Sargsyan was appointed Minister of Defence by
Ter-Petrosyan on 26 July 1995, during the restructuring of government ministries. He remained in that position for almost four years. According to
Thomas de Waal, the army was "the most powerful institution" in Armenia under him. Sargsyan is credited with substantially professionalizing the Armenian army. Sargsyan showed strong confidence in the army and stated in 1997 that its strength has doubled in the past two years. In the same year, in response to Azerbaijani President
Heydar Aliyev's statements that Azerbaijan was "ready to solve the Karabakh problem by force," Sargsyan replied, "Let him do it. We are ready." Sargsyan's term as Minister of Defence was marked by cooperation with Russia and
Greece. Sargsyan had "close connections" with the Russian military elite, especially Defense Minister
Pavel Grachev.
A 'power minister': 1995–96 elections headed by Vazgen Sargsyan significantly influenced the outcome of four elections from 1995 to 1999. In the aftermath of the war, which was accompanied by a harsh economic crisis in Armenia, President Ter-Petrosyan became unpopular. His authoritarian rule, the banning of the major opposition party
Armenian Revolutionary Federation in 1994 and the arrest of its leaders, In July 1995, Vazgen Sargsyan helped Ter-Petrosyan's
Pan-Armenian National Movement (PANM) win the
parliamentary election and pass the
constitutional referendum that gave the president more powers in appointing and dismissing key judicial and legislative officials. They were marred with major electoral violations. According to the Caucasian Regional Studies, Sargsyan "turned off the voters" from Ter-Petrosyan and caused "irritation and antipathy" in 28.6% of the people according to a poll. The election, held on 22 September, was largely criticized by observation and monitoring organizations, that found "serious violations of the election law". were denounced by opposition candidate
Vazgen Manukyan who had officially received 41% of the vote. Manukyan began demonstrations claiming electoral fraud by Ter-Petrosyan's supporters. The protests culminated on 25 September, when Manukyan led thousands of his supporters to the parliament building on
Baghramyan Avenue, where the Electoral Commission was located at the time. Later during the day, the protesters broke the fence surrounding the parliament and entered the building. They beat up the parliament speaker
Babken Ararktsyan and vice-speaker Ara Sahakyan. In response, Vazgen Sargsyan stated that "even if they [the opposition] win 100 percent of the votes, neither the Army nor the National Security and Interior Ministry would recognize such political leaders." He was later criticized by human rights organizations for this statement. State security forces, tanks and troops were deployed in Yerevan to restore order and to enforce the ban on rallies and demonstrations on 26 September. Sargsyan and National Security Minister Serzh Sargsyan announced that their respective agencies had prevented an attempted coup d'état. According to Astourian, in the crackdown Vazgen Sargsyan "intervened with an armed detachment and ordered the soldiers and the police to shoot at the legs of the demonstrators. Sargsian himself actually participated in the shooting." According to
Freedom House, Sargsyan was allegedly involved in beating and seriously injuring
Ruben (Rubik) Hakobyan, an MP from the
Armenian Revolutionary Federation (ARF), after he was arrested during the demonstrations.
Leadership split: Ter-Petrosyan's resignation In 1997, the
OSCE Minsk Group, co-chaired by Russia, the United States and France, pressured Armenia and Azerbaijan to agree on the final status of Nagorno-Karabakh. In September, Ter-Petrosyan stated his support of the "step-by-step" proposal, which included the return of the territories outside the NKAO borders. Ter-Petrosyan argued the normalization of relations with Azerbaijan and, therefore, the opening of the border with Turkey was the only way to significantly improve Armenia's economy. After the plan was publicized, he came up against strong opposition. The issue was "important to the Armenians because of historical and psychological factors. After having been losing territories for centuries, the Armenians are reluctant to 'lose' Karabakh now that they have won a war against Azerbaijan." The Nagorno-Karabakh Republic leadership, the Armenian intelligentsia and the
diaspora, the opposition also expressed their opposition to the president’'s support for the proposed settlement plan. Vazgen Sargsyan, who quickly denounced the proposal, became the
de facto leader of the opposing group within the government. They argued that "Armenia should try to improve its economic performance," while Ter-Petrosyan insisted that Armenia "could only achieve marginal improvements insufficient to address the fear of relative decline and economic exclusion". On 21 October 1997, ten members of the Republic bloc in the parliament left the faction and shifted their support to Vazgen Sargsyan. Ter-Petrosyan's bloc in the parliament was left with a majority of two seats. Despite the great public and political opposition, the Pan-Armenian National Movement voted in favor of Ter-Petrosyan's foreign policy. to resign in 1998. During the National Security Council meeting on 7–8 January 1998 it became clear that Ter-Petrosyan did not have enough support to continue his reign as president. On 23 January 1998, during the peak of the crisis, Vazgen Sargsyan declared his unconditional support to Robert Kocharyan, and blamed the Pan-Armenian National Movement for trying to destabilize Armenia. Sargsyan also guaranteed that the Armenian army "will not intervene in the political struggle". Ter-Petrosyan announced his resignation on 3 February 1998. According to Michael P. Croissant, it was Vazgen Sargsyan who "played ultimately the principal role in inducting the president's resignation". In his resignation statement, Ter-Petrosyan referred to Vazgen Sargsyan, Robert Kocharyan and Serzh Sargsyan as "the well known body of power". He cited the threat of destabilization of the country as the reason of his resignation. Ter-Petrosyan's resignation was followed by the resignation of National Assembly speaker
Babken Ararktsyan, his two deputies, Mayor of Yerevan
Vano Siradeghyan, Foreign Affairs Minister
Alexander Arzoumanian and others. A significant change occurred in the National Assembly. Dozens of members of the parliamentary faction called the Republican Bloc (mostly made up of Ter-Petrosyan's Pan-Armenian National Movement) joined Vazgen Sargsyan's Yerkrapah bloc, making it the largest parliamentary bloc, with 69 members compared to only 56 for the Republic. After Ter-Petrosyan's resignation, Prime Minister Kocharyan became acting president. Almost a year after Ter-Petrosyan's resignation, Vazgen Sargsyan stated at the Republican Party convention that he "respects and appreciates" Ter-Petrosyan and described him as a "wise and a moral man and politician". Sargsyan insisted that the question of "political responsibility" was the main reason behind his resignation, and stated that if Ter-Petrosyan had decided not to resign, "no one could have removed him" and that Sargsyan would have resigned as defence minister instead. Commenting on the circumstances of his resignation in 2021, Ter-Petrosyan insisted that Vazgen Sargsyan and Kocharyan were "ready for civil war" if he did not resign.
1998 election: Kocharyan as president was elected president in 1998. Sargsyan (along with Interior Minister Serzh Sargsyan) openly supported
Kocharyan and used his influence for his
election in March. He called Kocharyan a "man of unity of word and action" and stated that his experience in Karabakh and Armenia "shows that he is capable of solving economic problems also". No candidate gained more than half of the votes in the first round, while in the second round of the election, held on 30 March, Kocharyan won 58.9% of the vote. The
British Helsinki Human Rights Group suggests that "ordinary Armenians turned to Robert Kocharian as someone untainted by mafia connections and the intrigues of Yerevan politics." The OSCE observation mission described the first round as "deeply flawed," while their final report stated that the mission found "serious flaws" and that the election did not meet the OSCE standards. Although Demirchyan didn't officially dispute the election results, he never accepted them and did not congratulate Kocharyan. After the election, however, Sargsyan suggested Kocharyan appoint Demirchyan prime minister to decrease the tensions in the political scene. Even after becoming president, Kocharyan did not have any significant institutional support (e.g. a party, control of the army, a source of money) and remained "in a fundamental sense an outsider in Yerevan". Kocharyan had a more tough position on the Karabakh settlement issue than Ter-Petrosyan. He also urged the international community to recognize the
Armenian genocide, something on which his predecessor did not place importance. In response, Turkey and Azerbaijan tightened their cooperation in isolating Armenia from regional projects. Kocharyan did not put pressure on the Nagorno-Karabakh leadership to concede territory to Azerbaijan. He was supported by the
Armenian Revolutionary Federation, which was allowed to actively operate after Ter-Petrosyan's resignation a month before the election. ==Rise in power==