TOPIC OF THE WEEK: Local ballot, national message—what Vagharshapat says about Armenia's 2026 Parliamentary Elections
This week I complete my trilogy on the political and geopolitical backdrop in the South Caucasus by looking at the results from the important local elections in Armenia's Vagharshapat (the 5th largest city in the country). I use the results to test my early-month theory (and projection) about how the key Parliamentary vote in Armenia will turn out next year.
In the event, the outcome was neither a rout for the opposition, nor a landslide for the authorities. The plurality win for Pashinyan's Civil Contract was significantly facilitated by selective gerrymandering and administrative pressure, and the margin of victory was worse than the previous 2021 vote. The election was not a "triumph of democracy" as the PM dubbed it, and the trick of administratively redrawing electoral districts will not work in the 2026 parliamentary elections. The real threat to Civil Contract is not some mythical “apocalypse,” to quote the PM again, but the potential consolidation of the opposition, a task that has not yet been accomplished.
Vagharshapat confirmed that the ruling party is bleeding support, but not at a pace that would hand victory to the opposition. This suggests the current balance is likely to persist: my baseline for the national vote next year remains a slim plurality for the incumbent against a fractured opposition field. Alternative paths are still on the table, as discussed in my earlier report, but the Vagharshapat results strengthen my confidence in the baseline scenario.
If the 2026 election results come in similar to those in Vagharshapat, markets should be reasonably content. Investors would see continuity and macro stability, although not the reform push needed for a real FDI breakthrough. In this scenario, Civil Contract wins a plurality, faces a splintered opposition and has to engage in coalition talks. Its current super-majority in parliament would be gone, forcing Pashinyan to reckon more seriously with critics of his “peace through concessions” line. Still, Western partners would stay engaged, with grants and loans flowing, keeping spreads in check and the dram supported. The peace track with Azerbaijan would plod ahead without major shocks, and TRIPP would likely come on stream within 2–3 years as Armenia builds out the necessary logistics. The trade-off is slower delivery on structural reforms—courts, SOEs, competition policy—where coalition politics would drag out decisions. Some protests would linger in the background, but they would be noise rather than a threat to government stability.
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