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15.2.15

The Cup Runneth Over: A New Era of Oligarchic Competition

Serouj Aprahamian
 
Civic activist Artak Khachatryan was kidnapped by three masked men in front of a shopping center in Yerevan, on Sat., Feb. 7. Hours later, he was found unconscious on the side of a street near his home.
Khachatryan has played a leading role in protests against the government’s controversial Turnover Tax Law affecting small- and medium-sized businesses. He is also a prominent member of the Prosperous Armenia Party (PAP), the second largest political party in Armenia’s parliament, headed by well-known oligarch Gagik Tsarukyan.
The beating immediately prompted harsh condemnation from the PAP. The party’s political council placed responsibility for the crime on the ruling regime, and threatened to take to the streets and boycott parliament should the perpetrators go unpunished.
What followed was a series of warnings from the government and responses from Tsarukyan’s team, culminating in an aggressive speech by President Serge Sarkisian five days later. The speech has been characterized as a virtual declaration of war against Tsarukyan, with Sarkisian hurling personal insults and promising to crack down on the opposition tycoon.
In turn, Tsarukyan responded the next day calling for snap elections and the organization of rallies, marches, protests and civil disobedience aiming at removing the president from office.
This unexpected flurry of events has blown open a dramatic rift in the upper echelons of Armenia’s oligarchic establishment.
Up until 2012, Tsarukyan’s party was a member of the governing coalition and was considered to be close to the president. Whatever differences existed between the two were considered mostly cosmetic. Many even saw a ploy to divide the opposition in PAP’s departure from the coalition, rather than an actual challenge to the regime. As is often pointed out, the two sides even share family ties, with one of Tsarukyan’s daughters being married to Prime Minister Hovik Abrahamyan’s son.
So why has the oligarchic unity of the past been replaced with the clearly deep fissures of today? Was the beating of a civic activist enough to spark a war of words that has spilled over into open confrontation?
Making sense of these developments requires us first to recognize that, for businessmen of Tsarukyan’s stature, the state represents a major threat to their wealth. Unlike oligarchs in developed countries, the elite in Armenia do not have a stable and functioning legal system to defend their fortunes. They must constantly find alternative ways to maintain their privilege. This explains why so many feel the need to directly hold political office, control media outlets, and assemble their own private armies.
Having often gained their riches through dubious means themselves, they are at all times susceptible to state reprisal should they raise their head. Those who have dared challenge government policy in the past, no matter what their status or wealth in society, have been quickly retaliated against.
For example, during the 2008 presidential elections, opposition candidate and former president Levon Ter-Petrosian openly tried to court oligarchs such as Tsarukyan to his side, warning that they face the constant risk of losing their fortunes under the current regime. Indeed, tycoons such as Khachatur Sukiasyan who supported Ter-Petrosyan were driven out of the country, having many of their assets seized and handed over to pro-government businessmen. This gloves-off response did not go unnoticed by the likes of Tsarukyan.
Even before that, the central concern of the super-rich in Armenia has always been protecting themselves against threats to their wealth and property. A 2003 study by the Armenia 2020 project, based on interviews with 13 leading oligarchs, concluded that “the state, its machinery and institutions are perceived by the oligarchs as a dangerous force, able at any moment to cause serious damage to their business.”
Tsarukyan and his party have made clear that their main concern is changing this economic environment in the country. They have rallied against higher taxes, seizure of companies through state power, rising national debt, unfavorable investment conditions, and crisis in the financial market. An often repeated phrase from Tsarukyan and other PAP members is that the “people’s patience has run out,” that their “cup has runneth over,” and that is why he has entered the political arena.
Developments over the past week have proven that the oligarchic class is not a homogeneous entity many once made it out to be.  The tacit ruling arrangements of the past have broken down. There are clearly divergent interests at play, and opposing groupings taking shape. Given the immense resources at his disposal, the challenge posed by Tsarukyan to the Sarkisian regime is certainly a serious one.
Also backing Tsarukyan is the 2nd president of the country Robert Kocharian who has been releasing specially tailored interviews on his website, 2rd.am, criticizing Sarkisian’s reign—especially his economic policies—and calling for radical change. In his latest interview on Jan. 23, he stated that the biggest obstacle to progress in the country is “the conflict between the political elite’s economic interests and the long-term interests of the nation.”
These adversarial shifts among Armenia’s oligarchic class represent a serious new struggle for power within the country—one that is motivated first and foremost by defending wealth and privilege. Contrary to rhetoric from both sides about democracy and the common good, what we are seeing is the polarization of the ruling elite in terms of those connected to the state apparatus and those threatened by or opposed to it.
It is yet to be seen what will result from this increased friction in the upper echelons of power. What we can be sure of is that there is a new era of oligarchic competition taking shape that is likely to have significant ramifications for the country’s development.

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