Networks of Power and Informal Institutions in Armenia
By Alexander Iskandaryan
The central plot in the history of independent Armenia is the emergence and eventual
formalization of informal structures. This, plus the transfer and adaptation of models borrowed
from other countries, sums up twenty years of domestic political development in Armenia.
The institutions of newly independent Armenia – such as the army, political parties,
businesses etc. – have no continuity from the USSR. Many norms of interaction were formed in
the informal field, and consequently, the evolution of informal ties in Armenia can hardly be
distinguished from the evolution of elite interactions and statebuilding on the whole, because
when the system of formal governance institutions is not fully formed, institutions do not so
much become corrupted as they become replaced by substitutes.
It is especially enlightening to see how this system emerged, including its formal
institutions and procedures and especially its informal mechanisms and substitutes. Armenia’s
evolution was in many ways different from that of a “regular” post-Soviet country1. With all the
inevitable differences between the former Soviet republics in terms of size, location,
demographics, culture, and of course presence or absence of carbohydrates, there was a reason
why Armenia’s evolution took a different turn from the very beginning (Furman 2008).
The reason was the conflict over Nagorno-Karabakh, which in many ways defined
Armenia’s domestic and foreign politics, becoming the main catalyst of Armenia’s
independence. In the post-Soviet world, Azerbaijan is probably the only other country whose
independence movement was not sparked off by anti-totalitarian or anti-imperialist feeling, but
by a territorial conflict. Other post-Soviet countries fought to be free from the Moscow center
and the Soviet system (like the Baltic states) or were handed their independence on a plate (like
the countries of Central Asia).
In Armenia, the territorial conflict led to a situation where the civil society was – from the
very start – the main player in the struggle against the Soviet regime. Totally informal – and
officially banned – in the Soviet years, it surfaced in the late eighties and had to plunge at once
into politics, forming itself as a political body in the course of political struggle, as it established
its networks and organized its activities. Naturally, the process was informal throughout, even
where it directly opposed formal Soviet institutions. This was inevitable, because once ethnicity
became politicized in the course of an ethnopolitical conflict, new ethnic elites emerged, which
were still informal and before they could become formalized, they had to oppose and dismantle
old Soviet institutions.
In Armenia and Azerbaijan, the conflict began before the movement for independence
did. To a large extent, it was the Karabakh conflict that catalyzed the emergence of national
independence ideologies in the two countries. Armenians in Nagorno-Karabakh began
demanding unification with Armenia before the Armenians of Armenia started fighting for
independence.2 In Armenia the territorial issue gave rise in 1988 to the Karabakh movement, the
first mass movement in the Soviet Union that was in opposition to the authorities.
The goals pursued by the leaders of the 1988-1991 Armenian revolution were close to
Bismarck’s efforts to unite Germany in the late 19th century, or the Italian Risorgimento. This
1
2
For details on the history of post-Soviet Armenia, see: Kozhokin (1998).
Nagorno-Karabakh has its own political history, which I am not going to discuss in this paper.
made the Armenian revolution very different from democratic movements in Eastern Europe,
and especially from the Baltic states’ fight on Soviet colonialism. The Karabakh movement in
Armenia was more of a national liberation or an irredentist movement than a democratic one.
This had impact on the Armenian revolution and subsequent developments. At first, the
movement for unification of the Armenian Soviet republic with the Armenian-populated
autonomy in Soviet Azerbaijan tried to remain loyal to Moscow. It did not upset any Soviet idols
and was trying to play the new Glasnost policy against the increasing weakness of the Soviet
government. Protestors in Yerevan in 1988 carried slogans like “Lenin, Party, Gorbachev!”
Although they clearly did not believe in Communist slogans, the leaders of the protests were
trying to make use of the old ideology (Mouradian 1990, 405-464).
Grassroots-level demands without orders from the top, protest rallies and petitions, the
establishment of non-governmental organizations, the idea of a referendum as a political tool, the
initiation of territorial administrative changes from anywhere but the very top – all this made it
quite clear to the Moscow authorities that the Karabakh movement in Armenia was intrinsically
hostile to the idea of preserving the Soviet Union, even if in a new format. Although at that
stage, the leaders of the Karabakh movement did not advocate reforms or democratization of any
kind, the very idea of changing the subordination of Nagorno-Karabakh, and the methods used to
promote this idea, had a strong democratic component of which the new Armenian elites were
not fully aware at the time.
The rallies of the late eighties gave an impetus to the creation of the Armenian political
system. A million people protesting in the streets in a peaceful and organized way have set a
standard for political activity and created a culture of street protest. Once the leaders of the
Karabakh movement realized that their irredentist goals could not be reached inside the USSR,
they opted for independence – as a method of getting Karabakh, not as a goal per se. Instead of
the Communist Party, Armenia started appealing to the international community. Socialist
slogans were replaced by democratic ones. Methods changed, the irredenta remained the focus
(Furman 1995, 36-39).
However, once independence from the USSR was designated as a goal of the Karabakh
movement, a political and ideological overlap happened. The struggle for Nagorno-Karabakh
became the core of newly independent Armenia’s political identity. The methods also changed.
Appeals and petitions were history by autumn 1991 when the conflict escalated to war. The war
lasted over three years and was won by the Armenians; it also led to historical changes in the
Armenian society and Armenia’s nascent political system.
Up to 1994, the needs of war were on the top of the young country’s agenda, and the
army became one of the main, or probably the main actor of state building. The army – or,
originally, the informal substitute of an army - was put together from paramilitary groups of
volunteers, a motley crowd which originally had no centralized command. As the war escalated,
talented and ambitious commanders rose to the top and formed the army headquarters.
Once the war was over, a veteran corporation formed, estimated at several thousand men,
probably below ten thousand. The veterans varied greatly in terms of social background; it was
the experience of warfare that made them into a caste. This could have led to a classical thirdworld scenario; in countries with weak democratic traditions, the army is not just a political actor
but also a type of political elite. However, Armenia was exhausted by the costs of war and could
not afford to pay the Karabakh veterans the salaries they aspired to. In place of money, the
authorities started handing out informal benefits, primarily in the business sphere. As a result, the
veteran corporation soon gained control over many types of businesses and created a
countrywide system resembling feudal domains (Zolyan 2011). The economy remained marketbased but the weight of a businessman in the “military capitalism” hierarchy became a key factor
in the economic competition. In post-war Armenia, a businessman had to be a member of the
local veteran club, or join it once his business became large by local standards.
At some point, the victorious veterans did not just participate in the government; they
were the government. The 1998 soft coup d'état was to a large extent driven by the army:
Armenia’s first president Levon Ter-Petrossyan was coerced to resign by a group of top officials
led by the then minister of defense Vazgen Sargsyan, a legendary war hero.
However, by the start of the new millennium the veteran corporation began to transform
for the simple reason that it did not have a recruitment mechanism. Less than a decade after the
end of the war, the veteran caste mutated into a regular business community, and new trends
prevailed in the formation of Armenia’s economic elites.
The short-lived post-revolution consolidation of the Armenian society around its leaders,
naturally, immediately ended after the war. The population at large was pauperized;
infrastructures were ravaged by the war, economic prospects appeared bleak; a radical protest
was in order. By the mid-nineties already, Armenia’s authorities became estranged from the
nation and, especially, from the largely marginalized educated classes.
Social protest in Armenia is acute and uncompromising, and rallying is a tradition, but
political opposition has very little say in governance. There is growing tension between the
emerging informal system of political power and the formally existing democratic institutions
(multi-party democracy, freedom of speech etc) (Zolyan 2011). The tension causes the low
legitimacy of the government; however, the ruling party has so far successfully manipulated
public opinion when necessary, for example, during elections.
Mass poverty was one of the results of the revolution, war and blockade. Armenia doesn’t
possess significant quantities of natural resources; the effect of the collapse of Soviet economy
was made a lot worse by the war and the blockade. A peace agreement was never signed, the
hostilities ended in a ceasefire, meaning that formally, Armenia was still at war and needed to
maintain a strong army. Formed from scratch, from the most primitive types of economic
activity, the economy of new Armenia was heavily burdened by the military expenditure.
Business was developing from the grassroots, starting with portable stalls and family businesses.
A typical consequence of poverty is a merger of business and politics. Once a
businessman becomes “large” by local standards and sorts things out with the “veteran” crowd,
they enter a very competitive realm where resources are scarce, import and export options few,
and the market, tiny. The business operators engage in a constant quest for consensus. Informal
ties to politicians, or self-co-optation into their ranks, provide a convenient arena for this activity.
The everyday laborious cutting-up of the small economic cake – the distribution of influence
zones, licenses, preferences and access to resources – has become the main drama of Armenia’s
domestic politics, making businesspeople key actors in the political field.
Armenia doesn’t have mature political parties; the ones operating today are substitutes of
various kinds, including shapeless informal networks of socially active people driven by career
ambitions, advocacy bodies, electoral machines and trade unions of public officials. This dictates
the vague phrasing of party manifests, the non-existence of genuine platforms or clear goal
setting, and an overall personality-focused political landscape.
The entities operating in the political field are not political parties but elite groups, chiefly
business groups, and the parliament has become an exchange of economic interests. At elections
in 2002 and 2007, quite a few businesspeople got elected to parliament. In contrast to the first
years of independence, clashes in the Armenian legislature do not happen between liberals and
Christian Democrats, proponents of the social state or market economy, but between
representatives of informally networked business groups.
The emergent political system of Armenia cannot afford to be fully authoritarian. In the
absence of mineral resources, such as carbohydrates, the state has no annuity to dole out; the
businesspeople need to delineate influence zones and make their own money before the
government can get them to pay tax, whether official or “grey.”
The natural format for this process is a coalition formed by leading operators in trade and
manufacture, regional feudal lords and officials of the central administration, exporters and
importers, and so on. The president is a part of this system: a major part, but still a part. The
system dictates a coalition parliament and coalition government. Currently this arrangement has
ceased to be completely informal. Its institutionalization is manifest in the fact that the
government is formed on a coalition basis even in the absence of a technical necessity, and only
Heritage, like a living fossil, remains in the cold, opposed to the system in general. On informal
levels, coalitions are even more strongly manifest, since the ruling Republican Party is in itself a
coalition of elite groups.
While elite groups compete against each other, the population is not involved or, worse,
used. Competition in Armenian politics is tough; players compete for resources and privileges,
for leverage over politics and, thereby, economics. In the parliament, business groups form
unions and break up, fight for power and move from camp to camp. What matters is that the
competition involves elites, while society at large remains a tool, and not a player in politics.
The players themselves believe in the stability of their playing field; indeed, just a
handful of marginalized opposition MPs reject the legitimacy of the current system. Meanwhile,
the main threat to stability lies in its very arrangement, whereby politics is an informal elite game
in which the society can only get involved at the time of elections, which, as a result, become a
disaster.
This said, the current system, in which large businesses are represented in the legislature,
is still pregnant with societal representation; it’s just that the groups are not wide enough. The
owner of a large company can mobilize his employees and their family members to vote a certain
way. More often than not, they will do it voluntarily because they understand that a change of
government can cause him to lose his privileges and them, their jobs. However, a businessman
cannot motivate an entire social group to vote a certain way or start a street protest.
Progress is possible but can be slow and will be easy to abort at any stage. Successful
transition to a representative democracy will require long-term economic growth; businesses will
need to mature and break free of the corporation, and civil society will need to grow some
muscle. The more years pass since the war, the more one can hope that economic development
will lead to the emergence of a middle class and the consolidation of state institutions. Until this
happens, the Public Official, the Legislator and the Businessman will work together to make sure
that the system stagnates, the elite reproduces itself, and there is no need for mass repressions.
The line between informal mechanisms and formal elites in Armenia should not be drawn
between professional realms, but through time. In a nation whose formation began in the late
Soviet years, was consolidated by the war and put to the test by an era of de-industrialization and
return to archaic practices, informal recruitment into the ruling elite was the only option. The
nonexistence of institutions or traditions of political competition led to the creation of substitutes,
which enabled the functioning of the state machinery. Although the substitutes sometimes play
the part of institutions, in reality, they are not institutions, either because their functions are not
defined by the constitution, or because in reality their functions can vary in a very wide range.
However, they usually fulfill their functions in an unsatisfactory fashion, and the overall design
of the political system is evolving in the direction of institutionalizing the substitutes.
The substitutes, or informal mechanisms, are gradually becoming formalized; they cannot
avoid changing in the process. For example, a group of businessmen goes into politics in order to
ensure preferences for their businesses; it calls itself a political party simply with view to getting
seats in the parliament and lobbying its interests in the legislature. To achieve this, it must
compete in elections, which dictates the need for media resources, experts and regional networks.
Gradually, the businessmen in the new party learn the skills needed for public politics. The form
fills with content.
The elite nature of Armenia’s politics and the weakness of its middle class are hampering
the transformation of substitutes into institutions. Monopolized business leads to monopolized
politics; political groups become clienteles. Consequently, decision-making is limited to a
narrow circle, and informal mechanisms prevail. With the emergence of a viable middle class, on
the one hand, and a political participation culture, on the other, the informal substitutes
inevitably become formalized and set down new ground rules and competition formats.
This transformation is only beginning; a lot will depend on economic progress and
political development. More importantly, it is not obvious if it will succeed, or indeed continue
unfolding in this direction. What is obvious is that the transformation of informal power
mechanisms into formal institutions, and the engagement of wide social groups in political
decision making are the country’s main political challenges. This is not about reducing
informality or combating corruption; this is about creating a state. The society at large is aware
of these challenges, which means that there is some hope.
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