The system of government is highly centralized in Armenia, with sweeping powers vested in the office of the President of the Republic. The central government is appointed by the head of state and has considerable economic and political leverage over local government structures. The centralized power that existed in the Soviet period was reaffirmed by independent Armenia's post-Soviet Constitution, which was adopted in a referendum on July 5, 1995.
The Constitution lists the following two principles regarding the decentralization of power to local levels of government: state governance and local self-government. The former applies to the nation’s provinces and the latter to smaller administrative units.
Armenia is divided into 11 provinces (Marzer). The capital, Yerevan, also has the status of a Marz. Each province is run by a Governor (Marzpet) who is appointed by the central government. The Mayor of Yerevan, whose rank is equivalent to a provincial governor, is nominated by the Prime Minister and appointed by the President. Article 107 of the Constitution stipulates that it is the responsibility of the Governors to "implement the government's territorial policy [and] coordinate activities of territorial services of the national executive bodies." A Governor can be dismissed by the central government. The provinces have no budgets of their own and receive financing from the central government.
Provincial administrations, however, do possess the authority to supervise and intervene as deemed necessary in the day-to-day life of lower government structures, the Communities (Hamaynkner), that are located in their provinces. Under the Armenian Constitution, all cities, villages, and the 12 Districts of Yerevan have the status of a Community and are governed by a locally-elected Community Chief and a legislative body called the Council of Elders (Avakani). In cities, Community Chiefs hold the title of Mayor. These locally elected chief executives can be removed by the central government upon the recommendation of the provincial Governor.
The functions and responsibilities of the Communities are laid down in the Law on Local Self-Government, which was adopted by the Armenian National Assembly on June 30, 1996. Its entry into force on November 10, 1996, was timed to coincide with the first local elections in independent Armenia.
The Law states that "(l)ocal self-government is the right and ability of local self-government bodies... to manage the community's property and address issues of communal significance in order to improve the welfare of the population." Community heads and the Councils of Elders are elected by secret ballot for a term of three years. Article 23 of the Law specifies that the central government can dismiss a Mayor, Yerevan District Head, or Village Chief "in the event of unsatisfactory performance of responsibilities ordered by the state." In the summer of 1999 the cabinet of then Prime Minister Vazgen Sarkisian ousted more than two dozen village Chiefs, citing their failure to assist in the collection of property taxes.
The dismissal of an elected local administrator must be preceded by a formal "motion" to that effect from the corresponding provincial Governor. The local council of elders is to submit its written opinion on the issue to the central government before the latter makes a final decision. However, that opinion is not a legally binding document. A local Council of Elders may also petition the Governor to initiate the sacking of its chief executive. But again, the central government is the final authority in all removals from office.
The Law on Local Self-Government entrusts Armenia's Communities with two types of powers: mandatory and voluntary. Voluntary powers involve "any activity pertaining to the Community's interests and not contradicting the law, unless it is vested in other state bodies by legislation."
Of all the mandatory powers delineated in the Law, the adoption of a local budget appears to be the most significant. The Communities do not have the authority to introduce and/or collect local taxes by themselves. All taxation is controlled by the central government. Nevertheless, taxes on land and other property and 15 percent of all income and profit taxes collected within a community go directly into its budget. In addition, the Communities are allowed to earn income from their property and enterprises. The 1996 law also gives a city or village the right to set "duties and payments." This includes fees for enterprise registration, notary services, and the like. However, there is an apparent contradiction with another law that fixes the same standardized nationwide tariffs for such services.
According to the United Nations Human Development Report for 1998, the local revenues of Armenian Communities make up less than 30 percent of their budgets. This means that the bulk of local funds are provided by the central government in the form of subsidies. A city, village, or Yerevan District decides its budget allocations, but budget deficits and financial dependence on Yerevan leaves them with few choices.
In addition to the provisions stipulated in the Constitution, widespread poverty and the grave economic crisis present serious economic barriers to the decentralization of government in Armenia.
Local budgets must be approved by the Councils of Elders in order to take effect. Councils are empowered to make changes in the draft budget submitted by Community Chiefs and Mayors. Article 50 of the Law on Local Self-Government states that the Councils can "check any budgetary action, the quality and effectiveness of works performed, [and] require reports regarding performed expenditures." Community Chiefs must have the consent of the Councils in order to organize staffs, to establish enterprises, to dispose of communal land, to rent or sale communal property, and to engage in other transactions.
Other obligations of the heads of local governments include, but are not limited to, assisting the central government in averting and tackling natural and other calamities and their consequences, facilitating the conduct of the military draft, ensuring the public order, and putting together voter lists ahead of elections. Rural administrations are responsible for the "construction, maintenance and exploitation of local irrigation networks" as well as "facilitating the performance of agricultural work" by farmers.
The 12 districts in Yerevan have even less authority than the heads and legislative bodies of other urban communities throughout Armenia. Unlike the latter, Yerevan district administrations can not sanction street demonstrations and rallies, decide on architectural design or the "pattern of the use of lands" in their respective areas, and name streets or other public sites. These responsibilities, instead, are the prerogative of the appointed Yerevan Mayor.
An area in which local authorities can play a major role is retail trade and services. This role is particularly significant for the city of Yerevan even though Districts in the capital, unlike the other Communities, do not have the power to enact rules for this sector. Informal and formal local government connections are essential for launching and operating a small business. It is no wonder then that many Community leaders, especially in Yerevan, are wealthy and well-connected individuals
Urban Communities may see their already limited powers decline with the upcoming plan for the privatization of public utilities. Armenia's power grid is due to be privatized in the year 2000, and the government has found a foreign operator for the water supplies and sewage network. The national telephone company, ArmenTel, was sold to a Greek firm in 1998. Public transportation is increasingly in private hands. Secondary schools and universities are subordinate to the ROA Ministry of Education, with local governments controlling only kindergartens, "specialized schools," and public libraries and the like. Similarly, most hospitals and policlinics are run by the ROA Ministry of Health. Pensions and other social benefits are paid from a centralized fund which is managed by and accountable to the ROA Ministry of Social Welfare.
Researched and written by Emil Danielyan, Senior Researcher, and Dr. Lucig H. Danielian, Associate Director, the Center for Policy Analysis at the American University of Armenia
November 1999