ISSC INSTITUTE OF STRATEGIC STUDIES OF THE CAUCASUS _____________________________________________________________________________________________________________________________________________ Nazim MUZAFFARLI Eldar ISMAILOV BASIC PRINCIPLES FOR THE REHABILITATION OF AZERBAIJAN’S POST-CONFLICT TERRITORIES CA&CC Press® AB Stockholm – 2010 Nazim Muzaffarli Eldar Ismailov Basic Principles for the Rehabilitation of Azerbaijan’s Post-Conflict Territories Copyright © by CA&CC Press®, 2010 CA&CC Press® AB Hubertussigen 9 97455 Luleå Sweden All rights reserved. No part of this book may be reproduced in any form, except for brief quotations in articles or reviews, without the written permission of the copyright owner. Any quotations must acknowledge the source. ISBN 978-91-86545-00-0 From the Authors Writing this book was not an easy task. We had to address a wide range and baffling variety of questions that needed answers and study a vast amount of relatively new information, while numerous problems called for detailed investigation and analysis. However, this did not dampen our enthusiasm; we have been working every day for the past two years, driven primarily by our sense of civic duty, as well as by the purely academic challenge it poses. We are fully aware of the fact that the government and the people of Azerbaijan, together with the leading states and international organiza- tions, will have to work hard to liberate the Armenia-occupied territories. Strictly speaking, their post-conflict status will begin only when the Armenian occupation ends. Thus, the term “post-conflict territories” as applied today is premature, but will be used throughout the text to describe these territories. We are convinced that sooner or later, these territories will be liberated, and that post-conflict rehabilitation should be planned well in advance. It was this conviction that inspired us as we worked on the conceptual foundations of post-conflict rehabilitation. The post-conflict rehabilitation conception on the whole, as well as its individual parts, gave rise to lengthy and ardent debates with our colleagues. Much of what was said was discussed at round tables, which greatly contributed to the formalization of the rehabilitation conception. We would like to express our sincere gratitude to Doctor of Eco- nomics Shakhin Sadykhov, who heads the Economy and Financial and Crediting Policy Department of the Cabinet of Ministers of Azerbaijan, and PhD in architecture Elmir Abdullaev, who is a senior official at the Agency for Restoration and Reconstruction of the Territories of Azer- 3 baijan. During our discussions they showed a profound understanding of the problems and possible ways to address the specific tasks of rehabilitation of the liberated territories, the importance of which cannot be overestimated. We would also like to thank Mazakhir Sadykhov, Deputy Director of the Institute of Strategic Studies of the Caucasus, Nazim Ismailov, the Azerbaijan National Agency for Mine Action (ANAMA) General Director, PhD in economics Enver Abdullaev, Department Head at Azerenergy JSC, Vahid Husseynov, Senior Official of the Cabinet of Ministers of Azerbaijan, PhD in economics Fuad Murshudli, advisor to the President of the International Bank of Azerbaijan, and other colleagues who generously shared their suggestions and opinions. Ruzi Mammadov, who shouldered the burden of the auxiliary analytical efforts, deserves special mention and thanks. Prof. Frederick Starr, prominent American scholar, Chairman of the Central Asia – Caucasus Institute at Johns Hopkins University, has been involved in the effort from the very beginning and has agreed to write the Introduction. The fact that its first rendering was written before we completed the main part of the book inspired us immensely. We take pleasure in expressing our deep gratitude to Prof. Starr and are looking forward to working together on other joint projects. We were lucky to be able to refer to earlier projects by such as the Feasibility Study of the Program of Restoration and Reconstruction of the Territories of Azerbaijan Damaged by Foreign Aggression (1998) and the Program of Reconstruction of the Territories Liberated from Occupation – The Great Restoration (2005), both performed by Azeri and foreign experts. Our book is mainly devoted to the conceptual foundation of post- conflict rehabilitation and does not claim a full discussion of the problems related to post-liberation reconstruction and development of the still occupied territories of Azerbaijan. We have done our best to achieve a comprehensive discussion by linking together the elements of post-conflict rehabilitation in the spatial, functional (sectoral), financial, and resource respects. We are fully aware of the fact that the result is far from ideal and that our efforts must continue. 4 Contents ____________________________________________________________________________________ CONTENTS FROM THE AUTHORS 3 INTRODUCTION (By Prof. S. Frederick Starr) 9 1. BASIC PREMISES 21 2. METHODOLOGICAL PRINCIPLES 29 2.1. Taking Account of International Experience 29 2.2. Reasonable Minimization of Costs 30 2.3. Restoring the Old and Building the New – The Two Approaches Combined 30 2.4. Flexible Territorial Planning 31 2.5. New Structure of the Resettlement System 32 2.6. Stage-by-Stage Progress 36 2.7. Cooperation between Independent and Government Experts 37 2.8. Cooperation with Foreign Experts 39 2.9. Permanent Improvement and Adjustment of the Program 39 2.10. Other Methodological Principles 40 3. PROGRAM TARGET 41 3.1. Spatial-Territorial Boundaries of the Program Target 41 3.1.1. Program Area in Terms of the Country’s Economic Zoning 42 5 REHABILITATION OF POST-CONFLICT TERRITORIES ____________________________________________________________________________________ 3.2. Program Area Prior to Occupation 43 3.2.1. The Agdam District 43 3.2.2. The Fizuli District 44 3.2.3. The Jabrayil District 46 3.2.4. The Zangilan District 47 3.2.5. The Qubadli District 48 3.2.6. The Lachin District 49 3.2.7. The Kalbajar District 51 3.2.8. Natural Resources of the Program Area 52 3.2.9. Protected Natural Zones 54 3.3. The Program Area Today: Classification of the Degrees of Destruction 56 4. THE GOVERNMENT AND SECURITY 61 4.1. Improving Administration 61 4.1.1. Establishing a State Structure to Control Post-Conflict Rehabilitation 61 4.1.2. Setting Up Special Units in the Functioning Government Units 64 4.1.3. Special Functions of the Local Administrations in the Post-Conflict Areas 65 4.2. Decontamination of the Post-Conflict Territories 67 4.3. Securing Borders 71 4.4. Internal Security 72 4.5. Regulatory-Legal Rehabilitation Underpinnings 73 5. RESTORATION OF THE VITAL SERVICE SYSTEMS 75 5.1. Repatriation 75 5.1.1. Organization of Repatriation 75 5.1.2. Repatriation Costs 80 6 Contents ____________________________________________________________________________________ 5.2. Restoration of Residential Properties 86 5.2.1. Cost of Residential Properties Restoration 96 5.3. Restoration of the Power Supply 98 5.4. Restoration of the Water Supply and Sewage Systems 105 5.5. Gas Supply 110 6. RESTORATION OF INFRASTRUCTURE 113 6.1. Restoration of the Civil Administration Infrastructure 113 6.2. Restoration of Transport Infrastructure 118 6.2.1. Roads 118 6.2.2. Railroads 124 6.2.3. Air Transport 127 6.3. Restoration of the Telecommunication Network 129 6.3.1. Telephone Service 130 6.3.2. Mobile Telephone Service 132 6.3.3. Television and Radio Broadcasting 133 6.3.4. Computerization 135 6.3.5. The Postal Service 137 6.4. Restoration of Social Facilities 140 6.4.1. Health Care 140 6.4.2. Education 154 6.4.3. Culture and Sport 162 6.4.4. Professional Training Centers 166 7. ECONOMIC REHABILITATION 170 7.1. Targets and Principles 170 7.2. The Branches of Comparative Advantages in the Post-Conflict Territories 172 7.3. State Support of the Projects of Comparative Advantages 179 7 REHABILITATION OF POST-CONFLICT TERRITORIES ____________________________________________________________________________________ 7.4. Employment 182 7.5. Land Privatization 183 7.6. Motivating Private Companies to Work in the Post-Conflict Areas 186 7.7. Attracting Foreign Private Companies to Post-Conflict Rehabilitation and Economic Revival 190 7.8. Resources for Economic Development 192 8. THE ROLE OF IFI AND FOREIGN DONOR ORGANIZATIONS IN POST-CONFLICT REHABILITATION 201 9. RISK MANAGEMENT 204 9.1. Types of Potential Risks 204 9.2. Neutralization or Reduction of Risks 205 9.2.1. External Risks 205 9.2.2. Internal Risks 208 CONCLUSION 212 8 Introduction ____________________________________________________________________________________ INTRODUCTION On Karabakh and the Occupied Territories In the year 1988 a war broke out between Azeris and Armenians over the province of Karabakh, which was part of Azerbaijan but claimed by Armenia. The Soviet Union still existed at the time and President Gorbachev, angry at Azerbaijan’s powerful and protective leader, Haidar Aliev, supported the Armenians with arms. By 1992, the USSR had collapsed but the conflict over Karabakh escalated to a new level. Now an independent Republic of Armenia sought to separate all of Karabakh from Azerbaijan by force of arms and to link it to Armenia. In a one-sided war Armenian troops not only seized Karabakh but large areas of adjacent provinces of Azerbaijan as well – in total a sixth of the land area of the new Republic of Azerbaijan. In the process, some ten thousand Azeris died fighting while thousands of