by Dr. Armen Darbinian
Speech, delivered at the Conference "Armenia: institutional and governance review" organized by the WB and held in Tekeyan Center, Yerevan.

Dear Mr. President,
Dear Friends,

To my opinion, this seminar on civil service reforms is extremely important in light of the future development of our state and society, development of new priorities and determination of our next steps. I would therefore like to hail the WB's present initiative and I hope that, as a result of our discussions, we will be able to develop a coordinated approach to the problem of civil service reforms and focus on the priorities proposed by the WB, other international organizations and donors.

Thus, in view of better understanding of the priorities of civil service reforms, we should try to realize what kind of reforms did our state and society implement during the 9 years of independence and which is the starting point for the process of future reforms.

I would divide this time period into two stages. The first stage is between 1991-1995. I would call this period as a time of understanding of the realities of independence and formation of the state. The second stage starts from the second half of 1995 and continues till 2000, during which the state should have been able not only to strengthen the main principles of democracy, but ensure their strict implementation in everyday social and normative practices. While, during the first stage, the state managed, as a whole, to ensure the overall development of the country, we still have to admit that the efforts taken during the second stage were mostly futile. I intentionally don't want to refer to the upheavals of 1998 and 1999, as, in essence, the 1998's change of Power was the last social order to restore destorted democratic values, and the 1999's tragedy was reflection of our state and society's feebleness.

Indeed, at a certain stage of its development, every nation forms an independent state. Armenian people selected their model of state in 1991, by fixing, through a referendum, the creation of an independent and democratic state.

A republic is one of the types of a state, which consolidates numerous qualitative values, such as separation of power, independent judicial system, liberal economy, as well as freedom of speech, media, religion, and political parties.

By making this choice, our people proved the high level of their consciousness, and emerged before the world community as an integrated ethnical unity, which is committed to the principles of democracy. However, the fundamental principles of democracy, which in practice can be specified as absolute values, should become deeply rooted in the everyday social practice of people. Therefore, within an environment of a newly created democratic system, they are extremely fragile. Here, the main role of the state should be to implement social and legal measures, with the view of strengthening these values.

I think that those were the crucial objectives, which should have been addressed and achieved during the aforementioned period, i.e. starting immediately after the parliamentary elections in 1995. However, I have to admit, that until now our state didn't manage to fulfill this task. We should necessarily try to identify those main reasons which continue to serve as an obstacle, and only then to outline the plan of our future actions.

So, which were the obstacles? There were three of them.

The first and the most important - until now, the state and the authorities failed to turn the Society into a participant and a supporter of the implemented civil, economic, social and institutional reforms. Furthermore, by focusing exclusively on the problems of creating and consolidating the state system, our governors have been almost ignoring the objectives which were necessary for establishing and consolidating the new state and, as a result, today we don't have an organized Society, which would serve for the strengthening of democratic values and creation of a modern civil system, would be protected by the state, recognize the priorities of national development and address the state with its requirements. Accordingly, the following should be our main future steps focus on formation and consolidation of a new society, without weakening the state and processes of its development.

The second reason of our failures was the neglecting of the necessity to integrate political, economic, social, legal and institutional reforms implemented in our country.

Actually, while carrying out mass privatization, our country failed to create mechanisms for protecting privatization and turnover rights. Legal reforms were at least 4-5 years late, compared to economic, as a result of which the legal framework for protection of private ownership was established only in 1998 and became effective in 1999, while privatization started from 1992. It is natural that during such a short period, the legal framework could not totally protect private ownership.

During the process of mass privatization, the state didn't establish the necessary institutional structures peculiar for a market economy. Thus, until now, in Armenia we don't have a predictable and a regular market of land and real estate. The system of insurance is in an absolutely poor condition, the mechanisms of private investments and pension funds have not been established, the banking system is not adequately capitalized and does not seem to understand the realities of future development, and the process of privatization is based not on stock exchange mechanisms and possibilities of attraction of additional capital through issuing new securities, but on the old system of privatization which is totally inconsistent with our current targets.

The third main obstacle for establishing a democratic society is the failure to reassess the role of the state.

In fact, during the period of independence, our country failed to ensure the transfer of the role of the state from an immediate participant in economic relations and activities to a founder, regulator and supervisor of economic relations. There are still many areas where the framework of economic activities is not regulated, free competition is not ensured and the Government is not willing to waive its authorities in terms of various economic activities, while, being an immediate participant of these processes, it can not totally safeguard interests of private owners.

Besides, this situation became the source basis for the existing widespread corruption. Our country did not establish public executive bodies which could restrict the role of the state in the economic transactions like an antimonopoly agency, an institution responsible for bankruptcy and financial rehabilitation, or an agency responsible for restructuring the state-owned companies. The procedures for management of Armenia's natural resources have not been adopted, and such crucial laws as "Law on Concessions" and "Law on Division of Production" have not been enacted. There is a strong counteraction against denationalization of such monopolistic sectors as the railroad, irrigation and drinking water.

One of the major prerequisites for changing the role of the state is the need to strengthen the role of local governments. However, disputes relating to powers of municipalities and communities have turned into a norm. Sooner or later we should acknowledge that creation of powerful communities is one of the priorities of the state, and should appraise the performance of municipalities and mayors based on their willingness to delegate to communities their authority to manage subordinate sectors or, in other words, to cut their own powers.

In addition, we didn't manage to change the role of the state in terms of enacting and enforcement of laws and court decisions. We have numerous democratic laws, the implementation of which is not ensured by the existing state structures, whereas a fair and a consistent implementation of laws on a day to day basis is one of the major tasks of the state.

Thus, we identified the main three obstacles for setting democratic values. The first is the neglecting of the society in processes that we witness, the second is the neglecting of processes, which accompany and coordinate the reforms and the third is the neglecting of the urgency to reassess the role of the state.

Which are the ways for overcoming these obstacles? There are two.

1. During the process of the formation of a civil society, we should be able to ensure the mechanisms of consolidation of the society, with the view that people who have specific ideas, preferences and professional interests can consolidate their approach and extend their social orders.

For example:

• one of the major prerequisites for the consolidation is the formation of political parties, a goal, which was not realized in Armenia. Political parties did not became a symbol of ideological units, but rather turned into a tool for adjoining the influential leaders and obtaining some important leverages;
• public organizations, public opinion and media did not develop sufficiently in order to become an efficient mechanism for expressing interests of the society, which is one of the major oversights of the state;
• even in working relations, the objective of consolidation has not been achieved. In Armenia, trade unions continue to work in the spirit of the Soviet era, although today the state has ceased to be the exclusive employer. Furthermore, most of GDP is produced in the private sector. The state performs as an employer in a scarce number of state-owned enterprises alone. In spite of this, trade unions fail to implement the necessary organizational and structural reforms;
• we were unable to improve the role of such structures, as professional trade unions, organizations protecting interests of the consumers, etc.;
• even in terms of condominiums, which are one of the most efficient ways for consolidation of society, we did not proceed further than taking decisions and adopting resolutions.

In other words, we really need to put a strong emphasis on strengthening of the society, by choosing mechanisms for a strategic implementation of public assignments and by facilitating the possibility for self-expression of different groups of people within our society.

2. Within the framework of reforms in the system of state governance, we should first of all be targeted at balancing the state system. Obviously, due to some objective and subjective reasons, some of the state institutions acquired excessive powers at the expense of the others. Within an environment of underdeveloped judicial and other systems, which are aimed at protecting the rights of public organizations and people, today we have superfluous supervising, security and military structures. I think anyone would agree that the mechanisms of human protection and punishment should counterbalance.

We should be able to ensure the full participation of the members of society in the process of state governance. We should be able to break the existing psychological complex, which is the result of election practices that we have evidenced during the last 9 years, and to regain peoples' confidence in its constitutional right of executing the power. One of our major omissions is that within the numerous relief programs we should have envisaged a possibility for technical modernization of the election procedure, with the view to raise the level of transparency. I am convinced that if we don't restore the lost confidence, we will lose the chance of building efficient state mechanisms.