By Margarita Antidze and Hasmik Mkrtchyan
YEREVAN (Reuters) - Gurgen Badasyan has struggled to live on his Armenian state pension for years and holds out little hope that a parliamentary election on Sunday will improve his life in the mountainous South Caucasus state.
The government raised his monthly teacher's pension in January by a few dollars, to $82 from $75, but Badasyan says it is still almost impossible to get by.
"If not for my son and my daughter, I would not survive," the 68-year-old said, sipping his drink in a cafe in the landlocked former Soviet republic's busy capital, Yerevan.
Like many other Armenians, the most Badasyan is hoping for is a calm election that will reinforce stability in the tiny country of 3.3 million squeezed between Iran and Turkey.
Above all he wants no repeat of the fraud and violence that marred a presidential election in 2008, when eight protesters and two police were killed in clashes.
"My life will be the same after the election, but I don't want to see blood and fighting in the street again," he said.
Isolated and in chaos after the collapse of the Soviet Union, things got so bad in the 1990s that people cut down all the trees in Yerevan to use as firewood. The trees have been replanted but the capital, overlooked by Mount Ararat, is still dominated by Soviet-era apartment blocks on its outskirts, with homes near the centre built of a local pink-grey stone.
Armenia nestles in a region that is emerging as a vital transit route for oil and gas exports from the Caspian Sea to energy-hungry world markets, but has no pipelines of its own.
Instability is a constant threat as Armenia is locked in a dispute with neighboring Azerbaijan over the tiny region of Nagorno-Karabakh, over which they fought a war in the 1990s.
Armenia also has fraught relations with Turkey, in part because Ankara does not recognize as genocide the killing of Armenians in Ottoman Turkey during World War One.
TEST FOR DEMOCRACY
Sunday's election is widely seen as a test of democracy and a potential challenge for President Serzh Sarksyan, the winner of the 2008 election.
The parties involved have made social problems and economic issues the main slogans of an election campaign that has been unusually active for Armenia, Russia's main ally in the region.
Girls and boys have been handing out posters and white balloons to people in the streets of Yerevan, urging them to vote for Sarksyan's Republican Party.
Prosperous Armenia, a party led by wealthy businessman Gagik Tsarukyan that is also in the governing coalition, has posted huge campaign adverts on billboards across much of the country.
Armenia has been gradually recovering from the 2008-09 global economic crisis although the average nominal monthly salary is still under $300.
After a sharp economic contraction of 14.2 percent in 2009, growth was 4.6 percent in 2011 and the International Monetary Fund expects 3.8 percent growth in 2012. Inflation was trimmed to 4.7 percent in 2011.
Opinion polls show the Republican Party and Prosperous Armenia will amass more than 60 percent of the votes between them, signaling little or no change in government.
The policies of the coalition, which currently also includes the Country of Law Party, are unlikely to change.
For the first time in Armenia's post-Soviet history, the election is less of a traditional conflict between the government and opposition than a battle for supremacy between members of the governing coalition.
"What we do see is both a test and an opportunity for the Armenian president and the government, a test of their own credibility and personal honor, and also an opportunity for the Armenian president to move beyond the legacy of March 2008 once and for all," said Richard Giragosian, director of the Regional Studies Centre in Yerevan.
Guillermo Tolosa, the International Monetary Fund's chief representative in Armenia, said: "We don't expect any major shifts in basic macroeconomic policies and regarding relations with us."
A newcomer to the parliament could be the Armenian National Congress, a diverse coalition of radical opposition groups led by former President Levon Ter-Petrosyan, staging a comeback after his defeat in the 2008 presidential election.
(Writing by Margarita Antidze; Editing by Timothy Heritage and Louise Ireland)