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The South Caucasus 2018 THE SOUTH CAUCASUS 2018 FACTS, TRENDS, FUTURE SCENARIOS Konrad-Adenauer-Stiftung (KAS) is a political foundation of the Federal Republic of Germany. Democracy, peace and justice are the basic principles underlying the activities of KAS at home as well as abroad. The Foundation’s Regional Program South Caucasus conducts projects aiming at: Strengthening democratization processes, Promoting political participation of the people, Supporting social justice and sustainable economic development, Promoting peaceful conflict resolution, Supporting the region’s rapprochement with European structures. All rights reserved. Printed in Georgia. Konrad-Adenauer-Stiftung Regional Program South Caucasus Akhvlediani Aghmarti 9a 0103 Tbilisi, Georgia www.kas.de/kaukasus Disclaimer The papers in this volume reflect the personal opinions of the authors and not those of the Konrad Adenauer Foundation or any other organizations, including the organizations with which the authors are affiliated. ISBN 978-9941-0-5882-0 © Konrad-Adenauer-Stiftung e.V 2013 Contents Foreword ........................................................................................................................ 4 CHAPTER I POLITICAL TRANSFORMATION: SHADOWS OF THE PAST, FACTS AND ANTICIPATIONS The Political Dimension: Armenian Perspective By Richard Giragosian .................................................................................................. 9 The Influence Level of External Factors on the Political Transformations in Azerbaijan since Independence By Rovshan Ibrahimov ................................................................................................. 23 Georgian Politics in Transition: Trends and Obstacles for Potential Transformation By Kornely Kakachia ..................................................................................................... 43 CHAPTER II SOCIO-ECONOMIC DYNAMICS: COMMON CHALLENGES, DIFFERENT SOLUTIONS? Economic Development Challenges of Armenia By Levon Barkhudaryan ............................................................................................... 63 Economic and Social Development Perspectives of Non-Oil Sector of Economy in Azerbaijan with a View to 2018 By Vugar Bayramov ...................................................................................................... 77 Challenges and Economic Policy Directions of Georgia By Alex Aleksishvili ........................................................................................................ 101 CHAPTER III CROSSROADS FOR ENERGY SOURCES AND ROUTES: TRENDS AND SCENARIOS Energy Security in Armenia: Challenges and Opportunities By Armen Manvelyan .................................................................................................... 127 Recent Trends in Energy and Oil Revenue Management Policy in Azerbaijan: Challenges & Future Scenarios By Gubad Ibadoglu ........................................................................................................ 143 Georgian Energy Sector: Trends and Prospects for Development By Teimuraz Gochitashvili ........................................................................................... 159 CHAPTER IV SECURITY AND CONFLI CTS: GEOPOLITICAL DYNAMICS AND CLASHING CONCEPTS Security Perceptions: The Views from Armenia, Azerbaijan & Georgia By Richard Giragosian, Zaur Shiriyev & Kornely Kakachia ............................ 187 The South Caucasus 1918-2018: One Hundred Years of Hostility? By Mikayel Zolyan .......................................................................................................... 225 A Bleak Future for Nagorno-Karabakh: Models, Formats and Prospects. An Azerbaijani Perspective By Zaur Shiriyev ............................................................................................................. 241 The Reciprocal Impact of Unresolved Conflicts on the Process of Democracy Building - Georgia in the Regional Context By George Khutsishvili ................................................................................................. 285 CHAPTER V DYNAMIC ENGAGEMENT: THE EUROPEAN FUTURE OF THE SOUTH CAUCASUS Armenia-Europe: Minimizing Opportunity Costs By Alexander Iskandaryan .......................................................................................... 305 The South Caucasus: The European Future By Kakha Gogolashvili .................................................................................................. 319 CHAPTER VI THE WAY AHEAD: RECOMMENDATIONS Recommendations Armenia ....................................................................................... 341 Recommendations Azerbaijan ................................................................................... 350 Recommendations Georgia ......................................................................................... 358 Contributors Biographies ...................................................................................... 364 FOREWORD The Konrad Adenauer Foundation has been known for a long time for its pro- grams in international dialogue and cooperation. We value dialogue as an important component of the foundations overall cooperative approach in con- ducting activities in more than a hundred countries worldwide. On the na- tional and international level, we conduct civic education activities to promote peace, freedom, and justice. Our key concerns include consolidating democ- racy, enhancing interreligious and intercultural understanding, and promoting peaceful conflict resolution. In the South Caucasus, the Foundation has been active for almost a decade with the primary goal to support transformation processes for stronger democratic structures and more sustainable economic developments. Equally important is support for regional understanding and rapprochement of the region with European structures. Our commitment to that vision of a more free, prosper- ous and peaceful development in the South Caucasian Countries shall be a source of inspiration for our activities also in the future. The publication at hand is part of the Konrad Adenauer Foundations activities undertaken in the region to promote greater understanding between nations, countries, cultures and religions. It contains articles written by senior and junior experts from Armenia, Azerbaijan�������������� and �����������������������������Georgia. �Many������������������� books and arti- cles have been produced en mass since the early 1990s, when three coun- tries – Armenia, Azerbaijan and Georgia, regained their independence and the international community discovered the strategic importance of the region at the crossroad between Europe and Asia - ridden by conflicts, protracted transitions, problems of domestic consolidation, and power games of exogenous actors. The uniqueness of this compilation is that it has been initiated by the au- thors themselves. The articles follow the same structure that the authors had agreed upon during preparation workshops. This allows the reader to com- pare developments, trends and scenarios, whether in the political sphere, eco- nomic sector or in the perception of security in the three countries. Another unique feature of this volume is that the authors look forward and try to foresee major tendencies the region and their respective countries will face in the years to come. The main concept of the publication is to avoid getting lost in discussions about causes. Instead, authors try to analyze trends and offer scenarios. One would argue that looking forward implies attempting to understand and explain the past as well. Articles in the collection cannot avoid 5 analyzing legacies of the past, however with the intention to link the dynamic of current developments towards visions, outlooks and perspectives. 2018 is therefore not only a symbolic year referring to the 100th anniversary of the first independence of the South Caucasian countries, but allows with a five year time frame a realistic analysis of future trends. A specific added value of the volume is that it summarizes a set of recommendations in various policy fields for opinion shapers and decision makers of the respective countries. Publications with the title South Caucasus on their front page always attract critical remarks questioning the very existence of the region as such. Indeed, what unites ������������������������������������������������Armenia, Azerbaijan �����������������������������and ������������������������Georgia, except the past��������������� Is there any- thing beyond soviet and pre-soviet legacies of inter-ethnic conflicts and conflict- ing foreign policy orientations that could melt three policies into one region? In other words, does the region have a future? The authors of articles certain- ly provide some interesting answers. Even though the building blocks of the region South Caucasus are not always positive factors – conflicts, authoritarian backlashes, increasing social disparities, shadows of the past will with high probability still prevail in 2018, there is hope for the joint future of the region. Models of economic and social developments, scenarios for domestic poli- tics, the role of EU engagement and the possible Europeanization of nation- al policies as well as outlooks for cooperation in the energy sector – arti- cles of the collection cover not all but the most relevant topics in the South Caucasus of today and years to come. “The South Caucasus 2018: Facts, Trends, Future Scenarios” is a valuable source for those who are interested in many aspects
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