The Caucasus Globalization

Volume 3 Issue 4 2009 1 THE CAUCASUS & GLOBALIZATION

INSTITUTE O STRATEGIC STUDIES O THE CAUCASUS

THE CAUCASUS & GLOBALIZATION

Journal of Social, Political and Economic Studies

Volume 3 Issue 4 2009

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Editorial Council

Eldar Chairman of the Editorial Council (Baku) ISMAILOV Tel/fax: (994 12) 497 12 22 E-mail: [email protected] Kenan Executive Secretary (Baku) ALLAHVERDIEV Tel: (994 – 12) 596 11 73 E-mail: [email protected] Azer represents the journal in Russia (Moscow) SAFAROV Tel: (7 495) 937 77 27 E-mail: [email protected] Nodar represents the journal in Georgia (Tbilisi) KHADURI Tel: (995 32) 99 59 67 E-mail: [email protected] Ayca represents the journal in Turkey (Ankara) ERGUN Tel: (+90 312) 210 59 96 E-mail: [email protected]

Editorial Board

Nazim Editor-in-Chief (Azerbaijan) MUZAFFARLI Tel: (994 – 12) 499 11 74 E-mail: [email protected] (IMANOV) Vladimer Deputy Editor-in-Chief (Georgia) PAPAVA Tel: (995 – 32) 24 35 55 E-mail: [email protected] Akif Deputy Editor-in-Chief (Azerbaijan) ABDULLAEV Tel: (994 – 12) 596 11 73 E-mail: [email protected] Volume 3 IssueMembers 4 2009 of Editorial Board: 3 THE CAUCASUS & GLOBALIZATION Zaza Doctor of History, professor, Corresponding member of the Georgian National Academy ALEKSIDZE of Sciences, head of the scientific department of the Korneli Kekelidze Institute of Manuscripts (Georgia) Mustafa Professor, Ankara University (Turkey) AYDIN Irina D.Sc. (History), Leading research associate of the Institute of Ethnology and BABICH Anthropology, Russian Academy of Sciences (Russia) Douglas Professor, Chair of Political Science Department, Providence College (U.S.A.) W. BLUM Svante Professor, Research Director, Central Asia-Caucasus Institute, Silk Road Studies E. CORNELL Program, Johns Hopkins University-SAIS (U.S.A.) Parvin D.Sc. (History), Professor, Baku State University (Azerbaijan) DARABADI Murad D.Sc. (Political Science), Editor-in-Chief, Central Asia and the Caucasus, Journal of ESENOV Social and Political Studies (Sweden) Jannatkhan Deputy Director of the Institute of Strategic Studies of the Caucasus, Deputy Editor-in-Chief EYVAZOV of Central Asia and the Caucasus, Journal of Social and Political Studies (Azerbaijan) Erkin Senior research fellow of the Institute of Strategic Studies of the Caucasus, Member GADIRLI of the International Caucasus-Caspian Commission (Azerbaijan) Rauf Ph.D., Leading research associate of the Institute of Strategic Studies of the GARAGOZOV Caucasus (Azerbaijan) ARCHIL Ph.D. (Geography), Senior fellow at the Georgian Foundation for Strategic and GEGESHIDZE International Studies (Georgia) Elmir Director of the Department of Geoculture of the Institute of Strategic Studies of the GULIYEV Caucasus (Azerbaijan) Stephen Professor, Russian and Eurasian Studies, Mount Holyoke College (U.S.A.) F. JONES Akira Ph.D., History of Central Asia & the Caucasus, Program Officer, The Sasakawa MATSUNAGA Peace Foundation (Japan) Roger Senior Research Fellow, Department of Politics and International Relations, University MCDERMOTT of Kent at Canterbury; Senior Research Fellow on Eurasian military affairs within the framework of the Eurasia Program of the Jamestown Foundation, Washington (U.K.) Roin Doctor of History, professor, academician of the Georgian National Academy of METREVELI Sciences, President of the National Committee of Georgian Historians, member of the Presidium of the Georgian National Academy of Sciences (Georgia) Fuad Ph.D. (Econ.), Counselor of the Chairman of the Board of Directors of the MURSHUDLI International Bank of Azerbaijan (Azerbaijan) Alexander Professor, President of Georgian Foundation for Strategic and International Studies RONDELI (Georgia) Mehdi Professor, Tehran University, Director, Center for Russian Studies (Iran) SANAIE S. Frederick Professor, Chairman, Central Asia-Caucasus Institute, Johns Hopkins University-SAIS STARR (U.S.A.) James Professor, Director of the International and Regional Studies Program, Washington V. WERTSCH University in St. Louis (U.S.A.) Alla Doctor of History, professor, head of the Mediterranean-Black Sea Center, Institute of YAZKOVA Europe, Russian Academy of Sciences (Russia) Stanislav D.Sc. (Economy), Senior researcher, Institute of World Economy and International ZHUKOV Relations, Russian Academy of Sciences (Russia)

The materials that appear in the journal do not necessarily reflect the Editorial Board and the Editors’ opinion

Editorial Office: THE CAUCASUS & GLOBALIZATION © The Caucasus & Globalization, 2009 98 Alovsat Guliyev, AZ1009 © CA&CC Press®, 2009 Baku, Azerbaijan © Institute of Strategic Studies of WEB: www.ca-c.org the Caucasus, 2009 4 Volume 3 Issue 4 2009 THE CAUCASUS & GLOBALIZATION THE CAUCASUS & GLOBALIZATION

Journal of Social, Political and Economic Studies Volume 3 Issue 4 2009

CONTENTS

GEOPOLITICS

THE WIDER BLACK SEA REGION: THE EYE OF THE EU’S NEXT POLITICAL STORM OR Tedo THE SHINING SEA OF STABILITY? JAPARIDZE 6

IRAN’S SECURITY INTERESTS AND GEOPOLITICAL ACTIVITY Jannatkhan IN CENTRAL EURASIA EYVAZOV 19

UKRAINE: POLITICS IN THE BLACK SEA-CASPIAN REGION AND Anton RELATIONS WITH THE CAUCASIAN STATES FINKO 30

ON THE LOGIC OF THE DEVELOPMENT OF THE AUGUST (2008) CONFLICT Teimuraz IN GEORGIA BERIDZE 43

GEO-ECONOMICS

THE DIFFICULTIES AND CONTRADICTIONS OF SMALL BUSINESS DEVELOPMENT Andrei IN RUSSIA BLINOV 50

ENERGY SECURITY AFTERMATH OF RUSSO-GEORGIAN WAR: IMPLICATIONS FOR Kornely THE CENTRAL CAUCASUS KAKACHIA 61

INNOVATIVE ACTIVITIES AND Ramaz THEIR COORDINATION UNDER ABESADZE, ADVANCING GLOBALIZATION Vakhtang BURDULI 68 Volume 3 Issue 4 2009 5 THE CAUCASUS & GLOBALIZATION

MACROECONOMIC ANALYSIS OF GEORGIA’S ECONOMIC DEVELOPMENT USING A SOCIAL ACCOUNTING MATRIX Ekaterine (1999-2008) MEKANTSISHVILI 80

GEOCULTURE

ETHNODEMOGRAPHIC CHANGES IN THE CAUCASUS: EMERGENCE OF EUROPEAN ETHNIC COMMUNITIES Sudaba (THE 19TH-EARLY 20TH CENTURIES) ZEYNALOVA 91

SPECIAL FEATURES OF THE GEORGIAN CRISIS Guram SVANIDZE 103

GEOHISTORY

AZERBAIJAN AT THE CROSSROADS OF EPOCHS: THE FIRST ATTEMPT TO JOIN THE FREE WORLD Jamil (1917-1920) HASANLI 120

THE RUSSO-TURKISH CONFRONTATION Apollon IN THE CENTRAL CAUCASUS IN 1918-1921 SILAGADZE, Vakhtang GURULI 138

FROM THE HISTORY OF COOPERATION AMONG THE CAUCASIAN POLITICAL ÉMIGRÉS: Nikolai 1921-THE EARLY 1940S JAVAKHISHVILI 145

INDEX THE CAUCASUS & GLOBALIZATION Vol. 3, 2009 152 6 Volume 3 Issue 4 2009 THE CAUCASUS & GLOBALIZATION

GEOPOLITICS

Tedo JAPARIDZE

Ph.D. (Hist.), Ambassador, Alternate Director General, International Center for Black Sea Studies (ICBSS) (Athens, Greece).

THE WIDER BLACK SEA REGION: THE EYE O THE EU’S NEXT POLITICAL STORM OR THE SHINING SEA O STABILITY?

Abstract

n a region as large and as complex as al security really means. Success will I the territory that surrounds the Black mean looking forward toward the future Sea—a region beset by the cross cur- and what unites them instead of backward rents of divisive geography and more di- toward the past and what divides them. visive historic conflict—the building of part- How will the European Union (the EU) with ner-country capacity and regional security its new initiatives—the Black Sea Syner- cooperation is a difficult proposition at gy (BSS) and the Eastern Partnership best. Yet much has already been done in (EaP)—and other Black Sea regional ac- the region to create the conditions for such tors be able to cooperate with each other cooperation to occur. Taking the next step in order to increase the prospects of that to create regional stability and security will area’s security and its sustainable devel- require the area’s nations to reassess the opment which happen to be (though not common threat they face and what nation- all regional actors agree with that notion)

The views expressed in this article are the author’s own, and do not necessarily reflect those of the ICBSS or any other organization or government. Volume 3 Issue 4 2009 7 THE CAUCASUS & GLOBALIZATION the two sides of one and the same coin: Europe, the prospects of their interaction, the regional stability. So what does fate about some strategies and synergies that have in store for the entire Black Sea re- intersect each other, about some images gion: to be the eye of the EU’s next polit- that, while clashing with each other, have ical storm or the shining sea and area of an impact on some political as well as stability? So in this text I would like to public opinions—as far as some experts share some of my personal thoughts with like to say, perceptions or misperceptions you and talk specifically and more broad- nourish or even re-shape in many ways ly about the wider Black Sea area and the existing reality.

What We Are: A Region, a Strategic Space, a “Corridor” or an Area?

At the outset, I would like to reflect briefly (as I did many times before1) that when trying to define an issue or a problem, it would be worthwhile to start by looking at what it is not, before trying to describe what I believe it is. And in this connection, it seems to me that even these geographic, geopolitical or geo-economic methodological notions may matter for the prospects of the EU-wider Black Sea area relationship and still be an appropriate subject for our polemical analyses. Neither the wider Black Sea area nor the BSEC (as its institutional configuration) is an alternative to the EU, even though, for example, one of the main goals of the BSEC, in common with the EU, is to boost economic cooperation within a defined geographical area. I see the EU and the Black Sea area in general and specifically the BSEC in terms of a solar system in the making; the Sun in this case is clear, but the exact orbits of some of the surrounding planets are still in a state of flux. Nor is the BSEC an economic competitor and would be in the foreseeable future; if anything, it should be seen as a complementary economic partner and resource. Nor is the BSEC a nascent political union. More than far from that. Unfortunately, even just the opposite. The long-term strategic goals and aims of the BSEC member states are simply too complex and contradictory for that and the economic and political gravitational pull of the EU is too great for such a conclusion. One could even go so far as to argue that the wider Black Sea area is not even a “region,” in the sense that Scandinavia, say, is perceived clearly as a “region.” But nor, as some analysts try to describe the wider Black Sea area, is it simply a “periphery,” “black hole” or “the Bermuda Trian- gle” through which a space traveler might pass or, worse, just even disappear on the way to somewhere else. I would agree with the few of those who define this area as a “strategic corridor” and a “strategic space,” sharing, perhaps, in terms of external perception, many of the same characteristics that “Cen- tral Asia” evokes. The wider Black Sea area has only recently emerged as a critical node in the strategies of some regional states in the territory of the former Soviet space, including the Russian Feder- ation and traditional littoral countries like Turkey, Rumania or Bulgaria. More than that, the entire area has become integral to the evolving policies and strategies of the states of the Eastern Mediterra- nean; to a new and vital Russia, which has a crucial role to play throughout the Wider Black Sea region; to the Caucasus (and specifically to Georgia and its Black Sea costal zone) and the Caspian Sea Basin and Central Asia in general; to the Middle East; and, of course, to Europe. And it is obvious that where all of these dynamics converge, the interest from the United States, now with a larger presence

1 See: T. Japaridze, “The Black Sea Region: Meaning and Significance,” American Foreign Policy Interests, No. 29, 2007, pp. 113-125. 8 Volume 3 Issue 4 2009 THE CAUCASUS & GLOBALIZATION in the Middle East and Central Asia and specifically on the northern shores of the Black Sea than in the past, cannot be far behind, if in fact it is not already far ahead. The Wider Black Sea region (the “Region”) lies at the crossroads of European, Eurasian and Middle Eastern “security frameworks”—in a broader and multi-functional notion of the term which embraces political, economic, environmental, cultural and many other ingredients of the contemporary concept of stability and security paradigm. But while geographically located at the edge of each, the Region not only has never been at the center of any of these frameworks but has not even become a supplemental component in any of these strategic constructions.

Wider Black Sea Area-EU Interaction Gambit

Let us focus now on the wider Black Sea area-EU interaction prospects and try to explore how the wider Black Sea area should fit this new strategic landscape vis-à-vis the EU? There have been certain formidable steps made in this interaction and certain synergies have been identified and some constructive dialog has been initiated, although these dynamics need some concrete results and strategic direction and vision. What needs to be done to add some value to that process and make it irreversible and mutually beneficial? To answer this, one first has to put oneself into the EU’s shoes, so to speak, and look at the area and the BSEC, its only full-fledged institutional mantra, from the perspectives of Brussels. To some extent, there is a deep-seated wariness, not about the region per se but about the individual BSEC countries. This wariness stems, in part, from the internal politics of the EU itself, and from other seemingly endless debates on whether the “wider” or “deeper” direction the EU should take. In some quarters, the EU periphery, despite the fact that Rumania and Bulgaria have become members of the European Union, is still psychologically seen as a problem-ridden distraction that can no longer completely be ignored, but which can be contained or dealt with on an individual state basis in the form of aid and technical assistance. If I may be cynical for a moment, this was the rationale behind the Neighborhood Policy (ENP) or even those newly born EU initiatives such as the BSS and the EaP. But even in more “enlightened” circles of the EU, there is a distinct wariness. It stems, in part, from the fact that there is simply so much to do within the current enlarged EU and in dealing with the new member countries, as well as with bigger strategic issues such as trade, relations with the U.S., Russia and so forth. But within this camp there is a definite sense that more should be done, if only out of self-interest (always the best political motive, I believe, because it is inherently sustainable). They understand the growing energy importance of the wider Black Sea area to the EU. They can read a map and instinctively know that chronic instability and economic malaise on its borders is a dangerous combination. But this camp does not know what to do, and fears failure. I realize that such an assessment may appear harsh and pessimistic. But perhaps the seeds of our regional strategy can be discerned in it as well, because ultimately, it is events on the ground, both political and economic, such as, for example, an expanding and inter-connected energy and transport infrastructure, that will drive and shape EU’s policy toward the Region. There is a military concept known as “getting within your opponent’s decision cycle.” I am not suggesting that there is a confrontational charge between the EU and the wider Black Sea area or BSEC, in particular. But I think the concept is relevant here. For example and purely in my personal opinion, a BSEC engagement strategy that is built around serving the self-interests of the EU stands the greatest chance of success. And, ironically, it would also serve the best interests of BSEC member Volume 3 Issue 4 2009 9 THE CAUCASUS & GLOBALIZATION states, those that are candidates or future candidates for accession and those that may never be considered for that status. The EU, irrespective of whether it is motivated by fear of further expansion of instability on its own borders or, for example, of possible energy disruptions or any other strategic or tactical reason, would need to format anew or recalibrate these new relationships in the wider Black Sea area. The BSEC, only in case if it is reformed properly and recalibrated accordingly to fit the new strategic realities within the region and beyond it, can help deliver those relationships and the tangible, practical projects and initiatives. And just like events, no one can predict where these relationships might lead, but both sides need to probe and innovate in this regard. In this case, the axiom that a journey is more important than the destination, or in corporate-speak, the process is more important than the product, is paramount. Precisely because the EU is becoming a bit too much cautious an actor in the wider Black Sea area, it needs the BSEC to be more capable. The Black Sea Synergy (BSS) and the Eastern Partnership (EaP)—the new EU initiatives in the wider Black Sea area—are a sort of prelude for the regional actors to become themselves more inventive and resolute. I said it a couple of times and want to repeat it once time: if the BSEC were high-tech company, I would see it as some sort of Cisco Systems producing the routers that convey the ideas, issues and trends concerning the ENP around the Region and between the wider Black Sea area and the EU. In high-tech speak, it would provide the high-level “connectivity” which the EU needs urgently. But it must also influence and produce the “content” that will help dispel any misconceptions, prejudices and fears that the EU may harbor about the region. We all need to focus not only on the purely political and technical side of the accession equation but also deal effectively and early enough with perceptions and prejudices. It will pay a price for that for some time to come. In short, the wider Black Sea area’s potential and the BSEC’s capacity must be seen in Brussels as an essential enabler of all the EU programs that can help deliver the relationships and programs it will need to be effective from an EU perspective. In so doing, the BSEC, for example, does not “sell- out” its role of promoting the self-interest of its members, but quite the opposite. It actually positions itself to enhance that responsibility.

The Tumultuous Beginning

So where are we now regarding the prospects of EU-the Black Sea area relationship? As acknowledged in A Comparative Analysis of the Black Sea Synergy and the Eastern Partnership—a background paper prepared recently by the International Center for Black Sea Studies (ICBSS)2 —the BSS initially constituted an attempt by the EU side to create a complementary format to the already existing European Neighborhood Policy, the EU-Russia format and membership negotiations with Turkey. But following the Five Day War between Georgia and Russia in August 2008, as that paper admits, the Polish-Swedish proposal initiated the EaP as a solid framework for multilateral cooperation. Despite the fact that the re-emergence of both the BSS and the EaP is a positive development for the entire wider Black Sea area and the BSEC as a natural and potential partner of those formats, the local regional experts and pundits express their clear skepticism in regard to both initiatives. They expound on the parallelism and overlap between the BSS and EaP, particularly in regard to the potential for contribution, impacts and implications for the BSEC. The ICBSS comparative background paper exerts itself to dissipate those negative sentiments toward the BSS and the EaP, exploring in full detail the pros and cons of those new set-ups for the all-inclusive and sustainable economic development of the entire Black Sea area.

2 See: Ya. Tsantoulis, “Black Sea Synergy and Eastern Partnership: Different Centres or Gravity, Complementarity or Confusing Signals?” Policy Brief, No. 12, February 2009, ICBSS. 10 Volume 3 Issue 4 2009 THE CAUCASUS & GLOBALIZATION

In 2006, I raised some “strategic questions” regarding the operational capacity and the prospects of the BSEC, confident that appropriate and adequate answers to them could have made the wider Black Sea area’s rapprochement with the EU more realistic and pragmatic.3 Regrettably, it seems that I was slightly naive in this regard: despite the visible activities within the BSEC itself as well as certain interest from the EU side and the introduction and promotion of the above-mentioned BSS and EaP documents—and numerous meetings and discussions—the outcomes are minor and insignificant. Debates and their results have more to do with procedures and insignificant accomplishments, rather than provide viable, practical and productive conceptual solutions. Therefore, almost four years later and with some positive legacy of interaction between the BSEC and the EU, I would like to revert to my previous observations, suitably recalibrating and re- adjusting them. I shall attempt to interpret them through these new prospects and dynamics, in the hope that in the near future the EU-BSEC interaction will come to be on the right track and that the BSS and EaP will lead the wider Black Sea area toward realistic and pragmatic developments. But up to this moment, it seems that the relationship between the EU and the Wider Black Sea region is still an appropriate subject for critical analysis. Why do I say this? The never-ending debate over “equal partnership” between the EU and the BSEC deviates from the proper and adequate discussions about the real issues and problems and blurs the strategic focus of the BSEC decision-makers, unnecessarily irritating EU bureaucrats.

A New Role for the BSEC: Be Complementary and Proceed Ahead Resolutely

There are more drastic challenges than those existing in the wider Black Sea area and within the BSEC itself. So what role, for example, should the BSEC play in harnessing the forces of globalization that its member states, seeking to increase capacity, should understand and accommodate? That globalization will grow in coming years and decades, will become more diverse, broad-based and potent as well as at the same time more individualized is a given fact, in spite of its economic, cultural and political dislocations. More than that—as Moisés Naím, editor-in chief of the Foreign Policy Magazine put it—the growing number of actors empowered by globalization has the potential and capacity to cause large-scale damage and substantial loss of human lives, and the ongoing and escalating economic crises may sharpen desperation and lead to violence. Some governments might be more tempted to exploit international conflicts and disputes to distract their impoverished populations from those dire circumstances.4 And the wider Black Sea area is so greatly plagued with those low-intensity conflicts, disputes, external or internal luring developments. Consequently, the challenge for the entire wider Black Sea area and specifically for the BSEC is how to exploit the benefits of globalization, while at the same time preserving and promoting the unique characteristics of individual economies and societies in the face of seemingly overwhelming forces, as well as in some “smart power” way to avoid its negative after-shocks and malaise. The EU, as an organization more capable and of greater experience in this connection, through the implementation of the BSS and EaP, may become the most reliable partner of the BSEC—and mutually beneficial—if of course these prospects are not marred by pointless discussions that serve only to satisfy some bureaucratic ambitions and ego so typical of any international organization.

3 See: T. Japaridze, The BSEC: A Roadmap to Relevance. Polemical Reflections, Annex 2 to the Progress Report of Secretary General of the BSEC PERMIC. 4 See: M. Naím, “Think Again: Globalization,” Foreign Policy, March/April 2009. Volume 3 Issue 4 2009 11 THE CAUCASUS & GLOBALIZATION

For the BSEC, I think, there are several distinctive roles. The first is to help member states identify and understand the underlying technological, economic and commercial trends that intertwine to produce “globalization,” and to what extent such developments may influence their economies and cultures. This would be a relatively high-level exercise which would fit well within the Davos-style meeting format. The key here is not to have airy, academic debates on the rights and wrongs of globalization, but to confine it to a level where its consequences, and thus any consequent opportunities, are identified in a strictly Black Sea context. I think that the EU, with its invaluable experience and legacy in this domain, may provide the necessary experience and expertise for the entire BSEC area. If properly formatted, the BSS and the EaP would be perhaps useful in this regard as well. The BSEC is also a natural vehicle through which to identify and communicate the mainly economic and business opportunities that globalization can spawn. A vivid example is that the Turkish construction company Tekfen was awarded the 2004 Environmental Prize by the International Pipelines Contrac- tors Association for its practices during the construction of the Baku-Tbilisi-Ceyhan (BTC) terminals at Sangachal and Ceyhan. I once admitted that the developments within the BSEC are too often left in the hands of “experts.” But most of those “experts” have never set up a business or met a payroll. Investment bankers are often seen as the storm troopers of globalization. One idea would be to send EU-based investment bankers for some three-to-six months to particular regions of individual BSEC members. There they would meet their regional partners and could look at opportunities to create businesses that would serve niche markets in Europe. Not all would work; maybe most would not. It does not matter. It is the process of harnessing globalization to produce tangible benefits that counts. The Harvard Business School cannot teach a course along such lines. Another example could be direct BSEC participation in nascent plans of some multinational corporation working in the Black Sea region for long-term engagement with civil society and other influential, non-government actors in Azerbaijan, Georgia and Turkey as it happened during the construction of the Baku-Tbilisi-Ceyhan and the South Caucasus gas pipeline (SCP), the main regional energy projects. This strategy is directly related to globalization. Acting as a neutral facilitator of such a process would be a natural role for the BSEC, and it would be well placed to inform more widely about the impacts (positive and negative), problems and strengths of such strategies, not only within the region but in the EU and beyond. In short, the BSEC needs to use its regional outlook to foster what could be called a high-level globalization early warning system, and communicate its views as widely as possible. At the lower level, it needs to promote and participate in practical projects that creatively seek to harness the more positive benefits of globalization, and to communicate the results as widely as possible. The Black Sea region has become a strategic energy corridor to Europe. As admitted above, the inauguration of the BTC oil pipeline and the South Caucasus gas pipeline serve not so much the United States, one of its main backers, but European refineries and drivers. They were built to European technical, environmental and social standards by a largely Black Sea workforce with the help of mainly European engineers and experts. New projects to link natural gas pipelines from our region to the main European gas grid will bring additional sources of supply from the Caspian, and perhaps beyond, into European homes and factories, thus diversifying and helping to secure vital sources of supply. That is how the BSEC will become an “enabler” of EU needs and in this way the BSEC will, someday in the future, become an equal partner with the EU. The BSEC should act smarter! As Mark Medish, a distinguished American analyst correctly noted: “Those who believe that the South will ineluctably overwhelm the North, or that the East is destined to rise at the expense of the West, are indulging in almost Manichaean forms of regional pride and mercantilism.”5 At times, some political or bureaucratic “Manichaean bacilli”

5 M. Medish, On-line Debate with Kishore Mahbubani on the Future of “Brand America,” The Economist, 20 Feb- ruary, 2009, available at [http://www.economist.com/debate/days/view/257]. 12 Volume 3 Issue 4 2009 THE CAUCASUS & GLOBALIZATION of old-fashioned rigidness and dogmas are still verifiable in the wider Black Sea area and specifically within the BSEC. These infect the prospects for positive and productive discourse among the BSEC member states, some of whom are trying to tackle with the post-modern threats and challenges with outdated modern instruments, concepts and perceptions/misperceptions, thus blurring the strategic focus of regional decision-makers and experts, and hindering them from comprehending existing realities as well as upcoming prospects, including the region’s relations with the EU. Some look at the Black Sea region as a political and economic “black hole” or a “grey zone” of instability. I see it instead as a potentially vibrant market of more than 150 million people. I see it as a producer, consumer and exporter of much needed resources. I also see it as a source of a new generation of entrepreneurs, inspired by the European model. But my vision depends on partnership and cooperation. At a time when an established Europe engages in an inevitably introspective debate on future enlargement, we must not lose sight of the very real and tangible benefits that can flow now from stronger engagement between Europe and the Black Sea region, especially in the economic area.

Time for Reflection and Reconfiguration

As I mentioned earlier, the recently expanded and introduced European policies (the ENP, the BSS, and the EaP) are the main vehicles for direct engagement between the EU and Black Sea states without a direct commitment to eventual accession of some BSEC member states. That policy is still evolving. But even before the French, Dutch and Irish referendums cast such uncertainty over future relations, I detected some disquiet about the policy from within the Black Sea region. Some complain that these new formats are too prescriptive, too presumptuous, too “top-down” and far too detailed. Some cynics in the region even suspect that it is just a bureaucratic ploy to formally engage the entire region with the EU, as well as to keep some “noisy” countries quiet, those that might otherwise be lobbying more vociferously for membership. None can predict the outcome of the present political debate within the EU. Perhaps, as some commentators have suggested, the pushing of the political pause button on future enlargement will become permanent. Perhaps it is only a temporary and tactical pause to allow the political fall-out to settle. We have to await events as Europe continues what is likely to be a prolonged period of reflection. But a pause for political reflection should not become an excuse for a lack of engagement, especially in the economic sphere. In fact, it may be argued that a political pause makes it even more imperative to increase engagement between Europe and the Black Sea region. Our economic interests are inextricably intertwined, irrespective of our political future. We are prisoners of our geography. So let us focus on economic cooperation, where we both have a clear and long-term strategic interest. We may need to use that pause for our own interests and instead of being critical of the BSS and EaP, we could take the initiative from the EU and offer our European partners some interesting projects and ideas. As I mentioned above, for example, regional business needs to be given a direct role in the ENP, the BSS or the EaP. Perhaps we should form a broad business coalition between Black Sea and European companies interested or active in the region. It would not only help individual countries to better understand and influence those new European initiatives, it could also tackle issues which are common to most countries in the wider Black Sea area. Aside from energy developments, direct flows of foreign investment into the Black Sea region are lamentably low by international standards (they are low even in the Black Sea energy sector, according to some experts) and much of the investments that have been made can be attributed to the fact that the recipient countries were among those engaged in the EU accession process—Rumania and Bulgaria. Volume 3 Issue 4 2009 13 THE CAUCASUS & GLOBALIZATION

Such a business coalition could tackle impediments to increased investment, by lobbying and encouraging individual states to lower or remove structural barriers to trade. It could also help to create inclusive business networks throughout the region that would bring together all interested companies and business managers, including those from the four unrecognized entities in our region. That too must surely be in the long-term interests of Europe. Why not enrich the BSS and the EaP menu with this kind of proposals? It could help foster a better economic climate overall by helping countries to enact policies that encourage much informal and unregulated economic activity to shift into the formal sector. The widespread informal economies in many of our member states have provided a lifeline to many people in recent years. As flourishing as they may be, they also provide a fertile ground for corruption and rob the states of much-needed revenues that could be harnessed for development. On the energy front, the BSEC could form a joint pipeline working group with the EU to help ensure that a steady increase in capacity is available for our own growing consumption as well as that of Europe as a whole. A security dimension is also needed, one that underpins greater economic efforts, as stability is a prerequisite for development. Again, this is perhaps best done through a joint mechanism tied to the ENP, the BSS or the EaP. More than that, the EU should be more clear-cut and nuanced regarding its new initiatives, specifically the BSS and the EaP. Some BSEC countries, covered by those initiatives, perceive those major EU programs in the wider Black Sea area with some unhidden skepticism, describing them as bearing a certain semblance of the Commonwealth of Independent States (CIS) format—only with the EU in the helm of it instead of Russia, as in the case of the CIS. Moldova’s former president Voronin admitted that, for example, the EaP seems just as “some far away European prospect” whereas, according to him, Moldova has accomplished much more complex and comprehensive agenda toward the EU integration on an individual basis.6 Other critical or skeptical voices in this connection are surfacing within the BSEC space, including e.g. experts and pundits who try to interpret those new EU initiatives—and specifically the EaP—as some hostile attempt to “encircle Russia” or even isolate it. It has to be understood that these are not only wishful but even unwise conclusions and perceptions due to some well-known strategic considerations. First, it would be impossible to “encircle” Russia, one of the most powerful and capable BSEC member states. This is not only to be seen with respect to the Black Sea area but far beyond. Any, even hypothetical, “endeavor” to follow this path is just programmed to fail and the bearer of such a strategy will not be able to collect any merits in respectable circles. All sides are interested in a positively engaged Russia, within the wider Black Sea area and outside of it. This specifically counts for its relationship with Europe, which has repeatedly been declared by EU leaders. But what is obvious as well is that Russia, as well as some other regional big players, needs to identify more precisely the substance of its “Good Neighborhood Policy.” It is indeed possible that Russia could evolve its own version of that strategy, as Turkey is currently trying to do with its proposal of the Platform for Stability and Cooperation in the region. So the EU needs to work more resolutely and seek innovative ways in order to be more inform- ative with all regional actors in this regard. Without any doubt the perception and therefore the regional public opinion in part will be shaped by such a smart as well as concerted approach.

How to Be Relevant and Mutually Beneficial

We have a vision in common with the EU. The building blocks of that vision are primarily economic at this stage and the BSS and the EaP both address these concerns. It is surely in the interests

6 See: Kommersant, 1 March, 2009. 14 Volume 3 Issue 4 2009 THE CAUCASUS & GLOBALIZATION of both Europe and the Black Sea region that the BSS and EaP should serve as a two-way street in this regard. It is the process of engagement, not necessarily the product, which is so crucial at this time. We at the BSEC are willing to work together on tangible, practical and pragmatic projects that are in the interest of both Europe and the Black Sea region. We also sincerely hope that the commitments the EU has made to the BSEC through the BSS and the EaP will remain in force and are fully implemented by both sides. We also hope that the BSEC will be more innovative in this connection. Within the BSEC there are some countries that could even attain EU standards and criteria in the foreseeable future. The allure the EU holds for those countries serves as an impetus for internal transformation and re-adjustment. For that category of countries, now more than ever, we need not only to maintain the momentum of engagement, but to accelerate it. And we need to do it now. The BSS and the EaP are the most appropriate formats for that engagement, as far as these initiatives (i) emphasize interaction within global capital markets, and different patterns and models of all-inclusive economic development, (ii) promote economic cooperation throughout the wider Black Sea area and (iii) will encourage further confidence among the regional actors, and enhance their stability and security. But there are some unanswered questions on the ground and the first among them are on the regional security issues and dilemmas, and we need to find answers to them or at least to identify and qualify them accordingly.

On the Regional Security Risks, Dilemmas and the Existing Mechanism in the Wider Black Sea Area. What is Needed To Be Done?

As I admitted above, in today’s intensely competitive international economic environment, the concepts of “development” and “security” are intertwined and can no longer be viewed as separate subjects which are the case for the existing Black Sea internationally formatted organizations. They try to operate within their own institutional framework, do not communicate or exchange data or even debate or discuss some “interdisciplinary” issues and problems. They exist within their institutional, political vacuum and that, by the way, makes Europeans more than cautious, specifically when they come close to the unresolved or evolving security dilemmas of the wider Black Sea area. So we need to concentrate a bit on those issues and try to look at them through the regional lens- es but as well projecting those developments, risks, challenges and the capacity to tackle with them on a broader strategic landscape. As I acknowledged it earlier, the Black Sea area vividly demonstrates in all its complexities the problems with which we are confronted (and sometimes confounded) in so many troubled regions of the world today. What is more, at certain levels of analysis, we will see that this region is at the same time the font of many of the difficulties that we face and is also a principal artery through which so many of the problems with which we are concerned today are transmitted to the wider world. As a region, it has a surfeit of security challenges stemming from unresolved regional conflicts, frozen conflicts, energy supply, illicit trafficking, and of course, the neighboring conflicts in Iraq and Afghanistan. These challenges are exacerbated by multiple borders, difficult terrain, and the presence of unsecured highly radioactive sources, well-established smuggling channels and terrorist activities. Volume 3 Issue 4 2009 15 THE CAUCASUS & GLOBALIZATION

Both intelligence and law enforcement sources indicate that there is substantial North-South trafficking in different devices with sophisticated components, taking place in areas such as the North- ern Caucasus (and then through Georgia maybe), and as noted, subsequent delivery to Iraq or Af- ghanistan. All my experience tells me that there can be a direct correlation between the success and failure of such a venture and the level of intimacy of international cooperation which can be brought to bear on it. The central question for us is, “will this complex region become a gateway or bottleneck to stability and security?” Given that security and stability are a necessary condition for sustainable and irreversible economic development, the challenge to us is to fit and adjust existing mechanisms to the current trends and developments in the region and beyond it and then, ideally, to reach beyond them, to further develop overall cooperative mechanisms. For example, the crippled state of the utterly mismanaged conflict resolution processes in my part of the world. This region is filled with live conflicts, frozen conflicts, border conflicts, economic conflicts, and social disintegration in certain areas. And because violence loves a vacuum, consequently through it flow weapons, terrorists, drugs, and vulnerable energy supplies—in short, all the things that produce a prime testing and transit ground for political and military movements on the one hand, and specific armed tactics and weaponry, on the other At the outset, I would like to pose a slightly rhetorical question: Are there any existing unified and functioning regional security mechanisms in the wider Black Sea area? Our conclusion, sadly, is that there are none: even under the NATO umbrella. And although the absence of a formal security arrangement is not necessarily catastrophic, the fact that they do not belong to NATO or any other regional framework forces the regions and countries into a sort of insecurity grey area—hence their particular vulnerability to conflict and exploitation. I would also agree that in an environment of reduced resources and increased risk, no country, by itself, can significantly reduce the multiple and translational threats which everyone faces. The point is that these threats are not just to individual countries, but, because the region is a major transit area, they are contagious threats, which flow out to infect the wider world. What brings us back to the concept of developing effective networks of cooperative, mutually supporting and integrated structures to detect and interdict terrorist traffic and people, weapons, and its criminal lifeblood, drugs and the precursor chemicals? Obviously, high on the worry list are WMD Terrorist threats, but increasingly moving up the list are IED exchanges of materials and knowledge. These issues are of utmost interest for the entire international community, and first of all for the European one, which sits right at the adjacent distance from that vibrant area and some parts of which are currently formal components of the EU and the Euro-Atlantic alliance. Given that no country in the region has the resources, or possibly even the will to take on this burden for itself, the answer must lie in building partner-country capacity and regional cooperation. And we all know that this can only be done through the creation of an effective integrated structure. If we were to draw an inventory regarding the existing security mechanisms in the wider Black Sea area, the depressing truth is the list would be shockingly short: BLACKSEAFOR, Black Sea Harmony, SECI, maybe GUAM, and by all means, BSEC. By the way, I still keep saying that the BSEC has an unused potential and capacity to become more actively involved in the regional security equations. And by doing so, has a direct impact on the wider security problems, an essential component of which is the sustainable and all inclusive economic development. In my view, there has been a major change in how external actors perceive our region and the resultant recalibration of the notion of security and development in general as it applies to the region. This is partially because the content and context of the wider notion of global security have changed dramatically at every level. This notion has become both more complex and much more multi-facet- 16 Volume 3 Issue 4 2009 THE CAUCASUS & GLOBALIZATION ed: its facets are now interdependent, interconnected, and intertwined. As statesmen and practition- ers, we are all still going through a painful adaptation to this reality. In this new reality, we are all training ourselves to see the links between different levels of analysis and understand their meanings. Weapons are the products of conflict. Conflicts are the products of, and causes of, change. And the change is endemic and accelerating in Global Society. Increasingly, we know we must conceptually integrate. Consider, for example, the effect of floods and draughts caused by global warming on a region plagued with protracted conflicts, filled with some uncontrolled and partially lawless territories and prone to be a hotbed of development of asymmetric threats. To those of us who have been charged, at either a national state level or within the international organizations, with planning for these eventualities and moderating these strains, this poses two pressing questions, “Have we done enough? “Could we have been more successful?” With hindsight, reviewing my time as Foreign Minister of Georgia and as General Secretary of the BSEC Secretariat, I might say “yes, we have done a lot,” but the world has changed, the notions and the context of politics and the policy-making have changed and what has remained unchanged are the mindsets and perceptions and that is why the notions of development and security have been interpreted differently by almost all regional actors. They have their own traditions and practices and they pursue their own strategic goals and agendas. So we live in a post-modern world with new kind of threats, challenges and risks whereas the mindsets and the existing mechanisms to tackle with these threats are just modern or even pre-modern in some regional countries. So we need first to specify exactly the space in which we live, the threats and risks which we encounter, and the instruments we have in our possession with which to operate. This then lets us isolate the contagions which we might spread to the wider community. This process also helps us to raise, for example, the consciousness of the European and the NATO communities with respect to our problems and opportunities, and to bring closer together the regional actors, and also helps us all to focus on the threats, problems and opportunities which confront us and, through us, impact on the wider worlds of both the West and the East. There is a tendency amongst some in our area deliberately to focus upon the easiest and most acceptable topics such as economic development whilst, at the same time, to ignore the political and security problems which beset us all. This narrow focus is, of course, self-defeating, as there can be no adequate economic process without a parallel process of resolving the political and security problems which we confront. It is abundantly clear that inflows of foreign direct investment into the wider Black Sea area are low, largely because there is no comprehensive mechanism for managing these continuing conflicts and disputes and hence providing security. This low investment, of course, creates a feedback loop of further insecurity which proliferates instability. Good politics makes good economics and vice-versa. Political stalemate invites economic stagnation, which fosters disintegration and conflict. So it is particularly appropriate that today we go beyond the existing regional security mechanisms and focus instead our attention upon the complexities of these problems and try to identify a broader context in which we will need to discuss, operate, and hopefully resolve these pressing and shared foreign and security policy challenges and concerns. And starkly, if our region cannot become a more integrated, dynamic, political and economic region, it will remain an area congenial to terrorists and fa- vored by asymmetric warriors. A grey area, through which can transit (in all directions) dangerous, determined people and their innovative weapons, a bacillus which can infect both East and West. These threats and risks move with frightening speed, and infect people, countries, and conti- nents at great distances. And the wider Black Sea area is the heart through which these viruses get pumped. None of us alone can succeed in tackling these problems at the regional, international or global level. Too often, in my region, we try to do just that. Our drive must therefore be to bolster regional cooperation based upon the mutual assessment of threats and opportunities, and to create effective (that means not bureaucratic) regional structures for Volume 3 Issue 4 2009 17 THE CAUCASUS & GLOBALIZATION coming to grips with the problems and seizing the opportunities presented. If we do not, the viruses spilling through this region will continue to have an accelerating and deathly effect on conflicts way beyond our region. We do not need anything as drastic as a heart transplant, but nor do we need anything as minor as a pacemaker. What we do need is a stronger, healthier heart. But that’s not only a workload for the regional actors to accomplish. That needs some concerted actions and engagement of some joint capacity of the EU and NATO and it would be more than desirable if Russia joins that endeavor. But we need to forward some clear-cut messages about our aspirations and problems and in that regard, I think that our immediate addressee should be Europe, our immediate neighbor and maybe a future partner.

Some Message for Europe: It is Time to Be More than Just “Visible Mais Absent”

Since the referendums in 2005 in France and the Netherlands, there has been an avalanche of debate about the future of Europe. That debate must necessarily be centered within the European Union. But that debate, and the actions and policies that eventually emerge from it, will have a profound and fundamental impact on the future of the wider Black Sea area. In recent years, Europe has made some brave, bold and controversial moves, and none were so brave, bold or controversial, as it turns out, as the last enlargement to incorporate 10 states in Central and Eastern Europe. That enlargement, and the prospect of future enlargement into the Balkans, is said to have been a factor behind the rejection of the European Constitution by voters in France and the Netherlands. The popular fear of a wave of immigration—or “social dumping,” as some have termed it, from East to West may certainly have played a part. The perception of the supposed threat posed by low- wage “Polish plumbers,” “Turkish kebabci,” “Georgian nannies” or “Moldovan mechanics” seems to have struck a sensitive public chord. And as every politician knows only too well, “perceptions are reality.” So if recent events suggest that the perception in certain Western European states is that economic and social threats emanate from the east, what is the perception when one looks at developments in Europe from that very region? Many commentators have emphasized that the last EU enlargement has been perhaps the most successful European policy since the 1950s, when the first moves to create a European entity cement- ed the reconciliation of France and Germany. Perhaps that is only a perspective of Europe’s political and media elites. But it certainly worked in the accession states, where the prospect of EU membership clearly underpinned the peaceful transformation of former communist economies, and helped to introduce and entrench democratic values. That enlargement did partially affect the Black Sea region. But the next one—if there is a next one—will fully affect the region. Of the 12 member states of BSEC, Greece, Rumania and Bulgaria are the EU members. Accession talks with Turkey were renewed in the end of 2008. Serbia is covered by a broader EU commitment to the Western Balkans. Ukraine has made no secret that it sees its future in Europe. So too has my own country, Georgia. All BSEC states that are not on a direct accession path are subject to the still-evolving ENP that seeks to reward, in some still ill-defined way, the countries that embrace “European norms and values.” The only exception is Russia, which one could argue already has a “special” strategic relationship with Europe. It is perhaps ironic that, at a time when many people in what I will call “established Europe” are so disenchanted with the European project, its allure and attraction continue to exert such power and influence over EU’s Near Abroad. 18 Volume 3 Issue 4 2009 THE CAUCASUS & GLOBALIZATION

Let me, as an example, talk about my own country. Georgia has never appeared on any list for accession. Yet the European flag flies alongside Georgia’s national flag in front of Parliament and other public buildings. We can do so because it is also the official flag of the Council of Europe, of which we are a member. But that flag does not fly there to impress visiting European officials and politicians to support Georgia’s hopes. It is no publicity or public relations stunt. It flies there because it serves as a psychological anchor in a country which has been wracked by civil war and economic collapse. The ENP and its follow-up—the EaP—is necessarily a bilateral affair between Brussels and individual Black Sea countries. But it should mix a regional dimension as well and the BSS is the first cautious step in that direction though the BSS itself also needs to be much more inter-active, and involve a cross-section of the societies involved, and especially the business community, both from within the region and more widely in Europe. If the referendums in France and the Nether- lands have taught us anything, it is that policies and programs that are the exclusive preserve of political elites are always at risk of a popular backlash. As I have already mentioned, this is forcing Brussels to at least take a political pause with respect to the European Union’s enlargement. And this will only raise the significance of the further development of economic relations between the Black Sea countries and the EU. This breathing space will leave room to propitiously decide the fate of the unity between Europe and the Black Sea area, as well as the Black Sea area’s affiliation with Europe and the European civilization. I described above the ways this cooperation might be built in the current conditions. And I also mentioned how pointless and even detrimental political speculations on this account are. But nevertheless I must still ask one question that goes beyond the bounds of purely economic cooperation and economic pragmatics. I noted that most people in the wider Black Sea area are al- lured with the engagement by the EU, and some regional actors are sort of irritated in this regard. It would be understandable, but what is the substance of Russia’s, Turkey’s, Greek’s “Good Neighbor- hood Policy” in the wider Black Sea area if that policy exists at all?! That all of us in both Europe and the wider Black Sea area are facing uncertain and perhaps even irrational times is patently obvious, while the outcome is clearly not in sight. So perhaps we should not spend too much of our time speculating on end-games or future political structures and relationships. There are more than enough pundits, analysts and commentators who will happily and freely do that job for us. But I can’t help but to observe that from my perspective, “the wish to belong to the democratic community of Europe has been a powerful factor for both change and stability in Europe. Member- ship of the EU played an important part in the consolidation of democracy, first in southern Europe and then in central Europe. Not many revolutions are entirely peaceful and few result in stable democratic outcomes.” Those words, by the way, are not mine, but were written by Javier Solana, former EU’s High Representative for the Common Foreign and Security Policy. The old “Iron Curtain” never quite killed the hopes of millions of people in Eastern Europe. But if a Euro-Curtain dividing haves and have-nots were ever to descend over the wider Black Sea area, I fear that it could. The people of the wider Black Sea area understand perfectly well why the current circumstances may have compelled Europe to push the pause button; but to pause, at least according to my Oxford Dictionary, does not mean “to stop.” And there is no pause button when it comes to the desire of millions of people in the wider Black Sea area for peaceful reform, democracy, stability and security, the very things that Europe so eloquently stands for, and which it has so successfully cultivated across other parts of the continent. So pause if you must, but as you pause, please bear in mind that in a potentially volatile region such as ours, with its unresolved conflicts and still emo- tionally raw ancient rivalries, there are always forces at play whose only desire is to push the re- wind button of history. It would be ironic. No, that is not the right word. It would be tragic if one day a common Eu- ropean defense and military policy should emerge not in response to crisis and disasters in faraway Volume 3 Issue 4 2009 19 THE CAUCASUS & GLOBALIZATION places in Africa or Asia, but as an urgent need to patrol Europe’s “frozen frontiers” and to contain chaos and instability in its Near Abroad. So our message to Europe and specifically to the EU is: It is time to be more than just “Visible Mais Absent.” It is time to be visible and relevant. But it is also time for the Black Sea regional actors to be realistic and innovative. If these two vectors intersect and fit each other, then that synergy may produce some real, practical and feasible results and not only for some organizations or countries but for the peoples of the wider Black Sea area and far beyond. So let us not be consumed by specific structures, outcomes or end-games. Let us just get on with the job. Let us embark on the journey. And who knows, we may all be pleasantly surprised when we arrive at our eventual destination.

Jannatkhan EYVAZOV

Ph.D. (Political Science), Deputy Director of the Institute of Strategic Studies of the Caucasus, Deputy Editor-in-Chief of Central Asia and the Caucasus (Baku, Azerbaijan). IRAN’S SECURITY INTERESTS AND GEOPOLITICAL ACTIVITY IN CENTRAL EURASIA

Abstract

he author investigates the specifics of hind Iranian policies? What urges Iran to T Iran’s geopolitical activity in Central act at the supra-regional level? What tac- Eurasia in the post-Soviet period. tics does it employ? These and other re- What are the central security interests be- lated topics are discussed in detail.

I n t r o d u c t i o n

Geography, history, and ethnic and confessional affiliation tie Iran to Central Eurasia.1 The death of the Soviet Union made the region doubly important for the Islamic Republic of Iran (IRI). On the one hand, the IRI was finally freed from a much stronger power center: from that time on the

1 Here and elsewhere I rely on the concept of Central Eurasia and Central Europe formulated by Eldar Ismailov, according to which Central Eurasia includes three post-Soviet regions: Central Europe (Belarus, Moldova, and Ukraine); the Central Caucasus (Azerbaijan, Armenia, and Georgia); and Central Asia (Kazakhstan, Kyrgyzstan, Tajikistan, Turk- menistan, and Uzbekistan) (for more detail, see: E.M. Ismailov, “Central Eurasia: Its Geopolitical Function in the 21st Century,” Central Asia and the Caucasus, No. 2 (50), 2008, pp. 7-29). 20 Volume 3 Issue 4 2009 THE CAUCASUS & GLOBALIZATION newly created geopolitically autonomous space has been serving a buffer zone to the north of its borders. However, on the other, it turned out to be a source of new security threats. Previously controlled by one power, the region became an arena of stiff rivalry among Iran’s old contenders (Russia and Turkey) and its current opponents (the U.S. and its European allies). From that time on Iran’s security has been interconnected, in a functional way, with the newly independent states that sprang into existence in this region. This forced the IRI to step up its activities in relation to the newly independent states in the north and the powers seeking geopolitical control over Central Eurasia now free from Soviet domination.

Specifics of Iran’s Contact with Central Eurasia

Iran borders on the Central Caucasus and Central Asia, two out of three Central Eurasian regions. In the absence of adequate capability of its influence projection, this inevitably limits its geopolitical role in Central Eurasia as a whole. From the geographical point of view, Iran should demonstrate much more functional activity in the Central Caucasus than in Central Asia for the simple reason that it directly borders on two out of three states: it has a 611-km land border with Azerbaijan and a 35-km border with Armenia. Its land contact with Central Asia, however, is longer: 992 km with Turkmenistan and 936 km with Afghan- istan (if the latter is counted as a Central Asian state). This means that its geographic contact with Central Asia is three times longer than its Central Caucasian border. The answer to the question of why the Central Caucasus is much more important for Iran’s security policies should be sought in the geography or, rather, the geographic specifics of its supra-regional political structure. The Central Caucasus is much smaller than Central Asia, but Iran has land contacts with two out of three states in the former, while it only shares borders with two (if we count Afghanistan) out of six states in the latter. The smaller territory and land borders with most of the regional states in the Cen- tral Caucasus mean not merely much greater possibilities for sustainable regional influence. Other powers have similar advantages, which diminishes the region’s function of a buffer between Iran and its rivals. In Central Asia, the IRI faces much weaker and geopolitically much less active actors. In the Caucasus, on the other hand, it borders on Turkey, the rivalry with which goes back into history. Their interests in various spheres, the Central Caucasus being one of them, can be described as clashing. Geography cannot explain everything, but the specifics described above largely stimulated Iran’s different post-Soviet policies in the two regions. Iran has a sea border with Azerbaijan, Kazakhstan, Turkmenistan, and Russia; the Caspian Sea (which can be described as a focus of still unresolved military-political and economic problems) is another functional component of Iran’s security closely connected with that of the Central Caucasus and Central Asia. The repeated attempts of the five Caspian states to consolidate the security regime for the Caspian, in particular through settling its international legal status, have failed so far.

Macro Conditions Before and After the Soviet Union’s Disintegration

The interdependence between Iran’s national security and that of the Central Caucasian and Central Asian states does not hinge on geography alone. It is deeply rooted in the rich history of dom- Volume 3 Issue 4 2009 21 THE CAUCASUS & GLOBALIZATION ination of the Persian Empire over the regions. In fact, vast stretches of the Central Caucasus and Central Asia belonged, for more or less prolonged periods, to the Persian Empire.2 Iran’s rivalry with other powers in the region likewise goes back into history. The region’s pre-Islamic period can be described as Iran’s military-political and cultural hegemony3; later it had to compete for domination with other powers, the Russian and the Ottoman empires being the strongest rivals. “It seems fairly clear that a triangle has existed for over 250 years between Russia, Turkey, and Iran, in the different forms that these states have taken; from empires in the eighteenth and nineteenth centuries to republics at the start of the twenty-first.”4 Despite the rich history of Iran’s contacts with the Central Caucasus and Central Asia, the post- Cold War geopolitical order offered Iran relatively less favorable conditions. It even became much more vulnerable to regional security threats while the new world order was taking shape. First, throughout Soviet history, the Soviet Union and Iran created a mutually acceptable security regime. The Soviet Union controlled the Central Caucasian and Central Asian republics and kept the ethnoterritorial challenges on Iran’s northern borders in check. The bilateral relations on the Cas- pian were based on the treaties of 1921 between the R.S.F.S.R. and Persia and 1940 between the Soviet Union and Iran, which kept third countries away.5 The new realities destroyed the regime and made Iran’s northern land and sea borders much more vulnerable. On the other hand, the potential military threat presented by a large northern neighbor disappeared, at least theoretically, with the disappearance of the Soviet Union. From that time on Iran could strengthen its position in the liberated regions and set up a buffer zone there.6 In practice, however, the dangers created by the fairly vague post-Soviet security regimes in both regions, political instability, and armed conflicts in the newly independent states and between them coupled with Tehran’s obvious failure to capitalize on the opportune moment to set up a sustainable northern buffer out- weighed the newly created geopolitical advantages. The international legal regime of the Caspian underwent radical changes: from that time on Tehran had to face four coastal states instead of one with different approaches to the problem and no less different foreign policy orientations. The Caspian Sea was gradually becoming militarized before the Iranian leaders’ eyes, while third powers were gradually gaining a foothold in the basin. Second, seen from the West, the Soviet Union looked like the main ideological enemy and an alternative to the liberal-democratic world. In fact, the politicization and securitization of the Soviet Union as an enemy distracted the West’s attention from other no less rigid and ideologically biased regimes. They, in turn, used the fairly favorable conditions created by the rivalry of two “super ideologies” to extend, on the sly, the fields of their political maneuvering and profit from the rivalry in many other ways. The West explained wars, military coups, revolutions, and other social cataclysms in the world’s “periphery” by the global confrontation of ideologies. With no Soviet Union in sight, the West, which places much more emphasis on liberal approaches to security issues, turned its gaze toward other “incorrect regimes,” Iran being one of them. The desire to remove the Islamist regime was intensified by geopolitical and energy-related considerations and possible dividends created by control over Iran. Several consecutive events

2 See: A. Maleki, “Iran and Turan: Apropos of Iran’s Relations with Central Asia and the Caucasian Republics,” Central Asia and the Caucasus, No. 5 (11), 2001, p. 90. 3 Ibidem. 4 S.E. Cornell, Small Nations and Great Powers. A Study of Ethnopolitical Conflict in the Caucasus, Curzon Press, 2001, p. 24. The author referred to the Caucasus yet the above is equally true of Central Asia. 5 See: R. Mamedov, “Military-Political Activity in the Caspian in the Post-Soviet Period (Legal Aspects),” Central Asia and the Caucasus, No. 4 (46), 2007, p. 80; V. Kondaurova, “Looking for a Way to Resolve the Legal Status of the Caspian Sea: International Law Provides No Answer,” Central Asia and the Caucasus, No. 6 (54), 2008, p. 76; N.Z. Ter- Oganov, “Iran, problema statusa Kaspiyskogo moria i energoresursy,” Institute of the Middle East, 21 February, 2008, available at [http://www.iimes.ru/rus/stat/2008/21-02-08.htm]. 6 See: A. Maleki, op. cit., p. 95. 22 Volume 3 Issue 4 2009 THE CAUCASUS & GLOBALIZATION

(Iraq’s aggression against Kuwait in 1991; the Taliban gaining power in Afghanistan in 1996, and the terrorist attacks of 9/11) worsened Iran’s relations with the United States and its NATO allies. NATO expanded its military presence in Eurasia and used its armed forces to remove the local radical regimes.7 The unfavorable macro conditions Tehran had to cope with in the post-bipolar world were coupled with its fairly insufficient material, political, and ideological potential to be used for active and efficient geopolitical maneuvers in the post-Soviet south. The country’s economy, which was not very strong despite its large oil and gas reserves, limited, to a great extent, its power-projection capability of achieving sustainable influence in the neighboring geopolitical areas. The economic problems of its limited capability (the specifics of the Iranian economy proper aside) were caused by the sanctions imposed on Iran by the United States and some of its Western allies.8 Iran’s military-political potential leaves much to be desired: its technical and technological components depended on import, the stability of which, and external military-political support of Iran for that matter, were highly unreliable because it remained a fairly isolated country. In fact, it entered the post-bipolar era encumbered by numerous problems with neighbors; it has no allies to turn to if an active geopolitical game around it goes the wrong way. Its main historical rivals—Russia and Turkey—are in a much better military-political position. Russia has its huge military-industrial complex at its disposal coupled with the inherited military potential of the “second superpower.” As a NATO member, Turkey could count on its allies. De- prived of these advantages, Iran could only count on itself, which prompted circumspection and even caution when dealing with relatively delicate geopolitical problems, especially those in which its old geopolitical rivals were also interested. Iran could not go far with the help of its cultural-ideological potential (“soft power” to use J.S. Nye’s term).9 First, the Central Caucasus and Central Asia are ethnically closer to the Turkic heritage, and hence to Turkey rather than to Iran. In theory, Iran can rely on its “soft power” only in ethnically and linguistically close Tajikistan and Afghanistan.10 Reliance on a shared confessional identity is very much limited by different Islamic trends in most of the countries of both regions and in Iran. Azerbaijan is the only country which shares Shi‘a Islam with Iran; all the other countries, even ethnically close Afghanistan and Tajikistan, follow the Sunni tradition. Though it should be said that at the dawn of the new Eurasian order Iran tried to impose “its own brand of Islamic fundamentalism.”11 Vladimir Mesamed has the following to say about the role of the religious factor in Iran’s activities in post-Soviet Central Asia: “Iran also pinned hopes on confessional unity, yet it cannot be employed in each and every Central Asian state. First, there is no absolute unity since the majority of the local population are Sunnis. On the other hand, the majority of the Central Asian states have not yet acquired a fertile soil for Islam to strike root. Islamic resurrection in Kazakhstan, Kyrgyzstan, and Turkmenistan is slack. In contrast to what is going on in Uzbekistan and Tajikistan, these countries

7 In 2002, the George W. Bush Administration listed Iran among the “axis of evil” states. 8 See: O. Oliker, “Conflict in Central Asia and South Caucasus: Implications of Foreign Interests and Involve- ment,” in: Faultiness of Conflict in Central Asia and the South Caucasus. Implication for the U.S. Army, ed. by O. Oliker, Th.S. Szayna, Rand Corporation, Santa Mónica, 2003, p. 209. 9 On “soft and hard power,” see: J.S. Nye, “The Changing Nature of World Power,” Political Science Quarterly, Vol. 105, No. 2, 1990, pp. 177-192; Idem, The Paradox of American Power. Why the World’s Only Superpower Can’t Go It Alone, Oxford University Press, Oxford, 2002. 10 Several of the Caucasian peoples (the Ossets, Talyshes, and Tats) have Iranian ethnic roots, but they are too small and politically dependent. Russia’s recognition of South Ossetia independence did not make this separatist unit independent de facto. 11 O. Oliker, op. cit.; R. Sokolsky, T. Charlick-Paley, NATO and Caspian Security. A Mission Too Far? Washing- ton, 1999, p. 44; V. Sazhin, “On Relations Between Iran and Azerbaijan,” Central Asia and the Caucasus, No. 4 (28), 2004, pp. 89-90. Volume 3 Issue 4 2009 23 THE CAUCASUS & GLOBALIZATION have much less new religious schools, they print less religious books, there are less religious institutions there, and a much weaker pull to the holy places.”12 William Johnston believes that “the lack of success in exporting the Islamic Revolution to the Persian Gulf countries, and the legacy of the development of Islam under the Soviet Union” damp- ened its desire to place its stakes on revolutionary Islam in the south of the CIS.13 Second, the social, political, and economic model of the IRI could not be taken as a national self-determination or state development model for the Central Caucasian and Central Asian republics, which had just escaped the Soviet Union’s imperial system. The newly liberated countries wanted to join the ranks of secular democratic states with developed market economies. The Irani- an regime differed very much, to say the least, from the “international standards” these countries were pursuing. Still, Iran’s security interests in the Central Caucasus and Central Asia inevitably produced certain manifestations. At the same time, the unfavorable macro factors described above affected the forms and intensity of Iran’s regional involvement.

Central Eurasia as Seen through the Prism of Iran’s Security Interests

Since it was obviously impossible to draw the regional states into its sphere of influence in the short-term perspective and because of the unfavorable external conditions fraught with West-generated security threats, Iran was concentrating on developing relations with Russia as the legal heir to the former metropolitan country of the Central Asian and Central Caucasian republics, relations with which came second in the list of priorities. A military-political alliance with Russia against the United States and its NATO allies remains vitally important for Iran (this includes supplying Russian arma- ments and rendering assistance in the sphere of nuclear technology).14 This priority dominates the Iranian foreign policy agenda for Central Eurasia as a whole. In Central Asia, the Central Caucasus, and Central Eurasia as a whole, Iran was mainly concerned with preventing their transformation into a military-political springboard of the United States and its allies (Turkey included), which could be used against it either in the form of direct aggression and containment, or in the form of other acts designed to undermine its political system. This could be achieved in three different ways. n First, through domination (which proved unattainable in the short-term perspective for the reasons described above). n Second, keeping any other power away from the regions or, as R. Burnashev put it, “maintaining the power vacuum in the region and excluding outside powers”15 could hardly be realized because the regions rich in very much needed resources (oil and gas in particular) were too tempting to be left alone. n Third, to help the former metropolitan country restore its domination.

12 V. Mesamed, “Iran: Ten Years in Post-Soviet Central Asia,” Central Asia and the Caucasus, No. 1 (13), 2002, p. 29. 13 See: W. Johnston, “Iran’s Cultural Foreign Policy in Central Asia and the Southern Caucasus since 1991,” Cen- tral Asia and the Caucasus, No. 4 (46), 2007, p. 109. 14 See: O. Oliker, op. cit., p. 210. 15 R. Burnashev, “Regional Security in Central Asia: Military Aspects,” in: Central Asia. A Gathering Storm? ed. by B. Rumer, M.E. Sharpe, New York, 2002, p. 129. 24 Volume 3 Issue 4 2009 THE CAUCASUS & GLOBALIZATION

The latter, the “lesser evil,” was much more attractive than the post-Soviet “power vacuum” filled in, in the course of time, by Turkey or, worse still, the United States. On top of this, the “geopolitical concession” to Moscow could serve as the cornerstone of a future alliance with the concomitant advantages of re-arming, nuclear and missile technologies, etc. Russia could have performed the function which in the past belonged to the Soviet Union: that of containing the threats to Iran’s security created by the ethnoterritorial and confessional factors. Indeed, there are enough weak points along the country’s northern border with the Central Caucasus and Central Asia to trigger a profound crisis in its state system. Iran’s vulnerability caused by the ethnopolitical processes underway in the regions is much clearer than in case of Russia; this is explained by these states’ different ethnic structures. Russia and Iran are both ethnically heterogeneous states, although the correlation between the titular nations and the so-called minorities (including those living in compact groups in the Northern Caucasus in the case of Russia and in the Southeastern Caucasus in the case of Iran) differs. n First, the Russians, as the titular nation, comprise about 80 percent of the country’s nearly 140 million-strong population. n Second, over one-third of the population of the Northern and Central Caucasus are Russians and Cossacks, which ties the regions closer to Russia. In Iran, on the other hand, about 50 percent of the population is non-Persian (non-Iranian),16 mainly Turkic ethnic groups (Azeris and Turkmen) living in compact groups in the country’s north, which borders on the Central Caucasus and Central Asia (Turkmenistan). These groups are ethnically more closely connected with Azerbaijan in the north, Turkmenistan in the northeast, and Turkey in the northwest than with the Persians, who form the titular nation of Iran. This means that Iran is vulnerable to transborder ethnopolitical impact, mainly from the three states enumerated above. Brenda Shaffer has correctly written in this respect: “Iran’s ethnic groups are particularly susceptible to external manipulation and considerably subject to influence from events taking place outside its borders, since most of the non-Persians are concentrated in the frontier areas and have ties to co-ethnics in adjoining states…”17 While external ethnopolitical influence on Russia might, in the worst-case scenario, cost it the Northern Caucasus with its non-Russian population, in the case of Iran such impact might cost it its statehood. By its very existence, the Soviet Union bridled the centrifugal trends in Iran, therefore “in anticipation of the mounting separatism in their multinational country, spurred on by the social and political processes in the U.S.S.R., the Iranian leaders did not rejoice at the Soviet Un- ion’s disintegration.”18 Despite its varied ethnic affiliations, the Iranian population is Shi‘a Muslims, which keeps the ethnic groups together in one state. This partly explains the rigid domestic regime of the Islamic republic; any threat emanating from different state ideologies is taken as a threat to Iranian statehood. This specific feature of Iran’s political regime adds to its hostility toward Turkey, Azerbaijan, and the United States, which are building up their regional presence. The Caspian is the focus of Iran’s security interests and an area of the shared interests of Iran and Central Asia (Kazakhstan and Turkmenistan), Iran and the Central Caucasus (Azerbaijan), and Iran and Russia. It is the sphere where Iran is most vulnerable to military threats, first, because the sea is not yet completely demilitarized and because the coastal states are strong enough to reach and attack Iran’s Caspian coast. Second, the sea might be further internationalized with the fleets of third countries (America, Turkey, and other NATO members) being deployed there.

16 See: B. Shaffer, “The Formation of Azerbaijani Collective Identity in Iran,” Nationalities Papers, Vol. 28, No. 3, 2000, p. 449. 17 Ibidem. 18 V. Sazhin, op. cit., p. 89. Volume 3 Issue 4 2009 25 THE CAUCASUS & GLOBALIZATION

Iran keeps its main naval forces in the Persian Gulf, while the Caspian is still regarded as a theater of secondary importance.19 This is quite logical because the Gulf has been and remains a zone where the United States and its allies might deliver their strikes. In Soviet times the Caspian was protected by bilateral Soviet-Iranian treaties on the regime of the Caspian Sea. In the early 21st century, statements about the need to demilitarize the sea were accompanied by its militarization. Today, Russia has the strongest naval group; while Azerbaijan, Kazakhstan, and Turkmenistan are developing theirs. The rich offshore oil and gas fields, the still unidentified international legal post-Soviet status of the sea, which prevents clarification of issues related to its natural resources, and the dislocation of the armed forces of the coastal states make the situation even more complicated. Since the mid-1990s, the oil and gas offshore fields have been developing with Western involvement.20 This is another source of Tehran’s great concern. The possibility of the sea’s internationalization is a source of numerous concerns: it may cause its militarization in the form of arms supplies by external powers to the navies of the coastal states or even their permanent military presence in the sea. Iran’s behavior in the Caspian and Central Eurasia is explained by the logic of possible military threats. In the most general form, this space is Iran’s strategic rear, the importance of which is determined by the dynamics of the U.S.-Iranian confrontation unfolding in the Gulf theater and on Iran’s western borders with Iraq and Turkey. This means that Tehran’s priority in Central Eurasia as a whole and in the Central Caucasus and Central Asia in particular is to prevent transformation of this space into a hostile segment of its geopolitical sphere and to prevent its use as a toehold of containment or even an attack (by the United States and its allies). Since Russia is the main regulatory factor in the regions, Iran is treading cautiously there (despite certain fairly urgent problems) and never fails to demonstrate its respect for Russia’s “special” interests.

Specifics of Iran’s Geopolitical Activities

In the post-Soviet period, Iran’s efforts to secure its most vulnerable points created fairly stable amity/enmity perceptions of the regional states and external powers: Azerbaijan, Turkey, and the United States came to be seen as hostile actors, while Armenia and Russia (which opposed the strengthening of the former group’s regional positions) as friends. Iran’s behavior in the region fully corresponds to this: while being aware that its national security depends on Azerbaijan and Turkey, Iran is building up another dependence vector, namely, Russia and Armenia. In fact, Iran is using Armenia and Russia to oppose Azerbaijan,21 in order to prevent its strengthening and perpetuate its present vulnerability. At the same time, Armenia is building up its military-technical regional potential with the help of Russia, which is helping to strengthen Iran’s position vis-à-vis Azerbaijan and, most importantly, Turkey. To be more exact, the “Armenian buffer” designed to check Turkey’s trans-regional influence is being set up and consistently strengthened. The Turkic ethnopolitical influence on Iran’s northern part should be contained; besides, this fits the logic of the Iranian-Turkic rivalry in the Central Caucasus and Central Asia.

19 See: P. Lakiychuk, “Regionalnaia sistema bezopasnosti na Kaspii. Mezhdu ‘Caspian Guard’ i KASFOR,” Cher- nomorska bezpeka, No. 1 (5), 2007, p. 16. 20 Azerbaijan was the first of the coastal states to internationalize the Caspian’s oil and gas reserves. Since 1994, it has signed several agreements with foreign companies on exploitation of its offshore oil fields. By the early 2000s, it had 21 contracts with 33 consortiums for 14 countries (see: I. Aliev, Kaspyiskaia neft Azerbaidzhana, Izvestia, Moscow, 2003, p. 179). 21 See: R. Sokolsky, T. Charlick-Paley, op. cit., pp. 45-46; B. Shaffer, op. cit., p. 450. 26 Volume 3 Issue 4 2009 THE CAUCASUS & GLOBALIZATION

Informal support of Armenia, in particular its war against Azerbaijan, made its traditional geopolitical function, that of a sanitary cordon against Turkey’s impact on the Turkic nations of the Cen- tral Caucasus and Central Asia, much more pronounced. While before 1992-1993, when Armenia occupied the southwestern districts of Azerbaijan as a result of an active phase of the Nagorno-Kara- bakh conflict, the narrowest gap in the land border between Turkey and Azerbaijan22 was about 35 km (in the Meghri District of Armenia), today Turkey is separated by much vaster territories from the former Soviet Turkic areas because of de facto Armenian control over Nagorno-Karabakh and the Azeri areas to the west, east and south of it. Tadeusz Swietochowski has aptly described the geopolitical importance of this: “Karabagh formed a link or a barrier (depending on who controlled it) between the Muslims of the Eastern Transcaucasia and Turkey.”23 Iran’s security relations with Georgia are relatively less intensive, which is explained by geographical factors, namely, the absence of a border between the two countries. The history of social and political relations between the two countries may lead to specific functional behavior patterns. The contacts, especially predating 1801 when Georgia became part of the Russian Empire and after the early 1990s when Georgia became independent, can be described as hostile rather than friendly. In the 16th-19th centuries the Persian Empire waged frequent wars to expand its territory, Geor- gia being one of its targets. The Safavid and Ottoman empires were at war in 1514-1555; 1578-1590; 1603-1612; 1616-1618; 1623-1639; 1723-1727; and 1730-1736. Georgia was repeatedly divided; its eastern regions were incorporated into Iran. Russia and Iran waged two wars: in 1804-1813 and in 1826-1828. In the post-Soviet period, the diplomatic activities of the two countries reached their peak in the mid-1990s, during Eduard Shevardnadze’s first presidency when bilateral economic and cultural contacts became much more intensive than ever before. Later, when Georgia was developing its pro-American and European bias, caution came to the fore. Today, the two countries will probably acquire more hostile ideas about each other and will probably develop behavior forms to match in view of the continued tension between Iran and the U.S. and Georgia’s pro-Western foreign policy course. This tension and the frantic efforts of the United States and its allies to build up their influence on the Iranian northern borders will prompt Tehran to establish a stronger strategic alliance with Russia and Armenia. Iran will spare no effort to undermine the positions of America’s real and potential allies, Georgia in particular. Georgia (energetically supported by the U.S. administration), which is consistently seeking NATO membership, might acquire it; this will strengthen America’s military infrastructure not far from Iran and bring it closer to Iranian territory. At the same time, Russia’s invasion of Georgia in August 2008 weakened the pro-Russian public sentiments in Georgia, which means that its present geopolitical orientation will hardly change. This crisis worsened the relations between the U.S. and Russia and gave motivation for even stronger support of Georgia’s geopolitical identity. This, in turn, will boost the Russia-Iran-Armenia vector and the conviction of these states that they should oppose infiltration of the United States and its allies into the south of the post-Soviet space. In this context, Georgia can be described as a bridge the West can use. The structural factors and the logic of alliances will limit the political leeway of all the actors involved; they will form several groups according to the principle “the enemy of my friend is my enemy.” The “Georgian factor” will come to the fore in the security threats as perceived in Iran and the “Iranian factor” in the structure of Georgia’s security threats. Iran is fairly limited in its influence in Central Asia not only because it has no land border with the majority of the local states but also because the region is a fairly vast one, while the economic and

22 The land border between Turkey and Azerbaijan is limited to the Nakhchyvan stretch (about 15 km long), the area being separated from the rest of Azerbaijan by official Armenian territory. 23 T. Swietochowski, Russian Azerbaijan 1905-1920, Cambridge University Press, New York, Cambridge, 1985, p. 143. Volume 3 Issue 4 2009 27 THE CAUCASUS & GLOBALIZATION military-political potential of the local states differs from that of the Central Caucasian countries. Iran has a common land border with Turkmenistan and Afghanistan, which means that these two countries alone form the ethnoterritorial components of Iranian security and, by the same token, its interest in the region. There is an ethnopolitical tie between Iran, on the one hand, and Turkmeni- stan and Afghanistan, on the other, presented by compact settlements of Turkmen and Baluchis in Iran (about 2 percent each of the total population)24 predominantly in the border areas. Even though their numerical strengths in Iran are roughly equal, the impact of these ethnic groups on Iranian security and Iran’s interdependence with its neighbors depend on certain other cultural, civilizational and political factors. On the whole, the Turkmen question is much more functional in Iran even though separately discussed factors make this assessment fairly conditional. n First, the Turkmen have a state in which they constitute the titular nation, while the Baluchis are a nationality with no statehood of their own; they are scattered among several states as an ethnic minority. On the one hand, in the absence of statehood the Baluchis might acquire international support of their movement for an independent state. Today, this movement is limited to Pakistan’s western provinces. With international support, the Baluchis might form an independent state with the Iranian southeastern districts as its part. On the other hand, the fact that the Turkmen have a state of their own with good economic prospects and that the Iranian Turkmen never severed ties with their historical homeland,25 as well as the presence of external forces wishing to undermine the political regime in Iran, the irredentist trends on both sides of the Iranian-Turkmen border might be stirred up. n Second, the cultural-civilizational distinctions between the Persians (the titular nation in Iran) and the Iranian Turkmen are much more pronounced than the distinctions between the Persian and the Baluchis.26 In other words, the Baluchis, and the Kurds, are much better adapted to a single Iranian state than any of the Turkic peoples. This means that the latter are much more inclined to separatism/irredentism. More than that: the Turkic groups within the IRI or rather their numerical strength and much weaker integration into Iranian society make them an important object of external impact under the banner of Turan or the struggle against the “rogue states.” In view of the rapidly worsening relations with the United States, the latter looks much more realistic. Post-Soviet Tajikistan was a target for Iranian greatest activity even though the countries have no common border. It is hard to say to what extent Tehran is guided by the material aspects of its security interests, yet its attention to Tajikistan is no less functional than to its regional neighbors (with common borders) with much greater aggregate national power. The above is habitually explained by the two countries’ cultural, historical, religious, and linguistic closeness.27 Tajikistan, together with Afghanistan, comprises the Iranian ethnocultural cornerstone in Central Asia: their titular nations—Tajiks and Pashtoons—have Iranian/Persian roots. More than that: traditionally, Islam carries much more weight there than elsewhere in the region (in

24 See: CIA World Factbook 2008—Iran, available at [https://www.cia.gov/library/publications/the-world-factbook/ geos/ir.html#People]. 25 See: V. Mesamed, “Iranian-Turkmen Relations in an Era of Change,” Central Asia and the Caucasus, No. 4 (46), 2007, p. 121. 26 The Persians and the Baluchis belong to the Iranian group of the Indo-European languages, while the Turkmen belong to the Turkic group of the Altaic family of languages. 27 See: Sotrudnichestvo i bezopasnost v Tsentral’noy Azii: sostoianie i perspektivy, ed. by B.K. Sultanov, KISI under the president of RK, Almaty, 2008, p. 215; R. Sokolsky, T. Charlick-Paley, op. cit., p. 47; R. Burnashev, op. cit.; O. Oliker, op. cit., pp. 208—209; Kh. Dodikhudoev, V. Niyatbekov, “The Republic of Tajikistan and the Islamic Re- public of Iran: Cooperation Achievements and Prospects,” Central Asia and the Caucasus, No. 2 (50), 2008, p. 134; Ch.H. Fairbanks, Jr., “Ten Years after the Soviet Breakup. Disillusionment in the Caucasus and Central Asia,” Journal of Democracy, Vol. 12, No. 4, October 2001, p. 55. 28 Volume 3 Issue 4 2009 THE CAUCASUS & GLOBALIZATION

Kazakhstan, Kyrgyzstan, and Turkmenistan). The fact that Tajikistan and Afghanistan are predominantly Sunni countries, which makes them functionally less useful for Iran, should not ob- literate another important confessional factor: that they have the region’s most numerous Shi‘a communities. Tehran is interested in Tajikistan for political reasons: the latter is connected with Afghanistan and influences, to a certain extent, the situation there. For geographical reasons (a common border), Afghanistan might affect Iran’s security. Political instability in Afghanistan, which accompanied the war against the Soviet Union (in the bipolar world), the coming to power of the Taliban, the civil war of the mid-1990s-early 2000s and, finally, the military presence of the U.S. and its NATO allies in Afghan territory remain one of the major sources of threats to Iranian security. Being fully aware that its direct involvement in the Afghan conflict will never help it realize its interests in this country, Iran placed its stakes on the military-political groups inside the country and used its weight to support the so-called Northern Alliance, the anti-Taliban coalition.28 When the Taliban was overthrown, “Iran continued to support its own client groups in Afghanistan (and within the interim government), seeking to ensure their victory in internal Afghan conflict within the North- ern Alliance.”29 It should be said that the groups involved in the civil war in Afghanistan relied, among other things, on ethnic affiliation. While the Taliban was staffed mainly by Pashtoons (members of the titular nation), the Northern Alliance (supported from many sides, including Iran) represented the interests of ethnic minorities (the largest of them being Tajiks, who constituted 27 percent of the total size of the country’s population).30 Nearly all of its leaders—Ahmad Shah Massoud, Burhanuddin Rabba- ni, Mohammad Qasim Fahim, and others—were Tajiks. Stability in Tajikistan and Iran’s position in the country are seen as the main conditions of the continued functionality of its influence in the Tajik-populated north of Afghanistan and, by the same token, of the political groups with large Tajik membership and their potential inside the country. This explains Tehran’s active involvement in settling the Tajik conflict in the 1990s, as well as its cooperation with Moscow in an effort to stabilize the situation in Tajikistan. Iran’s post-Soviet policies were free of any intention to seek close military-political cooperation with any of the two regions’ newly independent states outside Russia’s involvement. The same can be said about Tehran’s institutional initiatives, especially if they could have been interpreted as an attempt to build up Iran’s military-political influence there at Russia’s expense. Iran relied on the economy (energy production, transportation, and investments) to acquire political dividends; in the military-political sphere it prefers to remain in Russia’s shadow or act together with it. In Armenia, its close cooperation is limited mainly to the transport and energy sphere31; in Ka- zakhstan it is involved in investment, energy transportation, and agricultural projects32; in Kyr- gyzstan, in hydropower production33; in Tajikistan, in hydropower production and transportation34; in

28 See: O. Oliker, op. cit., p. 213. 29 Ibidem. 30 See: CIA World Factbook 2008—Afghanistan. 31 Together with Armenia, Iran is building a gas pipeline between the two countries; there are joint projects in the field of electric energy exchange (see: H. Khachatrian, “Armenia’s Energy Sector: A Regional Actor with No Energy Re- sources,” Central Asia and the Caucasus, No. 5 (53), 2008, p. 100). 32 Transportation of products produced in Kazakhstan, including oil and grain, to the world market across the sea along the Aktau-Neka sea route (see: Sotrudnichestvo i bezopasnost v Tsentral’noy Azii: sostoianie i perspektivy, pp. 212-213). 33 In Kyrgyzstan, Iran is involved in building hydropower stations, dams, and power lines to export energy to the north of Iran via Tajikistan and Afghanistan (see: Sotrudnichestvo i bezopasnost v Tsentral’noy Azii: sostoianie i perspektivy, p. 214). 34 In Tajikistan, Iran is building the Sangtuda Hydropower Plant; the Anzob tunnel and a transportation route between the Lower Panj and Herat via Sherhan, Kunduz, and Masar-i-Sharif (see: Sotrudnichestvo i bezopasnost v Tsentral’noy Azii: sostoianie i perspektivy, p. 215; Kh. Dodikhudoev, V. Niyatbekov, op. cit., pp. 135-138). Volume 3 Issue 4 2009 29 THE CAUCASUS & GLOBALIZATION

Turkmenistan, in irrigation, trade, transport and communication35; in Afghanistan, it helps to develop personnel training, transport, communications, and agriculture,36 etc. The post-Soviet status of the Caspian was practically the only stumbling block between Iran and Russia; their continued interaction on the issue showed that the contradictions lay in the economic rather than in the military-political sphere. From the very beginning of the talks on the sea’s new status Tehran insisted that it should remain in the joint use of the coastal states (the condominium principle) or divided into five equal parts so that each of the states acquired 20 percent of the bottom area irrespective of the length of the coastal stretch.37 In this case, the Astara-Hasankuli line (the sea border between Iran and the Soviet Union) would have been pushed about 80 km toward the north. The Iranian variant is based on economic considerations because it would have placed the Alov, Araz and Sharq offshore oilfields (developed by an international oil consortium under an agreement with Az- erbaijan)38 within the Iranian zone. Russia, Azerbaijan, and Kazakhstan share a different approach: they suggest dividing the sea bottom along the median line and placing the surface in common use.39 In fact these countries have already concluded agreements among themselves. Iran and Turkmenistan40 have not done this. Under this variant, Russia will acquire 19 percent of the Caspian seabed; Azerbaijan, 18 percent, and Ka- zakhstan, 27 percent. The three countries will thus control 64 percent of the Caspian seabed. Iran will have to accept from 11 to 14 percent of the remaining 36 percent of the sea bed.41 The Alov, Araz and Sharq oil fields will remain in the Azeri sector. Despite the little-productive talks about the Caspian Sea’s status, Iran is even more concerned with other, rather than economic, issues. This is amply shown by the difference in its activity when discussing different parts of the Caspian package. It is concerned with potential threats coming from the north and caused by possible American and NATO military-political pressure coming from the land stretches of the Caspian countries and the sea. In this respect, Iran is supported by Russia and other Caspian states. This was clear at the Tehran Second Caspian Summit held in October 200742 which discussed the purely legal aspects of the sea’s future status, as well as coordinated their positions on the most urgent geopolitical and security issues. Russia and Iran agreed that no third countries should be present in the sea. This was discussed at all stages of the talks on the Caspian problems and was endorsed at the summit even though no convention of the Caspian’s legal status followed. The final declaration registered the countries’ determination not to allow third countries to use their territories in case of aggression against any of the Caspian coastal states.43

35 Iran is involved in about 50 joint projects, including a hydropower station on the River Tejen and exploitation of the Dostluk water reservoir built with Iranian assistance. A railway along the Caspian eastern coast is being contemplated. It will connect the five coastal states within the North-South transportation corridor (see: Sotrudnichestvo i bezopasnost v Tsentral’noy Azii: sostoianie i perspektivy, p. 217). 36 Iran has offered multimillion grants to training projects for civil servants. In the last three years it implemented 22 agricultural projects (see: M.T. Laumulin, The Geopolitics of 21st Century in Central Asia, KazISS, Almaty, 2007, p. 194). 37 See: N.Z. Ter-Oganov, op. cit. 38 See: Sotrudnichestvo i bezopasnost v Tsentral’noy Azii: sostoianie i perspektivy, p. 212. 39 See: N.Z. Ter-Oganov, op. cit. 40 Turkmenistan objects to the median line idea because the Russian, Azeri, and Kazakhstan variant deprives it of the Kiapaz, Azeri, and Chirag offshore oil fields, which will be found in the Azeri sector. 41 See: N.Z. Ter-Oganov, op. cit. 42 See: A. Lukoianov, “The Tehran Summit, Or the Russian President’s Visit to Iran,” Central Asia and the Cauca- sus, No. 1 (49), 2008. 43 See: N. Najafov, “Iran and the Southern Caucasus,” Central Asia and the Caucasus, No. 1 (49), 2008, p. 43. 30 Volume 3 Issue 4 2009 THE CAUCASUS & GLOBALIZATION I n L i e u o f a C o n c l u s i o n

Iran’s post-Soviet geopolitical involvement in Central Eurasia was greatly limited by geographical factors and its opportunity to exert its influence on the vast region. At the same time, the range of its security interests is much wider than those born by its geographic proximity to the Central Cauca- sus and Central Asia. The IRI entered the 21st century still involved in a conflict with the only superpower; its continued exacerbation does not exclude the use of force. This means that Iran should take into account the specifics of the Central Eurasian spaces liberated, in the post-Soviet era, from rigid geopolitical control. The fact that the security interests of Iran and its newly independent Central Eurasian neighbors (ethnic and territorial issues, the Caspian legal status, etc.) are intertwined stimulates Iran’s adequate regional policies. On the whole, however, in Central Eurasia, Iran’s geopolitical activity is concentrated around its efforts to prevent the U.S. and its allies from using this space as a foothold to contain Iran and undermine its domestic political stability or even to deliver strikes against it. Unable to fill the post-Soviet geopolitical vacuum on its own, Tehran has to cooperate with Russia (which, unlike Iran, has direct geographic contacts with all the Central Eurasian regions and enjoys much greater possibilities of projecting its influence onto them). In fact, seen from Tehran, the Kremlin’s control in Central Eurasia looks like a “lesser evil” than Washington’s, which is determined to transform the Tehran regime. More than that: Russia and Iran see it as their vitally important task to squeeze the West from this vast area. This geopolitical logic determined Iran’s post-Soviet activities in Central Eurasia, which took the form of its obvious and deliberately manifested respect for Russia’s “special interests” in the region, concentrating its activity on economic cooperation with the local newly independent states and refusal to support serious regional political initiatives which exclude Russia.

Anton INKO

Ph.D. (Philos.), expert at the Kiev Center for Political Studies and Conflictology (Kiev, Ukraine).

UKRAINE: POLITICS IN THE BLACK SEA-CASPIAN REGION AND RELATIONS WITH THE CAUCASIAN STATES

Abstract

he author offers an overview of Uk- sent policy in the Black Sea-Caspian Re- T raine’s relations with the Caucasian gion and looks into the distant past in search states within the framework of its pre- of the roots of the present developments. Volume 3 Issue 4 2009 31 THE CAUCASUS & GLOBALIZATION I n t r o d u c t i o n

For a long time Ukraine remained part of the Russian state and had to follow its foreign policy.1 This was especially obvious in its relations with the Caucasus or, on a wider geographic scale, with the Black Sea-Caspian Region. On the one hand, the Russian (later Soviet) military-political umbrella helped promote Ukraine’s economic interests and offered wider settlement opportunities for the Ukrainians, as well as protection against external threats. On the other, the Ukrainian top crust was deprived of any forms of independence. Certain politically active groups, the national kulturtrager intelligentsia in particular, remained at all times an active or potential opponent of Russia’s colonial policies. Independence largely changed Ukraine’s political role and its contacts with the Black Sea- Caspian Region. The above suggests the following range of problems to be treated here: n Ukraine’s historical ties with the peoples of the Caucasus; n Geopolitical and geoeconomic specifics of the Ukrainian lands within the Russian Empire and the Soviet Union which affected, among other things, the Black Sea-Caspian contexts; n Relations with the Caucasian states as part of President Kuchma’s “multivectoral” foreign policy; n The “color-induced” changes in Ukraine’s relations with the Caucasian states; n The response of Ukrainian society and the political community to the August 2008 events in South Ossetia.

Ukraine and the Caucasus: The Past

Relations between Ukraine and the Caucasus are rooted in the distant past and go back to Kievan Rus, which had direct contacts with some of the Caucasian peoples: the Kosogs (Adighes) and Iases (Alans). There is information about contacts between Rus and the south Azeri dynasty of the Sajides.2 Arabian and Persian sources (Al Mas’udi, Ibn Miskawayh, Ibn Hawqal, and others) contain information about the “Ruses” who raided the Caspian coastal areas in the latter half of the 9th-early 11th centuries, probably to capture the trade routes that connected Europe and the Orient.3 The Armenian communities in Ukraine and the Crimea developed under strong Turkic influence. In 1894, a group of linguists together with prominent Ukrainian Orientalist A. Krymskiy analyzed the Armenian judicial archives of Kamenets-Podolskiy dated to the 16th-17th centuries to conclude that they were written “in a Turkic language that used the Armenian alphabet.” Today Ukrain- ian linguists point out that “the Armenian-Kypchak language is one of the Kypchak-Polovtsy languages of the Crimea… It is very close to the Trakai dialect of the language of Karaims, the Kuman language, the Kypchak Urum dialects, and the mountain … dialects of the language of the Crimean Tartars.”4

1 To identify the role of Ukraine at any of the historical stages I rely on I. Wallerstein’s terms: the core, periphery, semi-periphery, and capitalist world system. 2 See: F. Turanli, “Z istorii ta traditsiy azerbaijantsiv,” available at [www.narratif.narod.ru] (in Ukrainian). 3 See, for example, A.Ia. Garkavi, Skazaniia musulmanskikh pisatelei o slavianakh i russkikh, St. Petersburg, 1870, available at [www.vostlit.info]; “Ibn Miskaveikh o pokhode russov v Berdaa v 943-944 gg.,” available at [www.adfontes.veles.Iv]. 4 A. Garkavets, “Kypchakoiazychnye armiane…” in: Kypchaksko-polskaia versiia armianskogo sudebnika i armi- ano-kypchakskiy protsessualny kodeks, Desht-i-Kypchak, Baur, Lvov, Kamenets-Podolskiy, Almaty, 2003, pp. 758, 767. 32 Volume 3 Issue 4 2009 THE CAUCASUS & GLOBALIZATION

The history of relations between Ukraine as part of the Russian Empire and the Caucasus brings Ukraine’s dual political role into bolder relief. It is wrong to discuss it within the “colony-metropolitan country” dichotomy since in actual fact it was a country with a double image: as a semi-periphery, Ukraine demonstrated certain features of the imperial “core” and imperial periphery depending on the specific circumstances in which these hypostases came to the fore. On the one hand, the Ukrainian lands were gradually deprived of their former independence, the traces of which were carefully obliterated. On the other, the Ukrainians, together with the Great Rus- sians, were the “vanguard” of the imperial center’s military and colonizing projects. This brings to mind Scotland as part of the British Empire and Hungary as part of the empire of the Habsburgs; however, the Ukrainians and Russians had an additional advantage, their ethnic, linguistic, and religious affinity helped to bridge the gap between the two peoples even more and create favorable conditions for assimilation. To be more exact, over a long period Ukraine remained an arena of rivalry between the idea of a Russian community encouraged by the imperial center (which looked at the Great Russians, Little Russians, and Byelorussians as sub-ethnoses) and the Ukrainian identity created and encouraged by the nationalist-minded kulturtrager intelligentsia. Ukrainians reached the Caucasian piedmont soon after Russia annexed the Crimean Khanate: “The annexation in 1783 of the Crimean Khanate together with its part along the Kuban River moved the borders of Russia to the Kuban middle reaches. After 1792, a Russian/Little Russian (Ukrainian.—Ed.) Black Sea area appeared in the steppes where Nogais used to roam. It was a powerful imperial outpost populated by Zaporozhie Cossacks who were moved there. By the late 18th century, the Caucasian Line was more or less clearly visible as a stretch of compact Cossack settlements between Taman and the mouth of the Kuban in the west and the mouth of the Terek in the East… Armenian, Greek, and German settlers were part of the Russian ethnic colonizing element, to say nothing of a strong Little Russian core involved in colonization of the Black Sea areas and Novorossia.”5 It should be said that gradual movement to the Caucasus started when General Tekeli routed the Zaporozhie Sech in 1775, a highly symbolic event that finally lifted the burden of the traditional Ukrainian liberties from the imperial center. Some of the Cossacks moved to Turkey to form the Trans-Danubian Sech. The loyal part was later transformed into the Black Sea Army which in 1792 was dispatched to the Caucasus. Still later, united with some of the Cossacks of the Caucasian Line, they formed the Kuban Cossack army.6 Ukrainian peasants willingly came to settle along the Kuban and the Terek next to the Russian settlers (by the 1910s, the share of Cossacks in these areas was as low as 42.9 percent).7 Well-known Caucasian Viceroy and Field Marshal Prince Paskevich was not the only Ukrainian involved in Russia’s actions against Iran and Turkey. There was Field Marshal Count Gudovich who, as commander-in-chief in Georgia, captured Anapa and Gumri, founded Ust-Lab- insk, and joined Dagestan to the Russian Empire. Another Ukrainian, Lieutenant General Kotliar- evskiy (known as Suvorov of the Caucasus), took part in the march on Ganja, commanded the Russian troops in Karabakh, occupied Akhalkalaki and Lenkoran, and played an important role in the court of the last Georgian czar Georgi XII. In his “The Captive of the Caucasus” written in 1821, Pushkin wrote the following about him: “I shall celebrate our hero Kotliarevskiy, scourge of the Caucasus: wherever his thunderous presence loomed, his coming, like the black death, brought havoc and destruction to the mountain tribes… Now he has put down his avenging sword, he no longer takes pleasure in war,” which cannot but leave one dumbfounded. Indeed, was it praise or a charge of war crimes?

5 A. Tsutsiev, Atlas etnopoliticheskoi istorii Kavkaza, Evropa, Moscow, 2006, pp. 33, 34, 35. 6 See: Entsiklopediia ukrainoznavstva, Vol. 10, Lvov, 1994, pp. 3771, 3772 (in Ukrainian). 7 Ibid., Vol. 4, p. 1213. Volume 3 Issue 4 2009 33 THE CAUCASUS & GLOBALIZATION

Despite Ukraine’s active involvement in colonization of the Caucasus, during the Caucasian War the national kulturtrager intelligentsia was on the side of the resisting mountain dwellers. Taras Shevchenko, in his poem “Kavkaz” written in 1845, was one of the first to lash his caustic invectives at the empire’s aggressive policy; he extolled Imam Shamil and the rioters as “great knights” with “truth, glory, and Divine will” on their side. The 1926 population census registered as Ukrainian 47.1 percent of the population of the Kuban area and 32.8 percent of the Stavropol area.8 There were Ukrainian settlements in the northern valleys of Karachaevo-Cherkessia, Kabardino-Balkaria, and North Ossetia.9 The period of Ukrainization of the Kuban area, when Ukrainian schools and periodicals appeared, was short, limited to the late 1920s-early 1930s. In these places, regional and social affiliations, especially among the Cossacks, were much more important than vague ideas about ethnic roots. The local Ukrainians were bi-ethnors (people with double ethnic affiliation and awareness) who easily identified themselves with the Russian ethnos; halted Ukrainization came neither as an unpleasant surprise nor as a challenge, which made assimilation easier. Ukrainian settlement of the Transcaucasus was of a different nature and different scope: “As distinct from the Caucasian piedmont where Russian settlers came in great numbers to the sparsely- populated steppes of the nomads, in the Transcaucasus, a region with a fairly large population and long history of settlement, Russian colonization took a different form. It can best be described as dotted or dispersed: settlements of several types (villages of Russian sectarians, military settlements or settlements of retired soldiers, and small townships built by Russian settlers) were scattered across the territory occupied by the local people.”10 Such was Petropavlovka (now Sabirabad), which Ukrainian peasants built on the banks of the Kura and the Araz in Azerbaijan.11 The dual nature of the Ukrainians’ political role complemented the ambivalence Russia demonstrated during its colonization of the Black Sea-Caspian Region. According to I. Wallerstein, “Russia supplied the classical example … of a semi-periphery, a state which combined, in the most intricate way, the features of a [capitalist] ‘core’ and a periphery… As distinct from the Asian empires, in the 18th-19th centuries Russia controlled important military potential situated in close proximity to the European ‘core’ of the world-system… This explains why Russia neither degenerated into a colonial periphery nor joined the capitalist ‘core.’ It stopped somewhere in between to become a semi-peripheral military giant with a chronically weak economic heart which frequently suffered from the blocked vessels of its bureaucratic apparatus.”12 The dual nature of Russian colonization was particularly shown in the fact that thanks to Russia (which played the role of “semi-conductor” of European influence), Western capital penetrated the oil and gas sphere in the Caspian at the turn of the 20th century (the Nobels, Rothschilds, and Royal Dutch/Shell of Henri Deterding). This is typical of semi-peripheral subjects, which served as interme- diates between the core and the periphery.13 It should be said that a “chronically weak economic heart” did not prevent the Russian leaders from going far in the development of transportation, trade, and shipbuilding infrastructure in

8 Ibid., Vol. 8, pp. 2119, 3015. 9 See: A. Tsutsiev, op. cit., p. 24. 10 Ibid., p. 34. 11 See: Administration of the President of the Azerbaijan Republic. The Presidential Library. Administrative-territorial division, p. 112, available at [www.elibrary.az/docs/azerbaijan/rus/gl2.pdf]. 12 I. Wallerstein, “Rossiia i kapitalisticheskaia mir-ekonomika: 1500-2010,” Svobodnaia mysl, No. 5, 1996, pp. 38, 39. 13 The “conducting” semi-peripheral role of contemporary Turkey in the Black Sea-Caspian region is highly il- lustrative in this respect. Turkey, writes E. Urazova, “seized the opportunities offered by the disintegration of the Sovi- et Union to assert itself, to secure far-reaching political and economic aims, and to help the West, in various ways, to master the post-Soviet expanse in Western and Central Eurasia. It was necessary, in particular, to facilitate access to their markets and natural riches (hydrocarbon and other mineral resources) for the Western transnational companies” (see: E.I. Urazova, Ekonomicheskoe sotrudnichestvo Turtsii i tiurkskikh gosudarstv SNG, IIBV, IV RAN, Moscow, 2003, pp. 24-25). 34 Volume 3 Issue 4 2009 THE CAUCASUS & GLOBALIZATION

Novorossia, the southern lands of which abutted on the Black and Azov seas. To acquire them, the Russian Empire pushed back Turkey in the 18th and early 19th centuries and moved into what is now Ukraine’s southern lands (including the former territories of the Zaporozhie army and Novaia Serbia). Newly founded Kherson and Nikolaev and, especially, the large Odessa port (founded in 1794 in the Haji Bay) offered traditional Ukrainian exports (wheat raised in the Podolie and Volhynia) even better conditions: “Merchant ships in increasingly greater numbers left Odessa for Turkey, Italy, France, and England … and the Middle Eastern countries. The Suez Canal offered access to India, China, and Japan. The Odessa port was developing into Russia’s southern gates to Europe and Asia… Odessa became Russia’s main grain exporting port which handled 40 percent of its grain exports. Russia became the main grain exporter in Europe.”14 This was the time when the Ukrainian lands played the role of a semi-periphery of the Russian Empire which, in turn, was a semi-periphery of the “core” of the capitalist world-system which had been formed around the West European countries. In exchange for their lost autonomy and traditional liberties, the Ukrainians acquired access to the Caucasus and Novorossia as part of imperial colonization. They reached the Black Sea coast, which widened the framework of Ukrainian ethnic settlement, fortified defenses in the south, and created a base for Ukrainian exports. In Soviet times, marine potential was developed further. Independent Ukraine inherited Eu- rope’s biggest Black Sea Shipping Company (over 300 ships) from the Soviet Union. Ukraine had the most ramified system of sea ports with the Soviet Union’s largest freight turnover, as well as ship- yards and a ramified pipeline system, a solid foundation for Ukraine’s active policies in the Black Sea-Caspian Region. The country lost much of its potential in the economic crisis of the 1990s. “Professional incom- petence cost the state its marine power. Ukraine’s communication backbone, which rested on the West-East-South (sea borders) geopolitical axes, lost one of its pillars. All opportunities to create Ukrainian-Black Sea and Azov trade and industrial regional complexes in the near future designed to ensure foreign economic ties and to develop the seas’ natural resources were essentially lost. Limited finances and the international disagreements with Rumania and Russia made it impossible to develop, on a large scale, the offshore energy resources any time soon.”15 Freight turnover in the commercial ports dropped from 121.4 million tons in 1990 to 53 million tons in 1996.16 During Leonid Kuchma’s second presidency (1999-2004), the situation improved together with the rest of the Ukrainian economy. In 2000, freight turnover was 84 million tons; in 2001, 89 million tons; in 2002, 106 million; in 2003, 110 million, and in 2004, 111 million tons.17

Ukraine and the Black Sea-Caspian Region: The Kuchma Presidency

Under President Kuchma, the country maneuvered between NATO and Russia within its multivectoral foreign policy. This was done to diversify energy sources to decrease the country’s depend-

14 Iz istorii morskogo flota, available at [www.who-is-who.com.ua]. 15 V. Dergachev, “Geoekonomicheskiy prognoz,” in: Geoekonomika (sovremennaia geopolitika), Vira-R, Kiev, 2002, available at [www.dergachev.ru/book-geoe/index.htm]. 16 See: V. Stetsiuk, “1990-2005 gody: dinamika gruzooborota portov Ukrainy,” Porty Ukrainy, No. 3, 2006, available at [http://www.blackseatrans.com]. 17 See: V. Ivanov, “O perspektivakh morskikh portov Ukrainy,” Porty Ukrainy, No. 3, 2006, available at [http:// www.blackseatrans.com]. Volume 3 Issue 4 2009 35 THE CAUCASUS & GLOBALIZATION ence on the Russian Federation, while preserving close economic and non-conflict political contacts with Moscow. This was especially important because the freight turnover of the Ukrainian sea ports depended on transit, mainly Russian transit. In “2007, for example, Russian transit (over 51 million tons) was nearly one third (29.2 percent) of the total turnover of the Ukrainian ports.”18 The same year, the freight turnover of the Ukrainian sea ports topped a similar index for the Russian ports on the Azov and Black seas (158 vs. 152 million tons).19 The country’s territory is crossed by 3, 5 and 9 pan-European transportation corridors (TC) as well as the TRACECA (Europe-the Caucasus-Asia) and the Black Sea-the Baltics corridors.20 Odessa, for example, belongs to transport corridors No. 9, TRACEKA, and the Black Sea-the Baltics. Ukraine’s involvement in TRACECA was regarded as a tribute to the Western vector of the country’s multivectoral policies: it allowed the EU to shatter Russia’s control over the export routes leading to the Black Sea-Caspian Region, Central Asia, and China. In the latter half of the 1990s, the Ukrainian Ukrferry company, working together with its Bulgarian partners, commissioned the railway-ferry line “Varna (Bulgaria)-Ilyichevsk (Ukraine)-Poti/Batumi (Georgia).” The Odessa-Brody oil pipeline project (1996-2002) followed the same logic oriented toward the United States; intended to move Caspian oil to Europe as an extension to the earlier commissioned Baku-Supsa pipeline, it ran into numerous problems at the earliest stages. Since neither Kazakhstan nor Azerbaijan sent their oil to it (contrary to what Ukraine had expected), the pipeline became known in the expert community as a “diversification simulacrum.” The project became the epicenter of uncompromising rivalry with the much larger Baku-Tbilisi- Ceyhan (BTC) project. The fact that in November 1999 the United States, Azerbaijan, Georgia, and Turkey signed the BTC agreement meant that “Turkey won the rivalry with Russia and Ukraine over the Caspian oil route in full conformity with the U.S.’s geopolitical aims.”21 The Odessa-Brody pipeline remained idling for a long time until in 2004 it started operating in the reverse regime, very much in the multivectoral spirit, on Russian oil supplied by TNK-BP. Osten- sibly concerned about the increased load on the Black Sea Straits, Turkey and the United States were obviously displeased. At the early stages of regional cooperation in the Black Sea-Caspian Region, Ukraine attached special importance to the BSEC as a possible foothold from which it could have claimed regional leadership. It was interested in the projects designed to create a common energy fuel market and transport infrastructures, in particular the “circular highway along the Black Sea coast and a system of main oil and gas pipelines to connect Central Asia, the Transcaucasus, and the Middle East with Eu- rope.”22 Ukraine joined the Black Sea Naval BLACKSEAFOR group and Operation Black Sea Har- mony. Over time, Kiev developed skepticism about the BSEC as an efficient structure: “So far the BSEC has not implemented any large-scale projects.”23 More than that: there were enough other claimants to regional leadership, Russia and Turkey in particular.

18 K. Ilnitskiy, “Uidet li iz Ukrainy rossiiskiy tranzit?” Porty Ukrainy, No. 4, 2008, available at [http://www. blackseatrans.com]. 19 See: K. Ilnitskiy, “Borba za liderstvo v Chernomorskom regione,” Porty Ukrainy, No. 8, 2008, available at [http://www.blackseatrans.com]. 20 See: I. Tushkanova, “Reki gruzov,” Distributsiia i logistika, No. 3, 2007, p. 40. 21 O. Gavrish, “Turetskiy marsh ne iskliuchaet ukrainskogo gopaka,” available at [www.ngv.ru]. 22 I. Maximenko, “Geopolitichni zmini v Chornomorskomu regioni ta perspektivi regionalnogo spivrobitnitstva” (Geopolitical Changes in the Black Sea Region and the Prospects of Regional Cooperation), available at [www.niss.od.ua] (in Ukrainian). 23 G. Shelest, “Iuvilei zi zmishanimi pochuttiami” (The Jubilee of Mixed Feelings), Ukraina i svit sogodni (Ukraine and the World Today), No. 28, 2007 (in Ukrainian). 36 Volume 3 Issue 4 2009 THE CAUCASUS & GLOBALIZATION

This forced Ukraine to pay attention to GUAM, a project that caused serious concern in Mos- cow, which regarded it as a vehicle of North Atlantic ideas about the Baltic-Black Sea-Caspian arc as a “stretcher” of the Black Sea-Caspian region rather than an instrument of its integration.24 At the same time, President Kuchma had his doubts about GUAM as well; as part of the multivectoral policy, it was regarded as an instrument of communication with the Euro-Atlantic world and as a coun- terbalance to Moscow rather than something of considerable economic and political value. In fact, even the loyal part of the expert community had its doubts about GUAM and its Euro- Atlantic vector: they were convinced that Ukraine’s interests in the Black Sea-Caspian Region were not adequately ensured. These experts pointed out that NATO membership of Rumania and Bulgaria and Turkey’s possible integration into the European Union might push Ukraine away from the routes that connect Europe with the Caucasus and Central Asia.25 Some experts deemed it necessary to point out that at a time when Russia was obviously negative about GUAM and Turkey had moved away from it, the project needed maximum American and European support. They wrote that the prospect of a “strategic triangle” (Kiev, Warsaw, Anka- ra) as an instrument of stability in the Baltic-Black Sea Region, the Caucasus, and Central Europe had been shelved. Experts pointed out that “the confirmed routes of the BTC and the Transcaspian gas pipeline … crowned the political stage of the Caspian-Turkey-Europe energy bridge. Turkey has acquired objective conditions for its stronger position in the region. This means that to a certain extent Ankara can be described as a rival of Kiev when it comes to strengthening GUAM and energy transportation. The Turkish idea of a peace and stability pact in the Caucasus was not a random initiative.”26 The most radical opponents of GUAM pointed out that the Odessa-Brody failure had been caused by a wrong assessment of the Azeri and Georgian intentions and GUAM’s overestimated role (as a “union of those displeased with Russia”): “Ukraine placed its stakes on Azerbaijan and its oil, on Georgia and its Black Sea port to handle oil, and on Poland as a transit country. This was a strategic mistake. Heydar Aliev’s and Eduard Shevardnadze’s polite smiles could not conceal the fact that they had opted for the ‘Turkish’ route. Warsaw had no role to play in the project. What the investors thought was most important. The United States was arguing in favor of the ‘Turkish’ route. Ukraine could rely on Kazakhstan, but the Foreign Ministry of Ukraine was making GUUAM a priority. So all the talk about the ‘project of the century’ and diversification of energy sources was no more than an exercise in eloquence.”27 Bilateral relations with the Caucasian countries were given fresh impetus once Ukraine had recovered from the economic depression of the 1990s. In 1995, the Ukrainian leaders paid their first official visit to Azerbaijan to discuss cooperation in the oil and gas sphere and the possibility of technical assistance in developing the Ukrainian Black Sea shelf. In March 2000, President Kuchma paid an official visit to Baku to promote the idea of extending the Baku-Supsa pipeline to Odessa-Brody. The sides signed an agreement on strategic partnership and economic cooperation in the energy sphere.28 Bit by bit the two countries increased their trade turnover: in 2004, Ukrainian export to Azerbai- jan reached $222.9 million (an increase of 45.6 percent over the previous year). Azerbaijan’s imports to Ukraine in 2004 amounted to $11.7 million.29 “Products of the fuel and energy complex (kerosene

24 See: “Geopolitika zony ‘Chernomorie-Kavkaz-Kaspiy’” (I), available at [www.odnarodyna.ru]. 25 See: Ia. Matiychik, “GUUAM—stan, novi aspekti i perspektivi rozvitku” (GUUAM—the State, New Aspects and Development Prospects), available at [www.niss.gov.ua/book/2004_html/012.htm] (in Ukrainian). 26 V. Korendovich, A. Pavlenko, V. Chumak, “Ukraina-GUUAM-Turtsiia,” Zerkalo nedeli, No. 5, 2001. 27 A. Goncharenko, “Mify ukrainskoi diplomatii,” Zerkalo nedeli, No. 28, 1999. 28 See: B.O. Parakhonskiy, “Regionalna politika Ukraini” (Ukraine’s Regional Policies), available at [www. niisp.gov.ua] (in Ukrainian). 29 See: S. Terekhin, “Ministerstvo ekonomiki i po delam evrointegratsii Ukrainy,” in: Mosty druzhby: Ukraina-Az- erbaijan, Vol. 2, Ukrainskiy izdatelskiy konsortsium, Kiev, 2005, p. 23. Volume 3 Issue 4 2009 37 THE CAUCASUS & GLOBALIZATION and lubricants), polyethylene, gas turbines and fixtures, and agricultural products (hazelnuts, fruit, juices, etc.) came to Ukraine from Azerbaijan, while Ukraine sold Azerbaijan products of its machine-building (special purpose vehicles and oil tank cars), ferrous metallurgy (steel products, pipes, etc.), products of its electrotechnical industry, tires, foodstuffs … etc.”30 The Dnepropetrovsk Na- tional University opened its branch in Baku. The two countries, however, did not see eye to eye on many fuel and energy issues. Baku deemed it necessary to formulate its position (contrary to what Kiev wanted in the oil sphere): “De- spite the fact that the Ukrainian route looked fairly attractive, Azerbaijan (represented by the State Petroleum Company) is involved in the Main Baku-Tbilisi-Ceyhan Export Pipeline, which demands considerable financial investments. Therefore, it finds it next to impossible to contribute to the Bro- dy-Plotsk oil pipeline.”31 The Financial-Production Interpipe Group (trading in pipes), the Frunze Scientific and Re- search Organization in Sumy (equipment for compressor stations), the Open Joint-Stock Company Turboatom in Kharkov (turbines), the Zaporozhie Plant of High Voltage Equipment, AvtoKraz Com- pany (lorries), the Yuzhkabel enterprise and Rossava Ltd. (tires), the Kharkov State Aviation Enter- prise, Praktika Ltd. (technical protection of banks and offices and fire prevention); the Poltavakondit- er Open Joint-Stock Company and Sandora Open Joint-Stock Company (fruit juices) were operating on the Azeri market.32 In 1993, Ukraine and Georgia signed a Treaty on Friendship, Cooperation and Mutual Assist- ance and promoted their privileged partnership in many, including military-technical, spheres. In 2004, the trade turnover between the two countries amounted to $158 million. Ukraine exported many products of its ferrous and non-ferrous metallurgy, chemical, and machine-building industries, while Georgia exported foodstuffs, ores, manganese concentrate, and chemical products to Ukraine.33 In 2001, during President of Armenia Kocharian’s visit to Kiev, the two countries signed a Treaty on Economic Cooperation for 2001-2010. In 2004, the trade turnover between them was $78.9 million (export accounted for $70.8 million; import for $8.1 million).34 Armenia found it profitable to use the Ilyichevsk-Poti/Batumi Ukrainian-Georgian ferry line as a foreign trade outlet. On the whole, in the period between its independence and 2004, while recovering from the economic depression of the 1990s, and realizing its foreign policy course in the Black Sea-Caspian Re- gion and elsewhere, Ukraine, as a typical semi-peripheral country, demonstrated that it wanted to be more or less independent. Like Russia, Ukraine placed its stakes on national capitalism: its most attractive assets were privatized by Ukrainian companies (“oligarchic business;” Interpipe, the financial group mentioned above, being the most apt example), rather than by transnationals. The Ukrainian leaders, with the European Union and NATO close to the country’s western borders, had to pattern their foreign policies accordingly. Without membership in the EU, one of the hegemons of the “core” of the world-system, anywhere in sight, they treated strategic partnership with Russia as a must. It should be said that the official multivectoral policy had a pronounced West- ern bias: it was announced that the country was oriented toward Western or even Euro-Atlantic values. Kiev tried to keep an equal distance in its relations with Washington, Brussels, and Moscow (the centers of global impact).

30 A. Abbasov, “Ekonomicheskie otnosheniia Azerbaijanskoi respubliki s Ukrainoi,” in: Mosty druzhby: Ukraina- Azerbaijan, Vol. 2, p. 23. 31 Ibid., p. 16. 32 See: Mosty druzhby: Ukraina-Azerbaijan, Vol. 1, Ukrainskiy izdatelskiy konsortsium, Kiev, 2004; Mosty druzhby: Ukraina-Azerbaijan, Vol. 2. 33 See: G.V. Shelest, “Ukrainsko-gruzinski vidnosini—faktor stabilnosti v Chornomorskomu baseini,” Strategichni prioriteti, No. 2, 2007, p. 53 (“Ukrainian-Georgian Relations as a Stability Factor in the Black Sea Basin,” Strategic Pri- orities) (in Ukrainian). 34 [www.mfa.gov.ua/armenia/ua/3593.htm]. 38 Volume 3 Issue 4 2009 THE CAUCASUS & GLOBALIZATION

Its leeway proved to be fairly limited; this was especially obvious in the case of the Western vector in general and the Caspian-Black Sea energy Big Game in particular. By the time it gained its independence, Ukraine had already lost the status of a main gas supplier, while its deep-sea oil reserves were hard to develop. As a transit country and a consumer of energy resources, Ukraine failed to squeeze into the Western transportation project with its Odessa-Brody oil pipeline. The Euro-Atlantic forces, however, pushed the Ukrainian route off the list of political and economic priorities.

Ukraine in the Black Sea-Caspian Region: The Orange Period

The “color” coup that brought Victor Yushchenko and his team to power early in 2005 buried the “Byzantine” multivectoral maneuvering. Ukraine turned to the Washington-instigated “democracy promotion” strategy in the Baltic-Black Sea-Caspian Region. The new leaders formulated their ambitious ideas: NATO membership in 2008; squeezing Russia out of the region with American help; involvement in settling the frozen conflicts in the Caucasus; and gaining access to the Caspian energy resources.35 In April 2005, Jumhuriet of Turkey offered the following opinion: “The U.S. is clearly seeking an effective instrument in the Black Sea area, the center of a rectangular formed by the Caucasus, the Balkans, Russia, and Turkey, to be used to control Eurasia. This explains why the West attached great importance to the regime change in Ukraine and Georgia.”36 In December 2005, Victor Yushchenko and Mikhail Saakashvili initiated the Community of Democratic Choice to tie the Baltic and the Caucasian-Black Sea expanse with Euro-Atlantic ideas. It brought together Ukraine, Georgia, Estonia, Latvia, Lithuania, Macedonia, Moldova, Rumania, and Slovenia. Several other countries also attended the constituent ceremony, but did not sign the declaration.37 The relations between GUAM and NATO, the EU and BSEC were pushed in the same direction.38 Politically, this course hinged on the special relations between Ukraine and Georgia as two “democratic vehicles” and on the presidents’ personal friendship. Those experts who voiced the official position deemed it necessary to point out that “for various … reasons Ukraine cannot yet play the role of a regional leader on its own. It needs external support; today, the Ukraine-Georgia tandem looks like the best instrument.”39 In 2005, the trade turnover between the two countries was $240 million; in 2006, it reached $384 million; in 2007, $669 million; and in 2008, 791.8 million. In 2008, Ukraine exported $657 million-worth of products to Georgia and imported $114 million-worth from Georgia.40 The two coun-

35 See: Ukraina: strategichni prioriteti. Otsinki (Ukraine: Strategic Priorities. Assessments), NISD (National Insti- tute of Strategic Studies), Kiev, 2006, pp. 516-517. 36 Quoted from: D.E. Eremeev, Turtsiia na rubezhe XX i XXI vekov, Gumanitariy, Moscow, 2007, p. 103. 37 See: L. Rassokha, “Balto-Chornomorske partnerstvo: perspektivi e,” Ukraina i svit sogodni, No. 9, 2006 (“The Baltic-Black Sea Partnership: There are Prospects,” Ukraine and the World Today) (in Ukrainian). 38 See: T.S. Starodub, O.I. Danilchuk, “Pitannia spivrobitnitstva ODER-GUAM z OChES, ES, NATO u formuvanni sistemi bezpeki u Chornomorsko-Kaspiyskomu regioni,” Strategichna panorama, No. 1, 2009, pp. 91-100 (“Problems of Cooperation of ODER-GUAM with BSEC, EU, NATO in Forming a Security System in the Black Sea-Caspian Re- gion,” Strategic Panorama) (in Ukrainian). 39 G.V. Shelest, “Ukrainsko-gruzinski vidnosini—faktor stabilnosti v Chornomorskomu baseini,” p. 52. 40 See: Ibid., p. 53 (see also: [http://www.mfa.gov.ua/georgia/ua/12150.htm]). Volume 3 Issue 4 2009 39 THE CAUCASUS & GLOBALIZATION tries pinned special hopes on the new Kerch-Poti ferry in the hope that Armenia would actively use it for its exports and imports. As part of military-technical cooperation, Ukraine delivered high-preci- sion weapons, radar stations, small arms, T-72 tanks, aircrafts, and Buk and Osa surface-to-air missile systems to Georgia. In 2007 alone, Ukraine supplied 99 tanks, armored fighting vehicles, guns and mountings, aircrafts, and 10 thousand units of small arms.41 The Ukrainian leaders and part of the expert community close to them hoped that with time the Russian peacekeepers in Georgia would be replaced with GUAM (mainly Ukrainian) peacekeepers in full accordance with the decisions of the June 2007 GUAM Summit held in Baku. At the same time, Kiev admitted that it could not be engaged in peacekeeping outside the UN mandate, while Russia would use its right to veto to block the initiative in the UN Security Council.42 Cooperation with Georgia was based on the Community of Democratic Choice, while in its dealings with Baku the new Ukrainian leaders tried to revive the dialog about Caspian oil at international energy summits. In 2007, such summits were held in Vilnius and Cracow; in 2008, in Kiev and Baku.43 The maneuvers can be described as partly successful because Azerbaijan seemed more interested in the Odessa-Brody oil pipeline. The Privat Financial and Industrial Group, one of Ukraine’s largest (it controlled the Galichina and Neftekhimik Prikarpatia refineries and, therefore, needed Caspian oil), succeeded in lobbying its Caspian-related interests. President Yushchenko issued a decree that banned the use of Russian oil in the Odessa-Brody pipeline; the Cabinet’s supporters hinted that this could only be done when Caspian oil arrived in adequate quantities. Trade between Ukraine and Azerbaijan was given a fresh boost: in 2008, trade turnover increased by 49 percent against the previous year to reach $1 billion (Ukraine’s positive balance being $835 million).44 Some of the leaders of Ukrainian metallurgy, machine-building, and the food industry showed a lively interest in the Azeri market. The following Ukrainian companies were represented in Azerbaijan: Ukrprominvest (Bogdan buses), AvtoKRAZ, Roshen, AVK, Sandora, and Veres (foodstuffs). Cooperation in the military-technical sphere proved just as impressive: in 2006, Azerba- ijan bought “50 tanks, armored fighting vehicles, large caliber artillery systems, and fighting aircrafts from Ukraine; in 2007, the figure was 103.”45 Cooperation with Armenia was less intensive: in 2005, trade turnover was $110 million; in 2006, $158 million; in 2007, $262 million; and in 2008, $304 million. In 2008, Ukraine’s positive balance was $241 million. Ukraine exported mainly metallurgical products and foodstuffs (wheat, maize, sunflower oil, flour, margarine, chocolate, milk and cream) to Armenia.46 In fact, the “color” leaders of Ukraine tried to capitalize on the Baltic-Black Sea-Caspian activities to gain their country a stronger position in its dialog with the European Commission as part of “new Europe,” a transit country of energy resources, and a partner in the Caucasian settlement. The Ukrainian authorities expected Brussels to take notice of Ukraine as part of its efforts to “de- frost” the Caucasian conflicts. It was generally believed that Ukraine’s interests in the Black Sea- Caspian Region were basically identical to those of the European Union. In February 2008, Javier Solana admitted to Saakashvili that the EU might send its peacekeepers to Abkhazia and South

41 See: D. Popovich, “Oruzheinoe delo,” Kommersant-Ukraina, No. 132, 2009. 42 See: G.V. Shelest, “Perspektivi zaluchennia Ukraini do vreguliuvannia konfliktiv na Kavkazi” (The Prospects of Ukraine’s Involvement in Conflict Settlement in the Caucasus), Strategichni prioriteti, No. 1, 2008, p. 181 (in Ukrainian). 43 For more detail, see: D.I. Kiriukhin, “Energeticheskaia politika Ukrainy: ekonomika na sluzhbe geopolitiki,” available at [www.analitik.org.ua]. 44 [http://www.mfa.gov.ua/mfa/en/publication/content/29355.htm]. 45 D. Popovich, op. cit. 46 [www.mfa.gov.ua/armenia]. 40 Volume 3 Issue 4 2009 THE CAUCASUS & GLOBALIZATION

Ossetia. In Ukraine, experts close to the official circles described this as “a unique chance for Ukraine.”47 Integration in the energy sphere received its share of Kiev’s attention: “When Latvia, Lithuania, and Estonia joined the EU in 2004, and Bulgaria and Rumania in 2007, the EU-formulated strategic assignment of creating a Baltic-Black Sea energy security belt reached its final stage. Ukraine played the key role in the process. The country’s future EU membership explains why its gas pipelines were joined to the EU infrastructure; Ukraine thus became a transit element of European energy security.”48 This ideology dominated the Brussels Declaration Ukraine and the European Commission signed in March 2009, which highly displeased Moscow. Very soon, however, the “New European” single-vectoral course aimed at Baltic-Black Sea- Caspian integration ran into serious problems. In fact, the most far-sighted members of the expert community warned at the early stages of the “color” U-turn: “…Ukraine’s excessive dependence on one axis only … might distort its regional and even global policies and contradict its Euro-integration intentions… In the short-term perspective Ukraine’s identification with the ‘sanitary cordon’ the U.S. is busy erecting against Russia and, by extension, against the Paris-Berlin-Moscow- Beijing axis might damage our state’s energy security and push it to the margins of the main con- tinental processes.”49 The fact that GUAM structuralized itself (it acquired its Secretariat, etc.) cannot disprove what Thomas de Vaal said about this in 2005: “A mirage.”50 The same fully applies to the Community of Democratic Choice; the absent economic aspect was both structures’ obvious fault. Back in 2005, experts voiced their doubts about Ukraine’s privileged partnership with Georgia which, they believed, was patterned to suit Tbilisi’s political plans rather than Kiev’s economic interests. As distinct from Russian financial-industrial groups, similar Ukrainian structures were effectively kept away from privatization of Georgia’s key assets. They pointed at Chiaturmarganets, Tkibulugol, and the Vartsikhe Hydropower Station as examples that went to Russia’s Evraz rather than to Ukraine’s Interpipe.51 On the whole, Ukrainian experts believe that today Ukraine has no effective instruments to promote its interests in the Caucasus; this makes it a potential hostage of third countries; indeed, write they, none of the new power transportation routes (BTC, BTE, or even Baku-Supsa) offered Ukraine diversification chances. Possible peacekeeping activities will hardly bring dividends. V. Kulik, for example, has written: “While in Transnistria Ukraine can be an effective mediator and as such can offer non-conflict models (and compromises), in the Southern Caucasus Kiev will find itself in the alien role of an ‘enemy and tamer of Abkhazian and Ossetian separatism.’”52 Pessimists have concluded that “so far Ukraine has failed to realize hardly any of its initiatives in the Southern Caucasus.”53 It was generally believed that in the Black Sea-Caspian Region, Ukraine

47 G. Shelest, “Chernomorska sinergiia,” Zovnishni spravi, No. 9, 2008 (“The Black Sea Synergy,” Foreign Rela- tions, in Ukrainian). 48 T.S. Starodub, O.I. Danilchuk, op. cit., p. 99. 49 E. Sharov, “Balto-Kaspiysko-Chornomorski region: problemi realizatsii natsionalnikh interesiv Ukraini” (The Baltic-Caspian-Black Sea Region: Problems of Realization of Ukraine’s National Interests), in: Ukraina: strategichni prioriteti. Otsinki, pp. 520-521 (in Ukrainian). 50 Gosudarstvennost i bezopasnost: Gruziia posle “revolutsii roz,” ed. by B. Coppieters, R. Legvold, Interdialekt+, Moscow, 2005, p. 392. 51 See: V. Kravchenko, “Ukraina-Gruziia: budushchee, polnoe neopredelennosti,” Zerkalo nedeli, No. 11, 2005. 52 V. Kulik, “Konfliktogenny potentsial Yuzhnogo Kavkaza kak sistemny vyzov natsionalnoi bezopasnosti Ukrainy,” available at [www.eurasianhome.org]. 53 O.O. Kotelianets, “Pozitsii krain Chornomorsko-Kaspiiskogo prostoru shchodo viznachennia mistsia Pivdennogo Kavkazu u formuvanni regionalnoi sistemi bezpeki” (Positions of the Countries of the Black Sea-Caspian Expanse on Identifying the Place of the Southern Caucasus in Setting up a Regional Security System), Strategichna panorama, No. 2, 2009, p. 70 (in Ukrainian). Volume 3 Issue 4 2009 41 THE CAUCASUS & GLOBALIZATION was guided by idealistic aims to the detriment of such purely realistic tasks as building up a large Black Sea commercial fleet. Turkey, one of the key players in energy transit and the military-political games in the Black Sea-Caspian Region, remained devoted to its well-balanced position; it showed no intention of joining forces with Kiev and was not alien to concentrating energy transit routes on its territory. Ankara demonstrated its complete indifference to the Community of Democratic Choice54; it remained distanced from GUAM and agreed to accept the Russian Blue Stream gas pipeline on its territory. Turkey reached a preliminary agreement with Moscow on the South Stream gas pipeline laid in its territorial waters, thus making unnecessary any talks about the project with Ukraine. Moscow, in turn, offered Turkey the role of the main transit country for Russian gas, which now belongs to Ukraine. The August 2008 war between Russia and Georgia in South Ossetia widened the gap in Ukrainian society, which disagreed over Kiev’s foreign policy in general and in the Black Sea- Caspian Region in particular. The public opinion poll conducted by the Segodnia newspaper and the Research & Branding Group on 14-18 August, 2008 registered a split; a slightly greater share of the polled sided with Russia and South Ossetia: 43 percent described Georgia as the aggressor against 33 percent who accused Russia. Fourteen percent of the respondents demanded that Ukraine support Georgia; 14 percent believed that Ukraine should be on Russia’s side; 67 percent advised neutrality. In agrarian western Ukraine (Victor Yushchenko’s base), 13 percent believed that Georgia had started the war; 68 percent saw Russia in this role; in the agrarian center (the base of Prime Minister Yulia Timoshenko), 31 percent described Georgia as the aggressor state; 42 percent, Russia. In the industrial southeast (the base of the opposition Party of the Regions and its leader Vic- tor Yanukovich), 62 percent blamed Georgia; 14 percent, Russia.55 President Yushchenko sided with Mikhail Saakashvili: he visited Tbilisi and even tried to achieve unilateral regulation of the continued presence of Russia’s Black Sea Fleet in Sevastopol by putting pressure on its commanders. Yulia Timoshenko preferred to remain neutral, while leader of the opposition Party of the Regions Yanukovich, after a long pause, suggested that Ukraine should recognize Abkhazia and South Ossetia. The Communist Party of Ukraine condemned the presidents of Ukraine and Georgia. Later everything that Russia said about Ukrainian arms supplies to Georgia and the Ukrainian military’s involvement in the war was used in domestic political squabbles. The war dimmed the prospect of Ukraine’s NATO membership. n In 2009, the country had several grave headaches: first, the new course that identified Ukraine’s interests with those of “new Europe” radically worsened its relations with Russia and did nothing to bring it closer to EU membership. The Brussels Declaration did not mean closer relations with the EU leaders; in fact, they gradually moved further away. The year 2009, however, marked progress in the talks on a free trade zone and on association and a visa-free regime with the EU countries. The European Neighborhood Policy and Eastern Partnership Program with very limited budgets (of which Ukraine is member together with the Caucasian countries and Belarus) cannot be described as a palliative of Euro- pean integration. n Second, it became much more obvious that the Western and Russian players alike wanted to bypass Ukraine as a transit country. The Western Nabucco, the Trans-Caspian Gas Pipeline, and Russia’s South Stream and North Stream will bring Ukraine nothing; it will have to pay

54 See: M.O. Vorotniuk, “Stavlennia Turechchiini do SDV,” in: Spilnota demokratichnogo viboru: suchasniy stan ta perspektivi rozvitku (“Turkey’s Position on the CDS,” in: The Community of Democratic Choice: Contemporary State and Development Prospects), Regionalniy filial NISD, Odessa, 2006, pp. 14-17 ) (in Ukrainian). 55 See: Proekt “Otsenka sobytiy v Yuzhnoi Osetii, avgust 2008,” available at [http://www.segodnya.ua/files/articles/ 120570/65/table2.doc]. 42 Volume 3 Issue 4 2009 THE CAUCASUS & GLOBALIZATION

more for its gas if Nabucco is realized. These projects will leave Ukraine, with its one of the world’s largest gas transportation systems, in the cold. Transportation corridors, likewise, might bypass Ukraine: Russia has concentrated on the St. Petersburg-Moscow-Voronezh-Rostov-on-Don-Novorossiisk route, while the EU is developing the Bulgarian Black Sea ports, and Constanþa of Rumania, which deprives the Odessa group of ports of their share of business.56 This means that Ukraine’s transportation interests have nothing in common with either Russia or the West. S. Tolstov has written on this score that Ukraine became a hostage of the EU neighborhood policy: the European Union is limiting its future expansion to the Balkans while treating Ukraine as an external, marginal, belt of its influence and security.57 Brussels is obviously interested in the Cau- casian countries (which also belong to the influence and security belt) as sources of fuel and transit countries and seems indifferent to Ukraine’s transit interests. This is further exacerbated by Russia’s desire to lay transit routes alternative to the Ukrainian. Despite the clashing energy transportation interests, Ukraine, together with Turkey, found itself among the countries the European Union has “offended.” The Ukrainian expert community has split over the Turkish Caucasus Stability and Cooperation Platform: there are cautious supporters58 and determined opponents. In an effort to remedy the situation Prime Minister Timoshenko put her White Stream project on the table for moving gas from the Azeri Shah Deniz field across Georgia. Its underwater stretch was expected to join the Ukrainian transportation system in Feodosia (the Crimea). It aroused no enthusiasm in Azerbaijan; some analysts believed that Ankara would be dead set against it since it would allow Georgia to move further away from Turkey. Iran showed an interest in the Armenia-Georgia- Ukraine gas transit route59 even if irritated by Ukraine’s active involvement in this type of projects. Tehran is contemplating several possible routes, including those across Turkey.60 In fact, Ukraine cannot be completely excluded from energy transportation projects; the situation in this sphere might change, which will push the Odessa-Brody pipeline to the fore. Ukraine still can defend its interests; development of Ukraine’s offshore hydrocarbons might strengthen its position. On the whole, however, in the sphere of oil and gas transportation routes and transport corridors, there is an obvious effort to push Ukraine to the margins of the capitalist world-system and depriving it of its subjectivity. As part of the Russian Empire and the Soviet Union, Ukraine realized its interests in the Black Sea-Caspian Region (colonization of South Ukraine/Novorossia, settlement in the Caucasian piedmont, foodstuff exports via Odessa, and development of the transportation system) within the Russian military-political and geoeconomic paradigm. Its traditional duality, however, played a mean trick on independent Ukraine: it looked much too pro-Western from Moscow and much too pro-Russian from the West. The attempt of the “color team” to perform a U-turn toward the Euro-Atlantic vector seriously undermined the country’s foreign policy position. In view of the upcoming presidential election and the end of the “color stage,” Ukraine has to readjust its foreign policy in the Black Sea-Caspian Region, among other things.

56 See: V. Dergachev, “Yuzhny geopoliticheskiy vektor vneshnei politiki,” in: Geoekonomika (sovremennaia geopolitika), Vira-R, Kiev, 2002, available at [www.dergachev.ru/book-geoe/index.htm]. 57 See: S. Tolstov, “Ukraina, Rossiia, ES: tendentsii, problemy i perspektivy vzaimodeistviia,” in: Ukraina ta Rosi- ia v politichnomu prostori edinoi Evropi (Ukraine and Russia in the Political Expanse of United Europe), Foliant, NIP- MB, Kiev, 2007, p. 101 (in Ukrainian). 58 See: O. Chabala, “Khto zbudue spilniy Kavkazskiy dim,” Zovnishni spravi, No. 4, 2009 (“Who Will Build the Common Caucasian Home,” Foreign Relations), available at [www.uaforeignaffairs.com/article.html?id=379] (in Ukrainian). 59 See: Iuzhny Kavkaz: tendentsii i problemy razvitiia (1992-2008), Krasnaia zvezda, Moscow, 2008, p. 119. 60 See: G.I. Starchenkov, “Truboprovodny transport Turtsii vstupaet v novy etap,” in: Sovremennaia Turtsiia: problemy i resheniia, IBN, IV RAN, Moscow, 2006, p. 173. Volume 3 Issue 4 2009 43 THE CAUCASUS & GLOBALIZATION C o n c l u s i o n

Relations with the Caucasus and the Black Sea-Caspian Region as a whole can be regarded as an element of Ukraine’s highly complicated relations with Russia. Their history abounds in confirmation of the Ukrainians’ dual political role. In the Russian Empire, their lands were a “dual semi-periphery,” that is, a dependent periphery and an imperial “core,” while Russia, in turn (according to Waller- stein), was a semi-periphery of the “world-system.” The lost remnants of political independence and national character were exchanged for the opening of so-called Novorossia (and the Caucasian piedmont as its part) once Turkey was driven away and the Crimea joined to Russia. This also ended nomad inroads and extended export possibilities for traditional Ukrainian products across the Black Sea. Under Soviet power, Ukraine developed its industrial and marine potential. After it acquired its independence and gradually recovered from the prolonged crisis of the 1990s, Ukraine, under President Kuchma, developed its relations with the Caucasian countries as part of its multivectoral policy of balancing between the U.S., Russia, and the European Union in an attempt, which was not too successful, to use Caspian hydrocarbons to diversify its energy sources. On the whole, at that time Ukraine demonstrated the independence and subjectivity typical of semi-peripheral countries. In the “color period,” the attempts to push Ukraine to the periphery of the capitalist “world-system” became more pronounced, especially when dealing with energy transit in the Black Sea-Caspian Region. The events in South Ossetia demonstrated a lack of unity in the political community and the public. Ukraine could still defend its foreign policy interests, while the split over the Russian-Geor- gian conflict in South Ossetia was bridged by the fact that the nation’s majority (irrespective of their convictions) wanted the country to stay away from the squabble. This shows that neutrality is probably the best possible option for the country.

Teimuraz BERIDZE

D.Sc. (Econ.), professor at the International Black Sea University, advisor to General-Director of the JSC “International Bank of Azerbaijan-Georgia” (Tbilisi, Georgia).

ON THE LOGIC O THE DEVELOPMENT O THE AUGUST (2008) CON LICT IN GEORGIA

Abstract

his article analyzes the objective and studies the political and economic results of T subjective factors to reveal the logic of the conflict and suggests possible short-term the development of the events in Au- and long-term ways to resolve the rather dif- gust 2008 (the Russian-Georgian war). It ficult situation that has developed. 44 Volume 3 Issue 4 2009 THE CAUCASUS & GLOBALIZATION I n t r o d u c t i o n

The end of the summer of 2008 was marked by a rather serious military-political conflict between Georgia and Russia that had several extremely negative consequences—political (Russia’s recognition of the independence of Georgia’s runaway regions), humanitarian (human deaths, lost homes, and several tens of thousands of temporarily displaced persons), and economic (all hostilities are detrimental to economies in general and to small ones in particular). On the international scale, the conflict brought into question several fundamental and universal principles of international law (primarily the principle of the supremacy of state sovereignty and territorial integrity of states), which is fraught in the future with a breakdown in world order. It stands to reason that a full (primarily legal) assessment of this phenomenon goes beyond the scope of this article and that it requires an in-depth analysis by specialists in a wide range of social studies and military science. An attempt has been made in this article to analyze several objective and subjective factors that we believe caused this conflict and to reveal its logic, since we are deeply convinced that it is precisely the correlation between the objective and subjective aspects that predetermines the content of any political situation. We might even say that we are offering some political philosophy, our vision of the consequences of what happened and the steps Georgia could take in post-conflict time and space.

The “Objective” Component of the Conflict

The word “objective” is in quotes since there was in fact no absolute need for what happened, nor was it inevitable, although the trends that had been developing over the past few years were certainly leading up to it. A political conflict between the sides had been going on for quite some time (we can provisionally say that it began as early as the collapse of the Soviet Union) before it came to a head in a direct military clash. Relations between Russia and Georgia have always been complicated and mainly dictated by the interests of the former1 (despite the fact that Georgia voluntarily joined the Russian Empire). In the Soviet era, however, these relations differed from those during the Russian Empire in the fact that Georgia was forcibly annexed to the union state and, within the framework of a single union state, the U.S.S.R., participated in political, ideological, and economic opposition of the two models of social organization—capitalist and socialist. After the collapse of the U.S.S.R.2 and the emergence of the Commonwealth of Independent States, almost all the conflicts in the post-Soviet expanse had a common origin—they sprang from the desire of nationalities to exercise their right to self-determination (we are not talking here about the correlation between nationality and ethnic affiliation, which is a separate topic of discussion), which was formally and legislatively enforced in the fundamental legal documents of the Soviet Union, but was in practice untenable due to the totalitarian essence of the state itself and its ideological determinacy. In other words, paradoxically, the principle of territorial integrity and right of nationalities to

1 See: I. Javakhishvili, Relations between Russia and Georgia in the 18th Century, Compass of Georgia, Tbilisi, 2000 (in Georgian). 2 Which is officially considered to have begun in 1991, although we believe it actually began disintegrating in 1988 when a set of economic decisions was adopted regarding economic entities, in particular, the Law on State Enter- prise (Association). It should also be noted that several politicians and political scientists of communist (leftist) orientation believe that this process began after March 1953 when Stalin died. Volume 3 Issue 4 2009 45 THE CAUCASUS & GLOBALIZATION self-determination were not opposed to each other in the U.S.S.R., while in conditions of “democra- tization,” these two principles already went against each other (to a certain extent). We will note that Russia is using this contradiction quite successfully today in the post-Soviet expanse. The next explanation of the situation that developed is that the Soviet model a priori contained a time bomb in the form of the autonomous territorial formations that were artificially created, without taking account of any historical justice. This approach was based on ideological determinacy, the desire to create some structure of united communality, a “Soviet nation,” the striving for a common ideal, and, most important, the guarantee against the emergence of centrifugal trends in the country’s vast territory. It stands to reason that each territorial formation of this kind had its own specifics determined by historical development. One more objective explanation of the standoff between the sides, in our case, is Georgia’s entirely natural striving toward Europe, toward European values, while Russia, after the collapse of the Soviet Union, has been striving to restore its status as the empire it was for several centuries in different forms (a monarchy and socialist state). Georgia, on the other hand, is striving to return to its natural historical, civilizational, and sociocultural path of development. In general, the world history of any empire confirms the fact that its emergence and development are based on some backbone-forming and strategic foundation: the factor of coercion in the Russian Empire (Georgia was a component of the vast empire, having voluntarily joined it) and the factor of ideology in the Soviet Union (Georgia was a union republic in a country “building socialism”). The question arises of what the striving of the current Russian political establishment to restore its influence at least within the framework of the former Soviet Union is based on? It has no ideological foundation to speak of and the liberal approach is not of a backbone-forming or strategic nature. If we were to point to one factor in particular, it would most likely be the economic factor (economic imperialism), when political goals are achieved by means of economic levers. In the 21st century, it will essentially be economic tools that constitute the main levers of political pressure. The steps several countries took to recognize the sovereignty of certain territories (for example, Kosovo) can to some extent be considered an objective explanation as well, while Russia’s actions on the territory of a sovereign state3 and its recognition of the sovereignty of two of its regions can be deemed a symmetrical response. However, it does not serve any purpose to carry out direct analogies between historical facts in order to explain the actions of politicians, as every situation and, correspondingly, the action of politicians has its specific features.

Role of the Subjective actor in the Conflict Situation

Objective and subjective factors, as philosophical categories, have a very specific application in the relatively young discipline of conflictology. Specialized scientific laboratories have been created and are functioning in Western scientific centers (at the University of Maryland, U.S., for example) that are engaged in studying the reasons for the emergence of and the laws governing the development of conflicts. There is a relatively wide range of reasons for the emergence of conflicts—political, territorial, religious, economic, social, and others. At the same time, there are also specific reasons for conflicts springing to life in a specific place, at a specific time, and with the participation of specific sides. A scientific analysis of these reasons requires a comprehensive approach and can only be achieved on the basis of an interdisciplinary methodology. In this context, we will try to analyze the role of the subjective factor.

3 See: V. Papava, “Rossiia: zheleznaia khvatka Kremlia,” EurAsianet, 2008. 46 Volume 3 Issue 4 2009 THE CAUCASUS & GLOBALIZATION

The matter does not concern a specific individual or that person’s actions (although subjective should primarily imply the actions of one person), rather the mindset of the group of people who make certain decisions. And this factor can be evaluated differently depending on which side of the conflict is looking at it. Was everything done by both sides (Russia and Georgia) to prevent the situation from escalating into an open conflict? There are more questions here than answers. Russia’s actions over the past 18-19 years have been deliberately aimed at spreading its influence in Georgia by means of political (by supporting the runaway regimes and torpedoing decisions on the international arena in the interests of developing a sovereign state) and economic pressure (in the form of privatization, particularly during the past five years, of strategically important economic facilities). By the latter we mean that during privatization, preferential conditions were created at ten- ders for Russian companies or those Russian companies that lurked under the guise of international enterprises (that is, Russian interests were lobbied). While the transfer of economic entities to the ownership of these companies meant they would control part of the economy. And it stands to reason that once they had economic levers at their disposal, it would be very easy in the future to apply political pressure too. All of this has quite a simple explanation—Russia as the legal successor of the Soviet Union is trying to exercise control over the former union territory by means of indirect methods (primarily economic). And here the term coined by Anatoli Chubais, “liberal imperialism,” is appropriate, which implies Russia achieving its political interests by exclusively economic means. The actions of the Georgian leadership at this time were also equivocal—open confrontation with Russia during Zviad Gamsakhurdia’s reign, the relatively calm situation during Eduard Shev- ardnadze’s rule, and, finally, the attempts at formal withdrawal from Russia’s control during Mikhail Saakashvili’s time at the helm. However, as mentioned above, Georgia’s economy is for the most part in the hands of Russian capital, which is fraught in the future, due to the logic of the interrelation between politics and economics, with the possibility of a political dictatorship. And to crown it all, Russia recognized the sovereignty of Georgia’s regions after the August events of 2008. Back in the mid-1990s, we noted the dominating role and influence of politics on the economy in countries with a transitional economic and political system.4 This is where the action of the subjective factor is manifested—the action of leaders and of the political establishment of the countries as a whole is playing an important, and perhaps sometimes even a deciding role in pushing the development of events along a particular channel.

Political Consequences of the Military Conflict

The most visible political result of this conflict was recognition “de jure” by permanent member of the UN Security Council, Russia (as well as Nicaragua), of two of Georgia’s regions as independent, sovereign states. Today it is difficult to predict how things will develop, but it can be said for sure that the steps of Georgian diplomacy regarding all other states must be regulated as much as possible to prevent further use of this example. What might be the political consequences in the short-, medium-, and long-term periods of development? Let us begin by saying that there is no need to exclude the emergence and activation of unexpected factors (both internal and external) in any of these periods, which could have a significant influence on the change in vectors of political development. In the short-term period, the political result is the breakdown in diplomatic relations with the RF and the unwillingness of the Russian Federation to hold political consultations, whereby this pri-

4 See: T.A. Beridze, Ekonomicheskie osnovy suvereniteta: novye aspekty vzaimodeystviia ekonomiki i politiki, Siakhle, Tbilisi, 1995. Volume 3 Issue 4 2009 47 THE CAUCASUS & GLOBALIZATION marily put Russia in a convenient position, since by announcing its unwillingness to hold a dialog with the current Georgian authorities, it is to a certain extent removing its need to adhere to certain regulations of international law regarding Georgia as a sovereign state and is making decisions exclusively in its own favor, without taking into account the interests of the other side. And in this sense, Russia might even be interested in preserving the existing situation. While the actions of the Georgian side on the international arena, and in relations with the U.S. and Europe in particular, should be aimed as much as possible toward softening the impact of this negative factor (meaning the attitude toward NATO). As for domestic political life, the military conflict dealt a discernable blow to the image of the country’s leadership, which was faltering anyway. And in these conditions the matter should primarily concern the development of statehood, with respect to which the government structures of present-day Georgia indeed have something to work on in the short term. In the medium-term period, the development of events will largely depend on the state of affairs in Russia itself, the alignment of political forces, and the country’s economic situation. For it is possible that disintegrating processes could begin in Russia itself and the problem of restraining the centrifugal forces may arise. After all, the policy of double standards has never had and never will have any positive consequences. Russia, in turn, could activate the energy resource factor as a way to resolve the political problems. And therefore diversification of energy resource suppliers could play a positive role in the future alignment of political forces on the international arena (an example might be construction of the Nabucco gas pipeline). In the long-term period, in our view, taking account of the growing effect of globalization in all of its diverse aspects will be a dominating factor in resolving the problems. Since it is precisely globalization in all its forms—political, economic, social, cultural, technical, and so on—that will significantly increase the interdependence among states and nations (and Georgia is a multinational state), which will create prerequisites for resolving the above-mentioned problem. In other words, political and economic decisions will not be made separately by the sides concerned and the effectiveness of these decisions will largely depend on the degree to which the sides concerned participate in them. We see this as a positive effect of globalization.

Economic Consequences of the Military Conflict

Paradoxically, the economic consequences of any conflict have both a positive and a negative effect. For the winning side, the possibility of abruptly raising the efficiency of the economy by drawing additional production factors into it (natural, financial, and human resources) is a positive effect, while the potential possibility of overheating of the economy—the inability to adequately allocate (distribute) resources and optimize the economic structure in the short- and medium-term periods of development—is a negative effect. For the losing side, the positive effect is not only and not so much the possibility of getting back on its feet in a relatively short time and laying the foundations for economic growth by means of borrowing (grants), but also the possibility of fairly rapid restructuring the economy on a qualitatively new basis (as happened in Germany and several other West European countries after World War II). While the possible violation of territorial integrity, which automatically leads to a drop in GDP, destruction of infrastructure, breakdown in economic ties, and, most important, loss of human resources (human capital), disorientation of society, and so on, can be considered the negative effect. This relates, to a greater or lesser extent, to both sides of the August 2008 conflict. The Russian Federation, after de jure recognition of Abkhazia and South Ossetia (Samachablo), made it possible to include these two regions in the zone of its economic interests and gain extremely specific benefits both from the political and the economic perspective, although the problems facing the Russian 48 Volume 3 Issue 4 2009 THE CAUCASUS & GLOBALIZATION economy itself will apply equally to its satellites. Georgia, on the one hand, after suffering territorial and human losses and inheriting a destroyed infrastructure, can count on obtaining an extremely specific economic benefit (part of which has already been acquired and used to restore the infrastructure and the potential of the economy as a whole). But here the time factor should also be taken into account—the briefness of the conflict, due to which it did not have time to inflict significant damage on the economy as a whole, other than creating very explainable difficulties in the banking sphere (within a few days approximately 160 million lari were lifted from deposit accounts in commercial banks). Again, however, these difficulties will be overcome with the help of investments from international financial institutions. In the short term, the military conflict did not have any perceptible negative effect on the Georgian economy,5 but in the long term, due to the decrease in foreign investments, this effect will be more perceptible (drop in GDP and employment). For example, in 2009 there were forecasts of a 30-35 percent decrease in foreign direct investments into Georgia and a mere 2-3% increase in GDP. We can say for certain that it was not so much the hostilities as the government’s inadequate and inconsequential actions in the economic sphere in recent years and, of course, the world economic crisis (the Georgian economy is extremely dependent on foreign investments, while a shortage of these resources in the crisis conditions could not help but have an influence on its development) that have had a negative impact on the state of Georgia’s economy today. And it is precisely economic growth and the poverty-fighting and raising of the population’s standard of living this entails that are the determining factors in finding a solution to the current political situation. What should the authorities’ economic policy be in these conditions? Its main vector should be aimed at improving the economic structure, developing import-substituting production, and ensuring import-substituting growth. The model (paradigm) of economic development should not be strictly liberal, but primarily reflect the current development trends of national economic systems. Eco- nomic growth should be ensured on the basis of elaborating modern technological precepts, and not on the basis of unreal financial flows. The government should exert efforts to minimize crisis-forming factors (inadequate structural, privatization, and foreign economic policy, poor protection of property owner rights, and so on).

C o n c l u s i o n

Today, Georgia faces the main objective reality of Russia’s “de jure” recognition of the independence of Georgia’s indigenous territories, while they have de facto been under Russia’s protection since the beginning of the 1990s. Resolution of this problem must and should be considered a priority in present-day Georgia and should be resolved at least in the long term. Today, in our opinion, Geor- gia must solve the double task of building a legal, democratic, and civil society, on the one hand, and a truly efficient market economy, on the other. From the political viewpoint, a truly democratic and legal state should be built6 (rather than so- called decorative democracy introduced, which in fact means a total absence of authority and lack of control on the part of the government), which will also become attractive for the population of the lost regions. In this respect, it is vital to form a system of independent courts and ensure freedom of the mass media from government pressure.

5 See: V. Papava, “Poteri i vyzovy. Kakim putiom my idiom?” Argumenty i fakty—Tbilisi, No. 40, 2008. 6 See: J. Khetsuriani, “Russia’s Recognition of Abkhazia and South Ossetia as Independent States in the Context of International Law: View from Georgia,” The Caucasus & Globalization, Vol. 2, Issue 4, 2008, pp. 23-32. Volume 3 Issue 4 2009 49 THE CAUCASUS & GLOBALIZATION

From the economic viewpoint, an adequate economic policy for the current stage in development must be pursued, property rights enforced, market economy institutions developed, and a highly effective society achieved on this basis, which will make the country attractive to investors and help to return the lost territories. Today dwarf parties have begun appearing on Georgia’s political horizon instituted both by the new political entities and by former high-ranking officials of the current administration. They are declaring their desire to extricate Georgia from the crisis, which, in our opinion, is a natural reaction to the situation that has arisen in the country, on the one hand, and a perfectly natural human desire to “be in power,” on the other. It should be noted that the phenomenon of the opposition in countries with a transitional political and economic system is an interesting and separate topic of study, whereas here we will limit ourselves to noting one of its common features—the absence of more or less realistic programs of future action. Today, we need to proceed from the reality that has developed, from the current configuration of basic factors, providing that the building of further relations will be based on taking account of the interests of the sides as a whole in the region. In publications of the Central Asia-Caucasus Institute, scientists have offered an interesting approach to a possible vector of development in the region, which suggests concentrating on developing the market economy and democracy in Georgia in order to make it the most appealing country in the region.7 The idea is to create conditions that will make the two breakaway regions interested in belonging to a single state—Georgia. We think this is the only solution. We believe that this problem can be resolved in the historical context of its development, keeping in mind the current reality and interests of the sides. And this will only be possible if a truly law- based, democratic, and civil society is formed, on the one hand, and a truly efficient market economy, on the other.

7 See: A. Gegeshidze, V. Papava, Post-war Georgia Pondering New Models of Development, Central Asia-Cauca- sus Institute (01/14/2009 issue of the CACI Analyst); V. Papava, Post-war Georgia’s Economic Challenges, Central Asia-Caucasus Institute (11/26/2008 issue of the CACI Analyst). 50 Volume 3 Issue 4 2009 THE CAUCASUS & GLOBALIZATION

GEO-ECONOMICS

Andrei BLINOV

Academician of the Russian Academy of Natural Sciences, D.Sc. (Econ.), professor of the Management Chair, All-Russia Extramural Financial and Economic Institute (Moscow, Russian Federation).

THE DI ICULTIES AND CONTRADICTIONS O SMALL BUSINESS DEVELOPMENT IN RUSSIA

Abstract

his article takes a look at the state of ios of the possible development of the small T small business in Russia, the sensi- private economy in Russia in the near fu- tive issues in this sector of the Rus- ture. In the context of these problems, the sian economy, and the results of state sup- author defines the main areas of appropri- port of small business. It presents scenar- ate state policy in small business.

I n t r o d u c t i o n

The small private business sector in Russia is as old as the market reforms. Small business is not only something new, it also requires immense efforts and is fraught with many dangers. Small business is the only sector where private property (whereby primitive although absolutely necessary for Volume 3 Issue 4 2009 51 THE CAUCASUS & GLOBALIZATION the efficient functioning of a market economy) exists in pure form. The absence or underdevelopment of small business in the economy makes it impossible to create a legal mechanism of market regulation (free contracts, protection and delimitation of property rights, the state’s efficient intervention in illegal infringement of the interests of all categories and groups of property owners). In addition, it is only through small business that ordinary citizens can understand what private ownership is all about and the opportunities, rights, obligations, and responsibilities that go along with it. It is not surprising that in Russia, where the years of reform have failed to lay a sufficiently strong and ramified foundation for small business, people are slow to respect other people’s property and abide by the law, development of a civil society and its institutions is faltering, corruption is thriving, and a middle class, the bastion of social justice, is very slow to form. The Russian state and its legislative and executive branches are not inclined to undertake wide-scale measures and engage in constructive interaction with mass, grass-roots, and democratic small business. The state has more in common with shadow oligarchs and the directors of pseudo- private post-socialist industrial giants. Consequently, it takes a state with a different mindset to create normal conditions for developing private initiative and propelling small business toward greater prosperity. It is the super task of small businessmen themselves (and not only them), their civil responsibility to their families and society as a whole, to encourage the state to change its mindset.

Small Business in the 21st Century

The development of small business is the most important prerequisite for economic growth in the globalized world. There are no universal criteria that apply equally to all national economies for defining the entities of small business. Depending on its national interests, each country substantiates and legislatively enforces its own criteria for determining which entities shall be classified as small and medium businesses. At the turn of the 1960s-1970s, small and medium enterprises began to occupy increasingly stronger positions in the economic structure of the U.S., Japan, Germany, France, and Canada, and a little later in Italy, Spain, and other countries in terms of forming the gross domestic product, the number of enterprises in the country and the size of their staff, and assimilating new technology. In the past two or three decades, small enterprises have proven their worth with respect to breakthrough scientific-technical developments. A new term—venture business—has been coined to describe this kind of innovative enterprise. It implies organizing groups of researchers, engineers, and scientists in the form of a small business to elaborate a particular scientific idea or project. If an idea is successfully tested and considered a “scientifically rated product,” the profit of the small business will be much higher than the average branch level. The main characteristics of the state of small business in different countries are presented in Table 1. The opportunities for small business to carry out its functions are directly determined by the institutional environment and state of the productive forces. This thesis is extremely important for identifying the potential of small business and determining the rational areas and volumes of its support by the state. 52 Volume 3 Issue 4 2009 THE CAUCASUS & GLOBALIZATION

Table 1

Integrated Indices Describing the State of Small and Medium Enterprises ) ) ) ) ) % Countries % ( ( units thou. Share ( ( Number of Number of Enterprises Employees 1,000 People Share in GDP of Employees in Enterprises million people Enterprises per in Total Number (

Great Britain 2,630 46 13.6 49 50-53

Germany 2,290 37 18.5 46 50-52

Italy 3,920 68 16.8 73 57-60

France 1,980 35 15.2 54 55-62

EU countries 15,770 45 68 72 63-67

U.S. 19,300 74.2 70.2 54 50-52

Japan 6,450 49.6 39.5 78 52-55

Russia 844 5.65 8.3 13 10-11

S o u r c e: A.G. Mikhailov, A.O. Blinov, R.M. Shafiev, Innovatsionnoe razvitie malogo predprinimatelstva, Delo, Moscow, 2008.

Main External actors and Problems of Small Business in Russia

Small business as it is understood today in Russia began to develop at the beginning of the 1990s and has not undergone any significant changes to date. There are two groups of reasons for the sluggish development of small business in Russia. The first consists of general economic reasons that are part and parcel of the state’s economic policy, and the second are of a specific, primarily organizational nature. When analyzing the business environment, several reasons for the slow development of small business in Russia can be singled out: n the rather complex and ambiguous economic situation in the country: n inflation, breakdown in economic ties, deterioration of payment discipline, high interest rates, poor legal protection of businessmen; n the low level of organizational-economic and legal knowledge of businessmen, the absence of the necessary business etiquette and economic culture, both in small business and in the state sector; Volume 3 Issue 4 2009 53 THE CAUCASUS & GLOBALIZATION

n the negative attitude of some of the population that basically associates business with inter- mediation and buy-sell; n the underdevelopment of the organizational and legal foundations for regulating business development at the regional level; n the inefficiency of the small business state support mechanism; n the low level of development of the small business infrastructure. The economic situation that has developed is having a negative effect on small business in all areas. Inflation in general and the increase in price for all elements of the production process are placing small businesses on the brink of bankruptcy. This particularly applies to enterprises operating in the production of goods and everyday services for the population that require raw and other materials which are becoming increasingly expensive. The list of problems alone facing domestic businessmen shows that the necessary conditions have not yet been created for developing business in general and small business in particular. A specific feature of small Russian business is that its entities essentially do not own any fixed assets. The overwhelming majority of small business entities are operating from rented facilities and using rented equipment. In this sense, Russian small businessmen can be described as hired workers rather than property owners. The main difficulties facing small Russian business include taxation, bureaucratic arbitrariness and administrative barriers, tyranny among the supervisory bodies, criminal pressure, the unregulated nature of leasing relations, constant changes in reporting forms, and difficulties with accounting reports. This results in a large shadow component in small Russian business. Despite all of its negative aspects, the shadow economy provides small business with a place to escape the stifling clutches of the draconian laws and regulatory acts, as well as with protection from bureaucratic tyranny. According to expert evaluations, and taking into account illegal employment, at least one third of the total number of employees in Russia’s national economy works full-time and 60% part-time, i.e. they also hold a second job, in small business.1 An extremely important difference between small business in Russia and in developing countries is the fact that it is being formed and is developing on the basis of a previously created highly industrial infrastructure. New communications, transport routes, electricity and gas supply, on the one hand, and the population’s ability to work in present-day conditions, on the other, are giving rise to an entirely different potential of small business for resolving Russia’s socioeconomic development problems in the context of globalization. World practice shows that two trends are possible in the development of market relations: the formation of a regulated or of an unregulated speculative market. A deformed type of market is taking shape in Russia.2 It is wrong to think that the experience of Western countries is impeccable and that it can be transferred without a second thought to domestic practice. This is precisely what happened when the “shock therapy” model was tried on for size. It did not fit because the people in Russia failed to take several prerequisites into account. The experience of Western countries shows that shock therapy is applied to open up the narrow bottlenecks that are hindering development of the economy, thus drawing businessmen with their know-how into the ensuing gap. By creating the necessary production links (often with state support), the business environment “dis- solves the blood clots” in the economy and within a short time helps it to recover from the crisis. This did not happen in Russia since small business, the main prerequisite required to ensure the success of shock therapy, had still not formed. It was almost non-existent in material production, and

1 See: V.P. Ermakov, “Konkurentosposobnoi ekonomiku delaet malyy i sredniy biznes,” Natsionalnye proekty, No. 6, 2009. 2 See: A.O. Blinov, Maloe predprinimatelstvo. Teoriia i praktika, Dashkov i Co., Moscow, 2002. 54 Volume 3 Issue 4 2009 THE CAUCASUS & GLOBALIZATION the deformed nature of the circulation sphere could not allow small business to make any significant improvements in the situation as well. Applying world experience is of course a good thing, but only providing that the conditions, possibilities, and mentality of one’s own country are taken into account, which can largely be ensured by domestic science. First, one of the necessary features of a regulated market is conditions promoting the free investment of funds in different spheres, while the gist of state regulation is not in manipulating the price system, but in forming optimal proportions. Second, such a market requires a perfect mechanism for regulating consumer demand, that is, for stimulating higher incomes and, consequently, higher pur- chasing power among most of the population, which acts as the driving force behind production. The contraction of the domestic consumer market (because of the increasingly perceptible drop in the population’s overall paying capacity) is an important factor hindering the development of small industrial business. It is not easy for a small businessman to gain access to the world market with his product due to its low competitiveness in the market. Another reason slowing down the development of small business is associated with the existing taxation system. According to a poll conducted by the All-Russian Public Opinion Research Center, 86.2% of enterprise directors named tax shortcomings and high tax rates as the main negative factor influencing the economic position of enterprises.3 The difficulties in forming small business in Russia are also associated with its specific features, whereby a business community consists of groups which gravitate toward one of two poles. One group consists of businessmen who organize their business on the generally accepted basis by means of loans, credits, shareholders’ contributions, and so on. Their activity is carried out within the framework of the adopted legislative regulations. The other group consists of entrepreneurs who use capital earned in the shadow economy to put their business on its feet. According to a poll conducted by the Russian Union of Industrialists and Entrepreneurs, 49% of the businessmen surveyed said they had come from the shadow economy, thus confirming the illegal basis on which their business was organized.4 In the context of the drop in standard of living, this is giving rise to a negative attitude toward small business among most of the population, and business is associated in people’s minds with something injurious. All of this discredits business and creates an unfavorable social base for its efficient functioning. The organizational reasons for the sluggish development of small business in Russia include the difficulties in obtaining permission to create business structures. Serious administrative barriers are arising due to the local authorities’ subjective understanding and interpretation of legal acts, which is leading to tyranny and the establishment of one’s own rules for entering into business. The next reason significantly hindering the creation and development of production business is the absence in protectionism policy of a clear orientation toward supporting production operations in particular. Business activity in material production is not being duly stimulated. Policy aimed at supporting business “in general,” and not the basic branches in particular, is leading to serious deforma- tion in the structure of business development and not ensuring the most optimal results.

State Regulation as a Barrier to the Development of Small Business

Having embarked on the road of market reforms, Russia must define its strategy with respect to the nongovernmental sector of the economy—national private, foreign, individual, collective, big,

3 See: A.I. Kornienko, “Malyy i sredniy biznes: osobennosti funktsionirovaniia,” Ekonomika zdravookhraneniia, No. 2, 2009. 4 See: A.V. Vilensky, “Problemy malogo predprinimatelstva,” Voprosy ekonomiki, No. 4, 2005. Volume 3 Issue 4 2009 55 THE CAUCASUS & GLOBALIZATION and small. A correctly formulated plan of action implies conscious formation of conditions for the operation of economic entities, which ensure the long-term profitability of business, mobilization of its investment resources at the micro level, and rapid progress in general. An authoritative and competent government is better for business than a weak one. A high level of social tension is always regarded as a risk factor. Ethnic and territorial conflicts do nothing to attract foreign business capital; and in such conditions national capital looks for a profitable place to invest abroad. In any country, business activity is organized and controlled by the state, proceeding from the priorities of the country’s economic development. The legal framework sets the degree of freedom for the businessman and molds his behavior. For example, if tax legislation is faulty, he looks for ways to evade taxes rather than ways to minimize tax payments within the framework of the law. The state should create a taxation system that makes timely payment of taxes more advantageous than non- payment. The overall instability of economic legislation has the same effect, that is, it makes businessmen less inclined to obey the law. The population’s attitude toward market reforms is also very important. As it becomes stronger, the market is failing to create new public structures or form a pro-market public opinion. So the state should pay close attention to and try to influence public consciousness. Innovation is one of the most important areas in the development of small business. Russia’s small business undoubtedly has an innovation component. It can be clearly discerned in commerce and services, in small production and construction. But the gist of this innovation lies in active incorporation and adaptation of foreign technology and materials. Small business is a kind of sponge that soaks up and disseminates production and business ideas in the local market that have already been successfully implemented in other parts of the world. The situation with scientific-technical small venture business in Russia leaves something to be desired. And this is the most important component of contemporary innovative small business. Rus- sian scientific-technical innovative small business is insignificant in scope and operates primarily under direct contracts from foreign companies or transnational corporations that try to economize by working with cheap researchers. The small number of venture funds in Russia that are engaged in financing this activity have so far essentially been fully operating on foreign capital. On the whole, the negative trend toward a contraction in the sphere of scientific-technical small business is caused by: n the lack of domestic demand for scientific-technical production; n the low profitability of scientific-technical activity in small business; n the lack of interest of big Russian capital in scientific-technical innovation activity on the whole and in small innovation business in particular; n the high ambiguity of economic activity in the Russian market. As of the present, a market for servicing small businesses and, correspondingly, the main institutions of this servicing have already developed in Russia’s leading regions. The Russian system of small business support must be placed under strict public control. This primarily means control by public associations in small business. This requires that the government play a mandatory role in their support.5 The ubiquitous criminalization of the economy, which is becoming increasingly ensconced, is having a negative effect on small business in Russia. The prevalent share of the shadow sector of the economy continues to be a distinguishing feature of small business. It must be said that the state system of small business support that has developed in Russia is on the whole equivalent to the current

5 See: E.V. Sytova, “Stimulirovanie malogo i srednego predprinimatel’stva v usloviiakh krizisa,” Nalogi-2009, No. 6. 56 Volume 3 Issue 4 2009 THE CAUCASUS & GLOBALIZATION

Russian institutional macro environment. Therefore, this system is failing to stimulate improvements in the business climate and help small business to open up lucrative opportunities for itself in the national economy. Small shadow business is unable to give large bribes to big bureaucrats. It circles around the many middle- and low-ranking officials who are satisfied with small but regular extortions. Accord- ing to experts, the total amount of such extortions, although it lags behind the amount of bribe-taking in big business, is still very high. The current state system of business regulation is pushing small business into the shadow economy. The main reasons for small enterprises retreating into the Russian shadow economy are lack of protection of property rights, corruption, weakness of the law-enforcement system, insufficient available financial resources, lack of circulating assets and the possibility of alternative payments (cash, barter, and so on), the coercive nature of leasing relations, administrative-bureaucratic barriers, underdevelopment of the market infrastructure, the heavy tax burden, and so on. An obvious reason for Russian small businesses becoming widely incorporated into the shadow economy is the unsophisticated nature of the regulatory-legal basis of entrepreneurship.6 There are too many gaps and imprecise formulations in the laws that allow for double and triple interpretations. The economic laws are random, fragmentary, and often contradict each other. This kind of legislation is a perfect Klondike for bureaucrats to procure unearned rent money. Shadow revenue of small business is primarily used as follows: n for the enterprise’s current activity (illegal payment in cash, office lease payments, paying off business partners, and so on); n for personal use; n for paying state controllers, tax officers, and security and law-enforcement officers, going through various authorization procedures, and so on (bribes); n for paying racketeers who provide “protection.” The personal safety of businessmen is becoming an especially urgent issue as the economy becomes more criminalized. It stands to reason that this is making the business sphere less attractive for working in and forcing businessmen to look for a solution to the current situation. Some are creating their own security services, which are usually expensive and, due to the low professionalism of their employees, unreliable. Administrative barriers in Russia are not simply one of the difficulties in small business development. They represent an entire set of complicated and contradictory relations associated with interaction between business and the government in the management structure, the main entities of which are inclined toward engaging in a constant battle for preferences. Such barriers that hinder the movement of goods, capital, and labor are bureaucrats’ main tool in countries with developing markets for obtaining high-status rent money. Administrative barriers are usually divided into two groups: those that prevent the small businessman from gaining access to a particular commodity market or conducting particular economic operations (licensing, certification, accreditation) and those that arise due to the adoption (threat of adoption) of particular control measures over current economic activity.7 On the other hand, serious administrative barriers are arising due to the local authorities’ subjective comprehension and interpretation of legal acts, which is leading to arbitrariness and the establishment of one’s own rules for entering into business. The procedure for obtaining a license to engage in

6 See: A. Kryslov, “My khotim uprostit rabotu malogo biznesa, a ne posadit ego na sheiu gosudarstva,” Rossiyskaia Federatsiia segodnia, No. 22, 2008. 7 See: S.N. Katyrin, “Zakony biznes-klassa,” Rossiyskaia gazeta, 28 July, 2009. Volume 3 Issue 4 2009 57 THE CAUCASUS & GLOBALIZATION business activity is arduous and demanding, requiring not only the submission of a multitude of ref- erences, information, reports, and other documents, but also the payment of artificially high fees to register founding documents. An important task of small business development in Russia is organizing the training and retraining of civil servants working in the small business support system. Training personnel for small and medium business requires the following: n developing a system for teaching the basics of business activity at different levels of educational institutions; n developing a system of extended professional education for directors and specialists of current small businesses, infrastructure facilities of small business support, as well as civil servants, whose sphere of competence should include managing small business development and regulating its activity. Solving these tasks requires: n creating an extensive network of educational institutions at the federal, regional, and municipal levels; n developing educational services for meeting the demand of different social groups (unem- ployed and unoccupied citizens, retired servicemen, pensioners, young people, migrants, women); n ensuring the availability of high-quality business-education for beginning and already established businessmen. Since federal programs are not being financed by the state, the tasks aimed at improving educational services for entrepreneurship and small business are essentially not being performed. Less than a third of society’s real demand for businessmen training is satisfied. So a corresponding contract with higher educational institutions should be formed. The state should assume part of the cost for business basics training. The system of extended education in the regions, which ensures retraining and advanced training of small business specialists, should be financed from the budget. Small business development in Russia requires a mechanism for its interaction with big enterprises. Drawing big business into small business development should become one of the most important areas in the state’s economic regulation policy. Projects for creating holding companies, into which the big production complex can integrate, are a good case in point. World practice has long become convinced of the economic efficiency of interaction between small and large businesses. This interconnection gives businesses the opportunity to cooperate with each other on a very diverse basis: from delivering raw materials to selling finished products. The optimal model of this multidimensional interconnection is called a cluster. This kind of interconnection is not based on the sectoral principle, but on principles that create a technological chain for bringing a commodity or service to the consumer, whereby without interme- diary and sales companies. A cluster corporation can be created on the principle of building up a structure and incorporating elements into it that at first glance are distantly related to each other. Financial institutions, banks, and licensing and insurance companies play the main role in forming a financial infrastructure for small business. They carry out most of the lending and investing in small business, bear the main risks, and render the main accompanying financial and information services to small businesses. In the past three years, according to experts, the volume of bank lending to small and medium business has doubled. This increase is generated by the new players entering the market and expansion of the portfolios of its previous participants. 58 Volume 3 Issue 4 2009 THE CAUCASUS & GLOBALIZATION

Large banks have significant resource potential for attracting a large number of borrowers and lowering interest rates. But at the same time stricter demands when selecting small business borrowers and the lack of interest in small loans prevent them from encompassing the entire spectrum. So far large banks are servicing only higher quality small businessmen rather than smaller credit institutions. In order to augment the share of the small business market, banks have to constantly improve their product supply. This segment of the market is very mobile and it requires constant changes for its development. In Russian conditions, the problem of constant changes is particularly pertinent due to the rapid implementation of global reforms in the economy and the progress of information technology.

Business Structures are the Driving orce behind Private Business Development

The state and lines of activity of public business structures are important indicators of the socioeconomic situation that has currently developed in Russia and the results of the market reforms. We will note that many such public structures have already been created in Russia, including elite interest clubs, and so on. But it is public business corporations that constitute the legitimate tip of the iceberg of such structures. It is obvious that small businessmen, due to their low status, do not belong to elite clubs. Therefore public small business associations are called upon to perform both the formal and informal functions of defending the interests of small business before the state and big capital and to create a favorable climate for small business. Associations of small business entrepreneurs are an institution of collective protection of small business interests in the state power structures and control over power. It is not difficult for the bureaucracy to deal with each small businessman individually. However a public association is a very different thing. This kind of association has the ability to parry bureaucratic blackmail, extortion, and threats to paralyze work. Associations of small business entrepreneurs are more active than any other structure, recognize the most urgent problems of small business, and find ways to resolve them. As practice shows, the ways to develop small business they offer are usually superior to the proposals and projects of state departments in terms of their effectiveness and understanding of the issues.8 Associations of entrepreneurs participate in the formation and implementation of state and municipal policy which in one way or another affects the interests of small business. This participation is effected through representation offices of business associations in the consultative bodies of the state power structures and through political parties. Business associations usually take the most active part in elaborating and implementing small business support programs financed by the state and municipal authorities. In addition, associations of small business entrepreneurs are an institution for raising the responsibility and competence of small business entities and forming a positive corporate charter for conducting business. Business associations promote a rise in businessmen’s work ethics, first, by removing from business associations those who have proven themselves to be sneaky dealers and, second, through constant monitoring of business ethics. Business associations themselves elaborate codes of ethics (honor) keeping in mind sectoral specifics and see to it that they are faithfully abided by. In the final analysis, self-regulating business associations must answer to the state and consumers (the population) for the reputation of each of their members.

8 See: A.N. Buiankina, Malyy biznes: gosudarstvennoe regulirovanie, Luch, Moscow, 2008. Volume 3 Issue 4 2009 59 THE CAUCASUS & GLOBALIZATION

Small businessmen ultimately participate in the activity of public business associations in order to achieve three main goals: (1) lobbying and protecting their private and group interests before government and primarily large private structures; (2) improving the institutional environment of the business activity of small business entities using the business association’s resources, including receiving privileged services from business associations in the form of business, legal, and technological information; obtaining the possibility of privileged advanced training of small business employees, the business association’s assistance favorably settling business conflicts; (3) rationalizing the functions of business activity regulation and control, including business associations taking upon themselves certain management and regulation tasks that used to be performed by the state and municipal power structures (i.e. through self regulation). The organizational system of public business associations that claims the trust of its members should be as democratic and open as possible. Whatever the case, the degree of their transparency should be a notch higher than that of the state structures engaged in small business support.

Possible Scenarios of Russian Small Business Development in the Near uture

In all likelihood, three main scenarios are possible in the development of Russian small business in the near future—optimistic, pessimistic, and realistic. The optimistic scenario presumes that the Russian state will finally turn its promises into practical steps—carrying out real reduction and sim- plification of small business taxation, resolutely fighting corruption, dropping the administrative barriers that hinder access to the market, and strengthening the legal regime of private property, including ownership of land. In addition, artificial support of faltering large businesses should stop, and their restructuring should be carried out in a way that gives small business more direct and easier access to their assets and areas. Aside from political will and corresponding priorities in economic policy, this also requires specific external prerequisites—retention of relatively high prices on Rus- sia’s main export commodities (oil and gas) in the mid-term, redistribution of tax revenue from export to the stimulation of non-raw material branches and innovations, and establishment of as favorable conditions as possible for restructuring the country’s external debts. In this context, the small business sector is beginning to undergo rapid development; we believe that the rates of its development may come close to the level seen at the beginning of the 1990s when the number of small businesses approximately doubled every year.9 Trying to evaluate the possible dimensions of small business development, given the most favorable scenario of the socioeconomic situation in Russia, we proceed from the following hypotheses. First, the sociological studies carried out in countries with a developed market economy show that the percentage of potential businessmen usually constitutes 4-6% of the adult population.10 Similar studies carried out in recent years in Rus- sia confirm on the whole that the same thing is happening in Russian society too. In this way, given the optimistic scenario, essentially all potential businessmen could carry out their business inclinations, which would bring the number of active small businesses up to 2.8-3 million, and the number of

9 See: A.G. Mikhailov, A.O. Blinov, R.M. Shafiev, op. cit. 10 [http://www.hse.ru/journals/wrldross/vol01_4/Chepurenco1.htm]. 60 Volume 3 Issue 4 2009 THE CAUCASUS & GLOBALIZATION full-time employees in small business to 18-24 million people. Second, the restructuring of large enterprises and rehabilitation of the country’s financial system will inevitably lead to a large number of redundant workers. This will naturally swell the ranks of the self-employed, as well as cause a rise in the number of small businessmen who enter the private sector of the economy “out of necessity.” The pessimistic scenario presumes that the cosmetic reforms of the Russian economy and social sphere will continue. In so doing, the slogans of “small business support” will turn in practice into further intensification of tax pressure, which will cause small business to take to its heels and find shelter in the shadow economy at an even faster rate. The state will react to this by intensifying the repressions (the reverse side of which is further burgeoning of corruption at the grass-roots level) and tightening up registration and licensing procedures. This will naturally not deal small business an ultimate death blow, if nothing else by virtue of the fact that large enterprises will be unable to absorb the entire workforce, but at best it will continue to stagnate at approximately the present level, in a situation where the number of small businesses throughout Russia as a whole is approximately the same as the number in Warsaw alone. The realistic scenario lies somewhere in the middle. The state will make taxation easier, but cannot perceptibly lower it (due to the absence of political will or unfavorable foreign economic and macroeconomic conditions). Legislation will be improved slowly, sluggishly, giving bureaucrats time to react to each improvement in the law with refined by-laws which will greatly neutralize the positive effect of law-making. It will be easier to register a company, but it will still be difficult for the businessman to obtain a license for conducting a specific type of activity. The struggle over the Land Code will end in another draw with private ownership of land being declared but the mechanism for carrying it out legislatively not established, thus making both mortgage and various types of loan coverage essentially impossible. State policy with respect to small business will begin to be carried out more decisively and intensively, but will most likely be of a corruptive nature. In such conditions, a slow increase of 1.5-2-fold in the number of small enterprises and their employees is possible compared to the current modest level, that is, to 1.5-2 million small enterprises and 12-15 million full-time employees, whereby the share of small business in GDP may grow to 18-20%. The range of issues examined related to the problems facing the development and management of small business in Russia’s present-day conditions requires more in-depth study, combining the new theoretical knowledge with practice, and removing the gap between them.

C o n c l u s i o n

Systemic reform in Russia, given all the zigzags, blunders, and foot-dragging, is still part and parcel of movement toward a market economy. So the state should aim to create framework conditions that will help this process to develop of its own accord. In order to achieve this goal, the state’s economic policy should, at minimum, be neutral with respect to the nascent entities that are the driving force behind the market economy—private businessmen. It would be even better if the state made targeted efforts to assist the formation of market entities. Of course, in order to realize this minimum, the Russian government must change the very ideology of the state’s economic policy. Stimulating competition in the economy as a whole promotes the development of small business. An extremely important advantage of small business is open markets. This means free movement of capital, goods, and labor, which promotes the creation of a genuinely competitive environment. It does not take a lot of money to remove the internal boundaries and customs barriers, bureaucratic red-tape, and attempts to establish monopoly dictatorship, it takes only political will and the streamlined efforts of the corresponding power branches and government structures. If this were done in Russia’s conditions, it would give a significant boost to the business climate. Volume 3 Issue 4 2009 61 THE CAUCASUS & GLOBALIZATION

Small business is especially vulnerable since it does not have such powerful defenses as its own legal service and security service, which partially help to minimize the cost of the legal tyranny engaged in by large business structures. This also requires stronger state guarantees of property rights. Finally, a long-term concept of state small business support must be formulated and an inventory taken of its methods. This requires developing mechanisms for attracting private loans in the regions against the guarantee of specially created warranty funds (agencies), creating financial leasing centers, and also elaborating a mechanism of simplified taxation and imputed income taxation. All of this should help to facilitate the access of potential businessmen to loan capital for opening and expanding their business and ease management and accounting at newly created enterprises. In addition, the government’s role in forming a favorable climate for developing small business should in no way be limited to direct economic policy measures alone. First, the state should learn to see small business and the associations representing it as its equal and worthy partners. This can be demonstrated in practice not so much by holding occasional sumptuous congresses of the “frontrunners of small business” and creating servile small business associations, as by involving their representatives in permanently functioning structures where they can participate in forming small business policy.

Kornely KAKACHIA

Associate Professor, Department of Political Science, Faculty of Social and Political Studies, Javakhishvili Tbilisi State University (Tbilisi, Georgia).

ENERGY SECURITY A TERMATH O RUSSO-GEORGIAN WAR: IMPLICATIONS OR THE CENTRAL CAUCASUS

Abstract

ince the collapse of the Soviet Union, ognition of the independence of Abkhazia S the Caspian Sea and Central Cauca- and South Ossetia fundamentally changed sian region has become the focus of the situation in the region. The war has considerable international attention, prima- created a new strategic situation. rily because it is one of the oldest and po- And the question is now how to han- tentially richest oil and gas producing are- dle this delicate situation in a strategically as in the world. The August 2008 Russian and geopolitically important region. So by invasion of Georgia and the unilateral rec- controlling Georgia (in case Russia reach- 62 Volume 3 Issue 4 2009 THE CAUCASUS & GLOBALIZATION es its aims), Russia actually will be able to August war in Georgia demonstrated some cut off Central Asian and Caspian resourc- risks associated with the functioning of the es. It means Russia would be able to iso- transit energy corridor in the Central Cau- late and cut off Azerbaijan and Central casus. It also demonstrated the need for Asian countries, and it will significantly broader security guarantees for a region strengthen its energy monopoly over Eu- that is vital to European and global energy rope with all the ensuing consequences. So security. This paper deals with economic it is about a major shift in the energy pol- damage inflicted by the Russo-Georgian icy and geopolitics based on this energy war in the Central Caucasus and its impli- policy and Russian energy monopoly. The cations for regional security.

I n t r o d u c t i o n

Since the industrial revolution, the geopolitics of energy—who supplies it, and securing reliable access to those supplies—have been a driving factor in global prosperity and security. Over the coming decades, energy politics will determine the survival of the planet. The political nature of energy, linked to the sources of supply and demand, comes to public attention at moments of crisis, particularly when unstable oil markets drive up prices and politicians hear constituent protests.1 Since the collapse of the Soviet Union, the Caspian Sea and Central Caucasian region has become the focus of considerable international attention, primarily because it is one of the oldest and potentially richest oil and gas producing areas in the world. Surrounded by the three regional powers Iran, Russia, and Turkey and located on the crossroads of Europe and Asia, the Central Caucasus has also been at the center of post-Cold War geopolitical rivalries. To a considerable extent, the significant oil and gas reserves in the Caspian Sea, specifically in the Azerbaijani sector, have also amplified regional rivalries for political and economic influence in the region. Despite physical isolation, the region sits at the very heart of one of the world’s geopolitically most significant and sensitive areas. Thus, a large number of world powers see the resources as important, making the Central Caucasus the subject of a second “Great Game.” The August 2008 Russian invasion of Georgia and the unilateral recognition of the independence of Abkhazia and South Ossetia fundamentally changed the situation in the region. The war has created a new strategic situation. By sending forces over its borders for the first time since the 1979- 1989 Soviet-Afghan war and forcibly redefining the border with Georgia, Moscow has aroused concern among other newly independent countries about its future intentions. Whereas the invasion of Georgia was rightfully seen as part of Moscow’s plan to reassemble its former empire or at least exert enough control of its border to deny Western access to critical energy reserves without the Kremlin’s approval, the invasion was in part a reaction to the enlargement of NATO to the borders of Russia proper along with consideration for membership of both Georgia and Ukraine. One of the Russian targets in Georgia was the pipeline carrying oil from the Caspian Sea to the West.

Economic Damage of Russo-Georgian War

The five-day clash between the Russian and Georgian forces in August inflicted serious damage on Georgia’s economy both in causalities and in worsening the prospects for development and invest-

1 See: C. Pascual, “The Geopolitics of Energy: From Security to Survival,” available at [http://www.brookings.edu/ papers/2008/01_energy_pascual.aspx]. Volume 3 Issue 4 2009 63 THE CAUCASUS & GLOBALIZATION ment. The material damage has initially been estimated at some 1 billion dollars or about 8% of fore- cast 2008 GDP. The damage was mainly confined to military targets—bases, military airfields, air defense systems. There was no great damage to civilian targets, including industrial or agricultural assets, with the factory producing military aircraft in Tbilisi being a rare exception. Major communications routes have remained mostly intact. The only exception here was the blowing up by Russian soldiers of a railway bridge 40 kilometers east of Tbilisi on 16 August, after the ceasefire. This disrupted rail communication between the eastern and western parts of the country, causing problems not only for Georgia, but also for Azerbaijan and Armenia, for which this railway is an important route. Georgia suffered lost revenue from the confrontation: In 2007 BTC fees generated $25.4 million in transit revenues, and before hostilities erupted Saakashvili’s government had estimated BTC transit payments for 2008 at about $45 million. In addition, seeking an alternative route, BP switched to the recently reopened 550-mile, 140,000-bpd Western Route Export Pipeline, better known as the Baku-Supsa line, which opened in 1999 and was running at about 90,000 bpd. Because of the worsening military conflict, on 12 August, BP announced that it was suspending shipments through Baku-Supsa, as well as the Baku-Tbilisi- Erzurum pipeline, which transports natural gas from Baku to Turkey via Tbilisi. Completing the lock-in of Azeri oil exports, the fighting caused the authorities to suspend sea- borne shipments from Georgia’s Black Sea ports of Batumi (200,000 bpd) and Poti (100,000 bpd), both supplied by rail. Poti was closed on 8 August following reported Russian air strikes. Adding to the grim picture, the authorities also ceased exports from Kulevi, Georgia’s third Black Sea oil termi- nus, which opened in 2007 and is capable of shipping 200,000 bpd. But probably the most painful loss for Georgia was the damage to its reputation as a safe venue for investment and a secure corridor for fuel transportation. As early as May, Standard & Poor’s lowered its outlook for the sovereign credit rating of the government of Georgia from “positive” to “stable,” explaining it by the deterioration in relations with Russia and the reinforcement of the Russian forces in the separatist regions of Abkhazia and South Ossetia. During the August war, the agency expressed concern that investors may become even more cautious in making investment decisions in Georgia.2 In particular, the future of the EU’s Nabucco gas pipeline project for supplying EU member states with gas from Azerbaijan and Central Asia may have been endangered. Added to these concerns is the growing risk associated with infrastructural investments in the Central Caucasus in the aftermath of the war. Although Russian bombers did not target any energy facilities, the coincidence of an explosion in the Turkish section of the BTC close to the Georgian border a few days prior to the military operations raised some concern about the possible targeting of the pipelines.3 The war also demonstrated that the Western guarantees for Georgia lacked substance, and the integrity of the oil and gas corridor depended simply on Russian good will.4 A clear sign of this came from the BP decision to temporarily stop the oil flows through Georgia to divert part of them through the Russian facilities, while Kazakhstan Prime Minister Karim Masi- mov ordered the KazMunaiGaz company to study whether the domestic market could absorb the exports envisaged for transit via Georgia. Even the Azerbaijani company SOCAR re-directed a portion of its exports, normally sent through the Georgian terminal of Kulevi, toward the Iranian port of Neka during August and September 2008.5

2 See: “Georgia: War Costs Include Not Just Physical Damage,” Oxford Analytica, 10 September, 2008, available at [http://www.oxan.com/display.aspx?StoryDate=20080910&ProductCode=CISDB&StoryNumber=2&StoryType=DB]. 3 See: O. Coskun, L. Yevgrashina, “Blast Halts Azeri Oil Pipeline through Turkey,” Reuters, 6 August, 2008, available at [http://www.reuters.com/article/GCA-Oil/idUSSP31722720080806]. 4 See: S. Blagov, “Georgia: Pipeline Routes on a Powder Keg,” ISN Security Watch, 20 August, 2008, available at [http://www.isn.ethz.ch/isn/Current-Affairs/Security-Watch/Detail/?ots591=4888CAA0-B3DB-1461-98B9- E20E7B9C13D4&lng=en&id=90265]. 5 See: “Perspectives on Caspian Oil and Gas Development,” Working Paper, IEA, December 2008. 64 Volume 3 Issue 4 2009 THE CAUCASUS & GLOBALIZATION

The military confrontation inflicted significant fiscal “collateral damage” on Azeri oil exports, as all its westward export routes were closed. The war did not spill across the border into Azerbaijan, but its economic repercussions have. Foreign investment has been imperiled by the geopolitical instability laid bare by the brief war and the continuing uncertainty about the present peace.6 For Azerbai- jan the conflict was an unmitigated financial disaster, as the country’s oil sector receipts account for almost half of all government revenues, with oil exports generating around 90 percent of total export earnings. Between the BTC explosion and the military clash, Azerbaijan had been blocked from shipping approximately 17 million barrels of crude, while the U.S. Department of Energy estimated that Azerbaijan’s final cost for the lost shipments surpassed $1 billion. The Baku-Tbilisi-Ceyhan and Baku-Supsa oil pipelines and Baku-Tbilisi-Erzurum gas pipeline, as well as the Azeri state oil company’s recent purchase of the Kulevi oil terminal on the Black Sea, had begun to enhance the importance of the region as a major East-West energy corridor. Azerbaijan and Georgia have agreed, in partnership with Turkey, to build the Baku-Akhalkalaki-Kars railway, connecting the rail systems of the three countries. The project would create a much shorter and faster rail corridor between Europe and Asia than the current one through Russia, making Georgia and Azerbaijan the key hubs for the Eurasian transport network. However, the war has shrouded the future of these achievements in doubt and undermined the Azeri grand vision of turning the Central Caucasus into the primary transit hub to Central Asia. The conflict froze the operations of the East- West energy corridor. On 5 August, 2008, two days before the outbreak of hostilities between Georgia and Russia, there was an as yet unexplained explosion on the BTC segment at Yurtbasi village in eastern Tur- key. The cause of the explosion remains unclear, although Ankara initially suspected that it might have been a terrorist attack by the Kurdish separatist Partiya Karkeren Kurdistan, or Kurdistan Workers’ Party. BTC operator BP declared force majeure, and the pipeline only resumed operations on 25 August. Following this unrelated attack on the Baku-Tbilisi-Ceyhan pipeline in Turkey, the violence brought air and rail traffic to a sudden halt, closed the Kulevi port of Georgia and forced the evacuation of Azeri personnel. As a result, Azerbaijan and its Western oil company partners were forced to suspend operations in the Caspian oil and gas fields and energy contracts had to be re-negotiated. Kazakhstan has backed off the plan to build a $1 billion oil refinery in Batumi, a $10 million grain terminal in Poti, and to export oil products and other goods through the territory of Georgia. The export of Turkmen gas through the Central Caucasus has been similarly affected. The Georgia-Russia war has placed Armenia, which is hemmed in on all sides by closed borders with Azerbaijan and Turkey, in a bind as well. The war, and its complicated aftermath, has thus inflicted a considerable amount of damage on the Armenian economy. One of the consequences of this action was that some 107 train cars of wheat, 10 fuel containers and 50 additional train cars with miscellaneous goods were left in limbo. The unloading of ships with goods meant for Armenia report- edly resumed only on 1 September, according to the information of Armenian government. The delays were stoking concern about a possible wheat shortage in Erevan. Armenian companies were attempting to import the wheat via Iran. Gasoline has been another problem. Until late August, many gas stations country-wide posted “No gas” notices. Although the government declared that gas reserves were sufficient to withstand a temporary shortfall, drivers who were forced to wait in long lines to buy gas scoffed at the assurances. The stand-off has reminded the Armenians that their country’s economy is too dependent on Georgia for its own good. Only in August last year, when the war interrupted Armenia’s export trade, the country lost 600-700 million dollars.7 At the moment, 70-80 percent of Armenian exports travel

6 See: F. Ismailzade, “The Georgia-Russian Conflict: A Perspective from Azerbaijan and Implications for the Re- gion,” Caucasus Analytical Digest, No. 1, 17 December, 2008. 7 See: “Russia-Georgia Tensions Harm Armenia,” CRS, No. 495, 29 May, 2009. Volume 3 Issue 4 2009 65 THE CAUCASUS & GLOBALIZATION to Russia, leaving the Georgian port of Poti for Bulgaria, then shipped to Novorossiisk on Russia’s southern coast. The whole journey can take eight or ten days, whereas the road through the mountains and Upper Lars is relatively quick. This quickly drove Erevan to intensify its dialog with Turkey over the prospects for opening their common border that has been closed for decades, and, like Belarus, to join the EU’s Eastern Partnership. While the consequences of the conflict will be felt for a long time throughout the region, the balance of power in the Caucasus has shifted. Relations between Armenia and Azerbaijan have been influenced and the conflict might also have an impact on the Nagorno-Karabakh conflict. Armenia was left with no military ground transit from Russia, and the country is now essentially cut off from any possibility of obtaining effective help from its ally and has decided to respond quickly to Tur- key’s proposal to normalize relations and open the border. The very idea that Turkey would go through with the border talks without attaching any conditions on Karabakh has provoked anger in Azerbaijan, especially since Turkey sealed the border in 1993 in response to the Armenian occupation of the regions, a reality which has clearly not changed.

Geopolitical Interest of Regional Players and Balance of Power

The European Union has long sought alternate supply routes, including the prospective Nabuc- co pipeline that would carry Caspian and Central Asian gas to Europe but skirt Russia. The EU also risks continued energy dependency on Russia and a sharp rise in natural gas prices unless it backs alternative non-Russian projects similar to the White Stream. The White Stream pipeline aims to bring Caspian gas through Azerbaijan and Georgia and across the Black Sea to Ukraine and Rumania, from where it will travel further to Europe. The pipeline would reduce the impact on the EU of any future Russian gas cut-offs and complicate Russian plans to put gas prices on a higher footing for the long term. Having seen that the Baku-Tbilisi-Ceyhan and Baku-Tbilisi-Erzurum pipelines are aiding its efforts toward energy diversification, the EU representatives are debating various new energy-import projects. This in turn is leading potential supplier and transit countries to line up to get in on what promises to be very lucrative deals.8 But by diversification, Europe also means finding routes that do not go through Russia. In order to meet this challenge in the summer of 2009, the EU backed a consortium of energy companies from Turkey, Bulgaria, Rumania, Hungary, and Austria that have joined together to build the $11 billion Nabucco natural gas pipeline. Such an energy strategy, pundits say, is urgently needed to stop Moscow’s “divide-and-conquer politics.” The Nabucco pipeline would bring gas from the Middle Eastern and Caspian fields across Turkey’s Anatolian plateau, and north to Europe. The pipeline is backed and partly funded by the EU and is strongly supported by the United States. Perhaps most importantly, Nabucco would completely bypass Russia. But the real question that will determine Nabucco’s future—a question vividly on display in every country the pipeline will touch—is whether Europe has the stomach to fight as hard for its interests as Russia does for its own.9

8 See: B. Pannier, “South Caucasus Emerges As ‘Crossroads of Energy-Exports,’” 24 April, 2009, available at [http://www.rferl.org/content/South_Caucasus_Emerges_As_Crossroads_Of_EnergyExports/1615342.html]. 9 See: D. Freifeld, “The Great Pipeline Opera: Inside the European Pipeline Fantasy That Became a Real-life Gas War with Russia,” Foreign Policy, 24 August, 2009, available at [http://www.foreignpolicy.com/articles/ 2009/08/12/the_great_pipeline_opera]. 66 Volume 3 Issue 4 2009 THE CAUCASUS & GLOBALIZATION

However, Russia’s aggressive behavior versus Russia’s neighbors and the outright aggression against Georgia that led to effective annexation of two Georgian territories Abkhazia and South Os- setia, creation of the Russian military bases and deployment of regular Russian forces make the role and security of current or future pipelines running through that country an issue that weighs heavily on the minds of many in the EU. Similarly, whilst Russia sees the economic value of the energy security issues, this is secondary to its geopolitical value as a means of maintaining control over its so called “near abroad” and ensuring only nominal independence for the countries of the region. This policy is most clearly evidenced in their intervention in the internal affairs of these countries. Moreover, Russia seems unable to control the political development in the region and has moved to dominate the region, including through military means. Though officially Russia does not object to the construction of the Nabucco gas pipeline and as Russian Prime Minister Vladimir Putin said after the signing of South Stream documents with Euro- pean partners “will not create any impediments,” it has attempted to block alternative energy routes other than its own, encouraging crisis between Azerbaijan and Armenia over Nagorno-Karabakh and destabilizing and publicly invading Georgia. Moreover, like Iran Russia envisages resources of the Caspian Sea into the energy hub of non-Western energy zone.10 Moscow has sought to gain control of the energy transport and distribution networks in neighboring states for long-term economic gain and leverage over their policies, and to ensure that the energy producers among them export through Russia. Russia has also aggressively pursued blocking potential natural gas export competitors from entering the European market, such as Iran, Azerbaijan and producers in Central Asia, and works assertively to retain control over Central Asian export. Iran is the only country that has the volumes of natural gas and the location to pose any major threat to Russia’s supply dominance in Europe. In the spring of 2007, Moscow spent a considerable amount of money to buy out Iran’s potential access to the European gas market through Armenia.11 If Russia can be seen as the current leader in the competition for influence in the Central Cauca- sus, Iran can be considered an outsider for now. Iran’s policy in the Caucasus is based primarily on its own security and economic considerations. Domestic inputs and constraints—primarily the presence of a significant Azerbaijani minority in Iran—and its interests and confrontations beyond the region, including that with the United States, also influence Iran’s policies toward the region. However, the major Iranian concern in the region is not economic but strategic and its main objective is to expand its influence, for historic, economic and political reasons. In recent years, Iran also sees the role in energy security issues in the region and stands a good chance of being a future contributor to existing and planned pipelines through the Caucasus. As for Turkey, Istanbul would prefer to see the European Union-backed Nabucco pipeline built,12 since it would transit Turkish territory and thus provide both a new source of gas for the country and a new source of revenue. But Turkish participation in Nabucco also comes at a price. From Europe, the Turkish government seeks guarantees of eventual Turkish membership in the European Union. From Azerbaijan, the Turkish government wants a DAF (Delivery at Frontier) agreement, meaning Azerbaijan’s gas becomes Turkey’s as soon as it enters Turkish territory (from which Tur- key will sell it on to Europe).

10 See: R. Sinker, “The Management of a Transboundary Energy Resource: The Oil and Gas of the Caspian Sea,” in: The Politics of Caspian Oil, Palgrave Macmillan, 2001, p. 54. 11 See: B. Shaffer, “Energy as a Tool of Foreign Policy,” ADA Biweekly, Vol. II, No. 15, 1 August, 2009, available at [http://ada.edu.az/biweekly/issues/vol2no15/20090807034000901.html]. 12 At the time of the project’s inception, it was envisaged that the pipeline would be filled primarily with Iranian gas. However, the complex geopolitical situation around Iran, coupled with the current under-investment in the Iranian hydrocarbons infrastructure that has turned this country with colossal reserves into a net importer of gas, has led to a shift of focus. Attention now centers far more on Azerbaijan; specifically, on its offshore field of Shah Deniz. Gas for Nabucco is expected to come from Phase II of the project, which could provide the base load for the pipeline. Volume 3 Issue 4 2009 67 THE CAUCASUS & GLOBALIZATION C o n c l u s i o n

Once considered a “crossroads of civilization,” the Central Caucasus has emerged as a crossroads of energy-export routes—spurring renewed competition in the region. The August war radically transformed the geopolitical pattern in the Central Caucasus in several ways. n First, Georgia lost its previous central role in the region, which may endanger many investment programs (including energy) previously linked to that country. n Second, due to the break in relations between Georgia and Russia, Moscow lost part of its influence on the whole region, with the European Union and Turkey striving to fill that gap. n Third, the five-day war showed everybody how fragile the regional stability is and how dangerous an armed conflict may be in this region. As the competition continues, only one thing is certain—there is no formula for energy-export routes through the Caucasus that can satisfy all the interested parties inside and outside the region. The West’s failure to intervene credibly in Georgia reduces the prospects of strong Western action to strengthen and broaden the east-west energy transportation corridor across the Central Caucasus. Although Russia may seem to be a common enemy, the policies Moscow follows often make sharp different Central Caucasian states. And Russian policymakers frequently choose to play one against another. The recent visit of U.S. President Obama to Turkey was far more significant than the President’s speech would suggest. For Washington Turkey today has become a geopolitical “pivot state” which is in the position to tilt the Eurasian power equation toward Washington or significantly away from it depending on how Turkey develops its ties with Moscow and its role regarding key energy pipelines. It is clear that if Ankara decides to collaborate more closely with Russia, Georgia’s position is precarious. As a result Azerbaijan’s natural gas pipeline route to Europe, the so-called Nabucco pipeline, could be blocked as well. If it cooperates with the United States and manages to reach a stable treaty with Armenia under U.S. auspices, the Russian position in the Caucasus is weakened and an alternative route for natural gas to Europe opens up, decreasing Russian leverage against Europe.13 Moreover, for Turkey and the Central Caucasian countries (remaining members of the Com- monwealth of Independent States) the choices are stark—to continue relations with Georgia after the August war as before, thereby tacitly approving Tbilisi’s confrontational posture vis-à-vis Moscow and risking Russia’s wrath, or pay heed to Medvedev’s “privileged interests” in the Caucasus.14 While little is clear in this respect yet, the 2008 military clash has given the former Soviet republics significant food for thought about what happens to those former Soviet republics that ignore Mos- cow’s concerns and stray too far westwards. The global economic recession, decline of European demand and the lack of available investment are among the key factors making westbound pipelines from Eurasia largely a pipedream. Add to that the increasing geopolitical “pull” of China, an increase in Russian clout in its so-called “near abroad” after the Georgian war and the possibility of a future Iranian route—if rapprochement with the U.S. succeeds—and these uncertainties make the future pipeline policy in the Central Caucasus a forecaster’s nightmare.15

13 See: W. Engdahl, “War, Oil And Gas Pipelines,” available at [http://www.rense.com/general85/fth.htm]. 14 See: J.C.K. Daly, “UPI, Analysis: Implications of Georgia Leaving C.I.S., available at [http://www.upi.com/ Energy_Resources/2009/06/09/Analysis-Implications-of-Georgia-leaving-CIS/UPI-90981244588248/]. 15 See: A. Cohen, “Eurasian Pipelines—A Forecaster’s Nightmare,” 1 May, 2009, available at [http://www.heritage. org/Press/Commentary/ed050109b.cfm]. 68 Volume 3 Issue 4 2009 THE CAUCASUS & GLOBALIZATION

In addition, if the combined effect of the financial crisis and the August war is likely to weaken the political support for investments in the Central Caucasus aimed at freeing the Caspian resources from the Russian control, it is even more likely to undermine the economic viability of these investments that has already been questioned because of the insecurity of the supply of gas.16 And the question is now how to handle this delicate situation in a strategically and geopolitically important region. So by controlling Georgia (in case Russia reaches above-mentioned aims), Russia actually will be able to cut off Central Asian and Caspian resources. It means Russia would be able to isolate and cut off Azerbaijan and the Central Asian countries and it will significantly strengthen its energy monopoly over Europe with all the ensuing consequences. So it is about a major shift in the energy policy and geopolitics based on this energy policy and Russian energy monopoly. The August war in Georgia demonstrated some risks associated with the functioning of the transit energy corridor in the Central Caucasus. It also demonstrated the need for broader security guarantees for a region that is vital to European and global energy security.

16 See: M. Giuli, “Georgia and the Systemic Impact of the Financial Crisis,” Caucasian Review of International Af- fairs, Vol. 3 (3), Summer 2009.

Ramaz ABESADZE

D.Sc. (Econ.), professor, director of the Paata Gugushvili Institute of Economics (Tbilisi, Georgia).

Vakhtang BURDULI

D.Sc. (Econ.), department head at the Paata Gugushvili Institute of Economics (Tbilisi, Georgia).

INNOVATIVE ACTIVITIES AND THEIR COORDINATION UNDER ADVANCING GLOBALIZATION

Abstract

his article deals with modern forms of for restructuring the Georgian economy and T innovation systems and the need to im- the opportunities for Georgia’s participation prove them; it examines the prospects in regional and global integration. Volume 3 Issue 4 2009 69 THE CAUCASUS & GLOBALIZATION I n t r o d u c t i o n

In today’s world, dynamic economic development of a country is impossible without innovation support for production. Such support is necessary to ensure the competitiveness of produced goods in the domestic and international markets. As the world globalizes, products should be constantly renewed (through modernization, changes in the product mix, etc.), and this requires large investments. By innovative activity (innovation) we mean the whole complex of research and development works, and also works not classified as R&D (for example, in the field of selection), adoption of advanced technologies (production and consumption), and mass production of new products. Innovation has existed in one form or another throughout mankind’s history, and at the present stage of globalization it increasingly stimulates national economic development and intensifies competition. At the same time, the financial and economic crisis shows that sustainable development of the world economic system requires continuous improvement of innovation mechanisms in each individual country for the purpose of its deeper international integration. In the countries of the Central Caucasus (Azerbaijan, Armenia and Georgia), as in all other post- Soviet countries, the general decline in production in the 1990s was coupled with a reduction in the number of types (lines) of innovative activity. Georgia found itself in the most difficult position. Today the republic has not yet reached the GDP level of 1990, whereas Armenia and Azerbaijan (with its significant endowments of strategic raw materials) have long exceeded this level. The situation is even worse in the field of development and adoption of innovations: there is no intensive systematic activity in this field, although almost all post-Soviet countries had a strong scientific and technical potential, which was used less than effectively under the administrative-command system. Today many highly qualified specialists have emigrated. But the general intellectual level of society in the former Soviet republics remains relatively high, leading to the conclusion that it is possible to create modern innovation systems related to basic production and integrated with the economy of other countries on both a regional and global scale.

Development of Innovation Systems in the Context of General Economic Development

The current structure of the Georgian economy is imperfect, which is why the republic lags significantly behind developed and newly industrialized countries. In particular, the share of manufacturing is very low, and imports (high-tech equipment, finished consumer goods, agricultural and food products) are almost four times larger than exports (low value added products, raw materials and scrap). Radical structural changes can be made only with reorganization of production based on modern technologies so as to ensure the production of high-quality products and the country’s integration into the world economy. This will also make it possible to balance exports and imports, since the economy cannot sustain a trade deficit for a long time. That is why it is necessary to create a favorable institutional investment environment conducive to innovation in the field of high technology and in manufacturing as a whole, in agriculture and other areas of activity, including the service sector (export services in the first place). 70 Volume 3 Issue 4 2009 THE CAUCASUS & GLOBALIZATION

This means it is necessary to go over to a “knowledge-intensive mode of production”1 in the conditions of increasing interaction between innovative, financial and production activities. It is particularly important to improve and diversify the instruments for government regulation and coordination of the market economy, to enhance their efficiency “in order to address, among other things, the problems of pricing and innovation investment policy...”2 Without integrating the interests of the state, society and enterprises, “it is impossible to lay the groundwork for accelerating innovation investment processes and for a transition to a new quality of economic growth. Another challenging problem is that of interaction between market and non-market mechanisms, regulators and instruments with due regard for the impact of external factors.”3 The renewal of existing and implementation of new technologies should be based on an intensification of domestic and joint development projects and an increase in the share of high-tech imports and implemented innovations. In the opinion of some researchers, it is necessary to extend the range of protectionist measures in order to support the domestic production of high-tech products, and also to strengthen measures designed to limit exports of low value added products.4 Rising labor productivity creates the problem of employment, necessitating faster structural changes even in high-tech economies. At the same time, “the world faces a significant shortage of skilled personnel. Europe alone, according to experts, is short of about 700 thousand specialists in all sectors of the economy. There is a similar situation in CIS and developing countries.”5 Moreover, “since the 21st century will see a sharp increase in the role of the human factor in the economy precisely due to the transition to more advanced technological systems, today there are no longer any advocates of Milton Friedman’s idea whose essence can be expressed as ‘business for business’ sake.’ The need to increase corporate social responsibility is recognized in theory.”6 In practice, however, effective ways to achieve this have yet to be found. In our opinion, the transfer of the head offices of some companies to offshores, and also the growing income and wealth of a few individuals have a negative effect on investment activity and slow down rational economic restructuring processes. Such trends are in evidence even in a number of developed countries, although in some of them the upper limit of income tax on the wealthy is very high (for example, 40% in France and 57% in Sweden). In most post-Soviet countries, income taxes are equally low for all strata of the population, but this does not induce the rich to promote innovative activities. Meanwhile, most companies successfully operating in high-tech economies, “in their efforts to capture market share in world markets, … spend a lot of money on research and development. For example, Ford Motors spent $7.4 billion on R&D in 2001 in order to maintain and improve its competitiveness… On the whole, companies that gain ground in major world markets are those that make large investments in intellectual capital, which gives them competitive advantages.”7 The world financial and economic crisis shows that it is necessary to create a qualitatively new economic model that would match the technical and intellectual possibilities of the 21st century and would accelerate innovative development coupled with economic restructuring designed to increase employment and reduce material and energy inputs. State institutions, research and innovative organizations will increase their interaction with manufacturing enterprises, and this will stimulate the inflow of venture capital into innovative activ-

1 A. Neshitoi, “Neobkhodima smena prioritetov,” Ekonomist, No. 1, 2006. 2 A. Spitsyn, “Integratsia i modernizatsia ekonomiki,” Ekonomist, No. 6, 2006, p. 3. 3 Ibid., p. 7. 4 See, for example: V. Novoselskiy, “Perspektivy vysokotekhnologicheskogo razvitia,” Ekonomist, No. 6, 2006, p. 7. 5 Iu. Kormnov, “O povyshenii konkurentosposobnosti ekonomiki,” Ekonomist, No. 8, 2006, p. 20. 6 A. Seleznev, “Uslovia aktivizatsii investitsionnogo protsessa,” Ekonomist, No. 4, 2006, p. 10. 7 Iu. Kochetkov, “Ekonomika Latvii v usloviakh globalizatsii,” Voprosy ekonomiki, No. 2, 2005, p. 141. Volume 3 Issue 4 2009 71 THE CAUCASUS & GLOBALIZATION ities in small and medium companies because, “as we find from world practice, a significant role in the success of innovative business is played by small firms.”8 In a favorable investment climate, innovative activity will also be intensified at every stage of structural adjustment and will ensure the competitiveness of key domestic products and services in domestic and foreign markets.

The Innovation Crisis in the inal Period of the U.S.S.R. and the Simultaneous Diversification of Innovation orms and Coordination Methods in Developed Market Economies

In socialist countries, government support for innovation (except in some sectors of the military-industrial complex) steadily worsened, so that most production and consumption technologies became obsolete, especially in the field of production of consumer goods and services. At the same time, developed and newly industrialized countries kept developing technologies and economic mechanisms that served to improve existing and create new innovation structures. For example, in the final period of existence of the Soviet economy, the situation in the field of innovation was characterized as follows: “The actual current state of our economy objectively reflects the extremely low effectiveness of innovative activities. In the late 1980s, there was a sharp drop in the technical level of domestic products and in the indicators measuring the development and use of inventions; the share of developments above the world level decreased 2.2-fold, and that of world- class developments, 1.5-fold; the proportion of inventive developments did not exceed 40%, while their total number fell 1.8-fold, and their utilized part, 1.3-fold.”9 The typical features of the whole Soviet system were also characteristic of each republic, including Georgia. After the breakup of the U.S.S.R., most industries with obsolete technologies (and sometimes also relatively competitive lines of production, e.g. in the building materials industry) ground to a halt for a number of reasons: lack of demand, broken processing chains in the post-Soviet space, inadequate energy supply, etc.10 The innovation adoption mechanism significantly weakened, and many qualified specialists engaged in R&D and innovation adoption changed their field of activity or emigrated. Recently, some measures have been taken to promote innovation, but they have not been systematic. Even industries that have an opportunity to use domestic resources in producing goods prefer to import them. As for industrial exports, there are no such exports to speak of, except for some traditional food products. Meanwhile, work has recently got underway to create some kinds of infrastructure, including that required for innovation, and several advanced technology enterprises (such as a metal plastic products plant) have opened in the country, with part of their products designed for export. Several existing plants have been modernized, and a technopark is to be built in Kutaisi.

8 R. Asatiani, “The Phenomenon of Globalization and Its Influence on National Economies (A Case Study of Geor- gia),” The Caucasus & Globalization, Vol. I (3), 2007, p. 47. 9 N. Lynnik, V. Yeremenko, “K sozdaniu sistemy pravovogo regulirovania innovatsii,” Rossiiskiy ekonomicheskiy zhurnal, No. 2, 1993, p. 48. 10 See: V. Papava, Necroeconomics: The Political Economy of Post-Communist Capitalism, iUniverse, New York, 2005; V. Burduli, “The Role of Globalization in Reviving the Economy of Countries in Transition (A Case Study of Georgia),” The Caucasus & Globalization, Vol. I (3), 2007. 72 Volume 3 Issue 4 2009 THE CAUCASUS & GLOBALIZATION

But a competitive dynamic economy can only be created through innovative technology renewal that will increase exports, meet part of the domestic demand for key products, improve the export- import balance, and ensure maximum employment. That is why Georgia should create a modern innovation system (oriented, in the first place, to develop “high level” and “leading edge” technologies11) using the experience of developed and newly industrialized countries with due regard for its geo-economic peculiarities, opportunities for cooperation with other countries, and national traditions and mentality (following the example of newly industrialized countries). It is necessary to exploit the opportunities offered by globalization in concrete economic conditions in order to create a system for effective regulation of innovative activities. At present, innovative activities (R&D and application of its results in production) in developed and newly industrialized countries are conducted: n in large corporations or their laboratories; n in holding companies; n in university laboratories; n in government research organizations (institutes, laboratories, funds); n through venture capital; n in science and technology parks, centers, innovation incubators, etc.; n based on some kinds of international cooperation and innovative activities; with the participation of public and private foreign capital in science and technology parks and other organizations of recipient countries, with the help of multinational corporations and venture capital, through trade in new technologies, licenses, etc. The economic component of innovations is of great importance as well. It consists in the development of programs by appropriate government research or other institutions designed to create mechanisms for regulating and stimulating economic activity. Financing is provided by the state, corporations, venture capital, and specially established funds. In any developed state, innovation is promoted through all kinds of tax breaks for corporations, technopolises, business incubators, etc. Steps are taken to create various facilities (using private and public funds) and special funds for financing and providing soft loans. This creates a favorable investment environment for innovation adoption.

Some Aspects of Regulating Innovation in Developed and Newly Industrialized Countries

In developed countries, structural innovation processes are regulated by specialized government agencies, whose functions have expanded over time. Japan, for example, has a Council for Sci- ence and Technology Policy and a Science and Technology Agency. Similar organizations exist in France and Germany.12 Under globalization, the role of government agencies in the development of national and regional (internal) innovation systems has increased significantly. In Britain, for example, there is a

11 E. Semenova, “Vozmozhnosti innovatsionnogo tipa razvitia,” Ekonomist, No. 3, 2006, pp. 14-15. 12 See: M. Ionov, “Regulirovanie investitsionnoi i innovatsionnoi deiatelnosti,” Ekonomist, No. 5, 1992, p. 36. Volume 3 Issue 4 2009 73 THE CAUCASUS & GLOBALIZATION

Technology Strategy Board and an innovation support center, and in France, a National Research Agency and an Agency for Industrial Innovation.13 In developed and newly industrialized countries, great importance is attached to legislative and program support for innovation. In the United States, the National Science and Technology Policy, Organization and Priorities Act of 1976 and the Economic Recovery Tax Act of 1981 provide for special rules and tax breaks to promote company spending on R&D, the creation of venture funds to finance research and production processes (in small firms) and the establishment of research partnerships. In Switzerland, a Federal Act on Research was adopted in October 1983. In France, scientific research and technological development are regarded as national priorities in accordance with Law No. 85-1376 of 23 December, 1985. Its main purpose is to increase national spending (public and private) on innovation to 3% of GDP.14 In the U.S., a Small Business Innovation Research (SBIR) program designed to streamline investment activities marked the beginning of a new innovation policy; Russia has launched a similar project called Start.15 Such programs are also being developed in some newly industrialized countries. For example, the Turkish government believes that effective development of science and advanced technologies will be the dominant factor in the country’s integration into European structures and the world economic system. Accordingly, by 2023 Turkey plans to join the group of the most technologically advanced countries in the world. A long-term policy document (Vision 2023: Science and Technology Strategies) developed in Turkey provides for a large-scale reorganization of appropriate government agencies and research organizations. Priority areas of research include information technologies, computer software and hardware, the power industry, automation, biotechnology, chemistry and medicine; a special role is assigned to the aerospace industry.16

Innovation and International Cooperation in a Globalized World

Globalization leads to the emergence of mechanisms for international cooperation in the field of innovation and to the creation of national and global high-tech markets. In the last two decades, knowledge-intensive industries with “high level” technologies and those with “leading edge” technologies or, as they are known in Russia, “key” (cutting edge) technologies have come to the fore. According to the German Institute for Economic Research (DIW), goods are counted as “goods of cutting edge technology” if the expenditures for their research and development exceed 8.5% of the turnover17: media technologies, information software, biotechnologies, pharmaceuticals, etc.18 Nan- otechnologies have recently been added to this list, and spending on their development in advanced countries is constantly growing.

13 See: E. Semenova, op. cit., p. 21. 14 See: N. Lynnik, V. Yeremenko, op. cit., pp. 52, 53. 15 See: E. Yasin, “Gosudarstvo i ekonomika na etape modernizatsii,” Voprosy eknomiki, No. 4, 2006, p. 29. 16 See: M. Nikitina, “Modeli innovatsionnogo razvitia na primere respubliki Turtsia,” Mirovaya ekonomika i mezhdunarodnye otnosheniya, No. 6, 2006, p. 102. 17 See: E. Semenova, op. cit., pp. 14-15. 18 See: I. Doronin, “Mirovoi finansovyi rynok na poroge XXI veka,” Mirovaya ekonomika i mezhdunarodnye otnosheniya, No. 8, 2000, and others. 74 Volume 3 Issue 4 2009 THE CAUCASUS & GLOBALIZATION

The group of high level technologies includes 41 types of consumer goods (automotive, engineering, electrical and chemical).19 At the same time, in examining the problems of knowledge-intensive production, a number of foreign research centers (like the U.S. National Science Foundation) determine the range of such products arbitrarily, without any special criteria.20 Globalization has intensified joint research, development and engineering to create and produce new and upgraded products; an active part in this process is played by multinational corporations, whose enterprises in the host countries cooperate with local enterprises and organizations. New forms of international cooperation in the field of innovation and technology diffusion have appeared as well, for example, forms involving the use of outsourcing and franchising mechanisms with the participation of enterprises from different countries. Thus, “in meeting the requirements of world scientific and technical progress and faster innovation processes, international scientific and technical cooperation determines progress in managing the R&D complex and the production and distribution of goods on a transnational, regional, national and local scale.”21 “Corporate competition is increasingly shifting from the sphere of circulation to the sphere of production and R&D, increasing the importance of non-price competitiveness of goods compared to price competitiveness”22 ; out of the main components of production (capital, natural resources, labor and technologies), in the opinion of most researchers and business executives, technologies have now come to the fore.23 But some researchers add another component to this list: the “human factor,” which they rank among the most important factors alongside technologies.24 Its effective use is only possible given “a more detailed characterization of the human potential, institutional support for its development and use.”25 It should be noted that “unlike traditional foreign trade, international scientific and industrial cooperation … is essentially stable…; it means significant economies in total investments by project partners…, accelerates the development and production of cooperation products…, extends the product range, accelerates scientific and technical progress and innovative activity, and unites partners based on common economic, technological and scientific interests, ensuring mutual economic benefit and economic dynamism.26 As we see, all developed and newly industrialized countries have their own systems for supporting innovative development, which are an object of investigation for many researchers.27 The constantly improving U.S. innovation system is the most effective in the world. This is evident from the distinct trend toward continuous development of new technologies with a clear tech-

19 See: E. Semenova, op. cit., p. 15. 20 See: Ibidem. 21 Iu. Kormnov, “O mezhdunarodnoi nauchno-proizvodstvennoi kooperatsii,” Ekonomist, No. 8, 2004, p. 54. 22 Ibid., p. 55. 23 See: Ibid., p. 17; Iu. Iudanov, “Evropeiskie korporatsii v usloviakh globalizatsii,” Mirovaya ekonomika i mezhdunarodnye otnoshenia, No. 11, 2008, p. 66. 24 See: R. Abesadze, “Economic Development Factors,” in: Collected Scientific Papers of the Paata Gugushvili In- stitute of Economics of the Georgian Academy of Sciences: Problems in Developing the Market Economy in Georgia, Metsniereba, Tbilisi, 2004, pp. 60, 61(in Georgian); Iu. Iudanov, op. cit. 25 H. Rustambekov, “Creating an Economic Model for Azerbaijan: Typical Characterization and National Identifi- cation,” The Caucasus & Globalization, Vol. I (3), 2007, p. 67. 26 See: Iu. Kormnov, “O mezhdunarodnoi nauchno-proizvodstvennoi kooperatsii,”, pp. 56, 57. 27 See, for example: R. Abesadze, The Energy Eco Factor in Economic Development and the Macroeconomic Mechanism for Developing the Georgian Energy Market, Metsniereba, Tbilisi, 2004 (in Georgian); V. Burduli, Coordina- tion of Social and Economic Development at Regional and Local Levels, Meridian, Tbilisi, 2006 (in Georgian); V. Burdu- li, L. Datunashvili, “Globalizatsia i ispolzovanie eio vozmozhnostei v ekonomicheskom razvitii Gruzii,” Sotsialnaia ekonomika, No. 5, 2007; V. Burduli, G. Tsereteli, “Finansovaia sistema Gruzii i problemy razvitia i strukturnoi organiza- tsii proizvodstva,” Izvestia AN Gruzii, Economic Series, No. 4, 1998; S. Zhukov, “Rol’ gosudarstva v sotvorenii iuzhnoko- reiskogo chuda,” Rossiiskiy ekonomicheskiy zhurnal, No. 5, 1993; E. Semenova, op. cit.; Sh. Tatsuno, The Technopolis Strategy, Prentice-Hall, New York, 1986. Volume 3 Issue 4 2009 75 THE CAUCASUS & GLOBALIZATION nology adoption mechanism and huge innovation expenditures (public and private). According to experts, “the United States accounts for about half of all financial resources allocated by developed countries to science and technology.”28 Special mention should be made of the great role of the state, which finances innovations at all stages of their development and adoption, and which has created a system of incentives for large corporations and for attracting venture capital (mainly into small and medium enterprises). There is a close relationship between companies and research organizations; particular importance is attached to research centers and national laboratories.29 “American researchers are granted more patents than the researchers of the rest of the world taken together. New technologies are not only developed in the United States, but also actively adopted on a scale far exceeding technology adoption in all West European countries; payment for technologies amounts to 28% of U.S. external revenue.”30 Government innovation policy envisages special mechanisms to protect intellectual property. In European countries, the development of advanced technologies was spurred by the energy crisis of the 1970s. This process began with “the establishment of appropriate structures at universities for more effective use of research results, followed by the creation of advanced technology centers, whose main purpose was to accelerate the commercial application of the results of university lab- oratory research. Apart from commercialization of scientific and technical achievements, innovation structures in Europe are important elements of regional policy. They should help small and medium towns to restructure social production.”31 Great attention to rational distribution of innovation centers is paid in other countries as well: work is underway to improve the effectiveness of the whole process by attracting local specialists, to ensure more even distribution of productive forces, to even out regional economic development levels and create jobs. These positive changes are a characteristic feature of the ongoing globalization. In Japan, for example, the creation of technopolises was a result of the country’s specific regional development.32 “Such ‘21st-century cities’ as Tsukuba Science City combine new technology and rich cultural traditions of the regions… Under its innovation development program, Japan has established about 250 high-tech associations and started building new highways, airports, industrial parks, and science and technology clusters.”33 In 2001, the United States accounted for 19.4% of world trade in high-tech products; Germa- ny had 14.4%, and Japan, 12.4%. With the development of the innovation process in a number of European, Asian and Latin American countries, some of the leaders in world trade (Japan, Germa- ny, France and Britain) have been losing ground. At the same time, “there is an increase in high- tech production in countries such as Korea, Finland, Sweden and the Netherlands,”34 and also in China, Malaysia, Thailand and other countries, which is another manifestation of the globalization process. In the last decade, Turkey, our closest neighbor, has joined the list of newly industrialized countries that are increasing their high-tech exports. In 2005, allocations for research projects in that country increased by $300 million compared to 2004, and additional budget support for university laboratories amounts to $80 million. Overall, budget funding of research is close to 1% of GDP (compared to 0.6% in 2004). Despite positive dynamics, this indicator is still much lower than in developed

28 M. Nikitina, op. cit., p. 100. 29 See: N. Lynnik, V. Yeremenko, op. cit., p. 52. 30 M. Nikitina, op. cit. 31 Ibid., p. 101. 32 See: Sh. Tatsuno, op. cit. 33 M. Nikitina, op. cit. 34 E. Semenova, op. cit., p. 19; Handelsblatt, 23 November, 2004, p. 6. 76 Volume 3 Issue 4 2009 THE CAUCASUS & GLOBALIZATION countries. In the U.S., for example, government spending on science is 3.8% of GDP, and in Germa- ny, 3.5%.”35 Of great importance for innovative activities in Turkey is the creation of export processing zones. The first of these free zones was established near the city of Mersin, with over 200 companies (15% of them foreign) obtaining permits to take part in the project. Similar facilities also exist in Antalya, Adana and Izmir. They are called technoparks, which are also known as technology incubators or advanced technology centers; all of them have close relations with universities and research institutes.36 The above-mentioned policy document, Vision 2023: Science and Technology Strategies, provides for the establishment of another 16 technological development zones in various regions.37 A study of the experience of neighboring Turkey, with which we can establish business contacts in the field of innovation, is very important to Georgia.

Ways of Developing an Innovation System in Georgia

Following the example of developed and newly industrialized countries, Georgia should devise and implement a set of measures to promote the establishment and operation of innovation centers and to apply recent developments in close cooperation with research centers. It is also necessary to set up a government agency (say, a National Agency for Development and Adoption of Innovations) in order to promote the production of high-tech products in the country and increase their exports. We should develop a special program providing for rational regional distribution of innovation centers, thereby ensuring maximum employment in the regions. The program should include the following items: n national priorities in developing various types of innovative activity; n national priorities in adopting domestic and imported technologies; n opportunities for developing the scientific and technical potential; n future location of innovation centers and time schedules for their creation; n maximum use of the potential of existing research institutes and university laboratories (for example, the Marmara Research Center in Turkey includes nine specialized research institutes; a major technology park, the Ari Technopolis, is located on the campus of Istanbul Technical University; the main investors are the U.S. and EU countries38) and creation of new ones; n selection of effective ways to develop innovation centers; n mechanisms to finance innovation and adoption activities; n economic mechanism to regulate interaction between innovation centers and industrial (agricultural, construction, etc.) companies and other entities; n mechanism to stimulate innovation and adoption in large companies;

35 M. Nikitina, op. cit., pp. 102-103. 36 See: M. Nikitina, op. cit., pp. 101-102. 37 See: Ibid., pp. 102-103. 38 See: Ibidem. Volume 3 Issue 4 2009 77 THE CAUCASUS & GLOBALIZATION

n mechanisms to stimulate international cooperation and trade in the field of innovation; n proposals for legislative support for innovative activities and protection of intellectual property rights. As in developed countries, institutes and university laboratories specializing in economics, law and social sciences should take part in developing and implementing this program, in monitoring and analyzing the results of innovation activity, and in charting ways to enhance its effectiveness. As to the types of innovation facilities, it is necessary to look for opportunities to create technoparks, technology incubators, export processing zones, etc.,39 both in the center and in the regions, based on already existing and new organizations. In determining the specialization of innovation centers, we should take into account both global economic development trends and Georgia’s national peculiarities, and should opt for resource-saving production and consumption technologies, which is particularly important and will be increasingly taken into account under conditions of global warming caused by thermal pollution and the green- house effect.40 Rational allocation of budget resources for innovative activities should be made through special funds, with the attraction of private and venture capital to take part in them. But venture business has a tendency to develop independently. It would also make sense to attract foreign capital, both through direct involvement in the activities of innovation centers (using various incentives) and through “direct” and “indirect” outsourcing. By “direct” outsourcing we mean the creation in the recipient country (by the state or its companies) of innovation centers whose potential outputs will be in demand in the investor country. At present, many highly qualified Georgian specialists work abroad, which means a loss of potential revenue for the country. Such practices in establishing innovation centers are widespread in India and have recently been adopted in Russia, the Czech Republic and some other postsocialist countries. By “indirect” innovation outsourcing we mean multinational enterprises that cooperate in the host country not only with enterprises producing parts and components, but also with innovative organizations, including engineering firms. International cooperation in innovative activities with appropriate organizations from the U.S. and other developed countries is most advisable. In Georgian conditions, it is very important to draw on the experience of Turkey and accept its assistance in establishing export processing zones. It is also time to start thinking about a policy of diversification toward other neighboring countries, especially Azerbaijan and Armenia, because in the Soviet period there was a certain degree of regional integration with these republics in the field of innovation as well. It is necessary to establish a clear mechanism for interaction between innovation centers and manufacturing companies. Apart from government regulatory mechanisms, the experience of venture entrepreneurs in collaborating with small and medium firms can be of assistance in this matter, holding promise of substantial profits. We should set up special banks and funds to support innovation or grant special privileges to existing banks that finance innovative activities; loan rates should be reduced. The state should not only cofinance innovative activities, but should also stimulate industrial enterprises adopting innovations through benefits and subsidies provided under specially developed mechanisms.

39 See: V. Burduli, Coordination of Social and Economic Development at Regional and Local Levels, pp. 177-185. 40 See: R. Abesadze, The Energy Eco Factor in Economic Development and the Macroeconomic Mechanism for Developing the Georgian Energy Market, pp. 181-184, 195, 198. 78 Volume 3 Issue 4 2009 THE CAUCASUS & GLOBALIZATION Ways of Using Opportunities for Regional Integration of Innovative Activities for Effective Restructuring of Production

The above shows that robust innovative activity aimed at effective economic restructuring is impossible based on our own scientific and technical potential alone. That is why it is necessary to look for more acceptable ways of involvement in international cooperation, with different forms of integration, as in any other economic activity, applicable both in relations with neighboring countries and on a global scale. According to E. Ismailov, “regionalism is leading to a certain isolation of individual national economies from the major, structure-forming trends in forming the world economic system, on the one hand, and to stronger adherence of individual national economies, their blending into a single economic organism, and the creation of consolidated reference points for globalization trends, on the other. In other words, regional integration is the necessary level of development of globalization.”41 This applies to both the economic structure of individual countries and to the whole world economic system. It should be noted that “in countries with a narrow production range and no competition or experience of operating under market conditions, the benefits gleaned from participation in regional integration proved much lower.”42 In order to overcome these difficulties, we need a correct strategy in the field of rational regional integration. Before the breakup of the U.S.S.R. (1991), many enterprises in the Soviet republics operated as partners, although mainly based on obsolete technologies (with wide cooperation both in the supply of raw materials, parts and components for production and in the supply of finished products). In the field of innovation, integration was not so close because this requires a wider range of partners. But globalization offers opportunities for developing various kinds of integration so as to promote the creation of a sustainable and diversified high-tech economy. In our opinion, the following mechanisms are particularly important: establishment of export processing zones (with due regard for the effect of the world financial and economic crisis) with joint capital and with the participation of specialists from neighboring countries. Such zones should be created in places suitable for receiving raw materials or components, and also for shipping products to other countries (in transshipment points, this helps to reduce the cost of finished products). In Georgia, given the opportunities for export-import operations (with western, southern and eastern countries), it makes economic sense to establish such zones on the Black Sea coast, and also in areas bordering on neighboring states (with existing production infrastructures, as in Akhaltsikhe or Rustavi). Similar economically convenient centers could be established in Azerbaijan and Armenia. Thus, we can determine the conditions required for smooth operation of the regional innovation mechanism with subsequent inclusion in the global integration process: n close regional integration in the field of innovative development and adoption of advanced core technologies, with the selection of integration areas for each country in accordance with local conditions and opportunities;

41 E. Ismailov, V. Papava, The Central Caucasus: Essays on Geopolitical Economy, CA&CC Press, Stockholm, 2006, pp. 47-48. 42 Ibid., p. 48. Volume 3 Issue 4 2009 79 THE CAUCASUS & GLOBALIZATION

n regional cooperation in the field of livestock farming, crop production and land reclamation, and use of new technologies in the agricultural processing industry; n development of a regional program for mutually beneficial innovative activities in each particular country of the region (with due regard for the division of labor), including small countries bordering on Georgia (Azerbaijan and Armenia) and regions of large states (such as Turkey); n coordination and development of innovative activities in large national corporations and in small and medium firms (with venture capital); n coordination and promotion of efforts to attract high-tech multinational enterprises, and also technology imports by local producers in order to raise the level of production and prevent possible overproduction in the region. Thus, regional coordination of innovation policy and integration of regional activities will help to save resources and improve sales of new products. But the greatest qualitative improvement in the innovation level in both big and small countries is only possible given the region’s close global integration with developed, newly industrialized and developing countries (from R&D to the adoption of new technologies). Consequently, with rational coordination of innovative activities on a regional (cross-border) scale and their simultaneous integration into global innovation processes, each individual country can achieve a high degree of innovation activity that will ensure economic restructuring and maximum employment.

C o n c l u s i o n

Ensuring economic competitiveness in current conditions requires greater interaction between basic production and various forms of innovation. In the final period of the U.S.S.R.’s existence, negative processes in the economy led to a decline in innovation and adoption activities despite the country’s strong scientific and technical potential. At the same time, market countries were actively developing various forms and methods of innovation and ways of government and market coordination of innovative activities, and this resulted in significant achievements in the economy of both traditional developed and newly industrialized countries. In post-Soviet countries, innovation activities went into a slump, which led to the emigration of many qualified specialists. This article has examined the possible options for developing innovative activities in Georgia and the main principles for an appropriate program based on a systematization of various aspects of innovation and adoption in developed and newly industrialized countries (forms, incentives, legal framework, government coordination and international cooperation). We have also analyzed the ways to improve regional (cross-border) and wider international integration of innovative activities as an important factor in enhancing the competitiveness of the economy and ensuring its sustainable development in a globalized world. 80 Volume 3 Issue 4 2009 THE CAUCASUS & GLOBALIZATION Ekaterine MEKANTSISHVILI

Assistant professor, Department of Economics and Business, Tbilisi State University (Tbilisi, Georgia).

MACROECONOMIC ANALYSIS O GEORGIA’S ECONOMIC DEVELOPMENT USING A SOCIAL ACCOUNTING MATRIX (1999-2008)

Abstract

his article presents a macroeconomic try’s system of national accounts. It exam- T analysis of the Georgian economy ines the structure of the economic system, (from 1999 to 2008) using a Social Ac- the mistakes made in the reform process counting Matrix (SAM) based on the coun- and ways to correct them.

I n t r o d u c t i o n

The functioning of the economic system is a complex integrated process, and improvements in one area can lead to negative changes in other areas and pose a threat to the security of the economic system as a whole. In order to formulate an optimal development strategy, we need an in-depth analysis of the whole structure of the economic system, with a detailed study of macroeconomic dynamics for prediction purposes.

Social Accounting Matrix as a Tool of Macroeconomic Analysis

Macroeconomic analysis assumes the existence of a model that reflects the relationships between production, distribution, consumption and accumulation, between expenditure, income and final consumption, between saving and investment, etc. Let us consider a Social Accounting Matrix (SAM) based on the system of national accounts. There is a great deal of literature on this topic (G. Pyatt, J. Round, E. Thorbecke)1 which makes it possible to present a comprehensive picture (on both a national and regional scale) of the flow of products and their financial equivalents based on balance sheet indicators that quantitatively reflect various economic transactions taking place within the economy.2

1 See: W. Isard, I.J. Azis, M.P. Drennan, R.E. Miller, S. Sazman, E.Thorbecke, Methods of Interregional and Re- gional Analisis, Ashgate Publishing Company, Brookfield, VT., 1998. 2 See: Statistical Yearbook of Georgia, Tbilisi, Department of Statistics under Ministry of Economic Development of Georgia, 2004; 2008, pp. 140-159, 128-143. Volume 3 Issue 4 2009 81 THE CAUCASUS & GLOBALIZATION

Based on a SAM, it is possible to study the performance of the economy at various stages of reproduction. Moreover, in analyzing macroeconomic dynamics based on a comparison of absolute and relative (percentage) values of the matrix one can draw certain conclusions that may be used to develop national economic policy.3 In a SAM, each row/column pair indicates a certain economic action (an object of economic circulation). Input flows (incomings) are shown in rows (receipts, resources, income, liabilities and credit transactions), while output flows (outgoings) are shown in columns (use of funds, use of resources, expenditure, assets and debit transactions). The intersections of rows and columns form box- es called cells, with entries in these cells reflecting the linkages between accounts. As a result, each cell has a certain economic content and, when filled with statistical information, a quantitative content as well. A matrix designed to determine the economic structure and the interactions within it is based on three key economic processes: production, consumption and accumulation, and also economic relations with other countries, which reflect various aspects of economic circulation: n Production—balance of goods and services; n Consumption—balance of gross domestic product (GDP); n Accumulation—balance of capital expenditure and its financing; n External relations—balance of payments.

Macroeconomic Analysis of the Georgian Economy (1999-2008)

Based on the Georgian system of national accounts, the general pattern of flows in the economy can be presented in the form of a SAM (see Table 1). As can be seen from Table 1, the sequence of accounts begins with the production account. The result of production is the output of goods and services. The difference between output and intermediate consumption is called value added, which is the sum of primary incomes received from production. Income accounts are central to the matrix, since they connect the result of production with the process of capital formation and changes in financial assets and liabilities. Income accounts are divided into three groups, i.e., into three main stages of the circular flow of income: generation, distribution and redistribution, and also the use of income for consumption and saving. The purpose of the first group of income accounts is to reflect all incomes related to production. Gross value added is the sum of incomes received by domestic factors of production plus taxes on production and products (government revenue). It is divided into three parts: compensation of employees (earned income), taxes on production, and other factor incomes as represented by profit and mixed income (household sector). In the primary distribution of income account, factor income from property is shown as a separate item (interest, dividends, rent, undistributed profit, etc.). The balance of primary incomes, derived as a balancing item and the main result of the activities covered by the first group of accounts, represents the sectoral distribution of gross value added in accordance with provided factors of production. A contribution to the balance of primary incomes is also made by the “Rest of the world.”

3 See: D.W. Marcouiller, D.F. Schreiner, D.K. Lewis, “Constructing a Social Accounting Matrix to Address Dis- tributive Economics Impacts of Forest Management,” Regional Science Perspectives, Vol. 23, No. 2, 1993, pp. 60-90. 82 Volume 3 Issue 4 2009 THE CAUCASUS & GLOBALIZATION

Table 1

Social Accounting Matrix

Rest of Production Consumption Accumulation Σ the world

Production Intermediate Final Gross Exports consumption consumption capital plus balance formation of goods and services

Consumption GDP minus Balance of consumption primary of fixed incomes and capital current transfers

Accumulation Consumption Net saving Capital of fixed transfers capital (net)

Rest of Imports Net lending the world or borrowing (including statistical discrepancy) Σ

The secondary distribution of income account shows how various transfers change the balance of primary incomes, redistributing income in accordance with current government economic policy. The group of income accounts ends with the use of income accounts. They show how households, government units and non-profit institutions serving households allocate their disposable income between consumption and saving. For other sectors, income equals saving. The balance between consumption and saving is a very important characteristic of the economy. The capital account shows that for the economy as a whole saving equals investment, i.e., gross fixed capital formation and changes in inventories. The financial account shows how net lending or net borrowing is affected by the acquisition or disposal of financial assets. There is no balancing item in this account. Net acquisition of financial assets should be equal to net incurrence of liabilities. The entire chain of transactions that begins with production activity, which is reflected in the production account, is thus completed. As noted above, a social accounting matrix makes it possible to study the operation of the economy at various stages of reproduction and to perform a comparative analysis of absolute and relative (percentage) matrix values. The construction of a SAM involves the calculation of two kinds of absolute and relative matrix values: n The total of all indicators for each row of the matrix is taken as 100%, with calculation of the percentage of each indicator; n The total of all indicators for each column of the matrix is taken as 100%, with calculation of the percentage of each indicator. Based on the above SAM, let us analyze Georgia’s macroeconomic performance for 1999-2008. The first row/column pair is an income and expenditure account related to production (income is shown in the row, and expenditure in the column). Volume 3 Issue 4 2009 83 THE CAUCASUS & GLOBALIZATION

igure 1

First Row of the Matrix (Production)

20,000

15,000

10,000

5,000

0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Intermediate consumption Final consumption Gross capital formation Exports plus balance of goods and services

(absolute values) 60

0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Intermediate consumption Final consumption Gross capital formation Exports plus balance of goods and services

(relative values)

A comparative analysis of production for the first row (see Fig. 1) shows: (1) Intermediate consumption (the resource part of the production process) in absolute terms is characterized by slow growth (judging from the shape of the curve), while in relative terms it remains almost the same, which points to the insufficient resource intensity of the technological process and lack of dynamics in the share of intermediate consumption within the structure of primary incomes. (2) The growing dynamics of absolute final consumption values against the background of slight variations in relative values point to the domination of final consumption in the structure of primary incomes, which determines the dynamics of received income associated with the production process. (3) The slight variations in the dynamics of relative gross capital formation values against the background of an insignificant increase in absolute values point to small amounts of fixed capital investment, which ensures the technological process of production. 84 Volume 3 Issue 4 2009 THE CAUCASUS & GLOBALIZATION

(4) The similar dynamics of absolute and relative export values are explained by the fact that exports are the main source of budget revenue.

igure 2

First Column of the Matrix (Production)

20,000

15,000

10,000

5 000

0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Intermediate consumption GDP minus consumption of fixed capital Consumption of fixed capital Imports

(absolute values)

50 40 30 20 10 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 Intermediate consumption GDP minus consumption of fixed capital Consumption of fixed capital Imports

(relative values)

A comparative analysis of production for the first column (see Fig. 2) shows the following. GDP and intermediate consumption, which characterize the production structure and technology, are growing in absolute terms against the background of slight variations in the dynamics of relative indicators. GDP is growing faster than intermediate consumption in absolute terms, which means that the country is more oriented to creating and servicing the final product than to producing capital goods and equipment. The dynamics of absolute and relative values for imports coincide, which is evidence of steady demand for imported products. As a rule, these are consumer goods and some food products that are not produced in the country or are of low quality. Volume 3 Issue 4 2009 85 THE CAUCASUS & GLOBALIZATION

igure 3 Second Row of the Matrix (Consumption)

20,000

15,000

10,000

5 000

0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

GDP minus consumption of fixed capital Balance of primary incomes and current transfers

(absolute values) 100

0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

GDP minus consumption of fixed capital Balance of primary incomes and current transfers

(relative values)

In the second row of the matrix, income related to the consumption process appears as disposable income. A comparative analysis of absolute and relative values shows that the basis for con- igure 4 Second Column of the Matrix (Consumption)

20,000

15,000

10,000

5,000

0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 –5,000 Final consumption Net saving

(absolute values) 86 Volume 3 Issue 4 2009 THE CAUCASUS & GLOBALIZATION

150

100

0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 –50

Final consumption Net saving

(relative values)

sumption is provided by production-related income, while the share of profit from property is minimal. A comparative analysis of consumption for the second column (see Fig. 4) shows the unstable dynamics of final consumption expenditure in relative terms, while in absolute terms it has steadily increased. This is due to an increase in the cost of the consumer basket and in the share of final consumption expenditure compared to net saving. A comparative analysis of accumulation for the third row (see Fig. 5) shows that the part of GDP used for consumption of fixed capital and net saving is the main source of income related to accumulation. As to capital transfers, their share is minimal. At the same time, the relative values of consumption of fixed capital and net saving move in opposite directions (when the share of net saving increases, the share of consumption of fixed capital decreases). igure 5

Third Row of the Matrix (Accumulation)

2,000

1,000

0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 –1,000

Consumption of fixed capital Net saving Capital transfers

(absolute values) Volume 3 Issue 4 2009 87 THE CAUCASUS & GLOBALIZATION

150

100

0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 –50

Consumption of fixed capital Net saving Capital transfers

(relative values)

A comparative analysis of accumulation for the third column (see Fig. 6) shows an increase in the absolute values of gross capital formation while relative values tend to decrease. The absolute igure 6

Third Column of the Matrix (Accumulation)

10,000

5,000

0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 –5,000

Gross capital formation Net lending or borrowing (including statistical discrepancy)

(absolute values) 5,000

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 –5,000

Gross capital formation Net lending or borrowing (including statistical discrepancy)

(relative values) 88 Volume 3 Issue 4 2009 THE CAUCASUS & GLOBALIZATION

igure 7

Fourth Row of the Matrix (Rest of the World)

15,000

10,000

5,000

–5,000 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Imports Net lending or borrowing (including statistical discrepancy)

(absolute values) 200

100

–100 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Imports Net lending or borrowing (including statistical discrepancy)

(relative values) values of net lending are decreasing, and this points to the growing role of loans from other countries invested in fixed assets, which improves the dynamics of gross capital formation in absolute terms. A comparative analysis of the “Rest of the World” for the fourth row and column (see Figs. 7 and 8) shows that the balance of payments is based on exports and imports. Thus, macroeconomic analysis clearly shows the positive dynamics of some economic indicators for Georgia in absolute terms (GDP, final consumption, gross capital formation, intermediate consumption, etc.). But current growth rates give no reason to believe that the Georgian economy has reached a high level. Economic growth means a quantitative increase in the size of the economy, while economic development is an improvement in its quality. Development occurs in any economic system, but its nature and pace depend in large part on the structure of production and on the state of the economy in the initial period, while internationalization and globalization processes create new problems. In the past few years, the Georgian authorities have been trying to implement economic reforms: the Tax Code has been amended (in 2007, the number of taxes was reduced to seven, including five state and two local); affordable trade regimes have been introduced (including a system of reduced tariffs on trade with WTO countries); a preferential trade regime has been established with the U.S., Canada, Switzerland and Japan; a radical approach to the privatization of state property is being Volume 3 Issue 4 2009 89 THE CAUCASUS & GLOBALIZATION

igure 8

Fourth Column of the Matrix (Rest of the World)

8,000

6,000

4,000

2,000

0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 –2,000

Exports plus balance of goods and services Balance of primary incomes and current transfers Capital transfers

(absolute values) 100 80 60 40 20 0 –20 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Exports plus balance of goods and services Balance of primary incomes and current transfers Capital transfers

(relative values) implemented; the development of the banking sector has accelerated, and financial reporting operations and the foreign exchange regime have been liberalized (currency regulations apply equally to residents and non-residents). But the results of the reforms are so far unsatisfactory (living standards remain low, unemployment is increasing, and companies go out of business). With such indicators, it is no longer possible to conceal the existence of a crisis, although the government blames everything on the global financial crisis and does not admit its own mistakes in economic policy.

C o n c l u s i o n

As things stand today, a mixed system largely based on market processes and the regulatory functions of the state is believed to be the best economic system. 90 Volume 3 Issue 4 2009 THE CAUCASUS & GLOBALIZATION

But the creation of a mixed economy in Georgia is delayed. This is evident, among other things, from the fact that decades of backwardness have resulted in the existence of uncompetitive enterprises and the accumulation of huge debts in the public sector.4 The situation is compounded by poorly developed market infrastructure and underestimation of the role and importance of human capital, which almost cancels out the performance of state enterprises. The state’s regulatory activities are insufficiently effective; the consequences of the world economic crisis and the Russian-Georgian war (August 2008) have a negative impact as well. Experts agree that the reform process in Georgia has stalled and is very contradictory. All of this can have grave consequences, because the market and market relations not only help to raise the level of the economy in a particular country, but can also destroy it and deepen the socioeconomic and political crisis still further unless the authorities are able to make proper use of its positive qualities and offset its negative aspects.5 In order to resolve these problems, it is necessary to accelerate economic reforms, which should be geared to strengthen the regulatory functions of the state, spur the development of market infrastructure, enhance the social orientation of the economy, and create a favorable business environment. It is also necessary to make serious changes in fiscal policy, create conditions for foreign investment, improve the banking system and establish a securities market.

4 See: V. Papava, Nekroekonomika i postkommunisticheskaia transformatsia ekonomiki, Company Imperial, Tbili- si, 2001, pp. 32-33. 5 See: G. Tsereteli, “Gruzia na puti stanovlenia rynochno-ekonomicheskikh otnosheni,” Ekonomika, Nos. 8-9, 2007, pp. 15-20. Volume 3 Issue 4 2009 91 THE CAUCASUS & GLOBALIZATION

GEOCULTURE

Sudaba ZEYNALOVA

Ph.D. (Hist.), senior fellow at the Bakikhanov Institute of History, National Academy of Sciences of Azerbaijan (Baku, Azerbaijan).

ETHNODEMOGRAPHIC CHANGES IN THE CAUCASUS: EMERGENCE O EUROPEAN ETHNIC COMMUNITIES (THE 19TH-EARLY 20TH CENTURIES)

Abstract

he author discusses several issues created the ethnic communities of Euro- T related to the reasons for the czarist pean peoples: Slavs, Germanic, Roman- migration policy, traces its course, ic, Baltic and Finno-Ugrian peoples, and and looks at the results. Acting in this way, Greeks. She relies on statistical data and czarism noticeably changed the ethnode- population censuses to reveal the quanti- mographic structure of the Caucasus in the tative dynamics of the European commu- 19th-early 20th centuries. The author pays nities in the Caucasus in the period under particular attention to the process which review.

I n t r o d u c t i o n

The Caucasus is one of the world’s culturally diverse regions. Its geographic location on the borderline between the West and the East has made it an interesting geopolitical region with a rich history and variegated ethnic representation. The contradictions never interfered with the centuries- long cooperation of different ethnic cultures, which together can be described as the region’s cultural phenomenon. For many centuries, the Caucasus, a region rich in natural resources, historical and cultural heritage, and ethnic diversity, has been attracting European travelers who described their 92 Volume 3 Issue 4 2009 THE CAUCASUS & GLOBALIZATION impressions and supplied interesting information about the region and its peoples. Late in the 18th century, Europeans began moving to the Caucasus in great numbers; this process continued into the 19th century and went on unabated. Due to the favorable local conditions for socioeconomic development and preservation of ethnocultural identity and values, as well as ethnographic specifics, Europe- an ethnic diasporas appeared in the Caucasus in the course of the 19th and early 20th centuries.

The Migration Policies of Russian Czarism and Its Impact on the Ethnic Map of the Caucasus

New ethnosocial processes and changes in the region’s ethnic structure were triggered by the Russian Empire’s conquest of the Caucasus. Throughout the 19th and the early 20th centuries, the Cau- casus remained an arena of wide-scale migration processes: the region received huge masses of alien population from other countries and from the Russian interior. The history of migration in the Caucasus is complicated; the process unfolded under the impact of military-political, socioeconomic, national- cultural, confessional, and other factors which were prominent either separately or in all sorts of combi- nations. In the 19th century, migrations were mostly deliberate and carried out by the czarist authorities on a voluntary basis or under pressure. On the other hand, in the latter half of the 19th century, spontaneous population movements were caused by the region’s economic and industrial development. All sorts of political forces, as well as social and ethnic groups, were involved in the resettlement policy of Russian czarism intended to strengthen the Russian presence in the region and tie it to Russia. This was the general principle and main strategic task. The czarist government resolved to subjugate the Caucasus (a recently conquered and still untamed region) politically and economically by relying on its migration plans. Colonization was expected to create a solid ethnosocial base by placing aliens among the local population, develop a firmer ideological and economic grip on the region, and supply landless and poor peasants from the center of Russia with land. Imperial colonization of the Caucasus cannot be described as purely Russian in the ethnic sense. “The Russian colonization policy brought European and non-European (non-Russian) migrants into the Caucasian population.”1 Czarist colonization can be described as flexible—it involved not only Russians, but also other peoples (who had already been living in Russia) and also immigrants from other countries. In 1762, Catherine the Great issued a manifesto which invited foreigners to the Rus- sian steppes and supplied the legal basis of privileged immigration. A year later, another manifesto specified the conditions and benefits: the Russian government shouldered the resettlement costs; the newcomers were free to choose their place of residence; they were allowed to pursue their faiths; and they were exempt from taxes for the next 30 years, as well as from compulsory state service. On top of this, they could expect interest-free loans with a 10-year respite to be spent on building houses and buying cattle and implements, and were exempt from conscription. These privileges also applied to the migrants’ descendants.2 This attracted Germans, Greeks, Poles, Estonians, Moldavians, Czechs, Bulgarians, Lithuanians, Letts, and other groups to the region. After setting up the Caucasian Viceroyalty, czarism got down to the business of colonization. In the mid-18th century, the Caucasian foothills attracted numerous migrants; in the last quarter of the same century, the process extended to the Northern Caucasus. In the early half of the 19th century, Russians and Ukrainians (mostly Cossacks) moved in great numbers into the steppe zones of the Caucasian foothills. In the late 18th century, Russian and Ukrainian ethnic groups (based on the

1 N.Ia. Marr, Plemennoi sostav naseleniia Kavkaza, Petrograd, 1920, p. 32. 2 See: V.S. Belozerov, Etnicheskaia karta Severnogo Kavkaza, OGI, Moscow, 2005, pp. 42-44. Volume 3 Issue 4 2009 93 THE CAUCASUS & GLOBALIZATION

Zaporozhie and Don Cossacks) were gradually formed. The Cossacks were moved to the area to guard the border and develop the virgin soil. Over time, their ranks swelled with new arrivals from the south of Russia and Ukraine. Foreigners, likewise, arrived in the Caucasus for permanent settlement: in the 19th century, communities of Greeks, Germans, and other European nations appeared who lived in compact groups in the localities with the status of colonies.3 The Bolshaia entsiklopediia offers the following definition of a colony: “Colonies are settlements either connected or unconnected with the metropolitan country, especially those, the population of which (colonists from Lat. colonus—“land tiller, settler”) have preserved the specific features, customs and rules of their nationality either thanks to the patronage of the metropolitan country or because of their social position.”4 The newcomers were described as aliens not subject to compulsory military service; in 1867, they were allowed to settle and buy land in the Cossack territories, which increased the migration inflow to the Caucasus.5 In this way, migration movements created a special social and ethnoconfessional group in the Caucasus —aliens with or without registration. By the early 20th century, the region had already accumulated members of over 20 nationalities (their main territories found outside the Caucasus) who lived side by side with the locals. They came at different times, for different reasons, and under different conditions, and can be divided into two major groups: (1) migrations organized and carried out by the state and (2) spontaneous migrations by small groups or families.6 The migration policy of czarist Russia can be conditionally divided into several stages: late in the 18th-first half of the 19th century, the state purposefully moved Russians, Ukrainians, German colonists, Greek migrants, Polish military, and exiles to the Caucasus in great numbers. Later, in the latter half-late 19th century after the peasant reform of 1861, the movement became partly spontaneous and voluntary; the czarist government merely supported and encouraged it. The region’s economic and industrial progress, which started at approximately the same time, lured vast masses of Russian peasants with no or little land from Russia’s center. German colonists, Estonian, Moldavian, Czech, and Bulgarian peasants, and others likewise found the region attractive. At the same time, Europeans from various countries (many of them were workers, clerks, specialists in different fields, businessmen, etc.) were attracted by the Caucasian industrial upswing. Early in the 19th century, the czarist government moved large groups of people of different ethnic origins to the Caucasus. For example, in 1809-1811, 41,534 people of both sexes were resettled to the Black Sea area; in 1821-1825, 48,382 more; and in 1848, they were joined by 14,347 people of both sexes mostly from the Chernigov, Poltava, and other inland gubernias of Russia. In 1862-1864, the trans-Kuban areas were settled with 14,396 families.7 By the mid-19th century, the ethnic situation in the Northern Caucasus exhibited several trends: first, ethnodemographic changes were brought about by the Caucasian War, which caused fighting in the northwest and northeast of the area and drove some of the mountain peoples to Turkey. The changes induced by all sorts of reforms affected the migration processes among the North Caucasian peoples. On the other hand, various national groups which arrived in the Northern Caucasus en masse

3 See: “Poseleniia inostrantsev v Rossii,” in: Entstiklopedicheskiy slovar, ed. by F.A. Brokhaus, I.A. Efron, Vol. XXIV, St. Petersburg, 1898, pp. 672-675. 4 Bolshaia entsiklopediia, ed. by S.N. Iuzhakov, Vol. 11, St. Petersburg, 1903, p. 198. 5 See: Entsiklopedicheskiy slovar po istorii Kubani s drevneishikh vremen do oktiabria 1917 goda, Edvi, Kras- nodar, 1997, p. 188. 6 See: N.G. Volkova, Etnicheskiy sostav naseleniia Severnogo Kavkaza v XVIII-nachale XX veka, Nauka, Moscow, 1974, pp. 193-197. 7 See: L.Ia. Apostolov, “Geograficheskiy ocherk Kubanskoi oblasti,” in: Sbornik materialov dlia opisaniia mest- nostei i plemen Kavkaza, Issue 23, Tiflis, 1897, pp. 223-233. 94 Volume 3 Issue 4 2009 THE CAUCASUS & GLOBALIZATION can be described as one of the most important factors that left traces in the region’s ethnodemographic structure. Some of the groups arrived within the wide-scale czarist resettlement policy; some of them were driven by socioeconomic and political factors, but they too were supported and encouraged by the state. The Caucasian War changed the ethnic map of the Northern Caucasus beyond recognition: during the war and after it (in 1858-1865), North Caucasian mountain-dwellers emigrated in large numbers to Turkey, thus changing the ethnic composition of their home areas. This and the inflow of people from other places changed the size, percentage, and settlement areas of the local ethnic groups. By the late 1860s, the mountain stretch of Circassia had been de- populated, while Cossack villages moved into the foothills. Long stretches of the Caucasian Black Sea coast almost up to the Bzyb River were abandoned by some of the Adighes, Abazins, and Ubykhs who left for Turkey. In the latter half of the 1860s-early 1870s, the czarist government moved Russians, Ukrainians, Greeks, Czechs, Moldavians, Estonians, Armenians, etc. there. By the 1880s, the area was home to 10.7 thousand Russians; 2.3 thousand Greeks; 1.0 thousand Arme- nians; about 1.0 thousand Czechs; and 0.3 thousand Estonians.8 According to V. Kabuzan, in the 1860s, the population strength of the region dropped because about 500 thousand locals had emigrated. Russians (16.5 percent in 1858 and 30.5 percent in 1867) and Ukrainians (18.2 and 23.3 percent) increased their shares in the total population in the most noticeable way. The share of Armenians also increased from 0.8 to 1.1 percent; Germans from 0.1 to 0.3 percent, and Jews from 0.1 to 0.5 percent. At the same time, the outflow of the autochthonous peoples (Adighes, Nogais, Chechens, and Karachais) lowered their share in the region’s population.9 After conquering the Transcaucasus early in the 19th century, Russian czarism launched an active settlement policy in the region. Northern Azerbaijan was engulfed by migration flows: this was done to set up an ethnic, confessional, and social base in the region. N. Shavrov wrote on this score: “Our colonizing activities in the Transcaucasus were started not by settling Russians there, but by moving people of other nationalities in. First of all, in 1819, we moved 500 families of Ger- mans there from Württemberg. They formed their colonies in the Tiflis and Elizavetpol gubernias. Later, after the war of 1826-1828, over a span of two years (1828-1830), we moved over 40,000 Persians and 84, 600 Turkish Armenians to the Transcaucasus and put them on the best state-owned lands in the Elizavetpol and Erivan gubernias, where Armenians were in the obvious minority, and in the Tiflis, Borchali, Akhaltsikhe and Akhalkalaki uezds.”10 Armenians, Russian dissident peasants—raskolniks (schismatics), Molokans, Dukhobors, and a relatively small number of German colonists, Greek migrants, and Polish exiles figured prominently in the migration policy of Russian czarism. The czarist migration policy changed the ethnodemographic situation in Georgia to a great extent. According to K. Antadze, throughout the 19th century, the size of the ethnic groups involved in state migration policy within the territory of contemporary Georgia changed in the following way: in 1832, there were 0.5 thousand Russians; 1.8 thousand Germans; and 7.3 thousand Greeks; the figures for 1864 were: 19 thousand Russians; 12.1 thousand Greeks; and 4 thousand Germans; in 1897, the Russians numbered 76.4 thousand; the Greeks, 34.2 thousand; and the Germans, 7.8 thousand (not counting the troops deployed there and foreign subjects).11 This means that the Russian government moved large groups of Greeks, Russians, German colonists, Polish exiles, and other ethnic groups into Georgia.

8 See: N.G. Volkova, op. cit., p. 241. 9 See: V.M. Kabuzan, Naselenie Severnogo Kavkaza v XIX-XX vekakh. Etnostatisticheskoe issledovanie, St. Peters- burg, 1996, pp. 98-100. 10 N.I. Shavrov, “Novaia ugroza russkomu delu v Zakavkazie: predstoiashchaia rasprodazha Mugani inorodtsam,” in: Istoriia Azerbaijana po dokumentam i publikatsiiam, Elm, Baku, 1990, p. 60. 11 See: K.D. Antadze, Naselenie Gruzii v XIX veke, synopsis of doctorate thesis, Tbilisi, 1974, p. 20. Volume 3 Issue 4 2009 95 THE CAUCASUS & GLOBALIZATION Demographic Changes in the Caucasus in the 19th-Early 20th Centuries

Migration and ethnodemographic changes directly affected the sizes of the local and migrant ethnic groups. Indeed, over a relatively short period of time, new European ethnic communities ap- Table 1

Distribution of European Ethnic Communities in the Caucasus in the 1870s12

Administrative Russians Poles Units Greeks Italians Czechs French, Germans Estonians Moldavians,

The Northern Caucasus

Stavropol Gubernia 367,881 1,216 — 1,353 — 1,540 1,015

Terek Region 167,811 — — 2,974 — — —

Kuban Region 733,007 2,522 — 4,682 — — —

Total for the Northern Caucasus 1,268,699 3,738 — 9,009 — 1,540 1,015

The Transcaucasus

Black Sea District 10,692 111 868 75 604 1,941 —

Sukhum Department 138 — — — — — —

Kutaisi Gubernia 1,158 — — 29 3 551 —

Tiflis Gubernia 36,390 1,872 32 4,896 439 15,161 16

Baku Gubernia 18,201 — — — — — —

Elizavetpol Gubernia 8,891 — — 1,326 — — —

Zakataly District — — — — — — —

Daghestan Region 4,727 — — 18 — — —

Erivan Gubernia 4,339 1 — 4 — 1,090 —

Total in the Transcaucasus 84,750 1,984 900 6,348 1,046 18,753 16

Total in the Caucasus 1,353,449 5,722 900 15,457 1,046 20,293 1,031

12 See: Sbornik svedeniy o Kavkaze, ed. by N.K. Zeidlitz, Vol. VII, Tiflis, 1880, pp. I-XXVIII; Ibid., Vol. V, “Spiski naselennykh mest Kavkazskogo kraia,” Tiflis, 1879. 96 Volume 3 Issue 4 2009 THE CAUCASUS & GLOBALIZATION peared on the region’s ethnodemographic map; their numbers steadily grew due to the inflow of migrants that went on unabated throughout the 19th and early 20th centuries. This has been amply confirmed by population censuses and statistics. The number of Russians, as well as Greeks and Germans, in the Caucasus increased throughout the 1860-1870s: Russian peasants and German colonists were moved there from the Russian interior after the peasant reform of 1861; Greeks arrived from Turkey, while Poles (and other Europeans) were exiled to the Caucasus after the 1863-1864 uprising. In the 1880s, there were several reasons for the increase in numbers of foreigners (including Europeans) in the Caucasus: the ongoing migration policy; demographic growth of the ethnic groups that arrived in the early and middle 19th centuries; and massive resettlement, in the post-reform period between 1860 and the 1880s, of peasants of various ethnic affiliations (Russians, Ukrainians, Moldavians, Estonians, Czechs, Bulgarians, etc.) with little or no land from the interior gubernias of Russia. According to information supplied by family lists dated to 1886, there were 140,095 Rus- sians; 5,843 Poles; 9,260 Germans; and 57,156 Greeks in the Transcaucasus alone.13 Table 2

Statistical Data Related to the Numerical Strength of European Peoples in the Transcaucasus in 188614

Greeks Poles, English French, Italians, Czechs, Swedes, Slovaks Germans,

Gubernias Russians, Rumanians Ukrainians, Bulgarians, Lithuanians and Moldavians, Regions

male male male male male female female female female female

Baku 23,421 19,011 807 325 980 741 — — — —

Elizavetpol 4,236 3,853 3 3 940 962 1 1 47 55

Tiflis 18,610 17,145 757 522 2,582 2,484 8 10 11,754 10,417

Kutaisi 2,835 2,170 455 177 294 174 154 90 4,087 2,516

Erivan 2,109 2,043 25 15 2 5 — — 547 479

Daghestan Region 2,703 1,921 100 55 24 15 — — — —

An ethnographic boom occurred in the Caucasus in the late 19th century when the region embarked on the road of capitalist development; its growing economy and industry caused even more active migration and attracted even greater numbers of people from other countries and other parts of the Russian Empire. The data of the First General Population Census of the Russian Empire of 1897 can be described as the most reliable demographic source of the time.

13 See: Kavkazskiy kalendar na 1895 god, Tiflis, 1894, p. 229. 14 See: Svod statisticheskikh dannykh o naselenii Zakavkazskogo kraia, izvlechennykh iz posemeinykh spiskov 1886 goda, Tiflis, 1893, pp. 177, 317, 415, 531, 649; Kavkazskiy kalendar na 1896 god, Tiflis, 1895, p. 63; Kavkazskiy kalendar na 1895 god, p. 225. Volume 3 Issue 4 2009 97 THE CAUCASUS & GLOBALIZATION

Table 3

Quantitative Distribution of the European Ethnic Communities in the Caucasus Based on Native Language (according to the 1897 Census)15

Administrative- Territorial Greek Polish Latvian German

Units Russian, Romanic, Ukrainian, Moldavian Rumanian, Lithuanian, Finno-Ugric, Byelorussian including French, including Estonian including Russian,

Baku Gubernia 77,681 1,439 371 158 3,430 — 622

Elizavetpol Gubernia 17,875 616 148 143 3,194 558 16

Zakataly District 434 115 — — 11 2 —

Daghestan Region 16,044 1,630 537 78 261 — 50

Kars Region 27,856 3,243 956 51 430 32,593 484

Tiflis Gubernia 85,338 6,167 1,420 814 8,329 27,116 199

Kutaisi Gubernia 7,476 793 242 184 290 4,372 8

Batum Region 9,956 911 191 160 369 4,717 31

Sukhum District 6,011 234 123 138 406 5,393 607

Black Sea Gubernia 34,546 731 88 1,091 748 5,969 821

Erivan Gubernia 15,937 1,385 485 363 210 1,323 403

Stavropol Gubernia 803,192 961 199 110 8,601 1,715 1,532

Kuban Region 1,737,908 2,719 1,086 5,444 20,778 20,137 2,446

Terek Region 314,644 4,173 841 221 9,672 958 203

Late in the 19th and early 20th centuries, the ethnodemographic picture of the Caucasus became more variegated than ever. In some places of the Northern Caucasus, migrants outnumbered the locals. They settled in compact groups or dispersed; some moved to the countryside, while others preferred the cities and towns. Russians, Ukrainians, Germans, Greeks, Estonians, and other ethnic groups lived in compact groups; they set up villages and colonies or lived side by side in towns. Poles, French, Italians, Swedes, and other European ethnic groups lived mainly in cities and were employed by administrative services, the army, scientific and pedagogical institutions, industry, trade, etc. The European ethnic groups were represented, to different degrees, in the demographic composition of the rural and urban population of the Caucasus. In the late 19th century, for example, the

15 See: Kavkazskiy kalendar na 1908 god, Tiflis, 1907, pp. 108-124. 98 Volume 3 Issue 4 2009 THE CAUCASUS & GLOBALIZATION ethnic composition of the state peasant population in the Transcaucasian gubernias was the following: Greeks (2,037 chimneys, 17,027 persons of both sexes); Poles (53 chimneys, 231 persons); Germans (850 chimneys, 4,943 persons); and Russians (7,309 chimneys, 44,531 persons). The state peasants of various nationalities were distributed across the Transcaucasian gubernias in the following way: the Tiflis Gubernia—Greeks, 16,277 persons of both sexes; Russians, 15,946; Germans, 3,319; Poles, 231; the Baku Gubernia—Russians, 17,675; the Elizavetpol Gubernia—Russians, 7,275; Germans, 1,624; the Kutaisi Gubernia—no information of European ethnic communities; and the Erivan Gu- bernia—Greeks, 750; Russians, 3,635.16 The ethnodemographic composition of the Caucasian cities in the late 19th and early 20th centuries can be best described as a patchwork. According to the 1886 figures, for example, a large number of members of the European ethnic communities lived in the Transcaucasian cities. In Baku, there were 21.4 thousand Russians; 1.7 thousand Germans; and 1.1 thousand Poles. In Tiflis, there were 14.3 thousand Russians; 0.2 thousand Greeks; 1.2 thousand Germans; and 0.8 thousand Poles. In Kutaisi, there were 1.5 thousand Russians; 0.2 thousand Greeks; and 0.3 thousand Poles; and in Batum, 1.7 thousand Russians; 3.0 thousand Greeks; and 0.3 thousand Poles. Russians comprised 24.6 percent of the total population of industrial Baku; 18.1 percent in Tiflis, and 11.2 percent in the city-port of Batum. Greeks were concentrated in Batum (20.1 percent); their population in other cities (Poti, Tiflis and Kutaisi) was small—about 200 to 500 in each.17 The populations of Baku and Tiflis, two large cities and gubernia administrative centers, were even more varied. West Europeans had been moving there throughout the 19th century, which created large compact European ethnic groups in both cities in the late 19th-early 20th centuries. Twenty-five German families from Württemberg, moved by the state in 1817-1818 and settled on the Kuka shores, were the first European settlers in Tiflis. They preferred to live as a compact group in a colony which later became part of Tiflis. Germans from Bavaria, Saxony, and Prussia also lived in Tiflis in 1831. After the peasant reform, Germans from Warsaw also moved to Tiflis. In 1901, there were 3.2 thousand Germans in Tiflis, which was also home to other West Europeans. They were mainly French; while Italians, Austrians, Swiss, English, and Poles came next in terms of numbers. Gradually the number of people of West European origin increased for several reasons. In addition, when the Polish Uprising of 1863 was suppressed, the Polish population of Tiflis swelled with Polish exiles. Later, more Poles arrived from the Warsaw Gubernia and other cities of the Russian Empire (Voronezh being one of them). By 1901, there were 5.1 thousand Poles in Ti- flis.18 According to the 1864 one-day census conducted in the winter, there were 12,302 Russians; 949 Poles; 172 French; 1,119 Germans; 119 Italians; 24 English, and 119 Greeks in the city.19 According to a one-day census of 25 March, 1876, there were 1,592 Poles in Tiflis; 2,005 Germans; 27 Swedes, 32 Czechs; 15 Lithuanians; 10 Letts; 52 English; 267 French; 163 Italians, 9 Rumani- ans, and 388 Greeks.20 In the last third of the 19th century, the industrial and oil boom in Baku and economic growth attracted Europeans in great numbers. By the early 20th century, its ethnic context included Russians, Ukrainians, Byelorussians, Germans, Poles, Swedes, French, Italians, Greeks, Estonians, Lithuanians, Letts, Fins, and others. According to the 1913 Baku population census, there were 214,672 people of both sexes living in the city: 76,228 of them were Russians; 1,770 were Poles; and 3,274 were Germans.21 According to a one-

16 See: I.G. Antelava, Gosudarstvennye krestiane Gruzii v XIX veke (poreformenny period 1864-1900 gg.), Vol. II, Academy of Sciences of the Georgian Soviet Socialist Republic Publishing House, Tbilisi, pp. 281-283. 17 See: N.G. Volkova, “Izmeneniia v gorodskom naselenii Zakavkazia v kontse XIX-XX veke,” Sovetskaia et- nografiia, No. 6, 1968, pp. 43-44. 18 See: Iu.D. Anchabadze, N.G. Volkova, Stary Tbilisi. Gorod i gorozhane v XIX veke, Nauka, Moscow, 1990, p. 41. 19 See: Sbornik svedeniy o Kavkaze, Vol. IV, Tiflis, 1880, p. 60 20 See: Ibid., pp. 134-138. 21 See: Perepis Baku 1913 goda, Part III, “Naselenie Baku,” 1916, pp. 5, 11. Volume 3 Issue 4 2009 99 THE CAUCASUS & GLOBALIZATION day census of 1917, there were 234,277 people of both sexes in Baku (77,123 of them were Russians; 1,982 were Poles; 89 French; 2,777 Germans; and 795 Greeks.22 By the early 20th century, the European ethnic communities in the Caucasus had assumed their final shape. The Europeans who settled in the Caucasus lived in large and compact groups in cities and the countryside and formed ethnic communities. In the 1920s, their numerical strength remained the same. The all-Union census of 1926 reflected, in the widest way, the region’s ethnic composition. According to the census, the Russian, Ukrainian, German, Polish, and Greek communities were the largest in the Transcaucasus; while in the Northern Caucasus, the Russian, Ukrain- ian, Byelorussian, Polish, German, Greek, Czech, Moldavian, and Estonian communities were the largest. This is explained by the specifics of the migration policy and distribution of ethnic groups in the Caucasus.

Table 4

The European Population of the Transcaucasus according to the 1926 Census23

Transcaucasian Azerbaijanian Georgian Armenian People S.F.S.R. S.S.R. S.S.R. S.S.R.

Russians 336,178 220,545 96,085 19,548

Ukrainians 35,423 18,241 14,356 2,826

Byelorussians 3,767 2,867 540 360

Germans 25,327 13,149 12,074 104

Poles 6,324 2,460 3,159 705

Greeks 57,935 904 54,051 2,980

Estonians 1,043 168 871 4

Letts 944 569 363 12

Lithuanians 572 285 283 4

Moldavians 316 156 142 18

French 347 58 282 7

Italians 257 77 172 8

Czechs and Slovaks 237 87 143 7

Bulgarians 203 40 160 3

During the Soviet period, the social-political and social-economic processes affected the region’s ethnodemographic structure. In the 1920-1940s, when Soviet power was finally established in the Caucasus, mass immigration began. The ethnic composition and demographic situation in the

22 See: Izvestiia AzTsSU, No. 4, 1922, p. 34. 23 See: Naselenie Zakavkazia. Vsesoiuznaia perepis naseleniia 1926 goda. Kratkie itogi, published by ZakTsSU, Tiflis, 1928, p. 8. 100 Volume 3 Issue 4 2009 THE CAUCASUS & GLOBALIZATION

Table 5 European Population of the North-Caucasian Area and the Daghestanian A.S.S.R. (according to the 1926 Census)24

North Caucasian Area Daghestanian A.S.S.R.

People Total Urban Agricultural Total population population population population

Russians 3,841,063 1,009,342 2,831,721 98,197

Ukrainians 3,106,852 353,791 2,753,061 4,126

Byelorussians 51,317 28,697 22,620 178

Poles 18,425 12,588 5,837 460

Czechs and Slovaks 3,780 1,286 2,494 20

Serbs 277 133 144 1

Bulgarians 2,798 762 2,036 44

Letts 4,573 2,582 1,991 73

Lithuanians 2,292 1,718 574 69

Estonians 5,201 962 4,239 33

Germans 93,915 12,734 81,181 2,551

English 59 40 19 —

Swedes 82 70 12 1

Dutch 10 8 2 13

Italians 308 242 66 1

French 164 135 29 10

Rumanians 562 201 361 58

Moldavians 9,546 446 9,100 491

Greeks 32,178 11,125 21,053 82

Finns 322 128 194 9

Caucasus developed amid repressions against well-to-do peasants and other social groups and depor- tations of the autochthonous Caucasian peoples and alien ethnic groups; the hostilities of the Great Patriotic War (World War II) also played their role. All the Germans living in the Caucasus, Greeks, Poles, and members of other ethnic groups were deported from the region. Later, rehabilitation returned only a small part of them to the Caucasus.

24 See: Vsesoiuznaia perepis naseleniia 1926 goda, Vol. V, “Crimean A.S.S.R. North Caucasian Area. Daghestani- an A.S.S.R.,” Moscow, 1928, pp. 52-56, 342. Volume 3 Issue 4 2009 101 THE CAUCASUS & GLOBALIZATION Specifics of the Emergence of the European Ethnic Communities in the Caucasus

The European ethnic communities took a long time to take final shape; they traveled different roads, while migration and social adaptation had its specific and common features. On the whole, the phenomenon of diaspora primarily rests on cultural specifics which help the ethnic mechanism survive and function. Detached from their historical homeland, the migrants were determined to preserve and develop their national culture and resisted assimilation. Obviously not each and every ethnic group can form a diaspora; it is described by the following: adequate numbers; clear awareness of ethnic-cultural interests; high level of cohesion and consolidation; and active economic, public, and cultural self-organization. Adaptation of diasporas can be described as a special type of adaptation of alien ethnic groups caused by the specifics of their everyday life in the context of their existence as a diaspora. The specifics of their adaptation are determined by the relatively large distance between them and the local communities. Throughout the 19th-early 20th centuries, diasporas of European peoples (Germans, Greeks, Poles, Czechs, Bulgarians, Estonians, Letts, Lithuanians, Moldavians, etc.) appeared as part of the region’s ethnic structure. Their numerical strength, social composition, and degree of incorporation into the local economy and sociocultural milieu were different. They set up institutions of all sorts (cultural, educational, religious, and charitable) and schools to preserve their identity. The majority of ethnic groups that were either moved to the Caucasus in the 19th and early 20th centuries or came there themselves covered a long road before they formed diasporas. At first the newcomers were isolated from the locals by the new conditions of their day-by-day existence, strange culture, and everyday life. Later, economic integration brought the migrants and the locals much closer in the social and cultural respects. The high level of ethno-religious tolerance of the local people (especially obvious in the zones of social contacts) contributed to the process.25 The German, Greek, and Polish communities were the largest European diasporas in the Cauca- sus; they acquired their final shape in the early 20th century. Germans and Greeks lived in numerous compact (and mostly monoethnic) settlements in the Caucasus; great numbers of them lived in large cities. Early in the 20th century, both had their national public organizations and press; under Soviet power, there were national administrative districts—Greek and German (Vannovskiy)—in the Kras- nodar Territory. Their economic activities were varied and ramified; they actively contributed to the region’s industrial development. The Poles, most of them being exiles, formed a large and socially diverse community which lived in big cities. Their community had no national settlements; Poles were scattered mainly among the cities; the majority of them belonged to either the intelligentsia or civil servants. The Czech, Bulgarian, Estonian, Moldavian, and other European communities in the Caucasus were relatively small; they lived in their settlements in the Northern Caucasus and along the Black Sea coast and were mainly employed in agriculture. French, Italians, English, Swedes, Dutch, and other representatives of European peoples lived in small groups in large cities—administrative, industrial, and trade centers such as Baku, Tiflis, Ekaterinodar, Stavropol, and Vladikavkaz—and were employed in industry or trade. Their small numbers and the fact that no large compact groups of them were found anywhere meant they had no ethnic diasporas. They sided with the German, Polish, and other large European religiously and culturally kindred communities.

25 See: A.E. Mamedli, Sovremennye etnokulturnye protsessy v Azerbaijane: osnovnye tendentsii i perspektivy, The Khazar University Press, Baku, 2008, pp. 147-149. 102 Volume 3 Issue 4 2009 THE CAUCASUS & GLOBALIZATION

The European ethnic groups in the Caucasus had many common and many different features in terms of their linguistic, confessional, economic, and sociocultural characteristics. Recent eth- nological studies of their ethno-linguistic traits describe them as members of the Indo-European and Ural language families. The Slavs (Russians, Ukrainians, Byelorussians, Poles, Czechs, Slo- vaks, Bulgarians, and Serbs), the Germanic peoples (Germans, Swedes, Swiss, Dutch and English), the Greek peoples (Greeks), the Romanic peoples (Moldavians, Rumanians, French and Italians), and the Baltic peoples (Lithuanians and Letts) represented the Indo-European group of languages. The Ural group was represented by Finno-Ugric peoples—Estonians, Finns, Hungarians, Mordo- vians, and Mari. The absolute majority of Europeans in the Caucasus were Christians, either Orthodox or Prot- estants or Catholics. There was a certain number of followers of non-orthodox sects: German colonists-separatists, Mennonites, and Russian raskolniks and Old Believers. The European communities of the Caucasus had many common features in terms of their geographical distribution, the time they came to the Caucasus, the circumstances that brought them there, and the economic activities they engaged in. The same features, however—territory and places of settlement, dates and specific reasons of migration, and preferred economic branches and occupations—described them as different groups. Throughout the long period during which they remained part of the Caucasian ethnic picture they preserved their cultural images and were involved, on an equal basis, in ethnic cooperation across the region; they did a lot to promote the historical, economic, and sociocultural development of the Caucasus.

C o n c l u s i o n

The migration policy of Russian czarism in the 19th-early 20th centuries brought migrants to the region; ethnic groups appeared who settled in areas far beyond the Caucasus. Some of them came on their own free will, others were forced to move. The migrants were diverse in origin: there were peasants who belonged to various sects whom the authorities wanted to tuck away; peasants with no or little land; and exiles and people of highly varied ethnic and social backgrounds who came to the region to profit from its economic boom. The migration waves which reached the Caucasus one after another throughout the 19th century increased the size of the European communities. By the early 20th century, for example, the number of Slavs (Russians, Ukrainians, and Byelorussians in particular, as well as Poles, Czechs, and Bulgarians) increased. Germans and Greeks formed the largest ethnic European communities in the Caucasus; there were relatively fewer Moldavians, Estonians, Letts, Lithuanians, French, Finns, Italians, Swedes, and others. The European ethnic communities appeared in the Caucasus for different reasons and at different times; the settlement process and places of residence (cities or countryside), their economic activities, numerical strengths, and social affiliations also differed. The migration processes of the 19th-early 20th centuries were directly responsible for the changed ethnodemographic structure of the Caucasus: they brought new ethnic communities which left their trace in the region’s history. Volume 3 Issue 4 2009 103 THE CAUCASUS & GLOBALIZATION Guram SVANIDZE

Ph.D. (Philos.), coworker at the Human Rights and Civil Integration Committee, Parliament of Georgia (Tbilisi, Georgia).

SPECIAL EATURES O THE GEORGIAN CRISIS

Abstract

his article looks at the particular traits ciety. It focuses on the viewpoint that radical T of the emergence and development of public conscience and stubborn political lead- independent Georgia and studies the ers are the insurmountable barriers interfer- special features of the crisis in Georgian so- ing with Georgia’s peaceful development.

I n t r o d u c t i o n

Georgia’s most recent history has been developing dramatically. On the one hand, it is characterized by extremely mobile internal processes and society’s openness to innovation and reconstruc- tion, while, on the other, it has repeatedly found itself on the brink of arduous tests. With a rich history of survival and having lived through powerful empires, the Georgian people should have developed skills that ensure a stable and safe existence inside the country. But their an- cestors’ maneuverability in foreign policy could not always be applied to domestic affairs. Eighteen years ago, Georgia experienced the most extreme crisis phenomenon—anomie. At that time, axiological and moral precepts stopped working, and sociality as such was degraded. Soci- ety plunged into chaos. The absence of legitimacy turned it into an aggregate of both accidental and unstable social ties.1 It took colossal efforts to put the country on the path of stable development. Today, we are seeing the manifestation of other crises in society—instability, radicalism, and irreconcilability. The capital is awash with spontaneous meetings. This is why it sometimes seems that radical public conscience and stubborn political leaders are the insurmountable barriers interfer- ing with Georgia’s peaceful development.

General Sociological View

It stands to reason that radicalism presupposes instability. The more radicalism, the less likelihood of consensus in society and, consequently, the less stability in it. On the whole, internal instability and insecurity are normal and healthy phenomena for any society. Particularly if it is transforming and being built on democratic principles. But the more viable the system, the more opportunity it has to keep the processes within a standard framework. Going beyond the framework leads to a dead end.

1 See: G. Svanidze, “Ispivshie vod okeana,” Druzhba narodov, No. 9, 2008. 104 Volume 3 Issue 4 2009 THE CAUCASUS & GLOBALIZATION

As sociologists have noted, systems established by revolutionary radical methods use up many more resources and time on developing a stable and legitimate government. For example, in those countries where monarchies were overturned as the result of revolutions, the republican regimes that came to power proved incapable of acquiring legitimacy in the eyes of all the important strata of the population right up to the fifth post-revolutionary generation.2 Sociologist Seymour Lipset illustrates these provisions with the following observation—there are monarchies in most of the extremely stable democratic states of the West. At that time (the second half of the 1960s, only the U.S. and Switzerland, as purely republican countries, met the criteria of stability in the democratic rules of the game.3 What do we have in the case of Georgia’s most recent history? In this sense, the period of Zviad Gamsakhurdia’s rule is interesting. It represented the transition stage from the communist past to the independent existence of the Georgian state. If we follow the scenario presented above, it can be presumed that it was then that the foundations were laid for periodically recurring crises. Admittedly, there are some specifics. In Georgia, essentially complete self-removal of the “old type of law” has occurred, the bastion of which was the party-management core. The new regime acquired power easily, without visible resistance from the communists. Without encumbering themselves with emotional heart-wringing, the party bonzes rejected their past. One of the reasons for this development of events was the profound power crisis after the drama of 9 April, 1989. At that time, suppression of a peaceful meeting led to human losses. It would seem that conditions had developed for building a new society from scratch. But the inexperienced politician took an erroneous path. He tried to legitimize a system based on ethnonational principles. They proved insufficient for forming a stable society, since they did not satisfy enough of the population. This choice can be explained by the fact that only the nationalists put up any real resistance to the communist establishment in the country. Their efforts were directed against the policy of proletarian internationalism. In this they saw signs of communist cosmopolitism and the danger of Russification. Examples of civil courage and disobedience to Soviet power can be found precisely in this sphere. The negative attitude toward the policy of proletarian internationalism was so strong that, when they came to power, the Georgian nationalists ignored the need to form a civil society and develop general democratic principles. Nationalism grew into ethnonationalism. It placed the emphasis on building an ethnic state. It is important to note the nuance that the government proved incompetent due to its inability to consolidate society around the principles of ethnonationalism, and not because of the failures in economic policy. A severe economic crisis did not inflict the country and become urgent until later, after the rule of Zviad Gamsakhurdia. The factor of social structure is interesting.4 It nurtures the potential of causing a split in society. Often class, professional, religious, ethnic, and religious differences give rise to political differences. Sociologists have noted that class contradictions are also inherent in economically developed states. While axiological conflicts are more characteristic of developing countries. In the second case, contradictions are usually seen between the values of the modernization era and traditional values. The situation in Georgia has developed a little differently in this respect. Vocabulary relating to the class struggle was entirely excluded from Zviad Gamsakhurdia’s political discourse. The fight for social justice did not have any class feature. As for the axiological conflict, the special trait of the Geor- gian example is that here the consequences of modernization according to the socialist manner had to be eliminated. Westernization at that time was a certain mythologeme that was regarded as an absolute

2 See: S. Lipset, “Politicheskaia sotsiologiia,” in: Amerikanskaia sotsiologiia: Perspektivy. Problemy. Metody, Progress Publishers, Moscow, 1972, p. 207. 3 See: Ibidem. 4 See: Ibid., p. 214. Volume 3 Issue 4 2009 105 THE CAUCASUS & GLOBALIZATION boon. But there was no fight, and the values of the past disappeared peaceably into oblivion. The modernist, pro-Western discourse with its accent on the values of a civil society was long used by the authorities, but it remained declarative. Ethnonational rhetoric and its corresponding practice prevailed. The ethnic component of social culture became a factor of the split in society. The consequences proved grievous. In the autonomous formations and in several areas where minorities compactly live separatist movements emerged or became revived that led to bloody clashes. At that time, the way was paved for territorial disintegration of the state. The danger arose of collapse of the titular nation itself. The line of the split ran between Tbilisi, a cosmopolitan metropolis, and the ethnonationalistically oriented Mingrelian region, only because Zviad Gamsakhurdia was thought to be of Mingrelian origin. After the first president laid down his powers, a civilian resistance became aggravated in the country. Based on the example of Gamsakhurdia’s regime, the action of the so-called “inflated expectations” effect can be seen.5 Usually such trends are associated with those movements and social groups that had to seize state power by force, thus heralding in the hope that a “golden era” would begin. The ease with which the new regime acquired power in Georgia reinforced the inflated expectations even more, radicalized them. The charismatic leadership was a risk to the young state’s stability. It constituted a more direct road to “legitimations of domination.”6 The time and resources necessary for achieving other types of law and legitimacy (traditional, rational-legal) were saved on building the leader’s personality cult. The figure of Zviad Gamsakhurdia embodied the struggle for nationalist ideals and was identified with the system he created. Meanwhile, it is difficult to maintain a personality cult in conditions of an open society, in conditions of democracy. Some thought that the expectations formed during the So- viet era were not allowed to come to fruition, while others saw that they were obviously utopian. The insurmountable polarization generated disintegration of the social organism.

The Historical Dimension

During Soviet times, after Khrushchev’s Thaw, the alienation between society and the government gradually became aggravated in the empire. One of its most dangerous manifestations was legit- imization of the illegitimate things that went on by default in society, unification of common interests with the private interests feeding on it. Consent to this kind of order was akin to a deal, corruption turned into a systemic quality. The contradiction inherent in this alienation was not conducive to development, only to stagnation. It can be hypothetically presumed that during the stagnation period in the former Soviet Union, a so-called revolution of increased expectations, an increase in consumerism, occurred. Since this phenomenon has not been sufficiently studied, it can only be surmised that it took place during Brezh- nev’s stagnation era. At that time, the Western society of universal prosperity looked much more attractive to Soviet people than the gloomy monotony of Soviet power. Consumer standards grew and the population became less enticed by the promises of a radiant future. A new dimension of social structure appeared—the access of large and small groups of people to shadow sources of income and services. The double moral standards did not bypass Georgia. It was in this country that this duality became most fully developed, which was notorious in the Soviet Union. Corruption was characteristic not only of the ruling elite, but also became entrenched in everyday life. This corruption became so

5 Ibid., p. 208. 6 From Max Weber: Essays in Sociology, ed. by H.H. Gerth, C.W. Mills, Oxford University Press, New York, 1946, p. 78. 106 Volume 3 Issue 4 2009 THE CAUCASUS & GLOBALIZATION ingrained in public conscience that not only were fraudulent gains not deplored, they were esteemed as a sign of the ability to live the good life. The industrial mafia groups, those controlling the citrus, tea, tobacco, wine, and fruit sectors of the economy, were the largest shadow formations in Georgia. The sectoral principle of their appear- ance was supplemented by regional and subethnic factors, and so on. It should be noted that there were no clan structures in the country, there was no merging between structures formed on blood relations and the power and economic institutions. The country put up a fight against shadow groups in all their guises. In the 1940s, cleansing was carried out according to the regional principle (“the Mingrelian case”). During the time of Eduard Shevardnadze, a communist, personnel policy was strictly adhered to (the well-known resolution of the Georgian Communist Party Central Committee on the fight against nepotism, and so on). Preven- tion measures in this area were enforced in principles of forming the ranks of a party-management core. But the double moral standard was ever present. Zviad Gamsakhurdia led his own fight against the mafia’s stranglehold. This was one of the most popular slogans of the independence movement. But without a strong administrative apparatus, the first president suffered defeat in this struggle. At the same time, the virus of the double moral standard had penetrated Gamsakhurdia’s comrades-in-arms. Mingrelian particularism came into its own rights. Incidentally, the double moral standard is not something unequivocally destructive. Georgian history shows that it can be functional and be a strategy of survival for the people. Due to the constant threat of aggression and genocide, in conditions of extremely infringed or essentially non-existent sovereignty, the central government became a target of deals with the empires. State institutions had a purely pragmatic adaptive function. Constant breakdowns in dynastical inheritance undermined the legitimacy of supreme power. The community remained the last bastion for preserving the Georgian nation. The country was a conglomerate of communities with a single ethnic identity, which is reflected in the ethnonational concept “nation” (eri). Nationalism (erovneba) in Georgia unusually implies the ethnic origin of an individual. In the context of the nation’s survival, the double moral standard may still be tolerated. But there can be no doubt that it is not conducive to the building of state institutions. The intrigues of the appanage princes undermined the foundations of central power. The fact that Georgia has never known an absolute monarchy also takes its toll. After all, it was the monarchy that became the foundation of the state structures of contemporary Europe and created the traditions of statehood. Not to mention the sacralization of state institutions, which can be seen in the Far Eastern cultures (Confucianism and others). Georgian Orthodoxy was long the religion of a nation that was trying to survive physically and spiritually, the custodian of its cultural heritage and historical memory. The church was the bearer of the nation’s spiritual unity in its ethnic understanding. At that time, it could not participate in nation-building, due to the fact that it was constantly dis- continued. The low level of legitimacy of state power made society unable to organize and govern itself. This shortcoming can be compensated for if there is either some external power or a “boss”—a strong charismatic leader. They act as the guarantors of lawfulness and stability. It is typical that the Georgian public conscience retains the memory of czar-unifiers and czar- builders (David the Builder, Queen Tamara), the rule of whom was perceived as a golden era in the country’s history. Nostalgia for a legitimate central government, for a strong leader, was supplemented by mythologemes about powerful single-faith nations that should free the country from the yoke of the infidels and at the same time help to unite it. At first this was Russia. And now the new target of expectation is NATO. Volume 3 Issue 4 2009 107 THE CAUCASUS & GLOBALIZATION Culturological Dimension

It is customary to believe that one of the reasons for the permanent instability in Georgia is that individualism is strongly developed in the country. Georgia supposedly has more ambitious individuals than it can handle, each of whom is striving to become president. Admittedly, such statements are not underpinned by analysis. They are perceived as one of the national mythologemes. A Georgian historian said on TV that Georgians are not Englishmen. Englishmen are able to obey a specific captain on the ship, while we are so proud and stubborn that it is difficult for us to obey anyone. Another illustration showing homegrown individualism is the way football is understood in Georgia. Although it has a traditionally large number of individually strong players, it cannot form a more or less decent team. A compensatory reaction to the systematic failures of Georgian football has been developed in the public conscience—they say that individualism interferes. Whereby people lose sight of the fact that full-fledged individualism presupposes the individual’s participation in complicated types of coordinated interaction, to which Georgian football players are not inclined. After all, a football team is a kind of model of self-organization, the embodiment of the ability to follow general rules for the sake of achieving a common goal. And we are not saying that there were no big shots among English sailors, but they understood the need to obey the captain, who by definition was the most qualified person on the ship. Incidentally, one perspicacious viewer reacted to the historian’s tirade. In a telephone call to the TV channel, he asked whether this was not why it sometimes seems that Georgia is not destined to have a disciplined army. Whether the apology for this type of individualism was not conceptual non- acceptance of discipline. According to the mentioned mythologeme, individualism is regarded as an argument in favor of the Georgian culture belonging to the European. Admittedly, the aforesaid presumes that specifica- tions are made. And there are so many of them that the arguments are leading to opposite conclusions—Georgians belong to the Asian cultures. The reason is that the traditional way of life is still strong in Georgia. We are dealing not with the individual as a person, but with the representative of a group, the bearer of a social role. During a discussion at a parliament sitting of a draft law on lustration, the thought was expressed that it would only be of detriment, would drive a wedge among families. The reason—we are all relatives in Geor- gia. There will always be relatives among those who became victims of terror and those who carried it out. The authority of the community might be placed higher than individual freedom. Whereas a civil society can provisionally be called the unification of individuals as people, ethnonationalism presumes an aggregate of individuals—the representatives of ethnic groups.7 Participation in the group is pertinent and self-sufficient. Even belonging to ad hoc collectives (friends-comrades living on the same street, partners in card games) can guarantee access to the good life with as much success as an individual’s personal achievements and abilities.8 The super value of participation entails the super value of representation, which can go as far as “tribal self-boasting” and directly relates to personal ambition and creates the illusion of developed individualism. In conditions of the double moral standard, the traditions and customs of the community compete with the law. The law is observed, but not esteemed. Rituals look more understandable than paper pre-

7 See: G. Svanidze, Gosudarstvennaia politika v oblasti zashchity prav i grazhdanskoi integratsii lits, pri- nadlezhashchikh k natsionalnym menshinstvam, June 2006, 77 pages, available at [http://www.ecmigeorgia.org/rus/ publications.html]. 8 A typical situation—after learning the name and noticing the speech peculiarities of a new acquaintance, a Geor- gian clarifies what region the new acquaintance is from, what district, city, village. And wants to know if he is a relative of so-and-so, and so on. If it turns out that the new acquaintance is from Tbilisi, he, not waiting for additional questions, says that his relatives are from such and such a region, and so on. Finding at least one common acquaintance is considered something valuable. 108 Volume 3 Issue 4 2009 THE CAUCASUS & GLOBALIZATION scriptions. It is the same with the form of governance. The bureaucracy is omnipotent, but does not enjoy prestige. In this sense, it does not have the charisma enjoyed by the elders of the community.9 In the communist period, as a result of migration of the rural population to the city, particularly to Tbilisi, the importance of unofficial ties began to decline. But at that time migration to large cities went smoothly, keeping pace with the development of industry in them. The city was able to assimi- late the migrants and orient them toward more universal values of city life. At that time, it was considered inappropriate not to try and fit in, so as not to acquire the reputation of a yokel. In the 1990s, this balance was destroyed. Hundreds of thousands of refugees, migrants, and displaced persons began pouring into the metropolis from the impoverished districts and conflict regions. Tbilisi was unable to oppose the spontaneity of the local psychology. At that time, there was also talk about a crisis of urban culture and about the city turning into a big village. We cannot ignore the hedonistic precepts of the traditional culture. Some philosophers took them as a healthy, eudemonic, and Apollonic sides in Georgian culture. Whether there is a direct link or not between hedonism and the increase in consumerism in the country must still be studied and proven. Although it is clear from history that asceticism, and not hedonism, stands in opposition to the consumer environment. The slogan “Paradise forthwith!” nevertheless comes from hedonism, and not asceticism. Extremization of public conscience could lead to the population not being ready for the number and radical nature of the reforms, or for the rate of their implementation. Being more used to the leisurely life of a traditional society, public conscience will run to extremes, fall victim to political manipulations and tend toward chaos. The effect of the double moral standard will not pass unnoticed. Society and the individual are experiencing its exhausting so-called cross pressure. Whereas in conditions of stagnation, this provides room for maneuver, in an unstable stress situation the need arises for simplified solutions to problems that provokes radical actions. An element of Georgia’s political culture, such as meetings, has acquired particular importance. There is some truth to the statements that such acts are the achievement of the young Georgian democracy. The country’s citizens usually exercise their right to express their demands and right to freedom of association and gathering by observing formalities, without acts of vandalism, and in an organized way. A meeting is the development of elements of a national assembly, an attribute of traditional life. It often easily turns into a national assembly, some ethnic mass act reminiscent of a theatrical performance. Incidentally, it has been observed that actors from Tbilisi theaters and bohemians are often very prominently present at meetings. During the time of Zviad Gamsakhurdia, representatives of traditional ethnic genres, “wailers,” “voodoo specialists,” and so on, spoke during campaigns. It is worth noting that social demands are rarely put forward at demonstrations. Most frequently a Tbilisi meeting gathers in the context of a general crisis. The syncretical internally non-differentiated system spontaneously opposes the rejected system with its legislative, judicial, and executive branches, and law-enforcement bodies. At the same time, holding meetings has its price. It is believed that the more people a meeting gathers, the fairer it is. This also gives more reason to appeal to the meeting as to the nation, address it as a source and holder of power. Exploitation of the concept of “nation” does not help to raise the political culture of the masses, does not promote the democratic process, which presumes an independent choice made by the individual beyond the bounds of the group. A meeting in itself is totalitarian to the extent it opposes the

9 An example of the collision described can be the case of Sandro Girgvliani, which caused a furor. It was a case of equally everyday and large-scale dimensions. At that time, the hooliganistic behavior of a tipsy citizen with respect to high-ranking state security officials and their public humiliation ended up tragically for him. The incident registered a problem—the need for turning to the police was not even discussed. In the end, it was the low-ranking officials who organized the murder of Girgviliani who were sentenced and not the people who ordered it, which aroused indignation among the people. And again, few public representatives thought that administrative sanctions should have been brought against the disturber of the peace. Volume 3 Issue 4 2009 109 THE CAUCASUS & GLOBALIZATION right of the individual to vote at free elections by secret ballot. But this does not mean that man’s rights should not be respected, which he realizes in community with other people. The development of this tradition actually goes against the practice of holding elections, regarding the fairness of which serious differences always arise. Events take an undesirable turn when a meeting begins to be regarded as a form of the nation’s direct participation in governing the state, as some power structure. This trend reached its fullest development in November 2003, during the Rose Revolution. And it has not lost its pertinence today. The radicals reproach the opposition leaders for not knowing how to curb the events and allow people to go home after gathering “a whole stadium of protesters” (26 May, 2009). Supposedly the people were not pleased that they had been bothered for nothing. This kind of twist does not correspond to the demands of democracy and the law. This trend was laid after the tragic events of 9 April, 1989. As already noted, the authorities’ barbarous reprisal against defenseless people led to the government completely losing its authority among the population, on the one hand, and made it impossible to give a critical assessment of the action of the demon- strators, on the other. As a result, confidence in the effectiveness of radical mass action and the immu- nity of the meeting as a “people’s brainchild” became more reinforced in political usage in Georgia. This experience was not studied or taken into account afterwards. For example, demonstration of the administrative resource on 7 November, 2007, when a meeting was scattered, had the opposite effect. The state, which had already earned the definition of “a police state,” become “even more police” after the November events. The assessment was that supposedly Mikhail Saakashvili’s goons had dealt with the people in the same way as happened on 9 April, 1989. The tough measures used to scatter the meeting were perceived as even more brutal because they came from the Georgian police. And this was despite the complete incompatibility between the number and nature of the victims when scattering the two demonstrations. Eduard Shevardnadze made his contribution to establishing the tradition of meetings when “on the demand of the masses” he appeared before them. Since then the demand that the president come out and face the people has become imperative. Mikhail Saakashvili’s refusal to come out to the “masses” was evaluated as disrespect and a manifestation of cowardice. The significance and popularity of meetings in Georgia is also explained by another circumstance. Being close in spirit and purpose to some genres of traditional culture, it borrows, to a certain extent, some elements of feasting. As we know, in micro groups it is one of the mechanisms used for regulating and reproducing their internal solidarity. Basic values are given voice through the strict sequence of toasting rituals, whereby the participants in the feasting state their loyalty. In a quickly changing and unpredictable situation, the need to perform such rituals grows. So the meeting becomes a way of collective adaptation to the quickly changing conditions. The content and stylistics of any speeches are reminiscent of toasts that are not at all related to the specific reason for the demonstration. It is no accident that at one point during the act of protest in front of the president’s residence, a table more than 100 meters in length was set up for dining. The speeches continued and were reminiscent of toasts that top off wine-drinking.

Return of Eduard Shevardnadze

Zviad Gamsakhurdia’s regime served as a catalyst for bringing communist rule to an end in Georgia, but proved ineffective when it came to laying the foundations of an independent country. Eduard Shevardnadze’s return to Georgia from Moscow in March 1992 marked a new stage in the development of statehood. His international prestige was high enough to make maximum use of the external factors. The West, particularly the U.S., exerted great efforts to save, establish, and develop Georgian statehood. 110 Volume 3 Issue 4 2009 THE CAUCASUS & GLOBALIZATION

Mutual mistrust between society and the state for some time neutralized Eduard Shevardnadze’s authority. The elections at that time were not authentic and were falsified in favor of the returned leader. But everyone ignored this. Ethnic conflicts in the autonomous regions were frozen, but not settled. Eduard Shevardnadze was forced to get along with the leader of the Autonomous Republic of Ajaria Aslan Abashidze, who made a show of ignoring the central authorities. The assassination attempt on Eduard Shevardnadze in February 1998 was confirmation of the fact that Gamsakhurdia’s cronies had been hatching plans to retaliate and return to power the legally elected Supreme Soviet that was overturned as a result of the Tbilisi war of December 1990-January 1991. Although some of the moderate- ly or conformist-minded Zviadists decided to cooperate with Eduard Shevardnadze. The ethnonational discourse ultimately replaced the democratic one. Eduard Shevardnadze’s return did not mean the return of the old party nomenklatura. Georgia had its own “response”, which was supposed to curb a revolution (according to Pitirim Sorokin). In the East European and Baltic countries, this took the form of the return of the communists as a political force, admittedly, in a different Europeanized image, which only added to the legitimacy and stability of the systems created there. In Georgia, on the other hand, it was limited to giving jobs to the old bureaucracy. The former party elite was represented in the form of a new bourgeois class. This breakdown in forces did not save the country from phenomena that continued by momentum from the Soviet past. Again features of the double moral standard arose. A new “party-management core” appeared—the Union of Citizens. Instead of spreading democracy, expanding its social base, and forming a civil society, the new government privatized all the undertakings. It appropriated all the benefits that came from abroad to build democracy and declared itself the main agent of its ideas and their practical embodiment. A similar situation developed in the nongovernmental sector. Here its monopolists appeared. As in the economic sphere, oligarchization trends began here, blending of the state structures with nongovernmental organizations. All of this intentionally or unintentionally was furthered by the grant policy of international funds working not to spread the idea of democracy in the country, but to create “democratic castes.” This is when the foundations of private property were laid, although the accumulated capital was not impeccable in the legal and moral respects. Instead of a free market, society acquired a system for laundering dirty money, that is, crony capitalism. Political processes were sluggish. Eduard Shevardnadze tried to find a balance, limiting himself to half-measures. Radicalism at that time did not bring dividends in politics. It is interesting that during the eleven years of Eduard Shevardnadze’s rule the people languished under the burden of an energy crisis that was initiated by the mafia groups who made an enormous amount of money on it. But the people kept quiet. They were either content with the routine stability of the regime, or could not imagine that such cynicism and impudence were possible. The stability of Eduard Shevardnadze’s institutional system was maintained not thanks to general democratic consent, but on a deal that smacked of the double standard between the government and society living according to its own interests. The government’s minimum material resources could not maintain this deal for long. Nevertheless, during his rule, Eduard Shevardnadze withdrew the country from its state of chaos and created the foundations of statehood. He was also the initiator of the geostrategic breakthrough. Georgia became an “interesting” region for the West.

Roses with Thorns

The Rose Revolution was meant to enliven the social processes and give them a boost. The first task of the new authorities was to build on the “achievements” of Westernization in the country. It could have been presumed that the West’s widespread assistance did not exclude its direct participa- Volume 3 Issue 4 2009 111 THE CAUCASUS & GLOBALIZATION tion in internal Georgian affairs. It is a well-known fact that the Soros Foundation sponsored the revolutionary campaigns of 2003. Mikhail Saakashvili inherited an amorphous state apparatus, but quite a developed civil society with an extensive NGO system and free press. There was a personnel shakeup: the elite part of the nongovernmental sector formed according to Western standards wandered over into the power structures. The ruling party, Union of Citizens, was transformed into the National Movement. In this way, there was an attempt to form a system, the guarantor of legitimacy and stability of which was to be “those who had drained the cup of the West.” This was what personnel who had received their education in the West was called. The authorities understood the meaning of the slogan about retaining national values. They made a point of tying it to demands to build a civil society. In this respect, contacts were established with the Zviadists. The president obtained dividends. Upon its arrival in Tbilisi, the caravan of buses (mainly from Mingrelia) that stretched several kilometers brought Mikhail Saakashvili victory in the Rose Revolution in November 2003. It ensured the loyalty of the region’s electorate. The president’s wife sang songs in Minrelian in Zugdidi that charmed the local voters. Personnel from this region occupy leading positions in the security and defense ministries and not only there. Zviad Gamsakhur- dia’s reinterment was a significant phenomenon. Return of the Autonomous Republic of Ajaria to Georgia’s institutional system was also a great achievement. This happened after Moscow’s puppet, Aslan Abashidze, was driven out of Batumi. There were many changes in the country. Whereas during the time of Zviad Gamsakhurdia the country was on the brink of collapse, during Eduard Shevardnadze’s rule it was threatened with a relapse of Brezhnev’s stagnation. When Mikhail Saakashvili came to power in the country, the least he did was put an end to the energy crisis that had been the bane of the country’s existence for years and the most was that the country acquired a function in the geostrategic breakdown. For the first time in many centuries, a strong state apparatus formed in Georgia. The army and the internal affairs bodies were rather quickly restructured. The country’s fiscal services operated more ef- ficiently, and privatization was carried out, thanks to which the state budget increased five-fold. The new authorities created a legislation that placed Georgia among the first twenty countries in the world with the most favorable conditions for developing market relations and encouraging an inflow of investments. Their assets included fighting such a heretofore tenacious phenomenon as corruption. According to the report of the World Bank published in July 2006, in 2002-2005, the level of corruption has perceptibly decreased in Georgia, compared to other countries with a transit economy. A “zero tolerance toward the criminal” campaign unfolded in the country that dealt a severe blow to the criminal world.

By Means of Exclusion

Four years had not passed since the revolution before the country was again shaken by opposition meetings. The radicalism, inability of the sides to listen to each other, denial of consensus, and so on customary of Georgian political life made themselves known again. What was the reason for the new outbreak of instability? As already mentioned, the authorities make skillful use of the ethnonational factor. The “historical insult” of the Zviadists has been removed, and the self-isolation of the Ajarian Autonomous Re- public has also been overcome. Admittedly, this trend failed to spread to the rebellious ethnic auton- omies of Abkhazia and South Ossetia. The thesis about the generation gap in the country and the contradictions between the traditional culture and modernist trends associated with it can be considered exaggerated. However, a certain conflict potential does exist. For example, there was talk about “age discrimination.” This was caused 112 Volume 3 Issue 4 2009 THE CAUCASUS & GLOBALIZATION by the fact that rejuvenation of personnel in Georgia was carried out hastily and in an accelerated way. The phenomenon that has been given the melodious-sounding name of “juvenation” proved extremely repressive and peremptory. It was crowned by the president’s remark to a certain part of the intelligentsia that he referred to as “refuse.” Whether or not the particularities of the age of the new state officials had an effect, at first the government not so much lost contact with the people, it stood opposed to them, entirely forgoing its own image. The superciliousness the “famous youth” from the president’s team permitted themselves with respect to the people flowed smoothly over into the fear of them. The people’s discontent was not long in coming. After the events of 7 November, measures were urgently undertaken. Many of the odious members of the president’s team stopped appearing on the TV screens and were later replaced. The party list of the pro-presidential national movement at the parliamentary elections was renewed by 75%. The age of its participants was much more diverse this time. But the values of Westernization that “those who had drained the cup of the West” were supposed to have inculcated were not severely rejected. Admittedly, “those who had drained the cup of the West” were accused of disdaining the national culture and their cultivation of religious tolerance was interpreted as a threat to the position of the Georgian Orthodox church. Statements were heard that went directly against the Western “teachers,” against the interference of “masons.” Supposedly, under the pretext of building liberal democracy homosexualism was being inculcated in Georgia and Jehovah’s Witnesses were freely roaming the country. Such accusations do not sound so imperative today, since as religiosity in the country increases, the position of Orthodoxy has become significantly reinforced. The “harassment” of the Jehovah’s Witnesses no longer annoys the population as much, and the tolerance of Georgian culture has not yet gone as far as sexual minorities. It is significant that the achievements of Westernization have not yet becoming deeply rooted in society. The degree of assimilation of these values by the current generation of “those who have drained the cup of the West” has aroused mistrust. Jokes have been circulating in society about the poor academic performance of some of the current leaders who were educated in the West, and about the status of the graduation certificates they received there. Most of the oppositionists do not question the pro-Western course. The age component of the social structure was not a factor of antagonistic opposition between the older and younger genera- tions. It is limited to grousing about the large number of social climbers in the government who have bad manners. To a great extent, it is the lack of demand for knowledge and experience, as well as unemployment, and not the age of those who are governing in this country that arouses protest among the population.

According to the Laws of Escalation

As already noted, a bloodless revolution does not guarantee stability of the new government if the latter does not correctly set its priorities. This is what happened with Zviad Gamsakhurdia, who became a victim of ethnonationalism and lasted for one year. The example of Mikhail Saakashvili shows what revolution is fraught with if there was no need for one. Radicalism, or “revolutionariness,” both in words and in deeds, clearly showed in his actions. While he did not provide anything that was a direct alternative to Eduard Shevardnadze’s regime. In the heat of the revolutionary statements, the essentially liberal and aging politician was called a tyrant, although no one had any clear recollection of a single cruel measure undertaken by his government. As we know, “overthrow of the tyrant” was preceded by meetings at which ministers, the parliament speaker, and a large number of deputies ruled the roost, while the minister of state security and Volume 3 Issue 4 2009 113 THE CAUCASUS & GLOBALIZATION his Western colleagues were doing their thing behind the scenes. This resulted in a whimsical symbi- osis of revolution and court coup. As a result, some achievements of the previous regime were shame- lessly appropriated, while there was talk only of its sins. Things got ridiculous when the new authorities held celebrations to open large facilities for the second time. The epitome of this attitude toward their inheritance of the past was an incident at one of the large international forums devoted to a major geostrategic project, the Baku-Tbilisi-Ceyhan oil pipeline, that was historical for Georgia. Mikhail Saakashvili failed to mention the role Eduard Shevardnadze played in laying the foundation for carrying out the project. This took place against the background of the president of Azerbaijan’s grati- tude to his predecessor-father who was also a founder of this project and the closest comrade-in-arms of his Georgian colleague. There is a viewpoint that Zurab Zhvania and Nino Burjanadze, who were not as vibrant, but more moderate and calm in their statements, were among the “favorites” of the Western establishment. But during the elections in 2003, these two did not gain the necessary number of votes to overcome the barrier. The people voted with great enthusiasm for more expressive “Mishiko,” who enjoyed the reputation of a corruption-fighter at that time. Mikhail Saakashvili did not make clear claims at being a charismatic leader. But the young president succumbed to temptation and reinforced his presidential power as much as possible, for which amendments were made to the Constitution. As the course of events showed, usurping power puts the stability of a young state at risk, just as does a charismatic type of leadership. A skillful PR man, Mikhail Saakashvili was unable to protect himself from the effect of such a mechanism as the free press and “authoritative opinion” of the man in the street and repeated Zviad Gamsakhurdia’s fate to a certain extent. Revolutionary vocabulary and concentration of power in the hands of an energetic young leader, as in the case of the first president, generated “inflated expectations” among the population. These “expectations” were proportional to the exacting demands the people made on the effectiveness of Mikhail Saakashvili’s power. Therefore, things that Eduard Shevardnadze was allowed were considered unacceptable in Mikhail Saakashvili’s case, or, people only see the negative and do not notice the positive. For example, while harping on about the rack and ruin of the church, the opposition is keeping quiet about the fact that more than 40 cultic buildings and so on have been restored and built in the country in the past four years. And the ambiguous events of August 2008 and NATO’s decision to halt Georgia’s integration into its ranks were readily assessed as just another failure of the president’s administration, and not as caused by powerful external factors. Reforms were conducted in the country that could not be popular among the population. So- called structural unemployment increased. Entire branches of production, scientific research institutes, and other institutions were closed down because they were deemed to have no prospects. The world economic crisis also played its part. But the opposition chose to ignore all this. Only the government was to blame for all the mishaps. Of course, there were also definite miscalculations. It is typical that “those who drained the cup of the West” do not play the last role among the protestors. After integration of the elite part of the nongovernmental sector into the state structures, foreign funds cut their grants to the sector by half, evidently deciding that the democratic personnel nurtured in nongovernmental organizations, when they came to power, would allow these funds to economize on building democracy in Georgia. Some of this contingent were passed over, while others were low on funds after NGO financing was cut back. That is, the tension in the country was largely caused by internal nomenklatura phenomena. Some believe that the “closely packed ranks” of “nationals” became even more closely packed. A so-called democratic caste appeared. In the very beginning, it was replenished by meeting activists, NGO representatives, and people who had gone to school abroad. Over time, its reproduction base increasingly shrank. It is worth noting that a distinc- tion began to be made between those who received an education in English-speaking countries and those who studied in non-English-speaking countries. Those involved in the Rose Revolution but not initiated into Western academic and non-academic programs began gradually being pushed into the background. The fact that after winning the election for head of the football federation (May 2007), its 114 Volume 3 Issue 4 2009 THE CAUCASUS & GLOBALIZATION chairman Georgi Nemsadze was forced to reject his victory the same day was evaluated as a defeat of this group of “nationals.” According to unofficial information, he yielded to pressure from higher- ranking party departments that followed the lead of the main trainer of the Georgian football team, a German who did not wish to cooperate with the new leader. The main negative consequence of the domination of the ruling party is the weak and fragment- ed opposition. It is a well-known fact that it represents an extraordinarily variegated political spectrum, which is evaluated as its weakness. It stands to reason that so many ambitious individuals in one team is fraught with coordination and organization difficulties. Essentially, after managing to get the government to call an early presidential election in January 2008, it was unable to sufficiently pull itself together in order to win the election or, at least, ensure its fairness. Mikhail Saakashvili is severely criticized for abusing the administrative resource. It is not surprising that Head of the Ministry of Internal Affairs Vano Merabishvili and Prosecutor General Zurab Adeishvili look to be the most odious of all the government ministers. But the other side of the administrative fervor in the struggle with corruption was clannishness, a phenomenon that is not customary in Georgian political life, when the representatives of one family occupy the main posts in the defense and security ministries. Such a breakdown suits the government, since it ensures the loyalty of the electorate of one of the regions. Another consequence of the extremes was the fact that the renewed and rejuvenated judiciary establishment turned into an appendage of the public prosecutor’s office. The court’s decisions were predominantly accusatory. While carrying out the “zero tolerance” campaign, there were reports every day on TV about how another mafia boss, drug dealer, or corrupted official had been arrested whereby violating pre- sumption of innocence. The number of people held in prison reached a record level (approximately 20,000). Introducing the practice of paying bail had an insignificant effect on the number of people detained, while the government preferred building new penitentiary institutions to improving this practice. A not entirely juridically correct addition was made to the criminal code. The fact that a person accuses himself of belonging to the criminal world could be grounds for his detention and court pros- ecution. The legality of the use of arms in some of the most scandalous operations by the Ministry of Internal Affairs, which entailed human deaths, aroused a negative response in society. The fight against corruption is primarily being carried out by means of administrative measures. This circumstance could not help but have an effect on the nature of the double moral standard in the country. Whereas before the population did not regard it as shameful to have fraudulent gains, now it reacts more sensitively to instances of officials making it instantly rich. It should be noted that, at the beginning of the meeting marathon, trust in the leaders fluctuated according to whether the person in question “was close to the feeding trough or did not have anything to do with it.” The list of mistakes goes on… The population evaluated campaigns against certain property owners, when major buildings were pulled down, as attacks on the sanctity of the institution of private property. Arguments that such campaigns were carried out in the interests of bigger property owners could not be accepted. Protests were aroused by the fact that after the death of billionaire B. Patarkatsishvili, who was opposed to the government, his family was deprived of the right of ownership to the Imedi television channel, which was regarded as a beacon of the free press in Georgia. Opposition politicians accuse Mikhail Saakashvili of putting strong pressure on big business too. He is known to have carried out several operations at the beginning of his rule aimed at scaring “unconscientious businessmen.” The case of businessman F. Khalvashi became widely known, whose capital supposedly suffered because of his political inclinations. The authorities’ domestication of the mass media is admonished. When Mikhail Saakashvili himself was in the opposition, many mass media manifested a fighting spirit. With the change in scen- ery, their fervor has noticeably waned. Volume 3 Issue 4 2009 115 THE CAUCASUS & GLOBALIZATION Depth of the Crisis

Mikhail Saakashvili’s regime has possibly earned enough “liabilities” to make it worthy of early retirement. Or, if we follow the speeches of the orators at the meeting, the president’s personality is dangerous for the country, for the world community, and for himself. Whatever the case, the question arises of whether it would not be more sensible to look for reserves in the system itself in order to resolve the conflict by means of institutional measures, instead of allowing radicalism to take the upper hand every time, thus destroying the entire system? The opposition endlessly assures everyone that it is adhering to the rule of the law. The question of whether it will send the president into retirement, without the corresponding legislative procedures, if he does not wish to resign voluntarily, is answered with the assurance that he will only be forced to resign in a way envisaged by the law and there will be no revolutions. Probably almost all the members of the opposition are aware of what is happening. Its nucleus consists of former parliamentary speaker and twice acting president, former prime minister, former foreign minister, former defense minister, former branch ministers, and members of parliament. Salome Zurabishvili, a politician who came from France and has a lot of experience in diplomatic work as a high-ranking official in the French Foreign Ministry, figures in the leading roles. Who, if not she, a herald of European values and legal conscience, knows the price of the recommendations by international organizations and the patriarch, as well as many nongovernmental organizations, to sit down at the negotiation table. She does not hide her personal disdain of the president, but this is not enough to stop her from achieving her idée-fixe. Arguments are presented in favor of this “non-alternative” line of behavior. For example, Eka Beselia, one of the leaders of the opposition, said on the Kavkasia TV channel that as soon as the goal is reached and new elections are scheduled, the opposition itself will announce its self-disbandment, and then ideas and programs will begin competing aimed at bringing the country out of its crisis. Re- examination of the election code, in her opinion, is not sufficient reason to meet with the opposite side. Eka Beselia prefers to hold early elections in keeping with the old legislation that has discredited itself, and only after that set about changing it. Making amendments to the constitution that will subsequently limit the president’s power does not ignite any confidence in those who want to see Mikhail Saakashvili replaced. They say that he will only reappear in a new guise, in the role of prime minister, say, and again it will be difficult to get rid of him. And this is given as another argument against holding a dialog with the authorities. The opposition’s television appearances are reminiscent of combat activity reports or gutter press stories by tabloids such as “Tbilisi is ours!” “A group of young activists obstructed the president, who was spending national money to dine out in a restaurant,” “The government is no longer in control of the country, and power has essentially gone to the people.” When the inviolability of the opposition bloc came under threat, the demonstration organizers said that the government was dealing not with the political opposition, but with the dissatisfied people. And for the umpteenth time in Georgia’s latest history, a meeting became an alternative to the state. Whereas Zviad Gamsakhurdia replaced the state apparatus with counter- meetings, when Edu- ard Shevardnadze was thrown out, a smaller demonstration supporting the president was scattered by a larger group of people led by Mikhail Saakashvili. The current president, who himself has become skilled at making speeches at meetings, says he will not help his supporters to organize reciprocal declarations, understanding the level of opposition this could arouse in society. It is difficult to determine how many people the president could gather, how many of them would truly be his supporters, and how many would come “out of necessity.” The radicals who came to the Dinamo Stadium to watch a show of their forces are more predictable in this sense. They honestly admit that they are only just beginning to work in the regions and “go out among 116 Volume 3 Issue 4 2009 THE CAUCASUS & GLOBALIZATION the people.” It was also revealed that guests from the opposition who showed up in Mingrelia were asked to enter a dialog with the government. Playing with figures pushes the question of the powers of this or another large group of people into the background. These manipulations should be taken very cautiously, since repeatedly in Octo- ber-November 2007 at Tbilisi demonstrations the radical youth declared the people’s right to forced seizure of power, referring, in so doing, to U.N. documents. Incidentally, after Zviad Gamsakhurdia’s overthrow, the president’s supporters said that it was the people in Tbilisi who had stirred everything up and far from all of them at that. They went against the will of the people, who had almost unanimously elected Zviad Gamsakhurdia. It cannot be said that the radical opposition has lost the reigns for controlling a demonstration. But the longer it lasts, the less willing its leaders are not to meet its expectations. They are particularly scared about the possibility of being drawn into long talks, which does not meet the spirit and tasks of the campaign. It becomes difficult to determine when speakers are being truly genuine and when they are merely trying to seem loyal. It is typical that “ordinary Tbilisi lad” Levan Gachechiladze looks more convincing at meetings. He made official use of his bohemian nickname, Grechikha, during the election campaign for president. There was another leader in his shadow, Irakly Alasania, who is considered the most likely candidate for president. As a former diplomat, he, who is more capable in talks and less willing to socialize with the meeting element, has earned himself the reputation of “spineless politician.” As experience shows, the slightest dissonance a particular politician allows to creep into his speech could cost him his political career. Irakly Alasania has already been whistled off stage several times during campaigns. The meeting gathered many people with their real problems, many representatives of the intelligentsia, and recognized faces known for their virtues and services. In many cases, there was less extremism in their reactions than in the speeches of the speakers. Sometimes shouts were heard calling for the speakers to be more moderate and responsible in their statements, to show more tolerance. But the time comes when people predominate at demonstrations who rouse the leaders to action, manifest intolerance, etc. At times speakers resort to irresponsible statements. The situation is saved by the fact that the meeting is incapable of realizing them. Liberties of that sort are justified by the specifics of the genre. Sometimes the organizers of a meeting think that their perception of reality is the most adequate only because it is shared by most of the people gathered on the square. Under the spell of the meeting atmosphere, its leaders accuse the president of being inadequate since he refuses to accept the fact that there is an institutional crisis in the country, which they themselves are causing by their inability to hold a dialog. Narrowed perception is leading to the participants in meetings not wishing to take into account the dangers posed by the presence of Russian occupational troops 35 kilometers from the site of the events, or the damage the world economic crisis is inflicting on the country’s economy. After visiting the cathedral complex on 26 May, 2009, the meeting leaders tried in every way to modify the message of the Patriarch, who unequivocally called for talks. The same evening the most radical act was carried out—seizure of the railroad. In contrast to the radical opposition that incautiously rejected the politically profitable slogan about the will to hold a dialog, the authorities constantly talked about their willingness to hold talks. Their greatest concession was to transfer the initiative for holding the celebratory undertakings in honor of the founding of the First Republic (26 May, 1918) to the opposition. The government is showing restraint and not making it difficult for the opposition to put up dozens of fake cages, most of which are empty anyway, to block the central roads. The opposition, in turn, constantly repeats that the talks with the government are considered pointless, since its representatives engage in foul play, while the government says that the opposition members are just unable to coordinate with each other. The powers that be refuse to succumb to the dictates of the street, while the opposition is calling on them to listen to the “voice of the people” and follow it. Volume 3 Issue 4 2009 117 THE CAUCASUS & GLOBALIZATION

International organizations are trying to save the situation by regularly holding consultations with the sides. For example, special PACE representative Peter Semneby is trying to till this unyield- ing soil. Only we should understand that where Peter Semneby’s mission ends the need for Admiral Eduard Baltin appears.

Will Conclusions Be Drawn?

Studying the Georgian example gives political sociologists much specific food for thought. It confirms the thesis that not only those regimes that come to power through revolution are unstable, but also those that make use of revolutionary pathetics at those times when the old regime holds itself aloof and removes all its claims. The “inflated expectations” that arise quickly turn to disappointment. The less the old regime resists and the more radical the rhetoric, the higher the expectations, the sooner the time of disappointment sets in, and the more radical the reaction. Precisely the same thing applies to the scheme according to which unstable regimes appear where democratic values are declared to be priorities but the authorities’ ambitions are charismatic. For example, Zviad Gamsakhurdia, clearly understanding the damage glorification of his personality was doing to his cause, still did nothing to prevent the building of his own personality cult. Deflation of the president’s charisma also entailed rejection of the entire system, the legality of which he embodied. Polarization of opinions occurred in the country. For some of the population, Zviad Gamsa- khurdia remained an “impeccable” leader who was surrounded by bad advisors and enemies, while for others he was an unqualified president, amateur politician, and hen-pecked husband. The actions of Mikhail Saakashvili to concentrate power in his hands had similar consequences. Eduard Shevardnadze’s return occurred in conditions of the government’s weak legitimacy. A civil war was going on in the country. The Zviadists did not recognize the legitimacy of a former communist’s ascent to power. But the policy of trying to find a balance without engaging in broad gestures and the willingness to compromise gradually eased the tension of the main conflict at that time. Eduard Shevardnadze’s regime, in spite of its high net cost, showed far greater stability and absence of radicalism than the governments of Zviad Gamsakhurdia and Mikhail Saakashvili. Incidentally, some steps have been taken. Zviad Gamsakhurdia was considered either an “angel” or a “monster.” Today no one calls Mikhail Saakashvili an angel. Society is divided according to the principle “we need a dialog!”—“no dialogs, Saakashvili resign!” This shows some progress. The specifics of the Georgian crisis also consist in the fact that there is no clear struggle between modernist and traditional values. Throughout the whole of Georgia’s latest history, exposure to Euro- pean values has been considered a priority. In public opinion, there even existed a mythologeme about the European roots of the Georgian culture. During Zviad Gamsakhurdia’s time, this was merely a declared priority. The West did not cooperate with the first president. There was no need to talk about European values infiltrating the country. The residue of the socialist past was replaced by ethnonationalism without a struggle. During Eduard Shevardnadze’s rule, Western governmental and nongovernmental funds began actively introducing the achievements of modernization in Georgia. Clashes between the traditional way of life and Western values could not occur because the new trends were only just gaining momentum. At this stage, relations between the two sides were built on the principle of the double moral standard. It cannot be said that antagonism is seen between them even now or that the double moral standard has been totally neutralized. In the first case, the need for integration into the new way of life, and not passive assimilation, is recognized. There are forces that are in favor of a third way of development based on “the purely national idea.” But their influence is minimal, and it can compete only with the attempts of the pro-Russian Georgian diaspora in Russia to participate in Georgia’s internal affairs. This new player is bent on achieving the country’s political reorientation. As for the double 118 Volume 3 Issue 4 2009 THE CAUCASUS & GLOBALIZATION moral standard, access to shadow sources of income and services has become the privilege of the ruling elite. The ongoing Tbilisi meeting, which is a kind of political-culturological institution, has become the reflection of a particular state of society. Non-radical in form, it could be radical in content. But since it is oriented toward direct participation in governing the state, it is also becoming radical in form. The main thing preventing the meeting from going overboard should be an increase in the people’s confidence in the fairness of the elections and affirmation of the individual’s sovereign right to free elections by secret ballot. This should reinforce the conviction among the masses that elections are a more appropriate way to express their will than meetings. The country is searching for a model of leadership that will be both strong and esteemed in the eyes of society. For some time there was talk about establishing a constitutional monarchy. Meas- ures were even taken to revive a dynasty. But the proposals to implement a project which should turn Georgia into a parliamentary republic are becoming all the more insistent. A universally elected parliament should act as an “esteemed” source, with the president and prime minister as its effective representatives. Such measures will make the social system more mobile and viable. And in this event, should the people become unhappy with the way the country is being run, national demonstrations will become more targeted and cognizant. There will be less likelihood of escalation into radicalism. This balance will help to remove the double moral standard in society. The instrumental, consumer approach to institutions of statehood will finally be supplemented with an axiological approach. Removal of the collision between society and the state will promote the development of a civil society in the country.

C o n c l u s i o n

Many of the problems noted here require further in-depth research. But the social sciences and political sociology in particular are experiencing hard times in Georgia. We can count on our fingers the number of sociological services in the country. It is no secret that precisely the statistics revealed by polls during election campaigns have provoked abnormal situations in society. There was no trust in the election committee, in the international observers, or in the sociologists themselves. Their cal- culations have become a target of political manipulations, and each time they placed the country on the brink of chaos. In November 2003, public opinion polls were the reason for the revolution. As a result, sociology has been degraded to a level that is detrimental to its own reputation. Rating politicians and parties is a popular pursuit at present. This is carried out by mass media which have little interest in the quality of the data they receive and much more interest in the possibility of launching scandalous PR campaigns. Study of superficial problems is not boosting the development of academic science. There are no signs of any branch vector developing in this sphere. Many political scientists have appeared on the scene, but their discourse is limited to leisurely arguments about woes in the political elite. Politics as a sphere of confrontation and coexistence of the interests of large groups of people is being replaced by political maneuvering, a sphere where certain individuals or oligarchic formations struggle to satisfy their ambitions. Of course, we could say that science is not being developed due to insufficient financing. But this argument is not convincing, whereby no one is showing any signs of wishing to engage in self- comprehension or exchange opinions. For several years now, there have been no round tables or con- ferences where ideas can be aired and the possibilities of our mentality correlated with the risks generated by the reforms. It is at times like that that nations normally search for their identity and attempt to establish a connection with the times. But instead of social thought undergoing a revival, it has Volume 3 Issue 4 2009 119 THE CAUCASUS & GLOBALIZATION become stupefied. Extensive studies have not been carried out, either before, when the reforms were just starting, or now, when there is no complete certainty whether these reforms will help to build the state or destroy it. This state of affairs is causing concern, because sociology constitutes the core of democracy, the main axiological landmarks of Georgian society. Sociology helps governments to maintain direct feedback with their citizens. Of course, the viewpoint of a respondent in a sociological poll does not mean that citizen is participating in governing the state, as happens at elections or during referendums. But no one doubts the fact that the development of sociology helps to strengthen democratic principles. 120 Volume 3 Issue 4 2009 THE CAUCASUS & GLOBALIZATION

GEOHISTORY

Jamil HASANLI

D.Sc. (Hist.), professor at Baku State University, deputy of the Milli Mejlis (parliament) of the Republic of Azerbaijan (Baku, Azerbaijan).

AZERBAIJAN AT THE CROSSROADS O EPOCHS: THE IRST ATTEMPT TO JOIN THE REE WORLD (1917-1920)

Abstract

he author covers a wide range of is- stage of World War I. The author analyzes T sues related to the establishment of the the position of the Azeri delegation at the Azerbaijan Democratic Republic and its Paris Peace Conference and the first at- struggle for the right to become part of the tempts of the young republic to integrate into world community. The article is an extreme- the free world. Dr. Hasanli relies on newly ly detailed account of the contradictory proc- discovered archival documents to demon- esses that unfolded across the Central Cau- strate that the Supreme Council at Versailles casus in 1917-1920; the highly complicated recognized de facto the Central Caucasian developments in Azerbaijan in the spring republics and to describe the Western coun- and summer of 1918; and the clash of the tries’ futile attempts to stem the Bolshevik Great Powers over Baku at the concluding occupation of the Caucasus.

I n t r o d u c t i o n

The Azerbaijan Democratic Republic (ADR) was born and existed during a hard and very contradictory stretch of history. Destroyed by the 1917 Revolution, the Russian Empire tried to restore its Volume 3 Issue 4 2009 121 THE CAUCASUS & GLOBALIZATION

1914 borders, which meant that in 1918-1920 the young ADR had to demonstrate no mean diplomatic ingenuity and skill to capitalize on the twists and turns in world politics. In 1920, the Supreme Council at Versailles recognized de facto Azerbaijan as an independent state. This was possible not only thanks to the political changes obvious since the fall of 1919, it can also be described as a great diplomatic achievement of the Azeri delegation at the Paris Peace Conference. The postwar geopolitical processes made it impossible to consolidate this historic achievement. In April 1920, the ADR ceased to exist. It was destroyed by complicated diplomatic maneuvers on a world scale rather than by domestic or regional contradictions. In fact, the newly independent states that sprang into being in the territory of the former Russian Empire found it hard to integrate into the world community mainly because Russia belonged to victorious Entente. Convinced that Bolshevism was a short-lived phenomenon, Russia’s former allies still hoped to restore it within its former borders, which demanded great caution from them. The Fourteen Points of President Wilson, the architect of the new world and a friend of smaller nations, can be described as the Western program of the future world order. Seventy years later, 14 republics detached themselves from Russia: in 1918 Woodrow Wilson had not planned this.

The 1917 Russian Revolution and the Beginning of Diplomatic Struggle for the Caucasus

Azerbaijan declared its independence on 28 May, 1918, although the Central Caucasus was involved in international relations much earlier. By the end of World War I, the growing need for fuel forced the warring sides to turn their gazes to Baku. The contradictory developments on the Cauca- sian Front and the political upheavals triggered by the 1917 Russian revolution inevitably shook the Central Caucasus, and Azerbaijan as its part. The 1917 February revolution in Russia not merely deposed the monarchy—it dealt a heavy blow to the vast country’s imperial pillars: the “inmates” of the “prison of nations” rose up to demand their liberation. This accelerated political developments in the Caucasus. On 9 March, the Central Caucasian deputies of the State Duma initiated a Special Committee with Constitutional Democrat Vassili Kharlamov as its head to administer the region. On 11 November, after the October 1917 coup in Petrograd, the political organizations of the Central Caucasus gathered in Tiflis to discuss the situation. Leader of the Georgian Mensheviks Noah Zhordania delivered a long speech in which he reminded the meeting that for the last one hundred years the peoples of the Transcaucasus had been toiling together with Russia and considered themselves to be an inalienable part of the Russian State. He lamented the lost ties with Russia and complained that the Transcaucasus had been left to its own devices. He called on the gathering to rise and rescue themselves in order not to perish in the ocean of anarchy.1 A Transcaucasian Commissariat was set up at his suggestion to administer the region until the Constituent Assembly settled the problem of power in Russia. On 14 November, the composition of the Commissariat was made public: it included representatives of all the Transcaucasian nations with Georgian Menshevik Evgeni Gegechkori at the head. This put the Russian army on the Caucasian Front in a quandary, yet everyone knew that the war with Turkey was over.2 Late in November 1917, Enver Pasha instructed Commander of the Third Turk- ish Army Mehmet Vahib to invite Commander of the Caucasian Front General Przhevalskiy to sign a truce. The Transcaucasian Commissariat accepted the suggestion on the condition that the Turks would

1 See: N. Zhordania, Za dva goda, Tiflis, 1919, pp. 51-52. 2 See: Z. Avalov, Nezavisimost Gruzii v mezhdunarodnoy politike (1918-1921), Paris, 1924, p. 30. 122 Volume 3 Issue 4 2009 THE CAUCASUS & GLOBALIZATION not start moving their troops so as not to provoke the Entente.3 On 21 November, General Przhevalskiy informed the Turks about this decision. Several days later, a small delegation of A. Smirnov, V. Tevza- ya, General Vyshinskiy, and member of the Dashnaktsutiun Party Jamalian arrived in Erzincan. On 5 (18) December, they signed a truce of 14 points.4 It was a stop-gag agreement. In a letter addressed to General Odishelidze and dated 16 January, 1918, Vahib Pasha invited the Transcaucasian Commissariat in the name of the Turkish government to take part in the talks in Brest-Litovsk and promised to do everything to achieve official recognition of the new state. This was an important step toward independence. It took the Commissariat quite a while to decide how to respond to the Turkish invitation. After long deliberations the issue was referred to the Transcaucasian Sejm (parliament) scheduled for 10 (23) February. The Turks were duly informed about this. After preliminary discussions about the future body of supreme power, the Georgian faction suggested that the newly born parliament be called Sejm (like in Poland, which had also detached itself from the Russian Empire). During the last days of the Interim Government, the Transcaucasian Bolsheviks supported this idea.5 The factions discussed the peace treaty and related issues and specified the positions of the sides. The Azeri faction met on 26 February; Chairman Mohammad Emin Rasulzade offered a detailed analysis of the situation in Azerbaijan and around it; the faction was very much disturbed by the fact that the Armenian military units chose to stop in Baku on their way home from the Caucasian Front; that the British units in the Middle East moving toward Northern Iran-Southern Azerbaijan threatened Baku; and that the Germans were displaying much more activity in the Caucasus and much more interest in Baku oil. The Azeri faction in the Sejm wanted peace with Turkey and stability in the Transcaucasus. On 3 March, 1918, Soviet Russia signed the Brest-Litovsk Treaty, under which it officially re- nounced the Decree on Turkish Armenia Lenin and Stalin had worded two months earlier and promised to do its best to evacuate Eastern Anatolia before returning it to Turkey, as well as pull its army out of the Ardahan, Kars, and Batum provinces.6 Later, at the Trabzon Conference (officially opened on 14 March), the Transcaucasian delegation lodged its official protest against the Brest-Litovsk Treaty in the part related to the Caucasus.7 The Turks argued that if the Transcaucasus had wanted a different treaty it should have registered its rights on an international legal basis and sought official recognition from other states. Today, the Turks pointed out, no recognition would allow the Transcaucasus to regain the lost opportunities.8 On 24 March (6 April), Turkey’s patience snapped: it laid an ultimatum on the table demanding a clear answer from the Transcaucasus in the next 48 hours. The delegates had to decide whether they accepted the Brest-Litovsk Peace or not. The document specified that talks between the sides would be possible after the Transcaucasus gained its sovereignty.9 Meanwhile in Tiflis, events were going in a somewhat different direction. E. Gegechkori, I. Tsereteli, Kh. Karchikian, Iu. Semenov, and others called on the urgently convened Sejm to decline the demands and, in fact, urged the parliament to declare war on Turkey. The Georgian and Armenian delegates likewise stopped short of a declaration of war. On 13 April, the Sejm declared war, which proved to be short affair. After eight days of fighting, in the course of which the Turks

3 See: Dokumenty i materialy po vneshney politike Zakavkazia i Gruzii, Tiflis, 1919, pp. 11-12. 4 See: A.N. Kurat, Türkiye ve Rusiya, Ankara, 1990, pp. 332-333. 5 See: S. Belenkiy, N. Manvelov, Revolutsia 1917 goda v Azerbaijane, Baku, 1927, p. 28. 6 See: Iu. Kliuchnikov, A. Sabanin, Mezhdunarodnaia politika noveyshego vremeni v dogovorakh, notakh i deklar- atsiiakh, Part II, Moscow, 1926, pp. 123-127. 7 See: Report of the Delegation of the Transcaucasian Sejm at the Peace Talks with Turkey, 1918, State Archives of the Azerbaijan republic (further SA AR), rec. gr. 970, inv. 1, f. 3, sheet 4. 8 See: Ý. Berkuk, Böyük Harpda Þimali Kafkasyadaký faaliyetlerimiz ve 15. firkanýn hareketi ve müharibeleri, Askeri mecmua, No. 35, 1934. 9 See: A.N. Kurat, op. cit., p. 472. Volume 3 Issue 4 2009 123 THE CAUCASUS & GLOBALIZATION took Batum on 15 April, the victors invited the Sejm to the negotiation table.10 This time the invitation was accepted. The delegates in Trabzon did not remain idle; as soon as the talks had been indefinitely suspended, Enver Pasha visited Trabzon and Batum. In Trabzon he met the Azeri delegates,11 who wanted his opinions about the future political structure of the Transcaucasus and, more importantly, about the future relations between two kindred peoples—the Azeris and the Ottoman Turks. Enver Pasha, the key political figure in his country, saw Azerbaijan, Georgia, and Armenia, with a common Sejm, as a federation or a confederation in close cooperation with Turkey. If this did not happen, Azerbaijan, which had a common border with Turkey, could form much closer ties with the Ottoman Empire. By way of com- ment on the Trabzon talks, Mamed Hasan Hajinski informed that Nuru Pasha, brother of Minister of War Enver Pasha, would shortly arrive in Azerbaijan from Iran together with 300 military instructors.12 In the morning of 22 April, 1918, before attending the sitting of the Sejm, the Muslim factions gathered for their meeting. They agreed to stand by Akaki Chkhenkeli, who wanted independence and peace talks.13 The same day, late at night, the Sejm majority declared the establishment of the Tran- scaucasian Democratic Federative Republic.14 On 26 April, it endorsed the Cabinet and listened to its statement. The greater role the Azeris had been playing in the developments earned them several Cabinet posts. F. Khoyski became Minister of Justice; N. Yusifbeyli (Usubekkov), Minister of Edu- cation; Kh. Melik-Aslanov, Minister of Railways; M. Hajinski, Minister of Trade; and I. Heydarov, State Controller in the Chkhenkeli Cabinet.15 On 28 April, the Ottoman Empire recognized the newly formed Transcaucasian Independent Democratic Federative Republic. This opened the road to a new round of peace talks in Batum. Fully aware of their importance, Turkey raised the status of its delegation by appointing Khalil Mentesh, acting Minister of Justice and Foreign Minister, as delegation head. Naval Minister Jamal Pasha arrived in Batum from Istanbul. The new state dispatched a delegation of 45 members, the number explained by the highly difficult political situation in the Transcau- casus.16 Chkhenkeli and Nikoladze from Georgia, Rasulzade and Hajinski from Azerbaijan, and Kac- haznuni and Khatisian from Armenia were the central figures.17 On 14 May, in Batum, Khalil bek handed in a note to the Transcaucasian delegation which demanded access to the Transcaucasus to prevent a British offensive on Baku. He explained that the field commanders were instructed to spare civilians if no resistance was offered.18 The Azeri delegates demanded that the Turkish troops be allowed to enter the Transcaucasus to stop the troops of the Baku Soviet of People’s Commissars, which were pressing on toward Ganja. The rapidly developing compli- cations in the region had different effects on the interests of the rivaling neighbors, causing disagreements in the Transcaucasian delegation in Batum. The Turks knew that Germany planned to cross Azerbaijan to invade Central Asia, Afghanistan, and India to deliver a blow at the enemy positions there.19 In mid-May, the Azeri and the Georgian factions were resolved to invite military forces from abroad; on 14 May, the Georgian National Council gathered for a secret meeting, which decided to

10 See: Dokumenty i materialy po vneshney politike Zakavkazia i Gruzii, p. 199. 11 See: Protokol sovmetsnogo zasedania vsekh musulmanskikh fraktsiy Zakavkazskogo sejma, 01.05.1918 g., SA AR, rec. gr. 970, inv. 1, f. 1, sheet 31. 12 See: Ibid., sheet 33. 13 See: Protokol sovmetsnogo zasedania vsekh musulmanskikh sejmovykh fraktsiy, 22.04.1918 g., SA AR, rec. gr. 970, inv. 1, f. 1, sheet 25. 14 See: T. Swietochowski, Russia and Azerbaijan. Borderland Transition, Columbia University Press, New York, 1995, p. 66. 15 See: Dokumenty i materialy po vneshney politike Zakavkazia i Gruzii, p. 229. 16 See: A.N. Kurat, op. cit., p. 464. 17 See: T. Swietochowski, Russian Azerbaijan, 1905-1920: The Shaping of National Identity in Moslem Communi- ty, Cambridge, 1985, p. 125. 18 See: Dokumenty i materialy po vneshney politike Zakavkazia i Gruzii, pp. 269-270. 19 See: R.G. Gatamov, Azerbaidzhanskiy faktor v germano-osmanskikh otnosheniakh (1917-1918), Avtoreferat dis- sertatsii na soiskanie uchenoy stepeni candidata istoricheskikh nauk, Baku, 2005, p. 18. 124 Volume 3 Issue 4 2009 THE CAUCASUS & GLOBALIZATION ask Germany through General von Lossow to establish its patronage over Georgia. In fact, at this moment, the Georgian emissaries in Berlin had already acquired Germany’s agreement.20 A commission with Noah Zhordania at its head was set up to talk to the German general. Under the secret agreement of 25 May, Germany dispatched first 5 thousand troops and later 12 thousand more to Georgia.21 On 26 May, the Georgian National Council declared Georgia an independent country and formed a Cabinet with N. Ramishvili as the prime minister. The new government rubber-stamped the pre-prepared document. On 28 May, Georgia acquired Germany’s patronage.

Azerbaijan Declares Independence

On 27 May, the Azeri faction of the Sejm met to discuss the crisis caused by the disbandment of the Sejm. The situation called for prompt decisions. In view of this, the faction unanimously decided to shoulder the functions of the government and announced itself as the National Council of Azerbaijan with M. Rasulzade as its chairman. On 28 May, the Council met for its first sitting attended by 26 members. The stormy discussions ended with a decision to immediately declare state independence and issue a corresponding document.22 The Council instructed F. Khoyski to form the Cabinet; an hour alter it approved the Cabinet’s personal composition: Prime Minister and Minister of the Interior Fatali Khan Khoyski; War Minister Kh. Sultanov; Foreign Minister M. Hajinski; Finance Minister and Minister of Education N. Yusifbeyli; Minister of Justice Kh. Hasmamedov; Minister of Trade and Industry M. Jafarov; Minister of Agriculture and Minister of Labor A. Sheykhulislamov; Minister of Rail- ways and Minister of Posts and Telegraph Kh. Melik-Aslanov; and State Controller J. Hajinski.23 This means that the National Council of Azerbaijan performed its historic mission of creating the first secular Muslim state. M. Rasulzade had the following to say on this score: “By making public its Declaration of 28 May, 1918, the National Council confirmed the existence of the Azeri nation. From that time on, the word “Azerbaijan” was no longer a geographic, ethnographic, and linguistic term but a political reality.”24 On 30 May, as soon as the Cabinet was formed, a radiogram was sent to the foreign ministers of the world’s leading countries which said: “Since the Federative Transcaucasian Republic was broken down after Georgia became separated from it, the National Azeri Council announced on the 28th of the current month the independence of Azerbaijan formed by the Eastern and Southern Transcaucasus and declared the Azerbaijan Republic. By informing you about the above developments, I have the honor to ask Your Excellency to notify your Government of this. Elizavetpol has been selected as a temporary seat of my government. Chairman of the Council of Ministers of the Azerbaijan Republic Fatali Khan Khoyski.”25 Each of the newly established national republics remained in Batum with its own peace conditions. On 4 June, the process ended with a Treaty on Peace and Friendship, which the three republics signed with Turkey. The same day, the Imperial Ottoman Government and the Azerbaijan Republic signed a friendship treaty; the Turkish side was represented by Minister of Justice Khalil Mentesh and Commander-in-Chief of the Caucasian Front Vahib Pasha; Foreign Minister of Azerbaijan M.H. Hajin-

20 See: H. Baykara, Azerbaycan Ýstiklal Mücadilesi Tarihi, Ýstanbul, 1975. pp. 257-258. 21 See: T. Sünbül, Azerbaycan Dosyasý, Ankara, 1990, p. 84. 22 See: Protokol No. 2 zasedania Musulmanskogo natsionalnogo soveta, 28.05.1918 g., SA AR, rec. gr. 970, inv. 1, f. 1, sheet 50. 23 See: Sobranie uzakoneniy i rasporiazheniy pravitelstva Azerbaijanskoy Respubliki, 1919, No. 1, Art. 1, p. 6, SA AR, rec. gr. 970, inv. 1, f. 4, sheet 3. 24 Ýstiklal, 28 Mayýs 1933 (Berlin). 25 Radiogramma predsedatelia Soveta ministrov F.Kh. Khoiskogo ministram inostrannykh del riada gosudarstv o provozglashenii Azerbaidzhana nezavisimoy respublikoy, 30.05. 1918 g., SA AR, rec. gr. 970, inv. 1, f. 4, sheets 9-10. Volume 3 Issue 4 2009 125 THE CAUCASUS & GLOBALIZATION ski and Chairman of the National Council M.E. Rasulzade signed the document for Azerbaijan. This was the first treaty the Azerbaijan Republic signed with a foreign state. Under Art 4, the most important for Azerbaijan, the Ottoman government pledged to extend military assistance to the government of the Azerbaijan Republic if it needed to maintain law and order in its territory.26 As soon as it received detailed information about what was going on in the republic, the Azeri delegation in Batum decided to ask for Turkish military assistance on the strength of Art 4. Rasulzade and Hajinski discussed this with members of the Ottoman delegation.27 Turkey, in turn, had to move cautiously so as not to alarm Germany. It was decided to set up a joint Caucasian Islamic Army out of Turkish regular units and Azeri volunteers which, Enver Pasha was convinced, would cushion Ger- man response.28 Ottoman units started moving toward Ganja, while the 5th Division under Mursel Pasha (staffed with 257 officers and 5,575 rank-and-file soldiers)29 entered the city early in June. Nuru Pasha and his headquarters joined them in Ganja. After spending its first eighteen days in Tiflis, the National Council and the Cabinet moved to Ganja, where a government crisis destroyed the first Cabinet. On 17 June, a second Cabinet under Khoy- ski was put together. Six of the former ministers who retained their posts were joined by six new recruits. Two days later, the portfolios were distributed in the following way: Prime Minister and Minister of Justice F.Kh. Khoyski; Foreign Minister and temporarily Minister of State Control M.H. Hajinski; Min- ister of the Interior B. Javanshir; Minister of Railways Kh. Melik-Aslanov; Finance Minister A. Amir- janov; Minister of Agriculture Kh. Sultanov; Minister of Education N. Yusifbeyli; Minister of Trade and Industry A. Ashurov; and Minister of Health and Social Services Kh. Rafibeyli. A.M. Topchiba- shev, Kh. Hasmamedov, and M. Rafiev were appointed ministers without portfolio. Kh. Melik- Aslanov was temporarily appointed minister of post and telegraph; A. Ashurov, likewise, was given the post of minister of foodstuffs on a temporary basis. On 23 June, the worsening situation forced the new government to introduce martial law in the country.30 The German representatives in Tiflis tried to slow down Turks’ advance on Baku; in view of this, on 24 June, Commander of the Eastern Group Vahib Pasha had to inform Nuru Pasha in Ganja that no other army, except that of the Ottoman Empire, could remain in the territory of Azerbaijan.31 On 17 June, the second Cabinet hastened to appoint delegates to the Istanbul Conference of the Central Powers (Germany, Austria-Hungary, Turkey, and Bulgaria). In anticipation of vitally important decisions for the country’s future, the government appointed a delegation of three members (Rasulzade, Hasmamedov, and Safikiurdski) with the authority to conduct negotiations on political, economic, financial, and military issues with all the delegations and conclude agreements.32

ighting for Baku

The developments of the summer of 1918 around Baku, both inside and outside the country, made liberation of Baku an absolute must. At the concluding stage of World War I, it became the center of

26 See: Dogovor druzhby mezhdu Imperatorskim ottomanskim pravitelstvom i Azerbaidzhanskoi Respublikoi, 04.06.1918 g., SA AR, rec. gr. 894, inv. 2, f. 88, sheet 2. 27 See: A.N. Kurat, op. cit., p. 530. 28 See: Ö. Kemal, Ermeni meselesi, Ýstanbul, 1986, p. 164. 29 See: N. Nasibzade, Vneshniaia politika Azerbaidzhana (1918-1920), Baku, 1996, p. 63. 30 See: Adres-Kalendar Azerbaijanskoy Respubliki, ed. by A.M. Stavrovskiy, Baku, 1920, p. 22. 31 See: Türkiye Cümhuriyeti Genelkurmay Baþkanlýðý Askeri Tarih ve Stratejik Etüd Arºivi. K. 3827, D. 38, <. 2. This refers to the manuscript of V. Gafarov’s book Vopros Severnogo Azerbaidzhana v rossiisko-turetskikh otnosheniakh (1917-1922 gg.). 32 See: Postanovlenie Soveta ministrov ob otpravke delegatsii na mezhdunarodnuiu konferentsiu v Stambule, 18.06.1918 g., SA AR, rec. gr. 970, inv. 1, f. 138, sheets 3-5. 126 Volume 3 Issue 4 2009 THE CAUCASUS & GLOBALIZATION conflicting interests among Germany, Britain, the Ottoman Empire, and Soviet Russia, which clashed over it. Peter Hopkirk, an agent of British special services in the Middle East, wrote: “At the end of the last century Baku had been one of the wealthiest cities on earth. The discovery of vast oilfields in this remote corner of the Tsar’s empire had brought entrepreneurs and adventurers of every nationality rush- ing here. Experts calculated that Baku had enough oil to heat and illuminate the entire world … so sod- den was it with the stuff… Baku had more oil than all the wells in the United States.”33 The Baku Soviet and the Council of People’s Commissars as its executive structure not only refused to recognize the national government of independent Azerbaijan, but also employed all political, economic, military, and diplomatic measures to interfere with its functioning. Soviet Russia was very much concerned about the Turkish movement toward Baku; the Baku Council of People’s Commissars resolved to spread its power to the entire country was likewise disturbed. On 12 June, Stepan (Suren) Shaumian informed Lenin and Stalin by phone that the military units of Baku were starting to move toward Ganja. On 18 June, People’s Commissar for Naval Affairs G. Korganov reported to the Baku Council of People’s Commissars that the Bolsheviks were winning.34 Their progress was accompanied by massive killings and robberies of the local people mainly because 70 percent of the rank-and-file soldiers and 100 percent of the officers of the Council’s army were Armenians.35 Later, Shaumian, who had taken part in the march, wrote that nearly all the officers of the army of the Baku Council of People’s Commissars were Armenians who had used violence in relation to the local Muslims.36 The mixed Azeri-Turkish units checked the Bolshevik onslaught. On 27 June, they clashed at Goychay; on 1 July, the Bolsheviks were stopped; on 20 July, the Islamic Army, which had liberated Shemakha, stopped in the environs of Baku when the diplomatic maneuvering around it reached its highest point. Early in July 1918, the German consulate in Istanbul reported: “If we manage to strike a deal with the Bolsheviks we shall have the city’s oil reserves at our disposal. If, on the other hand, the Bolsheviks are forced to abandon the city they will set the oil fields on fire. This means that we and the Turks will get nothing. Without oil the Caucasian Railway will soon stop.”37 Left alone, without Soviet Russia’s effective military aid, the Baku Council of People’s Com- missars pinned its hopes on Moscow’s diplomatic support. The talks between Russia and Germany that started late in June ended with a preliminary agreement. This is confirmed by Lenin’s telegram to Stalin dated 30 June: “Today, on 30 June, Ioffe reported from Berlin that Kühlman had talked to him. This preliminary talk shows that the Germans are ready to force the Turks to stop military operations beyond the Brest border and draw a clear demarcation line. They promise to keep the Turks out of Baku, but need access to the oil. Ioffe replied that we intend to strictly observe the Brest conditions, but are ready to accept the give and take principle. This information deserves special attention and should be transmitted to Shaumian as promptly as possible. Our chances of keeping Baku are good even though we shall have to give away part of its oil.”38 Under strong German pressure and the personal involvement of General Ludendorff, the Turks’ active onslaught was suspended. The German advisors in the Turkish army kept everything what Enver Pasha wrote under strict control, therefore he had to stop the Turkish advance on Baku.39 This was a smokescreen: while the official order demanded suspension, under a secret order the Caucasian Islamic

33 P. Hopkirk, On Secret Service East of Constantinople: The Plot to Bring Down the British Empire, John Murray, London, 1994, pp. 331-332. 34 See: G. Korganov-S. Shaumianu, 18.06.1918 g., Political Documents Archives at the Administration of the Pres- ident of the Azerbaijan republic (further PDA AP AR), Copies Fund, No. 374, sheet 20. 35 See: T. Swietochowski, Russian Azerbaijan, 1905-1920, p. 137; F. Kazemzadeh, The Struggle for Transcauca- sia, 1917-1921, New York, Oxford, 1951, p. 131. 36 See: Sobranie Azerbaidzhanskoy gruppy sodeystvia Istpartu TsK VKP(B.). Doklad S. Shaumiana, 11 July, 1927, Russian State Archives of Sociopolitical History (further RSASPH), rec. gr. 84, inv. 3, f. 283, sheet 53. 37 G. Papia, Politika Germanii v Zakavkazie v 1918 g., Tbilisi, 1971, pp. 58-59. 38 V.I. Lenin ob Azerbaidzhane, Baku, 1970, p. 125. 39 See: M. Seleymanov, Kavkazskaia islamskaia armia i Azerbaidzhan, Baku, 1999, p. 215. Volume 3 Issue 4 2009 127 THE CAUCASUS & GLOBALIZATION

Army received more troops, firearms, and ammunition to storm the city and keep the Germans away. Enver Pasha did not exclude armed clashes with the German units blocking the approaches to Baku.40 Late in July, hostilities resumed with new vigor when the Azeri-Turkish units reached Baku; this forced Russia and Germany to promptly sign an agreement. Early in August, the German General Staff, very much concerned about the Turkish successes in Azerbaijan, interfered in the developments. On 4 August, General Ludendorff wrote to Enver Pasha that if he did not halt his military operations in Azerbaijan the German officers would be recalled from the Ottoman Supreme Com- mand: “I could not tolerate the danger of a new war with Russia provoked by the Turkish authorities in blatant contradiction to the terms of the Treaty.”41 While Russia and Germany were talking in Berlin and Moscow, the military failures of the Baku Council of People’s Commissars undermined its position in Baku. The question was whether the city should be abandoned or defended. On 24 July, speaking at rallies of non-Muslim workers, the leaders of the Socialist-Revolutionaries, Mensheviks, and Dashnaks demanded that the British should be invited to defend the city against the Turks and Azeris. On 25 July, the Council met for an extraordinary session which listened to what Shaumian had to say about the political and military situation; after prolonged and fierce debates it was decided by a slight majority (259 against 236) to invite the British and set up a coalition government. On 31 July, the Baku Council of People’s Commissars resigned; it was replaced with a puppet government called the Central Caspian Dictatorship and the Presidium of the Interim Executive Com- mittee of the Soviets based on an alliance among the Socialist-Revolutionaries, Dashnaks, and Menshe- viks. It was controlled by the Armenian National Council. As soon as this happened, Foreign Minister M.H. Hajinski described the situation on the Baku front in a ciphered telegram to M.E. Rasulzade: “In Baku the Bolsheviks were deposed; Shaumian and others have been arrested. Their place has been taken by Mensheviks and Dashnaks and, in general, Russians and Jews. They are very strong. I informed Khalil Pasha about this. We should promptly move one more division from Batum, which can be done if the Turks abandon Abastuman and Atskhur to the Georgians; Khalil Pasha had asked Enver Pasha about this. You should act in this direction, otherwise Baku will be lost. The enemy has plenty of shells, long-range guns, and planes. We should also have this because even if we take Baku the enemies might burn it down and destroy it.”42 The newly established Central Caspian Dictatorship saw Britain’s arrival in Baku as its priority. Early in August, at an extraordinary meeting, Socialist-Revolutionary Lev Umanskiy tried to assure his colleagues that in two days the allies would arrive to rescue them. He spared no words to describe the possible tragedy if the Turks entered the city before the Brits.43 Soon it became widely known that the plan had been devised by the Dashnaks engaged in talks with Lionel Dunsterville in Anzali. The British were very much concerned with the Turkish victories in Baku: on the one hand, this meant that the German-Turkish bloc might lay its hands on Baku oil; on the other, they never excluded a possibility that Nuru Pasha might press further on to Central Asia, Afghanistan, and India. The British knew that Wilhelm II was engaged in secret correspondence with Emir of Afghanistan Ha- bibullah and that Germany intensified its intelligence efforts in this country. The British were very much disturbed by information the Turks disseminated in Iran and Afghanistan about the victories of the Army of Islam.44 The British government planned to cut short Turkey’s Eastern march in Baku.

40 See: N. Yüceer, Birinci Dünya Savaþýnda Osmanlý Ordusunun Azerbaycan ve Daðýstan Hareketi, Ankara, 1996, p. 65. 41 T. Swietochowski, Russian Azerbaijan, 1905-1920, p. 134. 42 Shifrogramma M.H. Hadzhinskogo M.E. Rasulzade o vziatii Baku, 20.09.1918 g., PDA AP AR, rec. gr. 277, inv. 2, f. 8, sheets 13-16. 43 See: Biulleten Tsentrokaspia, 2 August, 1918. 44 See: Maj.-Gen. Malleson, “Dvadtsat-shest komissarov.” Iz angliyskogo zhurnala za mart 1933 g., PDA AP AR, rec. gr. 303, inv. 1a, f. 31, sheets 6-7. (Major-General Malleson, “The Twenty-Six Commissars,” Fortnightly Review, No. 193, 1933.) 128 Volume 3 Issue 4 2009 THE CAUCASUS & GLOBALIZATION

On 4 August, the first British unit under Colonel Stokes arrived in Baku.45 Later, on 9-17 Au- gust, three battalions, one battery of field artillery, and several armored vehicles entered the city to represent the British Army.46 Peter Hopkirk wrote: “When, on 17 August, 1918, the British disem- barked in its sleepy port, only the ghosts of this once opulent past remained. In the aftermath of the war and the Revolution Baku must have looked like Shanghai after the Communist takeover in 1949.”47 After learning that the information about the numerous British troops landing in Baku was false, the Islamic Army launched final preparations. Dunsterville, very much like Bichekharov, soon realized that the government that had invited him was a puppet construction, while the city could not be defended. On 31 August, he sent a letter to the “dictators” in which he pointed out that continued defense was nothing but a waste of time and loss of life. He was convinced that there was no force in the world that could protect Baku against the Turks.48 A military expert, Dunsterville explained that the local people, the Azeris, were hostile toward the forces that would not let the Turks enter Baku.49 With the British in Baku, the situation was slightly different, however Soviet Russia never abandoned its efforts to restore its power in the oil-rich city. Late in August at the Berlin talks, Germany agreed to halt the Turkish onslaught on Baku if Soviet Russia removed the British from the city. On 23 August, Lenin telegraphed to F. Kolesov in Tashkent: “The Germans have agreed to guarantee a non- offensive on Baku if we drive the Brits out of it.”50 On 27 August, the German-Russian talks, which had lasted three months, were completed with a secret agreement which supplemented the Brest-Litovsk Treaty. Section Six dealt with the Caucasus. Under Art 13, Russia agreed with Germany’s recognition of Georgia as a sovereign state. Under Art 14, which dealt with Azerbaijan, Germany pledged not to extend its military assistance in the Caucasus to third countries outside the Georgian borders. It pledged to use its influence to prevent the military forces of third countries from moving into the territory between the Kura River and the village of Petropavlovsk; the borders of the Shemakha uezd and the village of Ayrioba; and the borders of the Baku, Shemakha, and Quba uezds to the northern Caspian coasts of the Baku uezd. Russia, in turn, pledged to ensure a maximum hike in oil production in the Baku Region and deliver one-fourth of it to Germany every month.51 By that time, Turkey, the anonymous “third country,” had already crossed the demarcation line, along with Azeri units. The Agreement of 27 August did not remain secret for long; it appeared in the Turkish press and was severely criticized. On 1 September, M.E. Rasulzade informed the Azeri government: “Accord- ing to information from Berlin, the Bolsheviks and Germany concluded an additional treaty under which the Bolsheviks recognized Georgia as the only independent state in the Caucasus. The Ger- mans did not object to Russia’s desire to keep Baku and its oil fields, mainly because the Bolsheviks are promising the Germans and their allies part of the Baku oil. This information amazed each and everyone; the newspapers ran indignant comments. Talat Pasha plans a trip to Berlin. We should, should by all means, capture Baku.”52 On 12 September, the Azeri delegation in Istanbul visited the German Embassy to hand in a note of protest in the name of the Azeri government. Copies were sent

45 See: Vospominania o revolutsionnykh sobytiiakh v Baku i Azerbaidzhane v 1917-1918 gg. Fevralskiy perevorot, 1917 g. Iz vospominaniy Bliumina, 1922 g., PDA AP AR, rec. gr. 276, inv. 2, f. 20, sheet 20. 46 See: Ministère des Affaires Étrangères (MAE) de France (Archives Diplomatique). Correspondanse politique et commerciale, 1914-1940. Série Z. Europe 1918-1940. Sous-Série USSR Europe — Russie service russe d’information et d’études (S.R.I.E.) XLI Caucase — Azerbaïdjan (1918-1920). Direction des Affaires Politiques et Commerciales Caucase République d’Azerbaïdjan Evènements Années 1918-1919. Vol. 832, folio 2. 47 P. Hopkirk, op. cit., p. 331. 48 See: W.E.D. Allen, P. Muratof, Caucasian Battlefields, Cambridge University Press, 1953, p. 495. 49 See: N.S. Fatemi, Diplomatic History of Russia. 1917-1923, New York, 1952, pp. 143-144. 50 V.I. Lenin ob Azerbaidzhane, p. 140. 51 See: Dokumenty vneshnei politiki SSSR, Vol. I, pp. 443-444. 52 Pismo predsedatelia azerbaidzhanskoy delegatsii v Stambule M.E. Rasulzade ministru inostrannykh del M.H. Hadzhinskomu, 01.09.1918 g., SA AR, rec. gr. 970, inv. 1, f. 16, sheet 2. Volume 3 Issue 4 2009 129 THE CAUCASUS & GLOBALIZATION to the Turkish Foreign Ministry, the embassies of Austria-Hungary and Bulgaria, and the diplomatic missions of neutral countries.53 Early in September the international situation changed in favor of the Entente, which decreased Germany’s interest in the agreement of 27 August. M.E. Rasulzade reported that Germany was no longer thinking about a victory. On the other hand, Britain’s stronger position in Baku could create a second front; this forced Germany to shift its Azeri priorities in a hurry. Aware of their big mistake in relation to Baku, the Germans informed the North Caucasian delegation at the Berlin talks about their changed position.54 Turkey and Azerbaijan played their role in the German decision to drop the 27 August agreement. On 15 September, after military and diplomatic preparations which took up the summer and fall of 1918, the Azeri and Turkish troops launched their general offensive on Baku. The same day, the British military left the city,55 with the troops of the Central Caspian Government beating a retreat. The leaders of the Baku Council of People’s Commissars arrested by the Central Caspian Govern- ment and freed from prison with the help of A. Velunts, one of its members, and A. Mikoian left the city in the afternoon.56 On 15 September, the Azeri-Turkish army liberated Baku. This has become the second most important date in the history of Azerbaijan after Independence Day of 28 May.

The Allies Enter Baku

In the fall of 1918, the German-Turkish bloc lost World War I. On 30 October, the Ottoman Empire had to accept the onerous conditions of the Moudros Armistice, which left a scar on the history of the Azerbaijan Republic. Under Art 11, the Ottoman Army had to pull out of Southern Azerba- ijan and the Transcaucasus immediately. The Ottoman units had to evacuate Baku in one week and leave Azerbaijan in one month. Under Art 15, the Transcaucasian Railway transferred to the Turks under the Batum agreement was entrusted to the allies, which could also occupy Batum. And finally, it was stated that “Turkey will not object to allied occupation of Baku.”57 Rauf Orbay, Minister of Marine Affairs in the Izzet Pasha Cabinet, who had headed the Turkish delegation at the talks in Tra- bzon, signed the document for the Turkish side. On 3 November, the conditions were officially published. Later the same day, Envoy Extraordinary and Minister Plenipotentiary of the Azerbaijan Dem- ocratic Republic in Istanbul A.M. Topchibashev visited Rauf bek to protest against the articles under which Baku and the Azeri Railway were transferred to the allies.58 Rauf bek tried to justify himself by saying that the allies had nagged about the fact that Turkish troops were stationed in Azerbaijan and had imposed these discriminatory articles on him.59 On 4 November, A.M. Topchibashev handed in

53 See: Nota predsedatelia azerbaidzhanskoy delegatsii v Stambule M.E. Rasulzade poslanniku Imperatorskogo ger- manskogo pravitelstva grafu Waldburgu, 12.09.1918 g., SA AR, rec. gr. 970, inv. 1, f. 8, sheets 8-9, f. 16, sheet 3. 54 See: Pismo predsedatelia azerbaidzhanskoy delegatsii v Stambule M.E. Rasulzade ministru inostrannykh del M.H. Hadzhinskomu, 01.09.1918 g., SA AR, rec. gr. 894, inv. 10, f. 154, sheet 11. 55 See: Les Anglais battus à Bakou, Ministère des Affaires Étrangères de France, Archives Diplomatique, Vol. 832, folio 3. 56 For more detail, see: Svidetelskie pokazania A.I. Mikoiana po delu Funtikova, dannye 20 marta 1926 goda, 20.03.1926 g., RSASPH, rec. gr. 84, inv. 3, f. 283, sheet 40; Iu. Baturin, Dosie razvedchika. Opyt rekosntruktsii sudby, Moscow, 2005, p. 106; P. Hopkirk, op. cit., pp. 252-357. 57 Iu.V. Kliuchnikov, A. Sabanin, Mezhdunarodnaia politika noveyshego vremeni v dogovorakh, notakh i deklaratsiakh, Part 2, Moscow, 1926, p. 188. 58 See: Pismo chrezvychaynogo poslannika i polnomochnogo ministra Azerbaidzhanskoy Respubliki A.M. Topchi- basheva predsedateliu Soveta ministrov F.H. Khoiskomu, 14.11.1918 g., SA AR, rec. gr. 894, inv. 10, f. 34, sheets 18. 59 See: Zapis besedy chrezvychaynogo poslannika i polnomochnogo ministra Azerbaidzhanskoy Respubliki A.M. Topchibasheva s morskim ministrom Turtsii Rauf beyem, 03.11.1918 g., SA AR, rec. gr. 894, inv. 10, f. 151, sheets 1-2. 130 Volume 3 Issue 4 2009 THE CAUCASUS & GLOBALIZATION a letter of protest to Deputy Foreign Minister of Turkey Reshat Khikmet bek, which said, in part, that the Ottoman government, which had recognized the independence of Azerbaijan, violated the rules and customs of international law by signing the agreement relating to Baku, the capital of Azerbaijan, and facilitating its capture by the British.60 On 10 November, Prime Minister Fatali Khan Khoyski and Acting Foreign Minister Adil Khan Ziadkhanly sent a telegram to Woodrow Wilson asking him to facilitate recognition of the Azerbaijan Republic by the great powers. The telegram said: “Before turning to the great powers of Europe, the Azeri people and government are pinning their hopes on you as a well-known humanist and patron of subjugated peoples. We are hoping for your support and recognition.”61 In his letter to F. Khoyski of 31 October, Envoy Extraordinary in Istanbul A.M. Topchibashev insisted that Azerbaijan start talking to the British stationed in Rasht and Anzali.62 Later, early in No- vember 1918, a delegation (consisting of N. Yusifbeyli, A. Agaev, and M. Rafiev) hastened to Anzali to talk to the British commanders in Northern Iran.63 The talks with General Thomson were far from easy; at first the British general refused to accept the fact that there was a state called Azerbaijan. After long deliberations, he said: “According to our information there is no republic set up by the will of the Azeri people; there is a government set up by intrigues of the Turkish commanders. Since you insist on the opposite, we shall verify everything on the spot and arrive at a corresponding conclusion.”64 On 17 November, British troops entered Baku under the Moudros Armistice.65 The next day, the Azeri government published an official statement on the entry of the Entente troops into Baku. It said that the troops were temporarily moved in and that they would be stationed only in Baku to concentrate military power in their hands. Under the agreement, they would not interfere in the country’s and capital’s domestic affairs. All government organizations should continue working as usual and the question of the self-determination of the peoples of Russia would be settled at an international peace congress, meaning the Paris Peace Conference. The statement further said that the final decision of the Azeri Constituent Assembly about the country’s political future was still unknown and that the political leaders of Azerbaijan should maintain law and order in the country. The document further stated that the government hoped that the allied troops would not infringe on the sovereign rights of the Azeri people.66 After several days in Baku, General Thomson realized that what he had heard from the Russian Constitutional-Democrats about “Azerbaijan being an invention of several hundred political racketeers” was far removed from reality. He announced that “Britain would support” the “parliamentary cabinet of Khan Khoyski” as “the only legal authority in Azerbaijan.”67 In November 1918, General Thomson wrote to London about Prime Minister Khoyski: “Undoubtedly a clever man, a lawyer, who has set up a vigorous local administration, vastly more practicable than any previously known in the Caucasus. …spoke bitterly of the treachery of the Armenians.”68

60 See: Zapis besedy chrezvychaynogo poslannika i polnomochnogo ministra Azerbaidzhanskoy Respubliki A.M. Top- chibasheva s sovetnikom ministra inostrannykh del Turtsii Reshat Khikmet beyem, 04.11.1918 g., SA AR, rec. gr. 894, inv. 10, f. 151, sheet 4. 61 M.B. Mehmetzade, Azerbaycan Milli Harekatý, Berlin, 1938, p. 99. 62 See: Pismo chrezvychaynogo poslannika i polnomochnogo ministra Azerbaidzhanskoy Respubliki A.M. Topchi- basheva predsedateliu Soveta ministrov F.H. Khoiskomu, 31.10.1918 g., SA AR, rec. gr. 894, inv. 10, f. 43, sheet 17. 63 See: A. Ziadkhanly, Azerbaidzhan, Baku, 1919, p. 59. 64 Diplomaticheskomu predstaviteliu Azerbaidzhana v Gruzii, 26.10.1918 g., PDA AP AR, rec. gr. 277, inv. 2, f. 18, sheet 1. 65 See: Les troupes anglo-russes sont à Bakou, Ministère des Affaires Étrangères de France, Archives Diploma- tique, Vol. 832, folio 14. 66 See: Azerbaijan, 19 November, 1918. 67 T. Swietochowski, Russian Azerbaijan, 1905-1920, p. 142. 68 “Soobshchenie general-mayora Thomsona. 17-24.11. 1918 g.,” Azerbaidzhanskaia Demokraticheskaia Respubli- ka. Arkhivnye dokumenty Velikobritanii, Edited and introduced by Ia. Makhmudov, Compiled by N. Maxwell, Baku, 2008, p. 75. Volume 3 Issue 4 2009 131 THE CAUCASUS & GLOBALIZATION

It was during the hardest days for the republic that the National Council took important measures to alleviate the crisis. On 16 November, the day before the British arrived in Baku, the National Council discussed the issues and, on 19 November, passed a Law on Elections; in fact, the laws On Setting up the Azeri Parliament and On Elections played an important role in the country’s history. The parliament had 120 seats distributed on a national basis: 80 seats went to the Azeris; 21 to Arme- nians; 10 to Russians; Jews, Germans, Georgians, and Poles acquired 1 seat each; and the Union of Trade Unions and the Union of Oil Industrialists received 3 seats each.69 On 7 December, 1918, Chairman of the National Council Mohammad Emin Rasulzade opened the first sitting of the newly elected parliament; he concluded his speech by calling on the deputies “to place the interests of the motherland and the wellbeing of the people higher than party interests.”70 He stressed the importance of electing the best person as speaker. After long deliberations, the deputies elected A.M. Topchibashev (who was still in Istanbul) as chairman; G.B. Agaev was elected his deputy and R. Vekilov his secretary. A new cabinet was another important task: although the largest, the Musavat faction was not large enough to form the government, which meant that a coalition cabinet could not be avoided. On 26 December, Fatali Khan Khoyski, who was entrusted with putting together the new cabinet, came up with its personal composition. Three portfolios went to Russians and two to Armenians, who de- clined the invitation. In his new cabinet, F.Kh. Khoyski filled the posts of prime minister and foreign minister; S. Mekhmandarov was appointed war minister; M. Asadullaev, minister of trade and industry; I. Protasov, finance minister; K. Lizgar, minister of foodstuffs; Kh. Melik-Aslanov, minister of railways; A. Safikiurdski, minister of post and telegraph; M. Hajinski, minister of state control; T. Makin- ski, minister of justice; Kh. Sultanov, minister of agriculture; R. Khoyski, minister of social services; E. Gindes, minister of health services; N. Yusifbeyli, minister of education and religious affairs; and Kh. Khasmamedov, minister of internal affairs. On 28 December, General Thomson announced recognition of the government of the ADR; he stressed that the coalition government under Prime Minister Khoyski was the republic’s only legal body of power and promised all-round support from the allied commanders.71 Later, Commander-in- Chief of the British troops in the Balkans and the Caucasus General George Milne, who arrived in Baku on 22 January, 1919, confirmed this statement. When talking with Fatali Khan Khoyski, he confirmed that the allied command had recognized the ADR government as the only power in Azerbaijan and promised “that the allied command will support this power with all the means at its disposal.”72 The political leaders of Azerbaijan not only smoothed out all problems caused by the allies’ arrival in Baku, their concerted diplomatic efforts also convinced the allied command to recognize de facto the Azeri democratic state.

Azerbaijan and the Paris Peace Conference

In the fall of 1918, the Central Powers, one by one, signed capitulation acts. In November 1918, preparations for a peace conference intended to consolidate the gains of World War I, confirm the status of the victor countries, bring order to postwar relations, and settle disputes were launched in earnest.

69 See: Zakon ob obrazovanii azerbaijanskogo parlamenta, 19.11.1918 g., SA AR, rec. gr. 895, inv. 10, f. 2, sheet 24. 70 Azerbaidzhanskaia Demokraticheskaia Respublika (1918-1920). Parlament, Verbatim reports, Vol. 1, Baku, 1998, p. 36. 71 See: Azerbaijan, 10 December, 1918; Nashe vremia, 30 December, 1918. 72 Azerbaijan, 25 January, 1919. 132 Volume 3 Issue 4 2009 THE CAUCASUS & GLOBALIZATION

In November 1918, in Anzali, members of the government of Azerbaijan when talking to Gen- eral Thomson who commanded the allied troops were promised that they would take part in the peace conference.73 Later, General Milne, the official representative of Great Britain, repeatedly confirmed that the Azerbaijan Republic would be invited to the Paris Peace Conference.74 On 28 December, Prime Minister Khoyski formed his third Cabinet and selected delegates to the Paris Peace Conference: Speaker A.M. Topchibashev was appointed delegation head; M.H. Hajinski, his deputy; two deputies (A. Agaev and A. Sheykhulislamov) went as members; Mir Yaqub Me- khtiev, Jeykhun bek Hajibeyli, and Mamed Magarramov were appointed consultants. On 20 January, 1919, they arrived in Istanbul, where A.M. Topchibashev had already tilled the soil. Early in January, he had talked to representatives of the allied and neutral countries in Istanbul and handed in a note of protest in the name of the Azerbaijan Republic about the Moudros Armistice; he had negotiated with Iranian and Russian diplomats; on 11 January, he had been received by the sultan.75 On 6 January, A.M. Topchibashev met U.S. representative Haeck to ask for Washington’s assistance in applying the Fourteen Points of President Wilson to Azerbaijan and in recognizing its independence.76 On 10 December, he met Dutch representative Van der Villebois. Earlier, on 30 Decem- ber, he had handed in a Memorandum on the Contemporary State of Azerbaijan to Swedish Ambas- sador Cosswa Anckarsvärd. It was agreed that the diplomatic missions of the great powers represented in Stockholm would familiarize themselves with the document. On 12 January, Cosswa Anckars- värd wrote to Topchibashev: “I sent the Memorandum on the Contemporary State of Azerbaijan you passed on to me on 30 December to Stockholm, to the Foreign Ministry of the Royal Government of Sweden.”77 British High Commissioner Richard Webb, likewise, informed A.M. Topchibashev that the memorandum he had received on 30 December was sent to the U.K. government.78 While the representatives of the republics formed in the south of the former Russian Empire, with the exception of the Armenians, remained in Istanbul, the Paris Peace Conference was ceremoniously opened in France on 18 January, 1919. Its long agenda was dominated by the Russian Question. On 22 January, the Council of Ten discussed the Russian Question in detail and heard President Wilson’s address to the warring sides in Russia, in which the American president recommended that they reach a temporary agreement and halt the hostilities. The Bolsheviks, the White Guards, and the new states that sprang into existence in the territory of the Russian Empire were invited to get together before 15 February on the Princes’ Islands in the Sea of Marmara not far from Istanbul.79 France, Britain, America, and Italy were also invited.80 None of the Caucasian republics, with the exception of the Mountain Republic, accepted the invitation.81 Despite the British and French pressure in Istanbul, Georgia and Azerbaijan refused to take part in the “Russian conference” on 28 January. They were convinced that the conference should deal with

73 See: A. Raevskiy, Angliyskaia interventsia i musavatskoe pravitelstvo. K istorii interventsii i kontrrevoliutsii v Zakavkazie, Baku, 1927, p. 33. 74 See: SA AR, rec. gr. 970, inv. 3, f. 4, sheet 6. 75 See: Ibid., sheet 3. 76 See: Zapis besedy chrezvychaynogo poslannika i polnomochnogo ministra Azerbaidzhanskoy Respubliki A.M. Top- chibasheva u amerikanskogo diplomaticheskogo predstavitelia v Turtsii Haeyka, 06.01.1919 g., SA AR, rec. gr. 894, inv. 10, f. 151, sheet 45. 77 Pismo shvedskogo poslannika v Turtsii S. Ankarsverda chrezvychaynomu poslanniku i polnomochnomu ministru Azerbaidzhanskoy Respubliki A.M. Topchibashevu, 12. 01.1919 g., SA AR, rec. gr. 970, inv. 1, f. 37, sheet 1. 78 See: Pismo britanskogo Verkhovnogo komissara v Stambule R. Webba glave predstavitelstva Mirnoy delegatsii Azerbaidzhanskoy Respubliki A.M. Topchibashevu, Ianvar, 1919 g., SA AR, rec. gr. 970, inv. 1, f. 139, sheet 2. 79 See: Mezhdunarodnaia politika noveyshego vremeni v dogovorakh, notakh i deklaratsiakh, Part 2, Moscow, 1926, pp. 219-220 80 See: M.H. Hadzhinski—Predsedateliu Soveta ministrov Azerbaidzhanskoy Republiki F.Kh. Khoiskomu, 27.01.1919 g., SA AR, rec. gr. 894, inv. 10, f. 66, sheet 3. 81 See: Foreign Relations of the United States. Russia, 1919, US Government Printing Office, Washington, 1937, pp. 43-44. Volume 3 Issue 4 2009 133 THE CAUCASUS & GLOBALIZATION

Russia’s internal hostilities and help restore the unity among the Russians. Georgia and Azerbaijan, in turn, were working toward independence from Russia, which meant that they had nothing to discuss with either the former or the present rulers of Russia. M.H. Hajinski informed his government that he believed that his country should stay away from the conference.82 The idea of a conference on the Princes’ Islands fell through; the way the new republics and the Russian warring sides treated it revealed the depth of the gap which divided them and their ideas about their future. On 22 April, after waiting for three months in Istanbul, the Azeri delegation boarded an Italian ship to go to Naples via Thessaloniki, Pireus, and Messina; on 2 May, they reached Rome; on 7 May, they departed for Paris by train.83 Immediately upon their arrival, the Azeri delegates plunged into hectic activities; they put the final touches to the Memorandum of the Republic of Caucasian Azerbaijan for the Paris Peace Conference drafted in Istanbul by A.M. Topchibashev, A. Agaev, and J. Hajibeyli; translated it into both official languages (English and French); and published it in leaflet form.84 A.M. Topchibashev wrote in connection with this: “Today we are concentrating on working on the Memorandum to be Presented to the Peace Conference.”85 The memorandum was supplied with a color map drawn on the strength of the documents the Azeri delegation presented to the conference and printed under the supervision of a French geographer J. Forest.86 The delegation also paid a lot of attention to the documents entitled Ethnic and Anthropological Composition of the Population of Caucasian Azerbaijan87 and Economic and Financial Situation in Caucasian Azerbaijan88 intended to supply the conference with a better idea of the country. The typed documents completed by 1 June, 1919 were distributed among the participants; later they appeared in printed form. In May, the Azeri delegates met with the delegations of Poland, Georgia, the Mountain Repub- lic, Armenia, and Iran. On 23 May, they met member of the British delegation Sir Mallet to discuss political, military, and economic situation and the status of the allied troops in Azerbaijan.89 On 2 May, on Woodrow Wilson’s initiative, the Council of Four (made up of the heads of governments of the U.S., U.K., France, and Italy) discussed for the first time the Central Caucasian question and Azerba- ijan as its part.90 The Straits issue and the mandates for the Caucasus heightened Americans’ interest in the Cau- casian republics and their delegations. The Americans in Versailles wanted to know what the newly formed Caucasian states thought about the problems discussed at the conference. The American president personally received the Azeri delegation on 28 May, the first anniversary of independence of Azerbaijan.

82 See: M.H. Hadzhinski—Predsedateliu Soveta ministrov Azerbaidzhanskoy Respubliki F.Kh. Khoiskomu, 27.01.1919 g., SA AR, rec. gr. 894, inv. 10, f. 66, sheet 3. 83 See: SA AR, rec. gr. 894, inv. 10, f. 70, sheet 3. 84 See: La Republique de l’Azerbaïdjan du Caucase, Paris, 1919; Claims of the Peace Delegation of the Republic of Caucasian Azerbaijan Presented to the Peace Conference in Paris, Paris, 1919. 85 Pismo predsedatelia delegatsii Azerbaidzhanskoy Respubliki na Parizhskoy mirnoy konferentsii A.M. Topchiba- sheva Predsedateliu Soveta ministrov Azerbaidzhanskoy Respubliki, 08-10.06.1919 g., SA AR, rec. gr. 970, inv. 1, f. 143, sheet 9. 86 See: Istoria, 23 February, 1991. 87 See: “Délégation Azerbaïdjanienne à la Conférence de la Paix. Composition Anthropologique et Ethnique de la Population de l’Azerbaïdjan du Caucase. Classé 1er juin 1919,” Ministère des Affaires Étrangères de France, Archives Diplomatiqueá Vol. 638, folio 44-52. 88 See: “Délégation de l’Azerbaïdjan à la Conférence de la Paix à Paris. Situation économique et financière de la République de l’Azerbaïdjan du Caucase. Classé 1er juin 1919,” Ministère des Affaires Étrangères de France, Archives Diplomatiqueá Vol. 638, folio 29-43. 89 See: Pismo ministerstva inostrannykh del predsedateliu delegatsii Azerbaidzhanskoy Respubliki na Parizhskoy mirnoy konferentsii A.M. Topchibashevu, 14.03.1919 g., SA AR, rec. gr. 970, inv. 1, f. 141, sheet 12. 90 See: B.E. Stein, “Russkiy vopros” na Parizhskoy mirnoy konferentsii (1919-1920 gg.), Moscow, 1949, p. 346. 134 Volume 3 Issue 4 2009 THE CAUCASUS & GLOBALIZATION

Earlier the same day, A.M. Topchibashev was received by American diplomat Henry Morgenthau (during the war he had served as U.S. ambassador to Turkey; in 1919 he was deputy chairman of the American Committee for Relief in the Near East).91 They discussed the most important details of the talks with President Wilson scheduled for the same afternoon. Fully aware of Azerbaijan’s natural riches and its powerful industrial potential, Mr. Morgenthau hinted that American capital might be sent to Azerbaijan, while his country would extend financial aid to the republic’s government.92 In the afternoon, President Wilson received the Azeri delegation. A.M. Topchibashev had the following to say about this: “The fact that President Wilson received our delegation was most important. Normally, he, like all the other Entente heads of state, does not meet any delegations personally.”93 On 31 May, this fact was mentioned on the radio; the French newspapers sold in Batum, likewise, covered the event.94 Meanwhile, Azerbaijan was celebrating the first anniversary of its independence; speaking at a gala session of the parliament, Chairman of the Council of Ministers Nasif Yusifbeyli pinned his hopes for the future on the Paris Peace Conference: “Independence of Azerbai- jan is a fact. Today, I am just waiting for the Peace Conference to pronounce its verdict. I do not think that representatives of the world’s most civilized nations will remain indifferent to the dreams and hopes of the Azeri Turks (the Azeris.—J.H.), otherwise I would be doubting just how civilized they are. If this happens, the Azeri Turks, while realizing their sacred right to self-determination, will be able to accuse these cultured nations of fanaticism and religious intolerance.”95

The Supreme Council of Versailles Recognizes the Independence of Azerbaijan

The speech of British Prime Minister David Lloyd George in the House of Commons on 17 Novem- ber, 1919, marked the turning point in the fates of the new states in the territory of the former Russian Empire. The events in Russia, where Admiral Kolchak was defeated while General Denikin was beating a retreat, forced the British prime minister to mention Azerbaijan and Georgia twice in one speech. The Great Powers, the U.K. in particular, feared the spread of Bolshevism to the Middle and Near East once it had established itself beyond the Caucasian Range. Back on 19 September, 1919, in a secret telegram to Lord Curzon, British High Commissioner in the Caucasus Oliver Wardrop voiced his concern about this prospect and insisted that Azerbaijan and Georgia be recognized as independent states. On 4 October, Lord Curzon asked Oliver Wardrop for certain details and deemed it necessary to remind him: “It is hard to find a procedure of an adequate or reliable recognition of the Transcaucasian republics still waiting for recognition from the Peace Conference or the League of Nations.”96 Late in November, Lloyd George met Under Secretary of State Frank Lyon Polk to clarify his position vis-à-vis the new states on former Russian imperial territory. He minced no words when saying that neither Kolchak nor Denikin, whose defeat had become obvious, should receive military aid

91 See: Who’s Who in America, Vol. 2, Chicago, 1950, p. 383. 92 See: Beseda glavy delegatsii Azerbaidzhanskoy Respubliki na Parizhskoy mirnoy konferentsii A.M. Topchiba- sheva s chlenom delegatsii SShA H. Morgenthau, 28.05.1919 g., SA AR, rec. gr. 970, inv. 1, f. 146, sheet 11. 93 Pismo predsedatelia delegatsii Azerbaidzhanskoy Respubliki na Parizhskoy mirnoy konferentsii A.M. Topchiba- sheva Predsedateliu Soveta ministrov N.Yu. Ussubekovu o prieme delegatsii prezidentom SShA V. Vilsonom, 28.05.1919 g., SA AR, rec. gr. 970, inv. 1, f. 146, sheet 7. 94 See: SA AR, rec. gr. 970, inv. 1, f. 168, sheet 2. 95 Azerbaijan, 30 May, 1919. 96 Telegramma lorda Curzona gospodinu O. Wordropu, 04.10.1919 g., Azerbaijanskaia Demokraticheskaia Re- spublika. Arkhivnye dokumenty Velikobritanii, p. 310. Volume 3 Issue 4 2009 135 THE CAUCASUS & GLOBALIZATION because the Red Army had finally captured everything. On 29 November, Polk wrote to U.S. Secre- tary of State Robert Lansing: “He [Lloyd George] strongly feels that Europe will be menaced by unified Russia. On this account he thinks that Georgia, Azerbaijan, the Ukraine, Bessarabia, the Baltic provinces and Finland, and possibly even Siberia should be independent.”97 Britain clarified its position in relation to Azerbaijan in a telegram from the U.K. Foreign Office, which Nasib Yusifbeyli received from Oliver Wardrop early in December: “The British government defends independence of Azerbaijan and treats it with great respect.”98 Early in January 1920, High Commissioner Wardrop kept the allies and the British government informed on an almost daily basis about Denikin retreating to the south under Bolshevik pressure. He suggested that the positions of the Transcaucasian republics and the Mountain Republic be urgently fortified by recognizing their independence: if Britain alienated the Caucasian Republics, they would have to talk to the Bolsheviks.99 The mounting Bolshevist threat in the Caucasus forced the Entente countries to discuss the situation in greater detail and start moving: the Red Army in the Caucasus meant that Bolshevism would move further, to the Middle and Near East, Iran and Hither Asia. The rapidly unfolding events meant that independence of Azerbaijan and Georgia became a priority. On 10 January, it was discussed at the session of the Supreme Council of the Paris Peace Conference convened on the British initiative. It was attended by the heads of governments and foreign ministers of Britain, France, and Italy, as well as the American and Japanese representatives at the Peace Conference and their ambassadors to France. Prime Minister of Great Britain warned that the Bolsheviks were pressing forward along the Caspian coast; if they routed Denikin, they would capture the Caspian and might possibly join forces with the Turks. (The British prime minister referred to Kemal Pasha, leader of the mounting national movement.) He went on to say that this would corner the Caucasian states and invited the meeting to think about the best way to supply them with weapons and military equipment.100 It was decided to refer to the Versailles Military Council the question of the aid it might be necessary to give to the Caucasian states against the Bolsheviks and, together with the British representatives, report to the Supreme Council.101 In the afternoon, the foreign ministers got together again to discuss, on Lord Curzon’s initiative, the political aspect of the independence issue. The British Foreign Secretary declared that Lloyd George intended to discuss independence of Azerbaijan and Georgia and that the Armenian question would be discussed together with the Turkish. On 11 January, the Supreme Council passed the following decision suggested by Lord Curzon: “Principal Allied and Associated Powers should together recognize the governments of Georgia and Azerbaijan as “de facto” governments.”102 This means that on 11 January, 1920 the Paris Peace Con- ference recognized de facto the independence of Azerbaijan. On 12 January, the Allied Military Committee supplied its information on the Caucasian Ques- tion to the Versailles Supreme Council; the memorandum was signed by President of the Allied Mil- itary Committee Marshal F. Foch, British representative on the Committee General C. Sackville- West, and Italian representative Ugo Cavallero.103 The same day, the British delegation drafted a Note which suggested that Georgia and Azerbaijan should receive political, military, and financial support and provisions, especially bread. Adequate military assistance was needed to defend Batum

97 Papers Relating to the Foreign Relations of the United States. 1919, Russia, p. 126. 98 Svidanie s predstaviteliami inostrannykh derzhav vo vremia zangezurskikh sobytiy, 1919 g., PDA AP AR, rec. gr. 276, inv. 9, f. 12, sheet 47. 99 See: R. Ullman, Anglo-Soviet Relations. 1917-1921, London, 1968, p. 322. 100 See: Papers Relating to the Foreign Relations of the United States. The Paris Peace Conference. 1919, Vol. IX, US Government Printing Office, Washington, 1946, p. 851. 101 See: Ibid., pp. 837-838. 102 Ibid., p. 959; Bulletin d’Information de l’Azerbaïdjan, Paris, No. 7, 17 Janvier 1920, p. 1. 103 See: Papers Relating to the Foreign Relations of the United States. The Paris Peace Conference. 1919, Vol. IX, pp. 902-903. 136 Volume 3 Issue 4 2009 THE CAUCASUS & GLOBALIZATION and Baku; the Caspian Sea should be closed to the Bolsheviks, while Denikin should either transfer his fleet to the British or sink it.104 On 15 January, representatives of Azerbaijan and Georgia (A.M. Topchibashev and M. Magar- ramov, together with I. Tsereteli and Z. Avalov) were invited to the French Foreign Ministry to meet Secretary General of the Foreign Ministry of France Jules Cambon, British representative Philip Kerr, and Italian representative Marquis de la Torretta. The French diplomat handed Topchibashev the decision on the de facto recognition of Azerbaijan.105 He stated that from that time on both Azerbaijan and Georgia, as independent states, could address the Peace Conference on all important issues.106 Later on the same day, military assistance to the newly recognized states was discussed by the Supreme Council also attended by War Secretary Churchill, Chief of the Imperial General Staff H. Wilson, First Lord of the Admiralty W. Lang, Admiral of the Fleet Lord Beatty, and other military experts who hastily arrived from London.107 On 17 January, Field-Marshal Wilson, Admiral Beatty, and Robert Vansittart, who represented the Foreign Office, met the delegations of Azerbaijan and Georgia in the Klaric Hotel to discuss the amount of military assistance in the event of a Bolshevik attack. The aid was limited to foodstuffs; there was no intention of sending troops to the Caucasus. When Admiral Beatty asked whether Azerbaijan could set up naval defenses without outside help, A.M. Topchibashev had to admit that this could not be done.108 On 19 January, the Supreme Council, attended by the heads of governments, met once more to discuss the Caucasian Question in detail; all members of the Azeri delegation were also present. The meeting listened to the memorandum drafted by the British delegation on instructions from the Su- preme Council issued on 10 January. Lloyd George disagreed with the military experts and stated that the military were bad politicians. He asked Marshal Foch: If the Caucasus cannot be kept without additional troops and if the weapons sent there would be lost we should refuse to help at all. Is this what the military mean?109 Marshal Foch rightly believed that military force was needed to defend the Caucasus, which meant that Clemenceau, Foch, and Churchill wanted to send troops while Lloyd George and Mr. Nitti were convinced that weapons and military equipment would suffice. When offering military assistance to Azerbaijan and Georgia, Lloyd George wanted to be sure that it would be used rationally and that this time the weapons supplied would not be captured by the Bolsheviks (as had been the case with Denikin). Georges Clemenceau, who chaired the conference, wanted to know what both countries feared most and whether they would be able to use the allied assistance in the most rational way.110 According to a preliminary agreement, Irakly Tsereteli spoke for both republics. He pointed out that military assistance was badly needed: “I speak in the name of the Georgian Delegation as well as in that of the Delegation of Azerbaijan. We are equally likely to be attacked by the Bolsheviks but we do not know whether we shall be or not. Were we helped by the Entente, the Bolsheviks might hesitate to attack us. In any case, we need the material assistance of the GREAT powers if we are to defend ourselves.” When Clemenceau asked: “Are you asking us to send troops also?” Tsereteli said that this would be the best form of assistance since sooner or later the Bolsheviks would move to the Caucasus. Lloyd George wanted to know all details about the armed forces of Azerbaijan. Advisor to the Azeri delegation Mamed Magarramov explained that a military law had been passed by the parliament and that 100,000 men could be put into the field in the shortest time possible granted there were necessary

104 See: Papers Relating to the Foreign Relations of the United States. The Paris Peace Conference. 1919, Vol. IX, pp. 903-904. 105 See: “La reconnaissance de l’independance de l’Azerbaïdjan et de la Georgie,” Bulletin d’Information de l’Azerbaïdjan, Paris, No. 8, 1 Fevrier 1920, p. 1. 106 See: Z. Avalov, op. cit., p. 241. 107 See: Ibid., pp. 243-244. 108 Ibid., p. 245. 109 See: Papers Relating to the Foreign Relations of the United States. The Paris Peace Conference. 1919, Vol. IX, p. 891. 110 See: Ibid., p. 893. Volume 3 Issue 4 2009 137 THE CAUCASUS & GLOBALIZATION arms and munitions. The British prime minister asked: “Have you the troops at the moment?” The Azeri expert specified: “We have a little army, in the command of a native Azerbaijan general, about 50,000 strong, perhaps more, disciplined, but there are only from 10,000 to 12,000 of these men with arms.” Lloyd George then asked the Georgians the same thing. Tsereteli answered that the republic had about 16 battalions of regular troops, each nearly 15,000 well-disciplined men. He deemed it necessary to specify: “In a fortnight we could mobilize 50,000 men if we had the necessary arms and munitions. …In a war for independence we can count upon the support of our whole people, among whom national enthusiasm runs very high.” The British prime minister then asked whether there was compulsory military service in the republic. Tsereteli explained that the Georgian officers in the czarist army had always been considered the best. When Lloyd George asked whether there was initial military instruction for the young men in Azerbaijan, Magarramov answered that in the past Azeri boys were not conscripted. But at the beginning of the war, he explained, there were organized detachments of volunteers who distinguished themselves in the Iron Division (a Muslim division with iron discipline). Azeri officers were highly valued in czarist times; in the republic all young boys must serve with the colors. Lord Curzon took the floor to ask: “Reports that I have received say that a certain number of officers of Azerbaijan are Turkish officers. Does the presence of these Turkish officers in the army leave us the guarantees necessary in a fight against the Bolsheviks?” Mamed Magarramov explained that after the conquest of Azerbaijan by Russia a great part of the population turned to Turkey for help. When the Turkish Army invaded the Caucasus there were Azeris and Daghestanis among its officers. When the Turkish army left the Caucasus, he added, 50 officers preferred to stay behind in Azerbaijan. They were all from the Caucasus, said Magarramov, therefore they would use their whole energy in fighting the Bolsheviks for the defense of their independence.111 The British prime minister summed up: the republics should promptly receive aid in the form of weapons, equipment, and munitions yet no troops should be dispatched either to Azerbaijan or Geor- gia. He was convinced that they should fortify their defense capacity and defend themselves, Baku in particular, with their own troops.112 So another date was added to the list of significant dates in the history of Azerbaijan (28 May and 15 September, 1918): on 11 January, 1920, the Paris Peace Conference recognized the independence of Azerbaijan and opened wide the vistas of its cooperation with the world community. In April 1920, Soviet occupation of Azerbaijan cut short the process. The diplomatic representatives of the Azerbaijan Republic in Paris formed the first wave of the Azeri political emigration.

C o n c l u s i o n

An analysis of the two years of diplomatic efforts of the ADR suggests that the government and the diplomats were working on a foreign policy course best suited to the nation’s interests. No efforts were spared to realize this course in the fairly complicated international context and to convince the world community to recognize the Azerbaijan Republic. The foreign policy course the government pursued in 1918-1920 was aimed at defending the country’s independence and promoting its gradual integration into the system of international relations as an equal partner of the Western countries and the region’s leader. The republic’s diplomacy covered a long road from orientation toward Turkey in the first months of independence to its de facto recognition by the Supreme Council at Versailles.

111 See: Ibid., pp. 892-894. 112 See: M. Yacoub, Le problème du Caucase, Paris, 1933, p. 123. 138 Volume 3 Issue 4 2009 THE CAUCASUS & GLOBALIZATION Apollon SILAGADZE

D.Sc. (Philol.), professor, head of the Department of Arabic Studies, Iv. Javakhishvili Tbilisi State University, corresponding member, National Academy of Sciences of Georgia (Tbilisi, Georgia).

Vakhtang GURULI

D.Sc. (Hist.), professor at the St. Andrew the First Called University at the Georgian Patriarchate (Tbilisi, Georgia).

THE RUSSO-TURKISH CON RONTATION IN THE CENTRAL CAUCASUS IN 1918-1921

Abstract

t nearly all times, the history of the Russian and the Ottoman, moved to the fore A Central Caucasus and Georgia as its to become the main geopolitical actors in part amounted to confrontation be- the Central Caucasus. Their relations, alter- tween the great powers which, as the key nating between wars and peace treaties, de- political players, left the region’s countries termined the regional climate. little chance of settling their domestic prob- The authors offer an overview of the lems and becoming involved in external, in- process, concentrating, in particular, on the cluding territorial, issues on an equal foot- 20th century. The events described below ing. At different times the Roman Empire, have not yet lost their urgency: today, too, Persia, Byzantium, the Arabian Caliphate, the Central Caucasus can be described as and the Seljuks and Mongols played the key a place where regional and global interests roles. In the 19th century, two empires, the (including territorial issues) clash.

I n t r o d u c t i o n

The rivalry between the Ottoman Empire and Iran over domination in the south of the Caucasus began in the early 16th century and continued with alternating success until the early 18th century when Russian joined in the fracas for domination in the Central Caucasus. It won its confrontation with the Ottoman Empire and Iran, and early in the 19th century subjugated Georgia. Russia’s arrival in the Caucasus created tension between it and the Ottoman Empire because the kingdoms and princedoms of Western Georgia (the Imereti Kingdom and the Megrelian, Gurian, and Abkhazian princedoms) were Ottoman vassals. The other Georgian territories found in the Central Volume 3 Issue 4 2009 139 THE CAUCASUS & GLOBALIZATION

Caucasus (Samtskhe-Saatabago, Ajaria, Artvin, Artaani, and others) were part of Turkey. The Rus- sian conquerors in Georgia undermined Turkey’s position in the Caucasus: after losing Imeretia, Megrelia, and Guria, Turkey was threatened with the same thing in Abkhazia, Samtskhe-Saatabago, and Adjaria.

The Bucharest, Adrianople, San Stefano, and Berlin Treaties

After winning the war of 1806-1812 with Turkey, which ended with the Bucharest Treaty of 1812 under which Istanbul ceded Abkhazia together with Sukhumi to Russia,1 the Russian Empire continued its advance in the Caucasus. Under the Adrianople Peace Treaty of 1829, which ended the war of 1828-1829, the Ottoman Empire retreated from Samtskhe-Saatabago (Akhaltsikhe, Akhalka- laki, Aspindza, etc); the war of 1877-1878 delivered the final and crushing blow: under the San Ste- fano Peace Treaty of 19 February (3 March), 1878 and the Berlin Treaty of 1 (13) July, 1878, Russia moved into Ajaria (Batum), Artvin, Kars, Artaani, etc.2

The Brest-Litovsk Treaty

By the 20th century the Russian and Ottoman empires were separated by a demarcation line established by the Treaty of Berlin. Under Art LVIII of the Berlin Treaty, “the Sublime Porte cedes to the Russian Empire the territories of Ardahan (Artaani.—A.S., V.G.), Kars and Batum, together with the latter port.” The treaty went on to say: “All other territories found between the old Russian-Otto- man border and the new line shall also go to Russia. “The new border shall stretch from the Black Sea along the border set by the Peace Treaty of San Stefano to reach a point to the northwest of Khorda and to the south of Artvin; from that point it goes straight to the Chorukh River, crosses it, and continues to the west of Ashmishen along a straight line to the south to meet the Russian border under the San Stefano Treaty at a point to the south of Nar- iman. This leaves the town of Olti to Russia. From the point at Nariman the border turns eastward, crosses Tebrenek (which remains in Russia’s possession), and reaches the Penek-Chai River. “It follows this river to Barduz; then turns to the south, thus leaving Barduz and Ionikioi to Russia. From the point to the west of the village of Karaugan, the border continues on to Mejingerg; then it follows a straight line to the top of Kassadag Mountain and passes along the divide of the Arax tributaries in the north and the Murad-Su in the south until it meets the old Russian border.”3 By 1903, the territories Russia had acquired under the Treaty of Berlin had been organized into the following administrative-territorial units: the Batum Region (with the Batum and Artvin districts) and the Kars region (with the Kars, Artaani, and Olti districts). Russia retained these possessions until 1918. The two countries resumed their opposition at the concluding stage of World War I (1914-1918) and later. During World War I, the old opponents

1 See: T. Iuzefovich, Dogovory Rossii s Vostokom, The State Public Historical Library of Russia, Moscow, 2005, pp. 72-73. 2 See: Sbornik dogovorov Rossii s drugimi gosudarstvami, 1856-1917, ed. by E.A. Adamov, State Publishing House of Political Literature, Moscow, 1952, pp. 169-171. 3 Ibid., pp. 169-171, 204. 140 Volume 3 Issue 4 2009 THE CAUCASUS & GLOBALIZATION fought on different sides. In 1914-1918, the fighting in the Caucasus showed that Russia was much stronger. Before the February Revolution of 1917, the Russian Caucasian Army moved beyond the Berlin Treaty borders and established control over part of Turkish territory proper (Anatolia). The Russian Caucasian Army was still battle worthy; Russia’s Black Sea fleet was also strong. It looked as if the Turks could no longer stand up to Russia in the Central Caucasus. However, the February 1917 Revolution in Russia changed everything: during its brief existence (March-October 1917), the Interim Government managed to preserve jurisdiction over the Transcaucasus. The government of Soviet Russia, however, which came to power on 25 October, 1917, lost it: the political forces of Georgia, Azerbaijan, and Armenia cut their ties with Soviet Russia. On 15 November, 1917, they set up a regional power structure in the form of the Transcaucasian Commissariat with Evgeni Gegechkori as its chairman.4 Even though the Transcaucasus (the Central Caucasus) detached itself from Soviet Russia, no independent state was set up there: the world still looked at it as part of Russia. The fact that the Russian Caucasian Army refused to recognize Soviet Russia and fought Turkey as an independent force was no less important in this respect.5 In these conditions, Soviet Russia had no choice but to withdraw from the war: continued fighting might have cost Lenin his power. The Soviet leaders opted for a separate peace treaty with Germa- ny and its allies (Austria-Hungary, the Ottoman Empire, and Bulgaria). Under the peace treaty signed in Brest-Litovsk on 3 March, 1918, Russia lost big chunks of its territory in the Central Caucasus, as well as in other places. Art IV of the Treaty said in part: “Russia will do everything within her power to insure the immediate evacuation of the provinces of eastern Anatolia and their lawful return to Turkey.”6 This referred to the territories occupied, by the time the treaty was signed, by Russian troops. The last part of Art IV was related directly to the territories of the Russian Empire: “The districts of Ardahan, Kars, and Batum will likewise and without delay be cleared of Russian troops. Russia will not interfere in the reorganization of national and international relations of these districts, but leave it to the population of these districts to carry out this reorganization in agreement with the neighboring States, especially with Turkey.”7 This means that a referendum should be held to find out what the people living in the Batum, Kars, Ardahan (Artaani) districts really wanted. On the whole, it became clear that the Ottoman Empire had finally gained supremacy over Russia. In March 1918, the 4th All-Russia Congress of Soviets ratified the Brest-Litovsk Treaty. The Transcaucasian Commissariat refused to recognize the part of Art IV of the treaty related to the Batum, Artaani, and Kars districts. In March 1918, the delegations of the Transcaucasian Com- missariat and Turkey met in Trabzon to discuss this issue. The Turks insisted on unconditional implementation of Art IV and offered the Transcaucasian delegation headed by Akaki Chkhenkeli two weighty arguments to confirm their demand: (1) the Transcaucasus was not one of the sides to the Brest-Litovsk Treaty and (2) as part of Russia the Transcaucasus had never been an independent state. The Trabzon Conference was suspended.8 Istanbul moved forward to capture the districts enumerated in the Brest-Litovsk Treaty; in March-April, Ajaria was totally occupied together with a large part of Samtskhe-Saatabago (as far as Borjomi). Nothing had changed when the Transcaucasian Sejm set up an independent state, the Transcaucasian Federative Democratic Republic, in April 1918. On 11 May, 1918, the Transcaucasian and Turkish delegations met in occupied Batum,9 where even

4 See: Dokumenty i materaily po vneshney politike Zakavkazia i Gruzii, Tiflis, 1919, pp. 7-8. 5 See: A History of Georgia, 20th century, ed. by Prof. V. Guruli, Artanudji Publishers, Tbilisi, 2003, pp. 45-55 (in Georgian). 6 Dokumenty vneshney politiki SSSR, Vol. 1, State Publishing House of Political Literature, Moscow, 1957, p. 121. 7 Ibidem. 8 See: Dokumenty i materaily po vneshney politike Zakavkazia i Gruzii, pp. 107-184. 9 See: A History of Georgia, 20th century, pp. 53-54. Volume 3 Issue 4 2009 141 THE CAUCASUS & GLOBALIZATION more severe demands were voiced. The Brest-Litovsk Treaty was supplemented with another condition: in case of war, Turkey would be given the right to move its troops along the Transcaucasian railway.10

The Batum Treaty and Moudros Armistice

In these conditions, Georgia restored its state independence on 26 May, 1918.11 By that time Georgia had already lost vast stretches of its southwestern and southern parts (Ajaria and Samtskhe- Saatabago). In this very difficult situation, the government of the Georgian Democratic Republic had to cede Adjaria to Turkey. Under the Batum Treaty of 4 June, 1918 between the Georgian Democratic Republic and Turkey, the latter acquired considerable parts of the Central and Southern Caucasus (including Georgian’s historical territories). Art II of the Treaty said: “The border line which separates the Ottoman Empire from the republics of Georgia, Armenia, and Azerbaijan begins at the place where the Cholok River falls into the Black Sea and coincides with the old border (dating to the period before the 1877 war between the Ottoman Empire and Russia). It reaches Shavnobud Mountain and runs along the mountain tops to reach the Khalkhama and Mepiskaro mountains along the 1856 border. Having reached them, the border turns to the south, goes by the top of Pirsagat Mountain and, two kilometers to the south of Abastuman, turns to the northeast to reach Karkhuldag Mountain. From that place it runs for five kilometers to the northeast and then to the southeast; it reaches the Gorkel area, crosses the Kura two kilometers to the south of Atskur and, after passing along the tops of mountains Kayabashi, Ortatavi and Karakaya, reaches Lake Tapiskhorska immediately to the south of the Molita Monas- tery. It crosses the lake to leave on Ottoman territory the part to the south of the straight line which goes to the south of the Molita Monastery directly to a point on the opposite coast separated by a kilometer and a half from the lake’s northern point. It reaches Tavkoteli Mountain to turn south and run along the tops of Shavnabad, Karakuzu, and Samsar mountains; after turning east, it passes along the mountain tops of the Dovskiran range; then turning south, it runs along the tops of Achri- kar, Bashrirap, and Nurrakhman mountains. Beyond Nurrakhman Mountain it continues in the southward direction and, still following the mountain range, reaches the Alexandropol-Tiflis railway five kilometers from Akbulak, from where it follows the mountain range to the Khanvali area where it continues in a nearly straight line to the highest mountain of Alagez; it continues in a straight line to cross the Echmiadzin-Serderabad highway 7 kilometers to the west of Echmiadzin. At a distance of 7 kilometers from the city, it goes along the Alexandropol-Julfa railway at a distance of 10 kilometers from it. At a distance of 16 kilometers to the southwest of Bashkiaran, it crosses the road which connects the area with the railway to turn to the southeast; there it passes 1 kilometer from the village of Ashagi Karabaglar and crosses the areas of Shagablu, Karakach, and Ashagi Chenakizhi to reach Elpinchai, along which it passes into the Arpa area. Here it coincides with the Arpachai River, reaches Kaialu and, along the Kay River, reaches the top of Aktaban Mountain. Then it passes along the tops of Karakurna, Arajiy, and Araklin mountains to reach the Belianchai divide. It follows this river to reach Alijin (to the south of the Aza area) on the former Russo-Persian border.”12

10 See: Dokumenty i materaily po vneshney politike Zakavkazia i Gruzii, pp. 268-316. 11 See: A. Silagadze, V. Guruli, Restoration of Georgia’s State Independence (1917-1918), Intellekti Publishers, Tbilisi, 1998 (in Georgian). 12 Dokumenty i materaily po vneshney politike Zakavkazia i Gruzii, pp. 344-345. 142 Volume 3 Issue 4 2009 THE CAUCASUS & GLOBALIZATION

After acquiring new territories, the Turks got down to the business of consolidating their advantages. In June 1918, they carried out what they called a referendum in occupied Adjaria and announced that the people wanted to become part of the Ottoman Empire. Then everything went wrong: defeated in World War I, the Turks had to evacuate Batum and Ajaria under the Moudros Armistice of October 1918. Adjaria became part of the British occupation zone; British warships entered the Batum port in December 1918 and January 1919, where they remained until July 1920.13

The Moscow Treaty

In violation of the Georgian-Russian Treaty of 7 May, 1920, Soviet Russia attacked Georgia in the small hours of 12 February, 1921. On 25 February, 1921, it captured Tbilisi. The Georgian government moved to Batum, from where it emigrated during the night of 17 March. In March 1921, while the war between Russia and Georgia was in full swing, Russia and Turkey met in Moscow to discuss the spheres of influence in the Transcaucasus. The talks were based on two important conditions: Turkey was to abandon all its territorial claims in the Transcaucasus, while Russia was to re- frain from its demand that Turkey’s northeastern border be moved to the line established by the Berlin Congress of 1878. On 16 March, 1921, while the government and the Constituent Assembly of the Georgian Dem- ocratic Republic were still in Georgia, Russia and Turkey signed the Moscow Treaty. By that time, Russia and Turkey were no longer immediate neighbors: they were separated by the formally independent Georgian, Armenian, and Azeri states, which meant that the treaty could not draw the border line between Russia and Turkey. The treaty described the northeastern border of Turkey, beyond which the country had to abandon all territorial claims: the northeastern border of Turkey passed along a line which began at the Sarp village on the Black Sea coast, crossed Khedismta Mountain, and continued along the divide of the Shavshet-Kanny-dag mountains to follow the north administrative border of the Ardahan and Kars sandþaks.14 This meant that Soviet Russia exchanged Georgia for the following territories it had acquired under the Treaty of Berlin of 1878: the Artvin district (Artvin and Artanuji), the Artaani district (Artaani, Digviri, Potskhovi, Childiri, Kola, and Taoskari), and the Kars district (Kars). Attachment I(a) based on Art I of the treaty specified the state border of Turkey in the Central Caucasus, including in Georgia’s historical territories.15 On 20 July, 1921, the All-Russia Central Executive Committee ratified the treaty; the Grand National Assembly of Turkey followed suit on 31 July. On 22 September, 1921, the sides exchanged ratification documents in Kars. By March 1921, Soviet Russia had conquered the Central Caucasus (Azerbaijan, Armenia, and Georgia). Despite the military occupational regime, the states remained de jure independent. For this reason, Moscow sought their recognition of the Moscow Treaty of 16 March, 1921, the newly established state borders in the Central Caucasus in particular. The Moscow Treaty touched on Georgia’s interests in certain other respects. Art 2 of the document said: “Turkey agrees to cede to Georgia its suzerainty over the port and city of Batum and the territory to the north of the border described in Art 1 of the present Treaty which belonged to the Batum Dis- trict, providing that

13 See: A History of Georgia, 20th century, pp. 69-70. 14 See: Dokumenty vneshney politiki SSSR, Vol. 3, 1959, p. 598. 15 See: Ibid., pp. 602-603. Volume 3 Issue 4 2009 143 THE CAUCASUS & GLOBALIZATION

(1) the population of the territories enumerated in this article shall enjoy broad local autonomy in the administrative respect, which will ensure each of the communities its cultural and religious rights and the population of which will be able to draw up a land law corresponding to its wishes. (2) Turkey shall enjoy free transit for goods shipped into Turkey or from it through the Batum port duty free and without delays or the levying of any other fees; Turkey will have the right to use the Batum port without paying special duties.”16 Art III of the Russo-Turkish treaty was related to Azerbaijan. It said: “the Nakhchivan Re- gion… forms an autonomous territory under Azeri protectorate, providing that Azerbaijan never cede this protectorate to a third state.”17

The Kars Treaty

We have already written that in March 1921 Azerbaijan, Armenia, and Georgia, occupied by Russia de jure, remained sovereign states: there were still no Transcaucasian Federation or Soviet Union. On the other hand, a plan for building a Soviet empire had been devised, although the status of Georgia, Azerbaijan, and Armenia within it still remained unclear. Meanwhile, Russia decided to strengthen its position in the Central Caucasus and resolve the problems with its main regional rival. On 23 September, 1921, Turkey, Georgia, Armenia, and Azerbaijan, as well as Russia as one of the sides, opened negotiations in Kars. The official Russian publications offered the following title for the Kars Treaty of 13 October, 1921: The Treaty of Friendship between the Armenian S.S.R., Azerbai- janian S.S.R., and Georgian S.S.R., on the one hand, and Turkey, on the other, signed with the R.S.F.S.R.’s participation in Kars. The Preamble said that Armenia, Azerbaijan, Georgia, and Turkey “decided to open negotiations with the participation of the Russian Socialist Federative Soviet Re- public.”18 People’s Commissar for Military and Naval Affairs Shalva Eliava and People’s Commissar for Foreign Relations and Finances Alexander Svanidze signed the document for Georgia. On the Rus- sian side, the document was signed by Yakov Ganetski (Fürstenberg), a member of the Collegium of the People’s Commissariat for Foreign Affairs of Russia; Bekhbud Shakhtakhtinski signed for Azer- baijan; Kâzim Karabekir Pasha, Veli Bey, Mukhtar Bey, and Memdoukh Shevket Bey signed for Turkey; and Askanaz Mravian and Pogos Makintsian, for Armenia.19 The Kars Treaty was based on the principles outlined by the Moscow Treaty between Rus- sia and Turkey; the northeastern border of the latter remained unchanged. Art I of the Kars Trea- ty annulled all previous treaties related to the Central Caucasus with the exception of the treaty of 16 March, 1921. Art II demanded that Georgia, Armenia, and Azerbaijan refuse to accept any treaty related to Turkey which the Turkish government and the Grand National Assembly rejected. In turn, Turkey pledged not to recognize any international treaty that was rejected by Georgia, Armenia, and Azerbaijan.20 Art IV established that the northwestern border of Turkey “begins at the Sarp village on the Black Sea coast, crosses Khedismta Mountain, and passes along the divide of Shavshet- Kanny-dag mountains to follow the former north administrative borders of the Ardahan and Kars sandþaks.”21

16 Ibid., p. 598. 17 Ibid., pp. 598-599. 18 Dokumenty vneshney politiki SSSR, Vol. 4, 1960, pp. 420-421. 19 See: Ibidem. 20 See: Ibid., pp. 421-422. 21 Ibid., p. 422. 144 Volume 3 Issue 4 2009 THE CAUCASUS & GLOBALIZATION

Art VI was related to Ajaria: “Turkey agrees to cede to Georgia its suzerainty over the port and city of Batum and the territory to the north of the border described in Art 4 of the present Treaty which belonged to the Batum District, providing that “(1) the population of the territories enumerated in this article shall enjoy broad local autonomy in the administrative respect which will ensure each of the communities its cultural and religious rights and the population of which will be able to draw up a land law corresponding to its wishes. “(2) Turkey shall enjoy free transit for goods shipped into Turkey or from it through the Batum port duty free and without delays or the levying of any other fees; Turkey shall have the right to use the Batum port without paying special duties. “To implement this article immediately after the signing of the present Treaty “a Commission of representatives of the interested sides will be set up.”22 Art VII of the Treaty said that the sides agreed “to facilitate border crossing for the people living in the border areas, providing that all customs, police and sanitary rules established by the Mixed Commission are observed.”23 This means that the Kars Treaty repeated, nearly word for word, Arts I and II of the Moscow Treaty of 16 March, 1921. The same can be said about Art III of the Moscow Treaty related to the Nakhchivan Autonomy. Art V of the Kars Treaty said that it was “an autonomous territory under Azeri protectorate.”24 Six out of the twenty articles of the Kars Treaty entered into force on the day it was signed, 13 October, 1921; Art VI, one of the six articles, was related to Ajaria; the others were to be enforced after ratification; Art XX obliged the sides to change the ratification documents in the shortest time possible.25 The exchange took place in Yerevan on 11 September, 1922. The Kars Treaty had no secret articles; none of the three attachments were secret; they were repeatedly published. The first of them described in detail Turkey’s northeastern border; the second, the Turkish border in the Arpa-chai and the Arax River zone; while the third dealt with the borders of Nakhchivan Autonomy. All three appendices were signed by representatives of all five countries.26 The Kars Treaty was drawn up in five copies in the Turkish, Russian, Georgian, Azerbaijani, and Armenian languages. The term of the treaty was not specified.

C o n c l u s i o n

On 30 July, 1992, Georgia and Turkey signed a Georgian-Turkish Treaty in Tbilisi. On the Georgian side, it was signed by Chairman of the State Council Eduard Shevardnadze; on the Turkish side, by Premier Süleyman Demirel. The Preamble said that the sides pledged to observe all earlier treaties and agreements starting with the Kars Treaty of 13 October, 1921. The Treaty of 30 July, 1992 was concluded for a term of 10 years. The treaty said that if any of the sides did not announce its intention to discontinue the treaty three months before its expiry the treaty would be extended for 5 more years. In 2002, neither Georgia nor Turkey wished to discontinue the treaty.

22 Dokumenty vneshney politiki SSSR, Vol. 4, 1960, p. 423. 23 Ibidem. 24 Ibidem. 25 See: Ibid., p. 426. 26 See: Ibid., pp. 427-429. Volume 3 Issue 4 2009 145 THE CAUCASUS & GLOBALIZATION Nikolai JAVAKHISHVILI

D.Sc. (Hist.), professor, senior fellow at the Department of Modern and Recent History, the Ivane Javakhishvili Institute of History and Ethnology (Tbilisi, Georgia).

ROM THE HISTORY O COOPERATION AMONG THE CAUCASIAN POLITICAL E´´´MIGRE´´´S: 1921-THE EARLY 1940S

Abstract

he author concentrates on the key 1921 and the early 1940s, a subject that T aspects of cooperation among the until recently has remained at the margins Caucasian political émigrés between of historical studies.

I n t r o d u c t i o n

For centuries, the Caucasian peoples maintained military-political, economic, and cultural cooperation among themselves albeit with different intensity: in fact, military-political cooperation was cut short by Russia which conquered the entire region. It was resumed in 1917, when the Rus- sian Empire ceased to exist. Georgia maintained especially close relations with Azerbaijan and the Mountain Republic, which is amply confirmed by the documents relating to the relations between the Georgians and their Caucasian neighbors in 1918-1921 now kept at the State Historical Ar- chives of Georgia.1 Occupation and invasive Sovietization of the independent Caucasian republics forced their governments into emigration, mainly to Europe. Their cooperation continued abroad where they decided to set up the single anti-Bolshevist center; the efforts went on in the Caucasus and abroad.

Cooperation among the Caucasian Political E´´´migre´´´s in the 1920s-1930s

On 8 May, 1921, when Sovietization of the Caucasus had been going on for nearly twelve months, a meeting in Paris brought together representatives of the Caucasian émigrés. Georgia was

1 See: The Central State Historical Archives of Georgia, Record group 1861, Inventory 1, Files 58, 655; Inventory 2, Files 3, 13; Record group 1864, Inventory 1, Files 25, 28; Record group 1969, Inventory 2, File 34; Record group 2037, Inventory 1, File 7. 146 Volume 3 Issue 4 2009 THE CAUCASUS & GLOBALIZATION represented by E. Gegechkori, N. (K.) Chkheidze, N. Ramishvili, G. Veshapeli, K. Sabakhtarash- vili, and M. Sumbatashvili; Azerbaijan by A. Sheikhulislamov, D. Hajibekov, M. Magarramov, and A. Topchibashev; Armenia by A. Agaronian, A. Khatisian, and N. Bekzadian; while Chechen A. Ch- ermoev represented the Northern Caucasus. They outlined the ways the Bolshevist regime in the Caucasus could be removed and decided to set up a united Caucasian bloc. On 10 June, the participants signed an agreement on setting up a Coun- cil of the Union of the Caucasian Republic to present the Bolsheviks with a united front.2 On 2 October, in Istanbul, the newly formed United Information Bureau of the Caucasian Re- publics was entrusted with recognizing independence of the Caucasian republics, ensuring unconditional recognition of the right to self-determination of all Caucasian peoples, setting up a democratic platform of struggle, establishing the people’s rule, liquidating large landed properties, and transfer- ring land to the peasants as private property.3 On 9 November, Caucasian émigrés gathered in Paris for another meeting; they decided, among other things, to set up a Headquarters of the Caucasian Military Affairs in Paris and move the core of the general commands closer to the Caucasus.4 In November 1924, the Caucasian Liberatory Committee was set up in Istanbul on the Basis of the Caucasian Confederation, an event with a political, as well as moral-psychological effect. The act was signed by representatives of the Georgian and Azerbaijan republics and the mountain peoples of the Northern Caucasus. On the Georgian side, it was signed by members of the National- Democratic Party Mikhail Tsereteli, David Vachnadze, and Alexander Asatiani; on the Azeri side, by Khosrov Sultan-zadeh, Abdullah Ali Emirjan, and Sheikh-ul-Islam-zadeh; and on the North Caucasian side, by Circassian Haytek Namitov, Chechen Vasan-Girey Jabagi, and Osset Alikhan Kantemir.5 Émigré groups from Georgia, Azerbaijan, Northern Caucasus, Ukraine, and Turkestan of the Prometheus Society set up in Warsaw in 1925 were the best organized among the Caucasian émigré structures which sprang into existence all over the world. Muhammad-Saeed Shamil (1901-1981), grandson of Imam Shamil, the recognized leader of the North Caucasian diaspora in Turkey and the Middle East and a founder and leader of the People’s Party of the Caucasian Mountain Dwellers, played an important role in Prometheus.6 The Armenian émigrés who found it hard to find a common language with the Azeris preferred to keep away from the political gatherings of the Caucasian émigrés; it was decided to enlist the Geor- gians to draw the Armenians, in any form, into a common Caucasian organization. In 1933, an Arme- nian-Georgian Union under David Vachnadze was set up only to expire soon thereafter. In May 1933, the Committee of Caucasian Independence published a draft Pact of the Caucasian Confederation and an Address to the Peoples of the Caucasus on the occasion of the 15th anniversary of restored independence. On 14 June, 1934, the document was signed in Brussels by former Chairman of the National Council of Azerbaijan Muhammad Emin Rasulzade, who headed the National Center, former Foreign Minister of Azerbaijan and later speaker of the republic’s parliament Alimardan bek Topchibashev, who headed the delegation, former chairman of the government of the Georgian Democratic Republic Noah Zhordania, former ambassador plenipotentiary to France Akaki Chkhenkeli, and Mamed Girey Sunshi, Ibrahim Chulik, and Tausultan Shakman from the Northern Caucasus.

2 See: The Court Case of the Parity Committee of the Anti-Soviet Parties of Georgia (Indictment), Tbilisi, 1925, pp. 8-9 (in Georgian). 3 See: R. Grdzelidze, Popular Uprising of 1924 in Georgia, Tbilisi, 1992, p. 12 (in Georgian). 4 See: N. Kirtadze, The Revolt of 1924 in Georgia, Kutaisi, 1996, pp. 120-123 (in Georgian). 5 See: R. Daushvili, “Kavkazskaia konfederatsia,” Kavkazskiy vestnik, Tbilisi, No. 3, 2001, p. 130. 6 See: A. Murtazaliev, Pisateli Daghestanskogo zarubezhia (Bibliograficheskiy spravochnik), Makhachkala, 2006, p. 63. Volume 3 Issue 4 2009 147 THE CAUCASUS & GLOBALIZATION

The Pact formulated the fundamental principles of the Caucasian Confederation based on mutual equality. The elected Caucasian Council and its Presidium as an executive structure were expected to guide the liberation struggle in the Caucasus. The Pact said: n “The national centers of Azerbaijan, the Northern Caucasus, and Georgia, n “taking into consideration that nations can develop freely only when completely independent, n “being convinced that this aim can hardly be achieved without pooling the forces of the entire Caucasus within the common borders, n “being confident that in this way each of the Caucasian nations will acquire real guarantees of its sovereignty needed to develop in full its intellectual and material forces, n “being confident that by adopting the underlying principles of the Union of the Caucasian Republic they will have their compatriots on their side, n “agreeing that the confederation as a political form of the Caucasian states is suggested by their geographic and economic unity, declare the following principles of the Caucasian Con- federation: “1. While preserving the national specifics of each of the republics and ensuring their sovereignty, outside the region the Caucasian Confederation shall act in the name of all the republics as an international unit of the highest order. The Confederation shall have a common political and customs border. “2. The foreign policy of the republics which belong to the Confederation shall be entrusted to its corresponding structures. “3. The borders shall be defended by the army of the Confederation made up of the armies of its members; its united command shall take orders from the leading bodies of the Confed- eration. “4. Any disagreements that might arise among the republics which belong to the Confeder- ation and which cannot be settled through direct talks shall be referred to the Arbitration or Supreme Court of the Confederation of the republics (that belong to the Confedera- tion), the corresponding structures of which are duty bound to accept the rulings without changes and to execute the rulings of the Supreme Court. “5. An expert commission shall draft, in the near future, the Constitution of the Caucasus with due account of the above. This draft shall serve as the starting point for the first Constituent Assemblies of each of the republics. “6. The Pact has reserved a place for the Armenian Republic.”7 The Pact was given positive coverage in the European press. In 1934, Noah Zhordania wrote in his article which appeared in the Paris-based Georgian newspaper Brdzolis khma (The Voice of Struggle): “The Pact of the Caucasian Confederation … is not an improvisation, a piece of news in- vented and worded abroad. It arrived from the Caucasus and is prompted by the vital needs and neces- sities of the people who live there. We have merely shaped it into a legal form, formulated its status, and enforced in writing the freedom struggle waged in our country by all nationalities: Azeris, Geor- gians, Armenians, and mountain dwellers. From time immemorial, these four peoples have been living side by side in the same territory and have been tied and are still tied by their vital interests. None of them can move ahead without others; none of them can fall into a precipice without taking the others along with it.

7 Samshoblo (Motherland), A national-democratic monthly, Paris, No. 16, 1934 (in Georgian). 148 Volume 3 Issue 4 2009 THE CAUCASUS & GLOBALIZATION

“In the 19th century the entire Caucasus lost its freedom when Georgia lost its; in the 20th century Georgia lost its freedom after the Caucasus lost its. This is the way it was in the past and this is the way it will be in the future: either united in freedom or separated in slavery. History leaves us no other option. The Caucasian peoples have accepted this; they are fighting all together against tyranny. “Our Pact is a legal description of our present struggle and our future victory… The Caucasian peoples which side with the Pact call on all subjugated nationalities and nations of the Soviet Union to destroy, by concerted efforts, communist tyranny and create a common foundation of freedom and good-neighborliness for all nations and peoples.”8 On 15 September, 1934, the tenth anniversary of the Caucasian Confederation, the Georgian colony in Warsaw gathered together representatives of the Caucasian colonies, as well as Poles and Ukrainians. The Georgians were headed by Kote Imnadze, the Azeris by Mirza Bala, and the North Caucasians by Mamed Girey Sunshi. Kote Imnadze, chairman of the Georgian colony and political committee, opened the meeting; he used Polish to tell the story of the revolt of 1924 and its results; he pointed out that since the liberation initiative of the Caucasian peoples had been repeatedly suppressed, they should pool their forces to achieve independence as their goal and added that the Pact had been created with the same aim in view. In May 1935, the Georgian colony took part in the burial ceremony of Marshal Josef Pi³sudski, an outstanding Polish statesman and military leader and a friend and patron of the Caucasian émigrés. In September 1936, a session of the Caucasian Confederation listened to the reports of those who represented Georgia, Azerbaijan, the Northern Caucasus, etc; on 25 September, they presented their extraordinary document to Carlos Saavedra Lamas, who chaired the XVII meeting of the League of Nations; several days later, on 28 September, they handed him a Memorandum and Pact signed by the representatives of Georgia, Azerbaijan, and the Northern Caucasus. The memorandum said, in part, that the Caucasian peoples fighting for independence were convinced that progressive mankind was on their side.9 The Caucasian Confederation maintained close ties with similar structures set up by other peoples who in the past had formed parts of the Russian Empire.

The Press of the Caucasian Political E´´´migre´´´s

At different times, and in different European cities, Caucasian émigrés published journals which dealt with Caucasian issues. Published under different titles, they all used the Russian language to be understood by all Caucasian émigrés, irrespective of nationality. In 1929, the People’s Party of the Mountain Dwellers of the Caucasus published the Gortsy Kavkaza (The Mountain Dwellers of the Caucasus) journal in Paris, which appeared in Russian under the editorship of Tambiy Elekkhoti.10 From time to time, Georgians contributed to the journal. Issue 2-3 for 1929, for example, carried an article by Georgian National-Democrat Georgi Gvazava called “Dobrovoltsy russkogo imperializma” (The Volunteers of Russian Imperialism).11 In 1929, the Nezavisimy Kavkaz (The Independent Caucasus) was started in Paris, which its cover described as the Organ of Caucasian Confederalist Thought. Issue 2 for 1930 carried an article by Georgian National-Democrat David (Data) Vachnadze entitled “Problema Kavkazskoy konfeder- atsii” (The Problem of the Caucasian Confederation).

8 N. Zhordania, “The Caucasian Confederation,” Brdzolis khma, Paris, No. 45, 1934 (in Georgian). 9 See: R. Daushvili, op. cit., pp. 130-132. 10 See: Z. Khuako, Mir pechati Adyghei, Maykop, 2003, p. 473. 11 See: G. Sharadze, History of Georgian Émigré Journalism, Vol. 8, Tbilisi, 2005, p. 408 (in Georgian). Volume 3 Issue 4 2009 149 THE CAUCASUS & GLOBALIZATION

In 1930-1931, one issue of the Kavkaz journal, mostly pro-Armenian, appeared in Riga; it carried an article by former Tbilisi Governor General Shalva Maglakelidze (1894-1976) called “Gruzia (istoricheskiy obzor i perspektivy)” (Georgia: an Outline of the Past and Look into the Future) and a poem called “Georgia” and signed by A.D.12 In 1934-1935, the People’s Party of the Mountain Dwellers of the Caucasus published a monthly Severny Kavkaz (The Northern Caucasus) in Turkish and Russian in Warsaw. Edited by Barasbi Baytugan it was, in fact, a publication of the Adighe émigrés which replaced the Gortsy Kavkaza. Issue 10, which appeared in February 1935, informed readers: “The present issue offers readers official information by the Presidium of the recently formed Caucasian Confederation about the newly established Council of the Caucasian Confederation which will be in charge of all political initiatives relating to the Caucasus. This is intended to strengthen the Caucasian union realized by the Pact of the Caucasian Confederation signed on 14 July in Brussels. “We interpret this as a logical step taken by the patriotically-minded Caucasians; we hail the newly established united Caucasian structure and wish it every success in dealing with its tasks.”13 In 1934-1939, the Kavkaz and Zaria Kavkaza journals appeared in Paris in Russian, German, English, Italian, and Turkish under the editorship of former Foreign Minister of the Mountain Repub- lic Heydar Bammat (1890-1965). He published articles on world and Caucasian political issues, his own deliberations on the future of the Caucasus and the Caucasian diaspora; he signed some of his books and articles on Islamic subjects with his pseudonym Georges Rivoir.14 In 1936, the Nezavisimost Kavkaza (The Caucasian Independence) journal was published in Berlin in French under Heydar Bammat as its editor. In June 1937, the Kavkaz journal published in Paris acquired a Georgian language edition; in Paris it was edited by Iosif Gvaramadze; the issues published in Berlin were edited by David Sagirashvili; its cover described it as a “monthly of independent national thought.” The journal attracted Georgian (Zurab Avalishvili, Shalva Amirejibi, Vladimir Akhmeteli, Revaz Gabashvili, Grigol Diasamidze, Mikhail Kedia, Georgi Kvinitadze, Alexander Nikuradze, and others) as well as Abkhazian (Vladimir Emkhvari), Azeri (Asad-bey and Khasan-bey Aliev), and North Caucasian (Heydar Bammat and Alikhan Kantemir) émigrés; West European politicians (Enri- co Insabato and others) sometimes also contributed to it.15 In his article “Politicheskie arabeski” (Political Arabesques), which appeared in the journal in 1937, prominent Georgian scholar Zurab Avalishvili wrote: “The independence of the Baltic republics was achieved without pooling them together into one state. The Caucasian republics failed to preserve their independence. Political, military, and economic disunity proved to be fairly harmful for all of them. “No matter what form their unification might take it should protect, in the best way possible, all the Caucasian peoples and keep them away from dissention and discord. It seems that for the sake of this the Caucasian nations will be prepared to obey, to a certain extent, discipline and the common Caucasian statehood.”16 In his article “Aktsions-programma kavkazskikh natsiy” (the Program of Action of the Cauca- sian Nations), former ambassador of Georgia to Germany Vladimir (Lado) Akhmeteli clearly identified the journal’s program and aim as bringing all the Caucasian peoples into a single confederation. He wrote on this score: “The shared historical existence, communal closeness caused by the geopolitical conditions, and similar customs and rites serve as a firm foundation for their complete unification. Many peoples invaded our common homeland to subjugate it. Some of them succeeded. They tempo-

12 See: Ibidem. 13 See: Z. Khuako, op. cit., p. 453. 14 See: A. Murtazaliev, op. cit., p. 47. 15 See: G. Sharadze, op. cit., pp. 398-400. 16 See: Z. Avalishvili, “Political Arabesques,” The Caucasus, Paris, No. 1, 1937 (in Georgian). 150 Volume 3 Issue 4 2009 THE CAUCASUS & GLOBALIZATION rarily captured our lands, enslaved those who lived on them, caused dissent among them, and fanned bloody fratricidal wars. The communities who have been living in the Caucasus from time immemorial still survived and preserved their racial features, languages, customs, morals, and traditions. Their love of their motherland taught them to believe they need a common Caucasian statehood. Wise Ilia Chavchavadze, whose birth centenary we are celebrating today, addressed all the Caucasian nations with: ‘Either we shall perish all together or we shall flourish together.’”17 The Caucasian émigré press was intended to bring the positions of the Caucasian political organizations closer together to unify them for the sake of fighting for their common aim.

World War II and the Position of the Caucasian Political E´´´migre´´´s

The radically-minded Caucasian political émigrés were convinced that the road to freedom lay through Germany’s victory over the Soviet Union; this served as the rationale for pro-German organizations of Caucasian émigrés in Paris and Berlin. On 30 January, 1937, Colonel Shalva Maglakelidze (since 1944 general of the Wehrmacht) stood at the head of Sakartvelos fashisturi darazmuloba (The Fascist Unit of Georgia) based on the Georgian patriotic organization Tetri Giorgi (White St. George). The newly-formed structure published the Kartlosi journal.18 In 1937, the organization published a book called Polozhenia k deiatelnosti i borbe (The Provi- sions of Activities and Struggle) in Paris, Point XIV of which said: “Georgia and the Caucasus form a single whole, a close unity of the peoples of the Caucasus is a must. Georgia and the Caucasus form an indivisible whole geographically as well as politically, economically, and culturally. This is proven by the ancient and recent history of the Caucasus. This means that close unity among the Caucasian peoples is a must.”19 Guided by the principle “the enemy of my enemy is my friend,” the right radicals among the Caucasian émigrés hailed the German attack on the Soviet Union. Driven by the hope of liberating their homeland from the Bolsheviks, some of them joined the German army on 22 June, 1941. The memoirs of well-known Georgian émigré Mikhail Kavtaradze (1906-2008) describe the mutually exclusive sentiments popular in the Georgian and other Caucasian political structures of the time: “The war caused ruptures among some of the Georgian émigrés; some were rapturous, some people were suspicious, others plainly at a loss … There were those who had dedicated twenty years of their lives to the freedom struggle and had never enlisted true allies. When Germany, the only possible ally among the big states very much interested in crumbling the Russian Empire, attacked Russia, the Georgians interpreted this as a negative development. Indeed, Germany was ruled by a hardly likable regime; more than that: this Germany was fighting not only Russia but also the fairly likable democratic countries.”20 It should be said that the members of the government in exile, prominent Social-Democrats, flatly refused to cooperate with the Germans. On 14 February, 1940, in Paris, leader of the Georgian Social-Democrats Noah Zhordania was very critical about the expansionist policy of Nazi Germany in the presence of the members of the Constituent Assembly of independent Georgia in exile.21 He

17 See: V. Akhmeteli, “The Program of Action of the Caucasian Nations,” The Caucasus, Paris, No. 2, 1937. 18 See: G. Sharadze, op. cit., p. 97. 19 Ibid., pp. 110-111. 20 M. Kavtaradze, 100 Years of Life (reminiscences, publicist writings, translations, poetry), Tbilisi, 2007, pp. 111- 112 (in Georgian). 21 See: N. Kikvadze, “National-Socialism and Georgian Professors,” Droni (The Times), Tbilisi, No. 16-19, 1993 (in Georgian). Volume 3 Issue 4 2009 151 THE CAUCASUS & GLOBALIZATION said: “I refuse to believe that the German state, which without qualms destroys the independence of free nations, will help to restore Georgian independence. Our future is tied to the democratic states which alone respect the freedom of others.”22 This cost him his freedom when the Germans entered Paris.23 Other prominent Caucasian scholars, politicians, and the military (there were Georgians among them: Z. Avalishvili, Sh. Amirejibi, V. Akhmeteli, L. Kereselidze, G. Kvinitadze, Sh. Maglakelidze, M. Tsereteli, and others) were of a different opinion. Even before World War II, they had been looking at Germany in the hope of finding a worthy place for their homeland in the future “victorious Third Reich.”24 These people hoped that, if victorious, Germany would help the Caucasian countries restore their independence, as happened in May 1918. It should be said that the Nazi regime gave practically no grounds for such hopes. During World War II, this cooperation was especially intensive; the radically-minded Cauca- sian, as well as Slavic (including Russian) émigrés fought together with the Germans against Bolshe- vism, their common enemy. This fact, however, goes beyond the chronological frameworks of the present article.

C o n c l u s i o n

When the Red Army occupied the independent Caucasian republics (the Mountain Republic, Azerbaijan, Armenia, and Georgia), some of the members of their governments had to emigrate. Starting in 1921, Caucasian émigrés frequently met in Istanbul, Paris, Brussels, Warsaw, and elsewhere to discuss burning issues; their cooperation continued until the war between Germany and the Soviet Union and left a certain trace in the political history of the Caucasus.

22 M. Tougouchi-Caianee, URSS face au problème de Nationalités, Luttich, 1947, p. 349. 23 See: N. Kikvadze, op. cit. 24 See: N. Javakhishvili, “The Attempt at Restoring the Kingdom of Georgia during World War II,” A History, Tbi- lisi, No. 1, 1993 (in Georgian). 152 Volume 3 Issue 4 2009 THE CAUCASUS & GLOBALIZATION

Index THE CAUCASUS & GLOBALIZATION Vol. 3, 2009

Author Article No. Pp. GEOPOLITICS

Archil GEORGIA AFTER THE WAR: GEGESHIDZE TOWARD LASTING PEACE AND STABILITY 1 6 Jannatkhan RUSSIA IN CENTRAL EURASIA: EYVAZOV SECURITY INTERESTS AND GEOPOLITICAL ACTIVITY 1 11 Alla RUSSIA AND THE INDEPENDENT YAZKOVA CAUCASIAN STATES 1 22 Svetlana THE NEW INDEPENDENT STATES OF CHERVONNAYA THE CENTRAL CAUCASUS: THE ACHILLES’ HEEL OF THEIR NATIONAL POLICIES 1 30 Nazim MUZAFFARLI (IMANOV), Eldar THE REHABILITATION OF ISMAILOV THE POST-CONFLICT TERRITORIES 2-3 7 Kenan HOW THE KARABAKH CONFLICT FITS ALLAHVERDIEV THE NEW GREAT GAME CONTEXT 2-3 25 Rustem DJANGUZHIN CENTRAL ASIA: (ZHANGOZHA) NEW GEOPOLITICAL ARCHITECTURE 2-3 37 Volume 3 Issue 4 2009 153 THE CAUCASUS & GLOBALIZATION

Author Article No. Pp.

Jason HIERARCHICAL GLOBAL STRUCTURES E. STRAKES AND THEIR INFLUENCE ON AZERBAIJANI VIEWS OF INTERNATIONAL POLITICS 2-3 47 Ramil THE PARLIAMENT IN AZERBAIJAN’S POWER ALIEV DIVISION SYSTEM 2-3 60 Tedo THE WIDER BLACK SEA REGION: JAPARIDZE THE EYE OF THE EU’S NEXT POLITICAL STORM OR THE SHINING SEA OF STABILITY? 4 6 Jannatkhan IRAN’S SECURITY INTERESTS AND EYVAZOV GEOPOLITICAL ACTIVITY IN CENTRAL EURASIA 4 19 Anton UKRAINE: POLITICS FINKO IN THE BLACK SEA-CASPIAN REGION AND RELATIONS WITH THE CAUCASIAN STATES 4 30 Teimuraz ON THE LOGIC OF THE DEVELOPMENT OF BERIDZE THE AUGUST (2008) CONFLICT IN GEORGIA 4 43

GEO-ECONOMICS

Michael POST-SOVIET MIGRATION TO RUSSIA: BARRY A COMPUTABLE GENERAL EQUILIBRIUM APPROACH 1 37 Rafiq DECISION ANALYSIS ALIEV IN FUZZY ECONOMICS 1 51 Ali AZERBAIJAN AND MASIMLI THE WORLD FINANCIAL CRISIS 1 68 Rasim HASANOV MANAGEMENT IN TRANSITION ECONOMIES: AN AZERBAIJAN REPUBLIC CASE STUDY 1 84 Iza MICROECONOMIC ENVIRONMENT NATELAURI IN POST-SOVIET GEORGIA: REVERSES AND PARADOXES 1 91 Ibrahim HYDROCARBON RESOURCES OF GULIEV THE CASPIAN REGION IN THE GLOBAL ENERGY SUPPLY SYSTEM 2-3 70 Rozeta POST-COMMUNIST TRANSITION PERIOD ASATIANI IN THE GEORGIAN ECONOMY 2-3 79 154 Volume 3 Issue 4 2009 THE CAUCASUS & GLOBALIZATION

Author Article No. Pp.

Hadjiaga STATE POLICY RUSTAMBEKOV IN THE COORDINATES OF POST-SOVIET MARKET TRANSFORMATION 2-3 89 George THE ROLE OF IVANIASHVILI- NATIONAL INNOVATION SYSTEM ORBELIANI IN ECONOMIC COMPETITIVENESS OF GEORGIA 2-3 100 Aysel TRAFFICKING IN HUMAN BEINGS: ALLAHVERDIEVA A TRANSNATIONAL THREAT OF THE GLOBALIZATION ERA (COMPARATIVE ANALYSIS OF THE CENTRAL CAUSASIAN STATES) 2-3 116 Andrei THE DIFFICULTIES AND BLINOV CONTRADICTIONS OF SMALL BUSINESS DEVELOPMENT IN RUSSIA 4 50 Kornely ENERGY SECURITY AFTERMATH OF KAKACHIA RUSSO-GEORGIAN WAR: IMPLICATIONS FOR THE CENTRAL CAUCASUS 4 61 Ramaz ABESADZE, INNOVATIVE ACTIVITIES AND Vakhtang THEIR COORDINATION UNDER BURDULI ADVANCING GLOBALIZATION 4 68 Ekaterine MACROECONOMIC ANALYSIS OF MEKANTSISHVILI GEORGIA’S ECONOMIC DEVELOPMENT USING A SOCIAL ACCOUNTING MATRIX (1999-2008) 4 80

GEOCULTURE

Tedo DUNDUA, EUROPEAN INTEGRATION AND Nino ARCHITECTURAL STYLES SILAGADZE (HOW GLOBALIZATION STARTED)198 Rauf COLLECTIVE MEMORY AND GARAGOZOV NATIONAL IDENTITY IN THE GLOBALIZATION ERA (EMPIRICAL STUDIES OF THE AZERI YOUTH) 1 104 Tamara THE ORIENTAL SCIENTIFIC AND ABULADZE CULTURAL AREA OF THE MIDDLE AGES AND GEORGIAN SCIENCE 1 114 Volume 3 Issue 4 2009 155 THE CAUCASUS & GLOBALIZATION

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Roya THE ART OF TAGHIYEVA AZERBAIJANI CARPET WEAVING IN THE CONTEXT OF THE INTERCIVILIZATIONAL DIALOG 2-3 133 Elmir RELIGIOUS EDUCATION VS. GULIEV RELIGIOUS RADICALISM IN ISLAM 2-3 148 Konul THE EAST AND THE WEST: BUNIADZADE YESTERDAY, TODAY AND TOMORROW 2-3 157 Anatoli SPECIAL FEATURES OF THE CHANGES YAMSKOV IN THE ETHNODEMOGRAPHIC SITUATION IN ABKHAZIA IN THE POST-SOVIET PERIOD 2-3 166 Sudaba ETHNODEMOGRAPHIC CHANGES ZEYNALOVA IN THE CAUCASUS: EMERGENCE OF EUROPEAN ETHNIC COMMUNITIES (THE 19TH-EARLY 20TH CENTURIES)491 Guram SPECIAL FEATURES OF SVANIDZE THE GEORGIAN CRISIS 4 103

GEOHISTORY

Jamil THE “TURKISH CRISIS” OF HASANLI THE COLD WAR PERIOD AND THE SOUTH CAUCASIAN REPUBLICS (Part II) 1 122 Parvin GEOHISTORY OF THE MIDDLE AGES: DARABADI THE CASPIAN AND VOLGA-CASPIAN WATER ROUTES OF THE 5TH-17TH CENTURIES 1 133 Mairbek REHABILITATION OF VACHAGAEV THE NORTH CAUCASIAN PEOPLES: THE PROBLEMS IT CREATED FOR THE CHECHENS AND INGUSHES BETWEEN 1957 AND THE BEGINNING OF THE 1990S 1 149 Nikolai HISTORY OF THE UNIFIED FINANCIAL SYSTEM JAVAKHISHVILI IN THE CENTRAL CAUCASUS 1 158 Zaur DISSIDENCE AND OPPOSITION GASIMOV IN THE CAUCASUS: CRITICS OF THE SOVIET REGIME IN GEORGIA AND AZERBAIJAN IN THE 1970S-EARLY 1980S 1 165 156 Volume 3 Issue 4 2009 THE CAUCASUS & GLOBALIZATION

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Parvin GEOHISTORICAL PROCESSES DARABADI IN THE CAUCASIAN-CASPIAN REGION DURING ANTIQUITY (THE 4TH CENTURY B.C.- 4TH CENTURY A.D.) 2-3 177 Kerim THE POLITICAL AND SHUKIUROV LEGAL ASPECTS OF MIGRATION BETWEEN RUSSIA AND IRAN (19TH-EARLY 20TH CENTURIES) 2-3 185 Vasif AZERBAIJAN’S INDEPENDENCE AND GAFAROV THE GEOINTERESTS OF THE RUSSIAN AND OTTOMAN EMPIRES 2-3 193 Jamil AZERBAIJAN HASANLI AT THE CROSSROADS OF EPOCHS: THE FIRST ATTEMPT TO JOIN THE FREE WORLD (1917-1920) 4 120 Apollon SILAGADZE, Vakhtang THE RUSSO-TURKISH CONFRONTATION GURULI IN THE CENTRAL CAUCASUS IN 1918-1921 4 138 Nikolai FROM THE HISTORY OF JAVAKHISHVILI COOPERATION AMONG THE CAUCASIAN POLITICAL ÉMIGRÉS: 1921-THE EARLY 1940S 4 145