Armenia’s domestic political situation has changed since 2008. Many of the previous challenges are now either resolved, or are less acute. In 2008, many supporters of former President Levon Ter-Petrosian, who was then Sargsyan’s main rival, were in jail. These prisoners are now released and many of them participated in the parliamentary elections of May 6, 2012, and established the HAK faction in the National Assembly. Although the HAK faction declares the removal of Sargsyan to be a principal goal, the problem of the tragic events of March 1, 2008, when ten people were killed, is not as acute as it was previously.

The latest elections in Armenia have been conducted in an orderly fashion, despite minor technical problems. This was especially evident after the Yerevan municipal elections on May 5, 2013, when the results were recalculated in more than one third of electoral constituencies at the request of opposition parties. Thus, the elections have been competitive and previous problems such as vote buying and ballot-stuffing did not play a significant role. This is an important change since Armenia’s elections since the mid-1990s have been accompanied by opposition complaints of election fraud. It also demonstrates that Sargsyan enjoys solid political support in Armenia, as his Republican Party (RP) alone holds 69 seats in 131-seat Parliament.

The Prosperous Armenia party (PAP), formerly a coalition partner of Sargsyan’s RP, did not fulfill the agreement signed on February 17, 2011, according to which the three coalition parties would support Sargsyan in the 2013 presidential elections. While this did not prevented Sargsyan from winning, it opened the possibility of PAP becoming an independent player. As for the parties currently considering themselves to be in opposition, they are very weak.

In parallel, the government under Prime Minister Tigran Sargsyan was reappointed almost without changes.

The problems Sargsyan faces in 2013-2018 are generally not new to Armenia, although certain specific political challenges may emerge, including the possibility that the HAK party could force the RP to investigate the events of March 1, 2008. In addition, PAP and the Country of Law party, which remains in coalition with RP, could separate from RP and become individual players. This is despite the fact that PAP terms itself an “alternative” party rather than opposition. Also, splits could emerge within the RP itself.

Economic challenges are numerous and are mostly addressed in a program recently presented by the government to the parliament, whose tasks largely echo the previous program approved by the National Assembly last June. Yet, the new document has more specific features, including an estimated growth of annual GDP by 5-7 percent, and a target of 7 percent growth for 2013. This is a very high estimation value compared to most Western countries.

In addition, poverty will be reduced by 8-10 percentage points in response to a corresponding increase in 2009 due to the global economic crisis; a new block will be built for Armenia’s nuclear power plant, a project that is far behind schedule due to the incident of March 2012 in Fukushima, Japan. Armenia still has ambitions to become a regional energy hub. Also, Armenia will soon issue its first Eurobonds, and will implement a cumulative pension system next year.

Armenia also faces a set of external challenges, most of which have existed since Armenia’s independence. Nagorno-Karabakh remains a constant source of tension between Armenia and neighboring Azerbaijan, which considers Armenia itself, not the region of Nagorno-Karabakh, to be its main opponent. Armenia maintains that the status of Nagorno-Karabakh must be determined by negotiations under the auspices of the Minsk Group and no breakthrough is foreseen to this problem in the near future.

Armenia also needs to balance the interests of Russia, Armenia’s political and military ally, and of Western partners. In particular, Armenia is a relatively successful member of the EU Eastern Partnership initiative. Armenia has so far managed to accommodate the expectations of these partners, but their interests could be subject to change. Turkey keeps its border with Armenia closed in solidarity with Azerbaijan and no changes are expected on this issue until 2015, marking the highly sensitive hundredth anniversary of the Armenian genocide in the Ottoman Empire.

More recent issues problems include the civil war in Syria, where Armenia may have to address the interests of Armenians residing in the country, and future relations with Iran in the aftermath of its June 14 presidential election.

Armenia thus faces a broad range of issues during Sargsyan’s second term as president in 2013-2018, most of which are beyond Yerevan’s control. Hence, the small country may face a difficult period in the years ahead.