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U.S. Warning Accompanies $235 Million Aid Funding for Armenia

22 December 2005

United States expects Armenian progress on political rights, election fraud

By Vince Crawley
Washington File Staff Writer

Washington -- The U.S. government’s Millennium Challenge Corporation (MCC) has approved a five-year $235.65 million plan to help fight poverty in Armenia, but the money is accompanied by a stern warning to the country’s leadership.

“We believe that corrective steps should be taken to demonstrate the Armenian government’s commitment to the principles underpinning Armenia’s eligibility for MCA [Millennium Challenge Account] assistance,” the corporation’s chief executive, John Danilovich, wrote in a December 16 letter to Armenia’s President Robert Kocharian.

If Armenia’s government does not demonstrate progress, the pledged U.S. funds could be suspended or terminated, Danilovich said in the letter, which was released December 19 when the $235 million grant was announced. (See related story.)

President Bush launched the Millennium Challenge program to work with some of the poorest countries in the world by providing “development assistance that recognizes sound policies and good governance are critical to poverty reduction and economic growth,” according the corporation. Targeted countries must request the funds and make a formal agreement with the United States to meet benchmarks in political and economic reforms. (See related story.)

The MCC board delayed its aid announcement until December 19 “as a direct result of concerns raised regarding the conduct of the November 27 constitutional referendum” in Armenia, Danilovich said in his letter to Kocharian. According to Danilovich, those concerns included, but were not limited to, “allegations of fraud, electoral mismanagement, mistreatment of individuals from opposition political parties and uneven access to the media.”

Danilovich’s letter also listed examples of measures that would demonstrate the Armenian government’s commitment to the principles of the Millennium Challenge program. These examples include:

• “Assurance that the government will respect the rights of citizens to open political debate, lawful public protest and access to information from independent media and other sources,” Danilovich said.

• “Acknowledgment of the numerous allegations made concerning the November 27 constitutional referendum and a high-level public commitment to investigate fully and to take appropriate measures against individuals involved in any wrongdoing,” Danilovich said.

• “Commitment to cooperate fully with civil society, international organizations, and the donor community to improve the fairness and transparency of the political and electoral process in Armenia in advance of the 2007-2008 parliamentary and presidential elections.”

About one-third of Armenia’s 3 million people live in rural areas and are dependent on semisubsistence agriculture, the MCC said in a December 19 news release.

“Despite good recent economic performance by Armenia and a steady decline in urban poverty, the rural poverty rate remains consistently high: 41 percent in 2004,” the corporation said. “Farmers are operating on small plots of land and are constrained by poor roads, inadequate irrigation and an under-developed market economy.”

The Millennium Challenge program “aims to reduce rural poverty through a sustainable increase in the economic performance of the agricultural sector,” the corporation said. The plan includes two investments: a rural road rehabilitation project and an irrigated agriculture project. The program would directly help 75 percent of the rural population and is expected to increase annual incomes by $36 million in 2010 and more than $113 million in 2015, the corporation said.

Armenia lies in the Caucasus Mountains and is bordered by Azerbaijan, Georgia, Iran and Turkey.

More information is available on the Millennium Challenge Corporation Web site.

(The Washington File is a product of the Bureau of International Information Programs, U.S. Department of State. Web site:

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