Band 23 / 2014 Band 23 / 2014 The creation of the Russian Customs Union and the Eurasian Union has created new power paradigms between Russia and her neighbours. Given Russia’s new political self-confidence, questions arise on the nature and purpose of these unions as non-military tools of persuasion. Which implications for Towards Europe?! Georgia, Armenia and Azerbaijan might an expanding Eurasi- an Union have versus the – currently stalling – enlargement of the EU? Does joining the Eurasian Union automatically Straddling Fault Lines and Choosing Sides mean re-attachment to Russia (or Armenia, as the case may in the South Caucasus be) for breakaway regions? Is the South Caucasus at a new fault line separating two civilizations, is it merely located in a difficult geopolitical area and can these fault lines be erased to enhance reaching a minimal level of stability? Towards Europe?! Towards Lines and Choosing Sides in the South Caucasus Straddling Fault ISBN: 978-3-902944-51-1 Ernst M. Felberbauer and Frederic Labarre (Eds.) 23/14 10th Workshop of the PfP Consortium Study Group Regional Stability in the South Caucasus (Eds.) Labarre Felberbauer, Study Group Information Study Group Information Ernst M. Felberbauer, Frederic Labarre (Eds.) Towards Europe?! Straddling Fault Lines and Choosing Sides in the South Caucasus 10th Workshop of the PfP Consortium Study Group Regional Stability in the South Caucasus 23/2014 Vienna, December 2014 Imprint: Copyright, Production, Publisher: Republic of Austria / Federal Ministry of Defence and Sports Rossauer Lände 1 1090 Vienna, Austria Edited by: National Defence Academy Command Stiftgasse 2a 1070 Vienna, Austria in co-operation with: PfP Consortium of Defence Academies and Security Studies Institutes Garmisch-Partenkirchen, Germany Study Group Information Copyright: © Republic of Austria / Federal Ministry of Defence and Sports All rights reserved December 2014 ISBN 978-3-902944-51-1 Printing: HDruckZ-ASt Stift 1506/15 Stiftgasse 2a 1070 Wien Table of Contents Foreword 7 Ernst M Felberbauer and Frederic Labarre Abstract 13 PART I: THE EUROASIAN UNION AND CUSTOMS UNION IN QUESTION 15 Geopolitical Development Aspects of the Customs Union and the Eurasian Economic Union: Relationship with the European Union 17 Ivan Babin The Eurasian Union and the Challenges of Russia’s Search for Regional Hegemony in the Post-Soviet Space 25 Oktay F. Tanrisever The Civilizational Choice of the Ukrainian People and its Regional Impact 37 Oleksandr Sadovskiy PART II: RECONCILING THE EU WITH THE EURASIAN UNION 49 Reconciling the EU with the Eurasian Union: A Pragmatic Approach 51 Gayane Novikova Russia, the EU and the South Caucasus: Towards a More Efficient Over-arching Cooperative Regional Security Framework 61 Elkhan Nuriyev 3 PART III: GEORGIA, ARMENIA AND AZERBAIJAN AT THE FAULT LINE: WHAT CHOICES FOR WHAT CONSEQUENCES? 77 Heading in Any Direction or Just Holding the Ground: Analysing the Case of Azerbaijan from the Perspective of EU and Eurasian Integration 79 Elchin Karimov Armenia Confronted with a Choice Between two Integration Projects 89 Emma Margaryan The Russian-Abkhazian Agreement on Strategic Partnership and Alliance – A New Geopolitical Threat to Georgia 105 Vakhtang Maisaia PART IV: THE IMPACT ON THE BREAKAWAY REGIONS 109 Armenia-Azerbaijan and the Nagorno-Karabakh Conflict 111 Orkhan Akbarov Self-Determination, Independence and Recognition: Real and Imagined Choices in the South Caucasus 117 Jonathan Lis Abkhazia and the Changing International Context 129 Astanda Pataraya Why does Putin Need an Eurasian Economic Union? 135 Inver Alshundba Epilogue 143 Frederic Labarre 4 PART V: POLICY RECOMMENDATIONS 147 Policy Recommendations 149 List of Authors and Editors 161 5 Foreword Ernst M Felberbauer and Frederic Labarre The 10th workshop of the Study Group “Regional Stability in the South Caucasus” was convened from 6-8 November 2014 in Reichenau, Austria, against the background of the worsening conflict in Ukraine. It seemed fitting to speak of the role of the two major political-economic integration projects in Europe – the European Union and the Eurasian Union – as of competing models of regional integration as forcing a choice upon “un- committed” countries in the South Caucasus. The workshop title “Towards Europe?! Straddling Fault Lines and Choosing Sides in the South Caucasus” is evoc- ative of the integration dilemma for Armenia, Azerbaijan and Georgia. This is also true of breakaway regions of Abkhazia, South Ossetia and Nagorno- Karabakh. The timeliness of the topic is not only due to the increasing tensions be- tween Russia and the Western powers. Recently, scholars have begun to treat the South Caucasus as a “settlement fringe”, a borderland between massive competing blocks which are intent on pressing certain socio- economic values upon the countries that are caught in between. This has been, to a certain extent, validated by two key events. One is the foreign policy concept of the Russian Federation which perceives the order of in- ternational relations at the beginning of the 21st century as a civilizational contest. The foreign relations concept of Russia does not clearly describe or denote what are the components of each “civilization” which may be taken to be the Euro-Atlantic (Western) civilization and the Slavic (East- ern) civilization. Another feature that makes this dichotomy all the more evident is the insistence by the European Union that participation in inte- gration initiatives such as the Association Agreements are exclusive to the European Union, meaning that a country such as Georgia, for example, could not also participate to the Russian Customs Union or eventual Eura- sian Union. The workshop addressed the issue of exclusivity as one that deepens the cleavage between the two trading blocs at a moment when the rationale for 7 trading and engaging in commerce – the production and increase of wealth as driven by free-market principles – are actually common to both blocs. It would therefore seem inaccurate to speak of two different blocs, or ideolo- gies, or even civilizations. Because of this, many believe that the Russian initiative is in fact a mask to hide the true meaning of the Eurasian Union; that of a re-created Soviet Union. Opinions on this subject are divided, as the reader can tell from the 10th workshop contributions. Some of the key issues discussed were: What is the nature of the Russian Customs Union, and the Eurasian Union? To what extent is the Eurasian Union an attempt by Russia to develop non-military tools of persuasion? What are the implications of an expanding Eurasian Union for Georgia, Armenia and Azerbaijan? Does joining the Eurasian Union automatically mean re-attachment to Russia (or Armenia, as the case may be) for breaka- way regions? Is the South Caucasus really at a fault line separating two civi- lizations, or is it merely located in a difficult geopolitical area? What impact has the Eurasian Union on regional stability in the South Caucasus? Can fault lines be erased to enhance the South Caucasus chances of reaching a minimal level of stability? To what extent does the Eurasian Union reflect the Eurasianist tendencies of the Kremlin? How can a commerce and trad- ing project so closely correspond to an integrative political project? Why aren’t the EU and the Eurasian Union incompatible? These are some of the questions that the workshop has addressed. Some of the answers are found in the contributions of this booklet. The most difficult knot to untie is the relationship of the South Caucasus countries relative to Russia and the EU on the one hand, and the prevalent security dilemma in the region on the other. Azerbaijan, which prides itself on being non-aligned, would have certain manifest interests in linking its trading and commerce future with Russia, owing to the potential for eco- nomic diversification that it carries, but the more lucrative market for its oil and gas is in Europe. Because of the tensions it faces with Armenia over Nagorno-Karabakh, and Russia’s commitment to the security of Armenia, Azerbaijan can move towards Europe only with great difficulty. There is a certain balancing act taking place here. Armenia is certainly among the most Europeanized countries in the South Caucasus, but the security relationship it enjoys with Russia definitely limits 8 the scope and depth of any integration project. As a matter of fact, Arme- nia was seen as keen on joining the Eurasian Union. Contributors to the workshop were again of a divided opinion as to how “free” this acceptance was. There are material benefits to be had with joining in on the Russian project. For one, it facilitates the travel of labour between Russia and Ar- menia. This is an important point for the latter, which depends much on remittances for its operating budget. Second, there is a form of loyalty at play, where the security of Armenia is in fact guaranteed by Russia. Like- mindedness often leads to commonality of integrative goals. Armenia and Russia might “naturally” attract one another in matters not only of security, but commerce as well. Georgia’s case is not any easier. Since 2013, the Georgian government has proven a certain degree of openness in relation to its Russian neighbour. This has allowed the re-opening of the Russian border to Georgian prod- ucts. Without formally joining in on the Russian Customs Union or Eura- sian Union project, Georgia has nevertheless managed to salvage some of its trading relationship with Russia despite its engagement with the EU through the Deep and Comprehensive Free Trade Agreement (DCFTA), which remains stillborn to a certain extent. As Georgia continues on the path of normative integration with the EU (and to some extent NATO), it has manoeuvred itself in such a position that the EU-Eurasian Union ex- clusivity clause seem not to operate. On the other hand, the fate of its breakaway regions seems to become clearer as time goes by.