The South Caucasus 20 Years After Independence

Carnegie’s Jessica Matthews and Thomas de Waal and Anthony Richter from the Open Society Foundation opened the conference. De Waal stressed that the conference would aim to leave discussions of geopolitics aside and take a closer look at states, societies, and state building in the South Caucasus. Armenia, Azerbaijan, and Georgia are no longer countries “in transition” or “geopolitical pawns” under the influence of great powers, he argued, but functioning, sovereign states. “It’s time to treat these countries as grown-ups,” he concluded.

Hans Gutbrod from the Tbilisi-based Caucasus Research Resource Center presented the results of surveys taken across the South Caucasus in 2010. These “Caucasus Barometer” surveys gauged public opinion in each country on issues such as state and society relationships, economic developments, and engagement with the outside world.

Results By Country

• Armenia: Many Armenians today believe there are few opportunities to obtain employment, receive an education, and enjoy a good standard of living, said Gutbrod. Nearly one third of Armenians expressed a desire to emigrate permanently. Public trust in the military and the Armenian Orthodox Church remains high, he noted, whereas trust in the president, state institutions, and judiciary is low. More than 70 percent of Armenian citizens believe that the government treats them unfairly, he added.


• Azerbaijan: In contrast to Armenia, public trust in religious institutions is relatively low while trust in the president and military is high. Despite widespread endorsement of the president, however, only 37 percent of Azerbaijanis believe that their country is heading in the right direction, Gutbrod noted. Corruption remains a significant problem – 30 percent of respondents admitted that they or a family member had recently paid a bribe.


• Georgia: In Georgia, interaction between state and society is more seen as a contractual relationship where the government acts as an “employee” that serves citizens’ needs, noted Gutbrod. There is widespread unhappiness with levels of unemployment and poverty. But 55 percent of Georgians are optimistic about their children’s prospects for a better life in the coming decades. The vast majority of Georgians believe that their country will eventually become a true democracy, he concluded.  

Regional and Global Perspectives

• Similarities: In all three countries, the middle class is small and poverty and unemployment remain very serious problems, Gutbrod said, leading to continued widespread emigration. Social networks, loans, and remittances play an important economic role in all three countries. Across the South Caucasus, citizens remain politically inactive, rarely mobilizing to solve local problems or engage their governments. Indeed, in Armenia and Azerbaijan, most citizens believe that the interaction between the government and general public resembles a “parental” or extractive relationship, he added.


• Self-Perceptions: According the survey results, a majority of Armenians, Azerbaijanis, and Georgians believe that their countries generally have a positive image abroad. At the same time, Gutbrod noted that Azerbaijanis are the least confident that the outside world knows about Azerbaijan.


• South Caucasus and the World: Despite the controversial 2008 Russia-Georgia war, most Georgians approve of doing business with Russians as much as they do with Americans. Georgians also value doing business with Abkhaz and South Ossetians – the main ethnic groups in the two regions that tried to secede from Georgia in the 1990s – more than they do with Armenia. Armenians overwhelmingly approve of maintaining business ties with Russia and the United States, while Azerbaijan favors trade with Turkey. In regards to strategic alliances, there is substantial popular support for NATO membership in all three countries, especially in Georgia where public approval is 70 percent, Gutbrod concluded.
   

Carnegie hosted a panel of Armenian non-governmental experts who discussed the democratic backsliding, economic challenges, and foreign policy issues that have characterized the past twenty years of independence. The Honorable John Evans, former U.S. ambassador to Armenia, moderated the discussion.

Politics and Poor Governance

• Centralized Power: Since the mid-1990s, the Armenian government has consolidated power and exhibited more authoritarian tendencies, noted Yerevan-based journalist Emil Danielyan. He explained that the president exerts complete control over all branches of government. Moreover, there is no independent media coverage of domestic politics because “broadcasting media is under the control of the presidential office,” noted Levon Barseghyan from the Asparez Journalist’s Club. However, Danielyan added, Armenia is neither a dictatorship nor an authoritarian regime because the opposition and civil society have a voice.


• Electoral Fraud: Panelists said that a series of flawed elections had created a democracy deficit in the country. Since 1999, roughly 25-30 percent of votes in parliamentary and presidential elections have been purchased by government proxies and oligarchs, asserted Barseghyan. Over the past 12 years, there have been major violations in electoral processing and miscalculations of votes at polling stations, he added. “Armenia is not a democracy for the simple reason that we do not have elections that are widely recognized as free and fair,” concluded Danielyan.


• Crisis of Legitimacy: The Armenian government suffers from a lack of legitimacy, argued Danielyan. This absence of legitimacy “not only fuels popular cynicism and apathy but also undermines civil society and weakens Armenia’s independent statehood,” he said. It also makes it more difficult to address issues such as corruption, social injustice, and weak rule of law.


• Rule of Law: Courtrooms are well furnished and judges are well paid, but “there is no justice in the courts, unfortunately,” asserted Barseghyan. “The rule of law has become the law of the ruler,” argued Richard Giragosian from the Yerevan-based Regional Studies Center.

Looking Back and Moving Forward

• Lost Opportunities: Giragosian characterized the past twenty years of independence as a period of “lessons lost” rather than lessons learned. The major threat to Armenian security is “continued isolation and insignificance,” he argued. Indeed, as Alexander Iskandaryan from the Yerevan-based Caucasus Institute pointed out, Armenia has only two real neighbors: Georgia and Iran.


• Economy: Armenia’s isolation, lack of natural resources, and small market tend to deter foreign investors, noted Iskandaryan. Nevertheless, the European Union is Armenia’s most important trading partner. Armenia’s weak economy is a result of what Giragosian referred to as “conflict economics” during the 1990s that fostered the rise of “commodity-based cartels” and the creation of a “closed economic system” largely dependent on remittances from Russia. In order to stimulate economic growth and create a true middle class, politics and business must be separated, Iskandaryan argued.


• The Shadow of Karabakh: The unresolved conflict with Azerbaijan over Nagorny Karabakh acts as “a driver and determinant” of Armenia’s political system and contributes to an “increasingly narrow political discourse” that favors militancy over moderation, argued Giragosian. However, Karabakh Armenian elites who have dominated Armenian political life for over a decade are “the last of the Mohicans” and nearing the end of their reign, he added. Although outright war ended in 1994, Armenia effectively remains “in a de facto state of cold war with Azerbaijan,” noted Iskandaryan.


• Foreign Policy: Armenia pursues a balanced foreign policy such that “Russia thinks Armenia is pro-Western and the West thinks that Armenia is pro-Russian," said Iskandaryan. The main priority is meaningful engagement with Turkey and Russia, explained Giragosian. He argued that rapprochement between Armenia and Turkey has the potential to transform the South Caucasus in a positive way. Armenia’s current strategy, he added, is to “sustain the momentum in Armenian-Turkish diplomacy on a Track II level.” He suggested that Yerevan should also reevaluate its asymmetrical relationship with Moscow and start to demand more from its Russian ally.
   

Eric Rubin, deputy assistant secretary in the Bureau of European and Eurasian Affairs at the U.S. Department of State, discussed the history of U.S. engagement with the South Caucasus and its continued commitment to the region.

A Changing Landscape

• Change Since the Soviet Union: The region is a “different landscape” from 20 years ago, marked by active engagement with the international community, economic development, and independence, reflected Rubin.
   
• Foreign Investment: Improving business climate and cracking down on corruption are critical to attracting foreign investment in the region, stated Rubin.
   
• High Level of Engagement: Considering the size of the countries in the South Caucasus, the U.S. level of engagement in the region is very high, stated Rubin. He described the region as a “very, very major priority” for Washington.

U.S. Engagement

• Georgia: The United States is eager to see a decrease in tensions between Russia and Georgia. Rubin stated that Georgia’s recent agreement to stop blocking Russian membership to the World Trade Organization was good news “for first time in three years.”
   
• Azerbaijan: “We have frank dialogue with government of Azerbaijan on human rights issues,” said Rubin.
   
• Armenia: Armenia will hold parliamentary elections in May 2012. Rubin explained that the elections process is at “the front of our dialogue and top of our list when we meet Armenian officials.”
   
• Armenia and Turkey: The United States has invested heavily in helping Armenia and Turkey strengthen their relationship. Rubin warned that “outbursts of rhetoric on both sides not helpful.” He said that he was hopeful that “once the door is open a crack,” rapid progress can be made in normalizing relations between the two countries.

Carnegie hosted Shahin Abbasov, a Baku based journalist, Leila Alieva, founder of the Center for National and International Studies in Baku, Tabib Huseynov, a political analyst from Baku, and Elnur Soltanov of the Azerbaijan Diplomatic Academy in Baku for a discussion of the situation in Azerbaijan twenty years after independence. The Honorable Richard D. Kauzlarich, former U.S. ambassador to Azerbaijan, moderated.

Media and Freedom of Speech

Abbasov discussed the development of media processes and freedom of speech in Azerbaijan since independence.

• The Golden Age (1991-1993): During the rule of Presidents Mutallibov and Elchibey, there were favorable conditions for the flourishing of independent media, said Abbasov.


• The Early Rule of Heydar Aliev (1993-1998): After Heydar Aliev came to power, violence and repression was used to silence both the media and civil society. However, Abbasov added, the market economy meant there was space for advertising and some room for media development.


• Since 1998: The authorities brought the advertising market under control and created financial obstacles to deprive free media sources of economic means, Abbasov said. The oil boom helped the government monopolize the economy and begin to invest heavily into controlled media. Now, 100 percent of broadcasting media and 90 percent of the newspaper segment is directly or indirectly controlled by the government or representatives of the ruling elite, said Abbasov. 

Patterns of development

• Successes: Since independence Azerbaijan had “successfully consolidated its independence” and oriented itself towards the West by gaining a valuable role in the energy security of Europe and the United States, Alieva said, arguing that the country had “reshaped Eurasia” and “outgrew its national significance.”


• Effects of a Resource Curse: However, there is a growing disconnect between the population and state as the country suffers from an increasing “resource curse,” with more than two thirds of the state budget coming from oil and gas revenues and a much smaller portion from taxes. The result, she argued, is that “we do not have a functioning market economy” and the ruling elite has a monopoly on both politics and economics.


• Periods of Oil Boom: Alieva contrasted the current oil boom with that of the late 19th century, arguing that the previous boom had been positive for Azerbaijan while this one had hurt the country as the government had concentrated the oil industry in state hands, undermined an independent judiciary, and flouted property rights.


• Struggle Between Elite and Civil Society: In modern-day Azerbaijan, she argued, “political patronage is the glue of the system” and “corruption is the compensating mechanism for lack of legitimacy.


• Civil Society: There is an unequal struggle between a system of well-funded political patronage and a weak and under-funded civil society. Although the “rent-seeking mentality” has spread throughout society and there was no recognizable income-earning middle class in Azerbaijan, Alieva said “there is always resistance” and politically active civil society is finding new ways of expressing itself through new technologies and with the limited support of Western donors.

Lessons Learned 

Huseynov shared lessons which the Azerbaijani public and elites have drawn from the upheavals of the past 20 years:

• Failed State (1991-1995): The conflict over Nagorny Karabakh and the economic collapse made Azerbaijan a failed state. From that era, Azerbaijanis learned the importance of having a strong leader and a strong central power. They saw that domestic political instability was associated with territorial losses and the importance of using a civic identity, rather than an ethno-nationalist identity, as a basis for state-building.


• Stabilization of the Autocratic System Period (1995-2005): During this period, President Heydar Aliev began to cultivate a personality cult and an “image of political indispensability” to enable him to exercise political control. He got rid of potential challengers and built up strong patronage networks.


• Consolidation of the Statist Model (since 2005): Since 2005, GDP rose threefold and the budget increased by twenty times as a result of the oil boom. The Azerbaijani government exercised increasing control over society with the only effective opposition now being within the elite, said Huseynov.


• Today’s Challenges: Huseynov identified four challenges facing modern-day Azerbaijan: choosing between a European model of development or that of a Middle-Eastern-type autocracy, with the risk of facing a “non-traditional” Islamist opposition; diversifying the economy, before oil reserves are depleted in around 2024; preserving a balanced foreign policy, which does not merely react to events; and finding a way to resolve the conflict over Nagorny Karabakh peacefully.

Prioritizing Competing and Indispensable Goals 

• Pursuing Incompatible Goals Simultaneously: The Elchibey government tried to pursue the consolidation of Azerbaijani sovereignty and resolution of the Nagorno-Karabakh conflict simultaneously, Soltanov explained. Ultimately, however, these goals were incompatible and the government was unsuccessful.


• Lesson Learned: The succeeding Heydar Aliev government created more stability in the country by prioritizing Azerbaijani sovereignty and only later turning its attention to the Nagorny Karabakh conflict, said Soltanov. 

Since its turbulent early years of independence, Georgia has made progress in state-building reforms, but it has yet to fully develop into a true democracy. Carnegie hosted several Georgian non-governmental experts to discuss two decades of state building, current democratization challenges, and prospects for the future. The Honorable Kenneth S. Yalowitz, former U.S. ambassador to Georgia, moderated.

Georgia’s Political Evolution

Ivlian Haindrava from the Tbilisi-based Republican Institute divided twenty years of independence into three periods.

• Independence and Chaos (Early 1990s): The first years of Georgia’s independence under Zviad Gamsakhurdia, until he was overthrown, and then under Eduard Shevardnadze were highly unstable due to wars in Abkhazia and South Ossetia, inter-Georgian conflict, constitutional revisions, and hyperinflation, Haindrava said.


• Stability and Stagnation (1995-2003): Despite early reforms, the creation of a national currency, and the emergence of free media in the mid-1990s, President Shevardnadze did little to combat corruption and develop Georgia during the latter years of his administration. Due to his unwillingness to reform, Shevardnadze effectively turned Georgia into a “shadow state” during his tenure, Haindrava argued.


• Authoritarian Modernization? (2004 - 2011): Haindrava described the Saakashvili era as a period of “lost opportunities” in which the government has adopted the policy of “modernization first, democracy later.” Saakashvili’s regime is more concerned with maintaining appearances than actually strengthening democracy, pluralism, freedom of speech, and government accountability, he concluded.

From Failed State to “Consolidated Nation” 

• A Difficult Transition: Even before the collapse of the Soviet Union, Georgia was a war-torn failed state, argued Ghia Nodia from Ilia State University in Tbilisi. Although Georgia slowly recovered during the 1990s, it remained a weak state until after the 2003 Rose Revolution, he added. Today, however, Georgia is a “consolidated nation” and a functional state that “provides public goods to its citizens.”


• Room for Improvement: Despite impressive recovery under successive administrations, Georgia has not yet completed the process of democratization. Managing pluralism, restoring popular trust in the electoral system, and supporting collective action are some of the key remaining challenges, argued Nodia. Saakashvili’s regime has introduced significant reforms while simultaneously consolidating power and ignoring human rights, added Shorena Shaverdashvili from Liberali magazine.
   

Carnegie hosted Yerevan journalist Emil Danielyan, Yerevan legal expert Davit Khachaturyan, Baku legal expert Erkin Gadirli, Hikmet Hadjy-zadeh, president of the Far Centre for Economic and Political Research in Baku, and Giorgi Gogia, senior researcher for Human Rights Watch in Tbilisi, to discuss the human rights situation in Azerbaijan, Armenia, and Georgia. Anthony Richter of Open Society Institute moderated.

Problems with a Free Press in Armenia

• Broadcast Media: Since the closure of the A1+ television station in 2002, the government strongly controls the broadcast media, the major source of information for most of the population. The only exception is the Gala television station in Armenia’s second city, Gyumri.
   
• Print Media: Of the ten daily newspapers in Yerevan, only two or three can be characterized as pro-government, Danielyan said. This situation is tolerated by the government because print media has low circulations, Danielyan explained, although the government is still using libel suits and financial penalties against this media.
   
• Online Media: the burgeoning online media, with dozens of news websites, is the most promising development for free media in Armenia, Danielyan said. The increasing availability of video content is slowly diminishing the importance of broadcast media, said Danielyan.

Human Rights in Armenia

• Legal Foundation: Upon gaining independence, Armenia joined the United Nations in 1993, and adopted a constitution which guaranteed human rights in 1995, said Khachaturyan. Habeas corpus rights and presumption of innocence were recognized by law. In 2001, Armenia joined Council of Europe and recognized the mandatory jurisdiction of European Court of Human Rights.
   
• Danger of Excuses: Several excuses are used to justify the violations of human rights in Armenia, such as:
  
  
  • Armenia inherited legal nihilism from Soviet Union.
     
  • Armenia is currently in “transition.” Khachaturyan countered this by asserting that “nothing is more permanent in the world than transition.”
     
  • Security and stability must take priority over human rights.
     
• Decreased Role of Judiciary: Violations of human rights have diminished public trust in the rule of law, resulting in a decreased role of the judiciary, said Khachaturyan. 

Human Rights in post-Rose Revolution Georgia 

Following the Georgian Rose Revolution in 2003, the country’s judiciary, prisons, and police underwent dramatic changes and restructuring, a process that Gogia explained is still far from over.

• Judiciary: Although the judiciary underwent some very dramatic reforms, Gogia said much remains to be done. There is still only a 0.01 percent acquittal rate in the country, indicating that rule of law remains incomplete.
   
• Prisons: the prison population has increased four to five times over the recent years, said Gogia. This development reflects the government’s zero tolerance policy and the marginalization of dissenting opinion in Georgia, he added.
   
• Police: Most alarmingly, the government is increasingly relying on a new police force it created after the Rose Revolution, Gogia said. There is general reluctance to prosecute abuses of power by the police, which limits the accountability of the police force. The police have a perception that they serve the government, not the people, asserted Gogia.
   
• State Building Versus Human Rights: As with other South Caucasus countries, the Georgian government tends to create a false dichotomy between state-building and human rights, argued Gogia. They do not acknowledge that state-building projects cannot be completed without a strong foundation of rule of law and human rights, he added.

Human Rights in Azerbaijan

• System-Wide Assessment: Azerbaijan has an overwhelmingly powerful president whose authority is not balanced by a strong parliament or judiciary, explained Gadirli. Trade unions have no power. He characterized the system as one in which “people pay bribes in order to get what they are legally entitled to” and in which well-educated people are forced to be in a situation of “skilled incompetence.” In this context, Gadirli said, Western governments should “stop pushing for cosmetic reforms” which often did more harm than good, as they discredited institutions, such as the ombudsman’s office, which had no real powers.
   
• Alarming Human Rights Violations: In his overview of the human rights situation in Azerbaijan since independence, Hadjy-zadeh said that each year Azerbaijan imprisons 40-50 political prisoners, despite pressure from Europe. Other human rights violations in Azerbaijan include physical violence against journalists, censorship of the press, and the forcible eviction of 60,000 Azerbaijani citizens without proper compensation.

Armenia, Azerbaijan, and Georgia weathered the political and economic turbulence of the early 1990s but have yet to develop fully functional market economies. Carnegie hosted several experts from the South Caucasus to discuss economic trends and long-term prospects for economic development in each country. Clifford G. Gaddy from the Brookings Institution moderated the discussion.

Armenia

David Grigorian from Policy Forum Armenia outlined three stages of Armenia’s economic development since independence:

• Post-Transition Progress: In the mid-1990s, following an initial crisis period in which the country suffered from a devastating earthquake (1988) and war with Azerbaijan (1991-1994), Armenia experienced remarkable economic growth. At the same time, however, “the seeds of authoritarian governance were sown” as former military generals began to participate in fraudulent elections, Grigorian noted.


• Qualitative Stagnation: Despite double-digit growth from 2000-2007, concentrated mostly in the construction sector, Armenia failed to diversify its economy, he said. Government spending on health and education remained low while “large oligarchic clans” gained more influence over Armenia’s economy.


• Hopeless Stagnation: As of 2008, Armenia’s economy and political sphere remain intertwined, he noted. The absence of a developmental agenda and the presence of corruption and weak property rights continue to stunt growth. On a more positive note, he highlighted the potential of Armenia’s human capital but stressed that “Armenia needs to depoliticize its economic decision-making.”

Azerbaijan

Ingilab Ahmadov, an economist at the Public Finance Monitoring Center in Baku, discussed the strengths and weaknesses of Azerbaijan’s resource-based economy:

• Regional Leader: Due to its oil and natural gas reserves, Azerbaijan has the strongest economy in the South Caucasus. Its gross domestic product (GDP) far exceeds that of Armenia and Georgia and accounted for 74 percent of regional GDP in 2010. Baku has also attracted high levels of foreign investment and has successfully integrated Azerbaijan’s economy into global markets.


• Resource Dependency: Although Azerbaijan has enough energy resources to last until 2025, its economy lacks innovation and competitiveness. Economic stability is contingent upon available reserves of oil and natural gas. As a result, Azerbaijan’s economy “is not self-sufficient,” he concluded.


• Other Challenges: Ahmadov questioned whether Azerbaijan was a true market economy since it has yet to join the World Trade Organization. He noted that business, politics, and bureaucracy are all inextricably linked. Azerbaijan’s economy still suffers from widespread corruption, unemployment, and the loss of Soviet industry, he said.

Georgia

Vladimer Papava from the Georgian Foundation for Strategic and International Studies and Dr. Mamuka Tsereteli from American University examined some of the key economic challenges facing Georgia and the South Caucasus in general. 

• Russia’s Impact: Despite the destruction wrought by the August 2008 war with Russia, Georgia has benefitted tremendously from an influx of international financial assistance, a phenomenon that Papava referred to as a “paradox of war.” Today, he added, Russia still controls much of Georgia’s electricity sector despite a downturn in diplomatic relations. 


• Economic Myths: Papava dispelled several popular myths about Georgia’s economy, explaining that Georgia has had economic relations with Russia even after the 2008 war and challenging the assumption that Georgia is fully oriented towards Europe. Despite Georgia’s impressive reform record, he added that neo-liberal reforms are not a distinct feature of Georgia’s economy and argued that “elite corruption” in the form of high-level monopolies still remains a serious issue.


• Lingering Challenges: Despite reforms implemented after the 2003 Rose Revolution, Georgia still faces major challenges, especially very high unemployment, noted Tsereteli. In Georgia and throughout the region, he added, governments remain wary of free entrepreneurship and treat businesses as sources of revenue, which inhibits economic growth. From a regional perspective, the unresolved conflict over Nagorny Karabakh remains the key obstacle to creating an open economic space in the South Caucasus, he concluded.


• Possible Trajectories: According to Papava, Georgia has three potential developmental paths: rapprochement with the European Union; “Singaporization” of the economy; or incorporation into Russia’s “liberal empire,” but it is not following any of these paths in a coherent fashion.
   

It is a great honor to address this learned audience that includes so many friends and acquaintances from the whole region, an audience that could be recognized as the academic version of the Caucasus cartel.  I’m particularly delighted to sit next to Jim Collins and to be introduced by him.  Working with Jim Collins was a pleasure, a learning experience, and that’s how you develop respect for people who know how to do good.  I want to thank Tom and Jacob and everyone else who have organized this gathering.

Now, given the occasion, I think it may be worth sharing with you some general observations.  It was clear from the beginning that the three republics with which we started would be facing major challenges when they became independent.  Yet it does not appear that the spectrum and depth of the challenges and the interrelationship between these challenges were fully realized by those pursuing independence and those recognizing it.

Indeed, the very tricky but widely used term “transition” seemed to cover all these challenges, covering them so well that the term “transition,” having been invested with both descriptive and prescriptive powers, ended up as a misnomer.  And just as in the good old times of the Soviet period, for most of the states involved, terminology covered up more than it revealed.  The teleologically loaded term, in fact, covered up the complexities of the process of transitioning. It was difficult and possibly inconvenient to realize the number and types of revolutions that were needed to make that difficult – in some cases, seemingly impossible – transition possible.

Twenty years constitute a short period of time in a region where tragic events that might have occurred 50, 100, 1,000 years ago occupy more space in collective memories than the longer periods of coexistence, even if not friendship, between these peoples.

This is occurring at the same time when a new search engine that moves faster  – three times faster than the one we had-- looks decrepit and old and antiquarian within five minutes; a search engine that can offer you your whole history and many versions of it within seconds on your screen.  But for us in the region, we look at those events of the past as more determining.

The multiplicity of revolutions needed for the transition to be successful and the difficulties of imagining and implementing a strategic plan for these revolutions were complex enough.  More challenging than the adoption of legislation, constitutions and the institution of institutions to implement those legislative initiatives and the constitutions – more challenging than these was the slow change in the patterns of behavior and mentalities of those who were both the promoters of the new laws and constitutions and their executors.  Laws can be reshaped overnight; people cannot be.

At the start of their independence and to replace the lost ideology of communism the three republics had two choices: They could have opted for legitimacy of government based on the concept of civic statehood, on citizenship and constitutionally based relations between citizens and the state; or on ethnicity and nationalism.  We ended up with very mixed results.  Nationalism, at the end seems, to have become more dominant.  And the more governments moved toward authoritarianism and lost their legitimacy, the more they relied on nationalism to justify their power.

Other than citizenship, we had a very important couple of terms that became key words.  One of them was the term “conflict resolution” which came into life and generally fostered a good amount of grant-writing and grant-giving, and that’s the story of one term that tells the other story of a region trying to get out of a bankrupt and, by this time, a toothless empire.

Conflict resolution was a Western term with serious implications of its own.  Sometimes, I had the feeling that Western based conflict resolution people were saying, “you guys provide the conflict; we’ll provide the resolution.” We certainly provided those conflicts. There were plenty of mediators, of course, including in the West, who were certain to use them sometimes to pursue their own geopolitical and strategic interests, no matter that they resolved none of these conflicts.

Now, another term on which we can ponder, but I will not due to time restraints, is “civil society.” Once conflict resolution practically ran its course and the grant-giving potential, civil society came in to take over.

Going back to conflict resolution, and without going into details, I should say that I do not think it is a matter of who wants peace, which country opposes it and which country wants a continuation of the conflict.  Rather, it has been a question of whose peace it will be.  What if a a certain kind of peace [arrangement] threatens the interests of some and increases the influence of others?  It seems to me that, by and large, the conclusion after 20 years is that there are good peaces and there are bad peaces, just as, apparently, there are good wars and bad wars, rather than good countries and bad countries.

These conflicts have cost these republics and peoples much more than the large number of lost lives, lost limbs, lost opportunities and displaced peoples on all sides.  These conflicts have produced swollen military budgets, increased militarization of societies, and securitization of state policies that have distorted state spending, undermined the promise of independence and made progress and democratization much more difficult.  And I will not add human rights, which was discussed here this morning.

In this process, it is not just the locals that have ended up supporting elites that now have an interest in continuing the conflicts – elites, sometimes political, that acquire economic leverage, or economic elites that buy up or become political elites.  We are facing a very dynamic situation where the interests of major countries adjust to the dynamics of the local [elites] and vice versa.

Now, we have studied the many components of this set of challenges to the new states and [political] entities that emerged 20 years ago in the Caucasus.  It is not all that obvious that we realize that the challenge was not just to these republics, but it was [a challenge] to the bigger neighbors and [international players] as well to rethink radically their way of looking at that region.

By and large, the burden for the absence of that full transition or the aborted transition has been placed fully on the republics of the region.  Yet, for the transition to have had a chance to succeed, it was critical that the major powers, regional and international, themselves transition into a new mode of thinking.

In effect, while supporting a “New World Order,” the big players continued a mini-Cold War in this region and in others.  The West spoke as if Russia was now to be seen as a partner, but acted—mainly the US—as if the idea was to make Russia subservient; some in Washington insisted on destroying it, just as Germany had to be treated after World War I.

The new war thus defined certainly lacked the ideological ardor of the simpler and more comfortable justification for the global antagonism that had existed before:  the “communist and enslaved” versus “democratic and free.”  Yet it was almost as ferocious, because now it freely entailed the [Western] economic forces that could come into play in the name of national security, energy, and that could be deployed for the purpose of achieving strategic goals, or maybe formulate relations of strategic interest in a manner that needed to put energy interests at the forefront.

Instead of just Moscow, now Baku, Tbilisi and Yerevan started looking at Brussels and Washington as well for the solutions of their problems – indeed, for their salvation.  More often than not, they acted as if they were guests in the region--waiting to be served coffee in the form of proposals by the OSCE and others that could be rejected, instead of realizing that (1) Each was in the region to stay; (2) so were their neighbors; and, therefore, (3) it would be necessary to find ways to accommodate each other and each other’s interests.

It is true that conflicts continue and solutions often escape for reasons other than those that explain their origins and initial phase.  But, ultimately, these are the problems of the local states.  It is up to Azerbaijan, Armenia, and Georgia to find solutions to the problems of their region.

Governments continue to find solace in principles of international law and thus connect to the larger community for whom such conflicts are, at best, diversions, and at worst, excuses and means to project themselves into the region.

Given recent political and financial developments in Europe, the Middle East, and the U.S., we have to realize that we need to take greater charge of our policies as Caucasian states and take responsibility for concessions and compromises that are necessary and unavoidable.  The so-called international community will be absorbed in these problems for a long time to come with less and less resources, time and concentration invested in the region except, possibly, by the regional big powers that have an immediate interest in it.

There are some things we need to do to get out of this situation.  We need to change our rhetorical focus from war and extreme positions to the need and possibility of peace, and work for the legitimation of the position of compromises on all sides.  We need to change the course we have taken in the teaching of so many separate and opposing narratives of our own histories, particularly as that applies to the way we educate the next generation.

Twenty years is a short time, but we have already managed to write very different histories not only of the past, but also of the present – things that happened five, 10 years ago.  Indeed, a few years ago, we talked with my friend, the former foreign minister of Azerbaijan, Tofik Zulfugarov, about doing a project at the University of Michigan: Could he and I write one single narrative of what happened on events related to the Karabakh issue, and resolve the strategic forgetting each party to the conflict has effectuated in order to create and live with a narrative that is simple and beautiful, but which also constitutes a big lie.

We need to start thinking of ways to develop a sense of the region itself.  As far as the governments in the region are concerned, we currently have a geographic political area, but not a mental and intellectual framework that imagines the region.  While it is not likely that the independent status of these states will disappear, we have already seen an erosion of the degree of independence.  That erosion will continue without the development of a regional outlook.  The lessons of the first republics should teach us something.  And if that’s not enough, we should look at the 2,000-year history of that region and see how it has been governed in different periods of history to see that unless you decide you are a region and act as such, then you will be taken apiece, one by one.

I’ve done two experiments since leaving my position in Armenia that have some relevance to this discussion.  The first was when I traveled to Istanbul, Yerevan, Baku, Tehran, Tbilisi, and gave the same lecture on conflicts, focusing on the Karabakh conflict. The repetition was boring, so in each capital where I was, I was more critical of the policies of that particular government and kinder to the others. The interesting thing for me was the questions I was asked. There were all kinds of questions. 

But at the end, in each city, there was inevitably one question that came up when I insisted on my critique of the policies of the government of that particular country.  And that question was, “But sir, don’t you see what neighborhood we are living in?” Turks looking at the neighborhood said, just look at Iraq, Syria, Armenia, Georgia, Iran, etc.  And then the Iranians would say, look at those Azerbaijanis, Armenians, Turks, Arabs, etc.  And so with Azerbaijanis, Armenians and Georgians. You know, every one of them thought the neighborhood was bad, but they thought it was bad essentially because of the others.

The second experiment was in Istanbul, where I’d invited mid-level officials from Armenia, Azerbaijan and Georgia to meet.  And we had prepared, with a Turkish academic colleague, a series of questions on foreign policy; the only issue we left out was the Karabakh conflict. The positions of the three republics were about 90 percent overlapping in their policies on the rest of the issues – 90 percent, if not more.  And this fact has not been realized.  There has not been a single document on foreign policy issues signed by the three republics.

We need to rethink the one conflict that pits entities within the region against each other, and that’s the Karabakh conflict.  We have to get out of certain mentalities.  We have to drop the illusion that Azerbaijani policymakers have that by strangling Armenia’s economy with the help of Turkey through blockades, the Armenian side will have to make concessions that it cannot otherwise make.  And the Armenian side will have to drop the illusion that diaspora investments will be equivalent to investments in Azerbaijan in the hydrocarbon resource sector.  This course is best described as mutually assured destruction.

At the end, we have to also drop our reliance on abstracted principles of international law, such as self-determination, territorial integrity, principles the international community doesn’t seem to care much about and respects only sporadically and selectively.  We have to stop using terms like autonomy and independence as beginning points for negotiations.  We have to start imagining our own solutions and take responsibility for our own future in the region. 
 

Since independence, ethno-territorial conflicts have inhibited social, economic, and political development in Armenia, Azerbaijan, and Georgia. Carnegie hosted a panel of non-governmental experts to discuss the impact of unresolved conflicts on states and societies in the South Caucasus. Christian Caryl, contributing editor at Foreign Policy magazine and senior fellow at the London-based Legatum Institute, moderated.

Conflict and Displacement in Georgia

• Abkhazia: The Georgian government confuses its public by insisting that the conflict is not between Abkhazia and Georgia, but between Georgia and Russia, said Margarita Akhvlediani from Go Group Media in Tbilisi. She said the government has the habit of “declaring a goal and moving in the opposite direction.” Georgia’s policy towards the breakaway region has only reinforced Russia’s influence and stifled opportunities for Abkhaz youth to study abroad, she added.


• Internally Displaced Persons (IDPs): Wars in Abkhazia and South Ossetia in the early 1990s and August 2008 have created more than 250,000 IDPs, noted Archil Gegeshidze from the Georgian Foundation for Strategic and International Studies in Tbilisi. Since 2010, the Georgian government has exacerbated the precarious situation of these IDPs through forced evictions from temporary shelters. Georgian nationalists have often used IDPs as objects of political manipulation in order to influence policymakers, he added.


• Other Consequences: After the Rose Revolution of 2003, Georgia’s military build-up consumed an increasingly large share of the state budget, noted Gegeshidze. The conflicts over Abkhazia and South Ossetia have also fueled an internal power struggle in Georgia and have provided government officials with a justification for backsliding on democratic reforms. Regional conflicts also deter foreign investors and prevent the South Caucasus from becoming an important international transit corridor, he concluded.


• A New Approach: Georgian diplomacy towards Abkhazia has failed because it is focused on conflict settlement rather than conflict transformation, noted Akhvlediani. Echoing President John F. Kennedy’s famous phrase, she proposed a new approach to conflict resolution: “Think not what your opponent can do for you, but what you can do for your opponent.”  

Armenia and Azerbaijan – Bitter Neighbors

• Nagorny Karabakh: The unresolved conflict over Nagorny Karabakh has “distorted development” and caused Armenia and Azerbaijan to focus on short-term survival rather than “long-term strategic vision,” noted Richard Giragosian from the Yerevan-based Regional Studies Center. The Azerbaijani military has obtained offensive weapons and is using “military pressure for diplomatic leverage,” he said. He argued that militarization in both countries could result in “threat misperception” and lead to “war by accident.”


• Azerbaijan: Although Azerbaijan lost the war with Armenia over Nagorny Karabakh, Ilgar Mammadov from the Baku-based Republicanist Alternative movement asserted that “Azerbaijan is winning the peace process,” while Armenia suffers from “self-isolation.” Giragosian suggested, contrary to the view of most Armenian experts, he believed that Azerbaijan’s membership in the United Nations Security Council is a positive development because it will hold Azerbaijan’s leadership to higher international standards.


• Unilateral Concessions: In order to advance stalled negotiations, each party to the conflict could take unilateral steps towards its adversary to reduce tension and mistrust. Gegeshidze said that the Georgian government should put less emphasis on “de-occupation of Abkhazia and South Ossetia as a strategy and start to engage with the de facto administrations on the ground. Giragosian suggested that Armenia could withdraw snipers from the 1994 ceasefire line, de-militarize one of seven occupied territories in Azerbaijan, and establish a diplomatic “hotline” between Yerevan and Baku to avert a potential crisis. Azerbaijan, Mammadov said, could not stand in the way of the re-opening of the Turkish-Armenian border and appoint an official to negotiate directly with Karabakh Armenians who are absent from the peace process.     
   

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.