, has been conducive to overall political stability. Nevertheless, the authorities are still far from meeting the minimum standards of good governance because the effectiveness and efficiency of the country's highly centralized government system still leave much to be desired. The absence of an independent civil service and the lack of powers vested in local governments are serious obstacles to better governance. The long-term stability of the government system will remain in question without further democratization of Armenia's political life.
The 131-member National Assembly has exclusive legislative authority. Parliament may dismiss the government by a vote of no confidence and unseat the president with a two-thirds majority if the Constitutional Court finds him guilty of grave offenses. In general, though, it lacks oversight powers to hold the executive in check. The legislature has on several occasions formed special commissions to investigate government activities and held hearings on issues of popular concern. Yet the practical impact of those inquiries has been negligible. The post-Soviet Constitution, enacted in 1995, allows the president to dissolve Parliament practically at will. The president does not need lawmakers' consent to appoint judges, prosecutors, and members of supervisory government agencies.
Although the national press widely publicizes parliamentary debates in Yerevan, local governments function less transparently. Draft legislation is generally available to the media and the public, but local businesspeople often complain about what they see as frequent changes in economic legislation.
Provincial governors and the mayor of Yerevan, whose rank is equivalent to that of a provincial governor, are appointed by and accountable to the president rather than the local population or Parliament. Locally elected councils of elders and locally elected district administrators (city or village mayors) govern the urban and rural communities (villages, towns, cities, and city districts) in Armenia's 10 provinces. Under the 1996 Law on Local Self-Government, district administrators form their own staffs to run the day-to-day affairs of their communities. The councils of elders, for their part, approve community budgets, supervise their implementation, and assess local taxes and fees. Their consent is required for important decisions on communal land and other property.
The prime minister can remove district chiefs upon the recommendations of provincial governors, who, under the Constitution, act as representatives of the central government and are responsible for implementing its policy. The dependence of community administrations on provincial and central authorities limits their impact on local affairs. Addressing several thousand local government representatives in September 2002, President Kocharian pledged to ensure devolution of more powers to their communities in the event of his reelection. His proposed constitutional reform envisages some corresponding changes in Armenia's basic law.
In the meantime, the central government controls all taxation, and the Ministry of Finance considers all budgetary requests from local governments. Technically, municipalities are free to determine spending priorities, but the scarcity of money leaves them few choices. Taxes on land and property, fixed state tariffs, and 15 percent of all income and profit taxes collected in a community go directly to its budget. This means that the bulk of local funds come from the central government in the form of annual budget allocations. But delays in their disbursement have been chronic. The Finance Ministry, for example, owed some communities $7 million in earmarked subsidies as of October 2002.
The most recent local elections in Armenia took place on October 20, 2002. Thousands of candidates contested top posts and legislative seats in more than 650 cities, towns, villages, and Yerevan districts. Markarian's RPA emerged as the clear winner of the elections, winning control of at least 170 communities across the country. The victory boosted the RPA's political clout at the national level, making the party even more significant in the eyes of Kocharian. He was widely expected to become more reliant on the RPA ahead of the February 2003 presidential elections. Most opposition parties largely ignored the polls, deciding instead to concentrate on the approaching presidential race. A monitoring mission from the Council of Europe concluded that the local elections were largely democratic.
The year 2002 saw the start of a major reform of the Armenian civil service, mandated by a law that Parliament passed in 2001. In January, Kocharian appointed all seven members of the Civil Service Council, which is supposed to ensure civil service independence by protecting government employees against arbitrary dismissals. The absence of such a protection had forced many bureaucrats to side with the ruling regime in political battles. A provision in the Law on Civil Service empowers the council to select staff for most government agencies and regularly check the professional fitness of government officials. Its passage had been blocked for months by opposition factions in Parliament that argued that the oversight body cannot be independent and impartial because it is appointed by Kocharian.
The council held the first competition for vacant government posts in October 2002, selecting 55 members of its staff from a pool of 560 applicants. More such contests were held later in the year. Local pundits were generally skeptical about the fairness and positive effects of the supposedly competitive hires, not least because the commission administering them is perceived to be dependent on Kocharian.
The government, meanwhile, restructured 15 different agencies by either merging them into appropriate ministries or subordinating them directly to the prime minister's office. According to Manuk Topuzian, chairman of a special government commission overseeing the civil service reform, more than 1,000 government jobs were slashed between January and June as a result of the restructuring. More staff cuts were in store. Yet many independent observers remained convinced that while the reforms might indeed contribute to better governance, low public sector wages will continue to provide fertile ground for corruption and inefficiency.