The Third Republic and the Construction of an Independent Armenian State

69. Levon Ter-Petrosyan and the First Presidency

On October 16, 1991, Levon Ter-Petrosyan was elected president of the newly independent Republic of Armenia.

His presidency began under extraordinarily difficult circumstances.

The government inherited Soviet administrative structures but had to transform them into institutions capable of governing a sovereign country.

Armenia faced severe economic disruption, energy shortages, the continuing effects of the 1988 earthquake, and an escalating conflict over Nagorno-Karabakh.

Ter-Petrosyan's government pursued international recognition, economic reforms, state institution-building, and the development of independent foreign relations.

The early years of the Third Republic were dominated by the need to establish basic state functions while managing war and economic collapse.

70. International Recognition of Armenia

The international recognition of Armenia was essential to consolidating its independence.

The United States recognized Armenian independence on December 25, 1991, and established diplomatic relations on the same day.

The United States opened its embassy in Yerevan in February 1992.

Other countries established diplomatic relations as Armenia entered the international community.

On March 2, 1992, Armenia became a member of the United Nations.

Membership in the United Nations represented a decisive milestone in Armenia's recognition as a sovereign state.

It provided a framework for participation in international diplomacy, multilateral organizations, and the development of treaty relationships.

Armenia subsequently joined major international institutions, including the International Monetary Fund, the World Bank, the Organization for Security and Co-operation in Europe, and the Council of Europe.

These relationships helped integrate the new republic into the international political and economic system.

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71. The Creation of the Armenian Armed Forces

An independent state required armed forces under national command.

Armenia began developing its own military structures during the final years of Soviet rule and the early period of independence.

January 28, 1992, is commemorated as the founding date of the Armenian Armed Forces.

The new military drew upon former Soviet officers, Armenian volunteer formations, and personnel involved in regional defense.

The armed forces were immediately confronted by the escalating Nagorno-Karabakh conflict.

The creation of a national military became one of the most important institutional developments of the early republic.

72. Economic Collapse and the Transition to a Market Economy

Armenia's transition from a centrally planned Soviet economy to an independent market economy was extremely difficult.

During the Soviet period, Armenian factories depended heavily on raw materials, energy, transportation networks, and markets distributed across the USSR.

The collapse of the Soviet Union disrupted these relationships.

Industrial production fell sharply.

Unemployment increased.

Inflation eroded savings.

Energy shortages forced factories to close and left households struggling to heat their homes.

Transport restrictions and the closure of borders with Turkey and Azerbaijan further constrained the economy.

The government introduced privatization and market reforms, but these changes were accompanied by social hardship and the emergence of substantial economic inequality.

The economic crisis contributed to significant emigration.

Many Armenians left the country seeking employment and greater stability abroad.

73. The Introduction of the Armenian Dram

On November 22, 1993, Armenia introduced its national currency, the dram.

The introduction of the dram was a major expression of monetary sovereignty.

It allowed Armenia to establish its own currency system and develop independent monetary policy through the Central Bank.

However, the transition occurred during a period of severe inflation and economic instability.

The government and central bank faced the difficult task of stabilizing the currency while supporting a deeply weakened economy.

The dram became an enduring symbol of Armenia's economic independence.