Carnegie hosted S. Neil MacFarlane of the University of Oxford, Lincoln Mitchell of Columbia University’s Harriman Institute, and Mark Mullen from Transparency International Georgia to discuss foreign assistance and its effect on South Caucasus. Carnegie’s Thomas Carothers moderated.

An Ambitious Agenda

Over the past twenty years, the South Caucasus has experienced unanticipated independence, economic collapse, and conflicts in Nagorny Karabakh, Abkhazia, and South Ossetia, said MacFarlane. To match the upheaval in this region, he explained that Western foreign assistance has followed an ambitious agenda, with aid aimed at humanitarian aid, political and economic transformation, conflict resolution, and peace building. In fact, Mitchell estimated that the region has received about $7.2 billion in foreign assistance, with around $4.4 billion going to Georgia, $1.9 billion to Armenia, and around $800 million to Azerbaijan.

Positive Developments

Although it would be overly simplistic to draw causal links between Western assistance and development in the region, MacFarlane said, it is important to consider the effectiveness of the aid that has been given.

  • State-building Assistance: Assistance aimed at state-building in South Caucasus can be considered to have been more or less effective, said MacFarlane, since the basis for statehood had been laid in all three countries.
     
  • Humanitarian Assistance: Assistance towards resolving humanitarian crises in the region can also be considered more or less effective, he said. There are still a number of humanitarian concerns in the region, although Mitchell pointed out that the South Caucasus has not experienced recent widespread famines, starvation, AIDS epidemics, terrorism, or large scale wars.
     
  • Economic Assistance: The economy grew in all three South Caucasus countries, said MacFarlane.
    If there had not been such sustained engagement by West, it is possible that the region would have seen three weak or failing states, concluded MacFarlane.

Negative Trends

Georgia, Armenia, and Azerbaijan all continue to suffer from a number of negative trends despite Western assistance, said MacFarlane. He listed a number of the most serious trends:

  • Unemployment and poverty
  • Unresolved conflicts, particularly over the breakaway regions of Abkhazia, South Ossetia, and Nagorny Karabakh
  • Weak rule of law and a lack of true democratic processes
  • Weak freedom of the media
  • Weak free markets
  • Frustrations over the potential for regional integration

Internal Factors

Some of the chief goals of Western aid, such as democracy, transparency, accountability, and conflict resolution, are not attractive to local elites, explained MacFarlane. These elites prefer to use the rhetoric of victimization and external threats to the region to strengthen their positions. As a result, he said, the elites use the power of the state to control resources and discourage challengers and demonstrate a clear disinterest in conflict resolution.   

Aid Recommendations

Based on his extensive experience, Mullen shared several recommendations that could make Western assistance more effective in the South Caucasus:

  • Interaction with the People: In Georgia, the U.S. embassy is currently stationed in a remote location where its officials have little interaction with the local population. Mullen argued that the embassy should move to middle of Tbilisi, or even to Kutaisi.
     
  • Relationship with Local Government: USAID grantees and staff value the relationships they have built with local government officials, but these relationships also allow local officials to influence the orientation of USAID activity, said Mullen.
     
  • Invest More in People and Less in NGOs: Almost all USAID grantees have an office in Washington, D.C., said Mullen. He recommended that donors focus more on partnering with the populations in the region, rather than organizations with presences both in the region and in the United States.
     
  • Importance of Scholarship: Mullen emphasized the enormous benefits that can be repeated from the relatively inexpensive assistance spent on student exchange and scholarship programs.