It's a defining theme for Armenia's presidential campaign.
Five case studies show how deep the debate over corruption actually goes.

Introduction
Government corruption has long been one of the most serious problems facing Armenia and affecting day-to-day lives of its residents. Dating back to the final decades of Communist rule, bribery, nepotism and other corrupt practices became even more widespread with the collapse of the Soviet command economy that created new, much greater opportunities for the illegal enrichment of various state officials. It is little wonder that such practices have become one of ordinary Armenians' main grievances and a major campaign issue for local politicians.

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Domestic Markets
Armenia may be regarded by Western lending institutions as a reform leader in the former Soviet Union, but its microeconomic environment still leaves much to be desired, with government connections remaining essential for doing business. Large-scale imports of fuel and basic foodstuffs, arguably the most lucrative form of economic activity in the country, have been effectively monopolized by a handful of wealthy entrepreneurs close to outgoing President Robert Kocharian and Prime Minister Serzh Sarkisian.

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Customs
Armenian customs handily outranks tax inspections as a source of complaints from the business community. These essentially stem from the State Customs Committee's (SCC) discretionary but legal power to determine the market value of imported goods (by ignoring invoices submitted by importers) and to tax them accordingly. Armenian companies involved in import/export operations say they often have to pay kickbacks to stop customs officers overtaxing their products.

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Tax Inspections
Armenian companies routinely underreport and/or hide their revenues to avoid paying taxes. Tax authorities' preferred method of trying to detect widespread tax evasion is to regularly or unexpectedly inspect company books and other financial operations. Anecdotal evidence suggests that such inspections, although regulated by a special law, are often conducted in an arbitrary manner that breeds corruption among tax officials.

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Foreign Investment
Allegations of government corruption are also at the heart of an ongoing dispute between the Armenian government and the US company Global Gold, which is mining gold in northern Armenia. The dispute broke out in early 2006 when the Armenian Ministry of Environment Protection unilaterally revoked Global Gold's licenses to carry out exploratory work at two small gold deposits, accusing it of failing to honor its investment commitments.

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International Loans
In 1999, the World Bank launched a $30 million lending program designed to upgrade Armenia's battered water infrastructure and improve Yerevan residents' access to drinking water. As part of the government-backed project, hundreds of thousands of households in the Armenian capital had to purchase and install, at their own expense, water meters in their homes. In return, the government promised to ensure around-the-clock water supplies to the vast majority of households by 2004. However, most city residents continue to have running water for only several hours a day.

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There's more to the campaign than corruption alone. Take a survey of other issues driving the race. » Dig deeper


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