Ambassador Richard Mills Remarks to American Chamber of Commerce

Ambassador Richard Mills Remarks to American Chamber of Commerce

01As prepared
February 1, 2017

Dear Ministers and Deputy Ministers, dear President of the American Chamber of Commerce in Armenia and Members of the AmCham Board of Directors, dear distinguished guests, thank you for joining me tonight.  It is becoming a very pleasant tradition for me to deliver policy speeches before the AmCham, a tradition that reflects the strong partnership the Embassy enjoys with the Chamber and our deep respect and appreciation for the work you do in furthering U.S.-Armenia bilateral ties.  As all of you know, I gave my first major policy speech before the Chamber and distinguished guests from the government back in November 2015.

In the speech, I outlined the four priorities I had set for myself and the Embassy over the tenure of my ambassadorship.

I announced these four priority areas 15 months ago because I wanted to be transparent with the Armenian government and people.  I also pledged to share the efforts my Embassy would undertake to achieve those goals and, over time, my assessment of how much impact the Embassy’s efforts are having in furthering our goals.  What I would like to do today is assess the quality and impact of the efforts the Embassy undertook to promote each priority, and offer some next steps as we look to continue working to advance these four priorities in partnership with the Armenian people and government.

When I think back on the past 15 months – that is, the period between my first speech before the Chamber in November 2015 and my address to you today – it is sobering to realize that in that relatively short space of time, we have witnessed events that have changed Armenia’s political and economic landscape, as well as demonstrated this country’s resiliency in the face of tragedy.  The more time I spend in Armenia, and certainly in the tragic aftermath of last April’s fighting, the more I realize how much the lack of a peaceful resolution to the Nagorno-Karabakh conflicts diverts precious resources – both Armenian and those provided from Armenia’s international and diaspora friends – from our shared goals and, frankly, the priorities I and my Embassy have set for ourselves.

The lack of a resolution to Nagorno-Karabakh fuels corruption because it keeps Armenia’s borders closed and, when borders are closed, it is easier for powerful business people and others to control economic markets and close off competition.

So as a preface to the rest of my remarks, let me underscore the continuing importance and priority the Embassy, the U.S. Government, and I personally will continue to give to achieving a peaceful settlement for Nagorno-Karabakh’s future.

Turning to my four priority areas, the questions I’d like to address today are two:  where do we stand a year later on each of these, and what additional steps can be taken?  While the Embassy’s priorities are all long-term goals, and transformative change is not to be expected in the course of a year, we are looking for signs by which to measure our course and identify progress.

My first priority has been to deepen the business and trade relations between our two countries, as part of an overall focus on boosting Armenia’s prospects for economic growth.

This is the area where we have arguably seen the most progress and we are hopeful that many of the seeds we have planted will bear fruit in the not-too-distant future.

In keeping with the agricultural metaphor, let me mention first our ongoing contributions to Armenia’s agricultural development.  Over the past two years, USAID has assessed this is a sector with significant economic and job potential – as well as the most effective way to prevent the migration out of rural villages – and that justifies new allocation of resources. So, USAID helped establish six new Farm and Veterinary Service Centers where local farmers can learn best practices in farm business development and animal breeding.  USAID also provided direct support to Armenian rural producers by supporting their participation in local and international trade expos and festivals, helping to establish rural agricultural cooperatives that boost local economies and create jobs.  Thanks to these activities, in the past year alone forty-one new businesses have been established, an additional forty-one start-ups have received additional financing from USAID, and over 650 temporary and permanent jobs in rural villages have been created.

The Embassy has also pursued several initiatives in the fields of entrepreneurship and STEM, which, I know this audience is well aware, stands for science, technology, engineering, and math.  For example, USAID announced last year that it is partnering with IBM, Yerevan State University, and the Government of Armenia to establish the Innovative Solutions and Technologies Center, or ISTC, which will connect top U.S. technology universities with nine Armenian universities to develop IT workforce skills.

In addition, with the support of the American-Armenian Hovnanian family, the Embassy established last year the brand-new Fulbright-Hovnanian program for top-achieving students who wish to earn a Master’s degree in entrepreneurship or a STEM field in the United States, and will return to Armenia to put to work in the Armenian economy the knowledge that they have gained from study overseas.

Since the primary focus of my economic priority was the deepening of direct business ties between the U.S. and Armenia, I am delighted to report that we have made considerable progress this past year.

ContourGlobal completed the acquisition of the assets of the Vorotan hydroelectric facility in 2016, and now represents the largest single U.S. private investment in Armenia’s history and the first U.S. investment in Armenia’s energy sector.  In addition, ContourGlobal plans to invest more than 70 million dollars over the next several years – and create about 150 near-term jobs.  Meanwhile, another U.S.-affiliated firm, Lydian International, started the construction of its Amulsar mining project in 2016.  By 2018, Amulsar will likely represent the largest U.S. equity investment in Armenia, with construction costs estimated at 370 million dollars from 2016 to 2018. During the peak construction phase up to 1,300 jobs will be secured, while 700 people will be employed directly by Lydian Armenia during 10 years of production.  I am happy to report that in a first for Armenia and mining operations here, Amulsar’s Environmental and Social Impact Assessment has been deemed fully compliant with standards set by the World Bank and the European Bank for Reconstruction and Development.  Investment from ContourGlobal and Lydian will amount to about half a billion dollars over the next few years.

Both companies also have been high-profile models of the concept of Corporate Social Responsibility in their respective interactions with local communities and by doing so, have encouraged its development among local Armenian companies as well.

To attract more – and more diversified – investment and business linkages, the Embassy also organized several well-received commercial events.  For example, just two months ago, in November 2016, we partnered with two government ministries and HSBC Bank to hold a sustainable mining business conference that connected 35 Armenian mine operators with seven leading U.S. companies.

In total, throughout 2016, U.S. Embassy-organized commercial events and activities brought 20 U.S. companies to Armenia, most of which are represented in the Fortune 500 businesses list.  Brands such as General Electric, IBM, Honeywell, Caterpillar, Dow, Oshkosh, and Open Systems International participated in these events.

Much of the Embassy’s activity in creating new business connections between U.S. and Armenian entrepreneurs was given new stimulus in the wake of the first meeting of the U.S.-Armenia Council on Trade and Investment in November 2015, which was established by our two countries after the signing of our bilateral Trade and Investment Framework Agreement – known as TIFA – in May 2015.  The purpose of the Council – and of the eight working groups that have been formed in such areas as Intellectual Property Rights, Government Procurement, and Customs – is to provide a regular platform for U.S. and Armenian technical experts to identify issues that hinder trade and investment between our two countries, and address these obstacles so that our business ties can deepen further.

The U.S. government is committed to continuing to work with our partners in the Armenian government to expand trade opportunities between the U.S. and Armenia and we want TIFA to be successful.  But to be maximally effective and achieve the increased trade that both our countries want, the TIFA Council needs to be more active.  Business forums are all to the good, but we must hold the working groups’ feet to the fire and ensure that they really tackle the existing and persistent barriers to trade and investment.  If you or your companies are facing barriers to trade, tell us.  The TIFA only works when it is business-driven.  Believe me; you don’t want a bunch of bureaucrats to drive the agenda.

One area where I would encourage the Armenian government to be more active is Customs, because the simplified and transparent implementation of customs procedures is a necessary prerequisite for Armenia to expand trade with the rest of the world.  Although I recognize that Armenia has to harmonize its customs and other trade facilitation procedures to conform to those of the Eurasian Economic Union, I encourage the Armenian government not to lose sight of its continuing obligations with regard to the World Trade Organization and its other international trading partners. I specifically suggest that the Armenian government further review its use of “reference pricing” and classification procedures for goods imported from abroad, as these can create barriers to large-scale international trade and negatively impact Armenian consumers.

Let me now move to our second priority, partnering with Armenians to fight corruption.    We have seen some positive outcomes, but much remains to be done.

I am pleased and encouraged by the fact that Prime Minister Karapetyan has made the fight against corruption a priority in his public remarks, and I have been heartened to see more Armenians speaking openly about how corruption affects them.

One area where we have seen significant progress, and for which I wish to strongly commend the Armenian government, is in its commitment to have Armenia join the Extractive Industries Transparency Initiative, or EITI.

EITI membership requires that the government, civil society, and the mining industry come together to foster greater transparency and the clean, responsible, and sustainable development of mining.  The Government, with USAID support, has worked hard on its candidacy package, forming a multi-stakeholder working group with representatives from extractive companies, civil society, and international partners, and formally submitting its membership application to the Board of the EITI in December 2016.  Joining EITI is not an end in itself, but it is a significant commitment to increased transparency and to uphold international standards in the all-important mining sector.

Over the past year, the Embassy has partnered with the government and civil society on a number of other anti-corruption initiatives.  For instance, we have supported programs by local media outlets to develop their investigative journalism skills, which helps the media sector fulfill its crucial democratic function of holding government and public figures accountable and of keeping the citizenry informed.  In other example, a USAID-funded anti-corruption project identified corruption risks in the health care sector and developed 55 recommendations – many of which would impart real benefits to everyday Armenians – which have been submitted to the Ministry of Health for consideration.

While the link between corruption and economic development, and between corruption and rule of law, have always been apparent, recently we’ve seen more discussion in Armenia about how corruption can impact and threaten national security.  When I mentioned the intersection between corruption and national security in my speech to the AmCham 15 months ago, many people were surprised, many were dismissive.  I don’t claim credit at all, but I think this issue is now more frankly addressed in Armenian political debates, and with proposals for serious action from the government, than it has been in the past.  Certainly the public discourse during and after the Four-Day War in April highlighted the corrosive effect corruption can have on national security and brought the issue into the public spotlight.

However, the only way to achieve meaningful progress in the fight against corruption is for the government to demonstrate political will.  The government must strengthen and empower public institutions at all levels and send a clear message from on high that corruption will not be tolerated and that no one is above the law.  Absent this message, no truly transformative change can occur.

Encouraged by the Prime Minister’s public commitment to tackle corruption, I offer two specific suggestions for the government to consider.

First, I suggest that the government strengthen the independent role and responsibilities of the Ethics Commission on High Ranking Officials.  I applaud the government’s recent step in this direction. Significant changes have been made to the Administrative Violations Code and Criminal Code, providing for fines, criminal sentences, and limitations on holding government positions for 3 years for individuals who submit false income declarations.  But more needs to be done.  One fix would be for the Government to make clear that the launching of an investigation into possible corrupt activities by a government official does not require specific evidence of an actual bribe paid or a favor given, but could be triggered by a prosecutor’s assessment that the assets declared by a government official are so great as to trigger reasonable grounds of suspicion.  Armenian media has done a very good job of analyzing ethics declarations and identifying instances where officials declare assets that are 40, 50 or one hundred times greater than their government salaries, but there was no indication of follow up by the Government.

And I respectfully suggest that the government consider establishing a fully independent anti-corruption body with full investigative and prosecutorial authority.  This was a specific recommendation by Mr. Peter Ainsworth, the Senior Anticorruption Counsel of the U.S. Department of Justice whom the Embassy brought to Armenia twice in the last year for consultations with government and civil society. This seems a propitious time for the government to consider this suggestion, as we understand the Prime Minister is currently deciding how to restructure the existing Anti-Corruption Council and formalize the connections and lines of authority between the Anti-Corruption Council and other bodies with anti-corruption mandates.

Let me address an anti-corruption action the Embassy undertook in 2015 that has been controversial with many in Armenia.  I know that our decision to provide USAID-funded support to the work of the Anti-Corruption Council was harshly criticized by many commentators over the past two years.

In response, we have said repeatedly – including in my remarks in November 2015 to all of you – that we are willing to work with any Armenian governmental institution that demonstrates a commitment to fighting corruption, but that at the same time, our continued support for the Council was contingent on the achievement of measureable results.  Because of its lack of progress thus far, less than 2.5% of the money allocated for its support was actually released to the Council.  I hope this fact will assuage the suspicions of the many people who speculated that USAID delivered the entire sum of money to the Council in an unmarked briefcase– we’re the U.S. government, not characters in a James Bond film. We have shared with the Prime Minister our need to see concrete progress from the Council and I know he wants to reshape the Council and its work as well.  Based on the outcome of our discussions with the Prime Minister, we will decide on next steps, including whether to continue our support to the Council or redirect those funds to a different anti-corruption mechanism.

Now let me now turn to our third priority, the strengthening of democratic institutions, human rights, and civil society in Armenia.  We have been deeply engaged on multiple fronts in this area.

Despite some progress and notable success stories which give reason for hope, we have also witnessed some troubling trends in the areas of human rights and rule of law.  Let me first mention some of Armenia’s very laudable successes in this area.  One of the most impressive is the fact that it retained its status as a Tier I country in the State Department’s Trafficking in Persons Report for the fourth straight year, thanks in large part to its interagency working group, which is a model of cooperation between the government and civil society. But if I may add just one thing:  to ensure that its efforts in preventing trafficking in persons continue to be recognized, I do urge the government to reinstate the Labor Inspectorate without delay.  Without a functioning Labor Inspectorate it is very difficult to track and prevent trafficking in labor and especially child labor.  In another win for civil society, and the Embassy’s efforts, we were able to congratulate the Armenian government for passing just two weeks ago the Law on Public Organizations, which is a complete game changer for NGOs in this country, allowing them to pursue greater financial independence and long-term sustainability. In the area of human rights, we are greatly encouraged by the initiative of the Ministry of Defense to establish a Center for Human Rights and Building Integrity, which the U.S. Embassy has supported, as well as by recent reports that the Ministry has created a hotline for parents to call if they have questions or concerns about their sons’ treatment in the military.

I also want to mention that thanks to small grants from the Embassy, several Armenian NGOs were able to implement projects that have made a real difference: SOSE Women’s Issues NGO carried out an amazingly creative social media campaign against sex-selective abortions, and several NGOs – including the Kendo National Association, Dasaran, and Aleppo – have implemented projects benefitting individuals with disabilities and promoting social inclusion.

What these success stories tell me is that there are many organizations and many people within government and in civil society that care deeply about these issues and are dedicated to bringing about real change within Armenian society.

But as I said, we also witnessed troubling trends over the past 15 months that give cause for real concern.

With regard to the constitutional referendum of December 2015, the Embassy was deeply concerned about the credible allegations of electoral fraud that came from non-partisan observers, media, and civil society.  Shortly after the referendum took place, we issued a public statement calling on the government to transparently investigate every case where there was credible evidence of fraud, and to prosecute suspected individuals to the fullest extent of the law. Following the referendum, the Embassy put down a clear marker, publicly announcing that we would draw upon the information contained in public reports to determine whether individuals who directly interfered in the integrity of the referendum process would be ineligible to participate in Embassy-sponsored programs or activities.  And although I cannot share information about the individuals who have been affected by this decision out of respect for their privacy I can assure you that we have followed through on our pledge.

Following the constitutional referendum, I very much welcomed President Sargsyan’s public commitment to address the public’s lack of trust in the electoral process.  I agree with the President’s characterization that these elections will shape the future of Armenia and it is crucial they be free and fair, and that the Armenian people have confidence in the results.  To help make the Armenian government’s public commitment to credible elections a reality, USAID – in partnership with the European Union, the UK, Germany, and the UN Mission to Armenia – has provided financial support for the new voting processes and electoral equipment agreed upon by the government, political opposition, and civil society last year, unprecedented agreements that required compromises on all sides. These measures will make possible same-day voter authentication and the publication of signed voter lists after the elections. But let me be clear:  these additional measures cannot, by themselves, guarantee free and fair elections.  They can make the electoral process more transparent and make it more costly to commit fraud, but the elections will be free and fair only if the government demonstrates the political will to make them so, and if the political opposition and civil society act to safeguard the process. The burden is on the government and its constituent institutions – the Central Election Commission, law enforcement bodies, and the judiciary – to take the appropriate actions and foster a climate in which the Armenian people are able to freely express their will at the voting booth.  At the same time, a free and fair election also requires responsible civic engagement in the election process from the political opposition and civil society, which is why we were glad to see them work with the Government last year, and hope that spirit of positive and constructive collaboration will continue throughout the electoral period and beyond.

For free and fair elections to take place, the government must also create a climate in which media and civil society are free, independent, and unfettered.  We have recently heard intimations of increased pressure on media and civil society that seems designed to constrain their freedom of expression and redirect critical editorial views in advance of the parliamentary elections this spring.  If true, this would be very worrying and would further erode Armenia’s standing in reports issued by international organizations on press freedoms worldwide.  We do take the government at its word that it intends to conduct free and fair elections, just as we take the opposition parties and civil society at their word that they intend to play a constructive role in the process, and this is something we’ll be watching closely over the next few months.

Let me now address the events of Erebuni last July.  During much of the 15-day standoff, Armenia’s law enforcement struck a good balance in terms of securing Armenians’ safety and security around an active site, while defending Armenians’ rights to peacefully protest.  However, we were deeply concerned by the credible reports of excessive use of force used by the police against unarmed protestors  and journalists on July 29-30.  We made our concerns clear at that time, noting that such actions violated press freedom and the rights of Armenian citizens to the freedom of expression and of peaceful assembly.  Although some police officers have been punished for their actions on that day, more could and should have been done in this regard.  Serious crimes occurred the evening of July 29-30 and it is important that those responsible be held to account.

Another area of concern which the fallout of Erebuni highlighted, has been the Government’s use of pre-trial detention.  While it is true that pre-trial detention is used in legal systems around the world, including in the United States, it should be a last resort, employed only when there are no other feasible alternatives to ensure that a suspect won’t flee or interfere with the ongoing investigation. It should never be used as a punitive tool to keep citizens from exercising their rights of free speech and assembly, and when pre-trial detention is ordered by the court, the reasons for doing so need to be fully transparent and grounded in a strong legal basis.  I will be frank that in the case of Erebuni and other politically sensitive cases this year, we are concerned by the pre-trial detentions of several defendants who participated in the demonstrations or are suspected of giving non-violent support to the militants, but were not involved in the actual armed seizure of the police station or in the deaths of the policemen.

Let me be clear, my intention in mentioning these cases is not to prejudge their guilt or innocence, but to emphasize that each pre-trial detention decision must be based on a strong, fully transparent legal rationale.  And the burden – again – is on the authorities to make these bases evident, or to proceed to an open trial as quickly as possible.

With that, I’ll move to our fourth priority, doing a better job of explaining U.S. foreign policy to Armenian audiences.

I identified this as a priority because many of the Armenians with whom I meet – even some people who have visited or lived in the United States in the past – have told us they do not understand U.S. policies.  This is a challenging battle in many ways, given the realities of the media environment in Armenia.  Armenians have limited exposure to U.S. and Western news sources, and even though Internet penetration is increasing every year, facilitating access to U.S. media outlets, many Armenians lack the necessary English skills to take advantage of this.  I have spoken to groups such as yours and at several universities; American staff at the Embassy have partnered with alumni to discuss various foreign policy issues at our American Corners; I’ve done a number of interviews and live Facebook chats; and we have a strong and active presence on Facebook and Twitter.  I’d be interested in hearing what your thoughts are, how you think we are doing and how we can do better.  If you think expanding understanding of U.S. actions in the world is a worthwhile goal, I encourage you to follow us on Facebook and Twitter, comment on our posts, and share them with your contacts.         To sum up, I am proud of the efforts my Embassy has undertaken in the last 15 months to advance these four priority areas.  I think our decision to focus on specific areas has been beneficial, for it allows us to concentrate the various tools and resources available to different sections and agencies within the Embassy and challenged me and my staff to design creative and complementary programs that can make a difference in areas that impact everyday Armenians every single day.  We’ve helped create jobs, clinch new investments, and start conversations between U.S. and Armenian businesses, and we’ve brought American experts to liaise with Armenian government officials and counterparts in areas where U.S. expertise can be helpful. As we move forward, however, there is still much room for improvement.

I’m coming to the end of a long speech, but before concluding, I want to mention that with a new U.S. president in office, this is obviously a time of transition and change, and with change can come opportunity.  I can tell you that whenever we have a new administration, the new team on board has lots of questions, and it is our job at the U.S. Embassy in Armenia – working in tandem with our Washington-based colleagues at the State Department – to provide the members of the new Administration with background and information so they can fully appreciate the contours and nuances of the U.S.-Armenia relationship, the importance of our interests in the South Caucasus region, and the depth of friendship that our two countries enjoy.

I thank you for your attention, your interest, and your friendship.  I look forward to speaking with many of you personally during the second half of the evening.  And let me say thank you once more to the Chamber for their hospitality and generosity in hosting tonight’s event.

Thank you.