The South Caucasus A Regional Overview and Conflict Assessment August 2002 Cornell Caspian Consulting SWEDISH INTERNATIONAL DEVELOPMENT COOPERATION AGENCY Department for Central and Eastern Europe The South Caucasus A Regional Overview and Conflict Assessment Prepared for the Swedish Agency for International Development Cooperation (SIDA) Stockholm, August 30, 2002 The South Caucasus: A Regional and Conflict Assessment Principal Author: Svante E. Cornell Contributing Authors (Alphabetical): Fariz Ismailzade Tamara Makarenko Khatuna Salukvadze Georgi Tcheishvili This report was prepared by Cornell Caspian Consulting under a contract for the Swedish Inter- national Development Cooperation Agency (SIDA). The views and opinions expressed in this report should in no way be taken to reflect the position of the Swedish government or those of the Swedish International Development Cooperation Agency (SIDA). http://www.cornellcaspian.com Cornell Caspian Consulting is a consulting company registered in Stockholm, Sweden, special- ized on the politics and economy of the Caucasus, Central and Southwest Asia. It has offices in Stockholm and Washington, D.C., and representations in Ankara, Turkey; Baku, Azerbaijan; Bos- ton, United States; Dushanbe, Tajikistan; Islamabad, Pakistan; London, United Kingdom; Tashkent, Uzbekistan; Tbilisi, Georgia; Tehran, Iran; and Ufa, Republic of Bashkortostan, Rus- sian Federation. Head Office: Topeliusvägen 15 SE-16761 Bromma Sweden Tel. (Stockholm) +46-8-266873; +46-70-7440995 Tel. (Washington) +1-202-663-7712 Fax. (Stockholm) +46-8-266873 Fax. (Washington) +1-253-550-4390 E-mail: <[email protected]> For further information please contact or refer to http://www.cornellcaspian.com 2 CAUCASUS: COUNTRY REVIEW Table of Contents Summary and Recommendations .......................................................................... 5 Summary ....................................................................................................................................... 5 Recommendations ........................................................................................................................ 7 General Long-Term Recommendations ................................................................................................7 Recommendations for Development and Governance..............................................................................9 Recommendations for Conflict Prevention .........................................................................................10 Regional Assessment .......................................................................................... 13 Recent Political and Economic Developments .........................................................................13 Political Situation........................................................................................................................15 General Political Evolution ............................................................................................................. 15 Political and Economic Reform Processes in The Region .................................................................. 17 Foreign Relations............................................................................................................................ 19 Political And Economic Relations with Sweden................................................................................ 22 Regional security: Changes after 9/11 ............................................................................................ 22 Human Rights and Civil Society ...............................................................................................24 Human Rights ............................................................................................................................... 25 Ethnic and Religious Minorities ...................................................................................................... 26 Gender Issues ................................................................................................................................ 28 Civil Society and Media ................................................................................................................. 29 Economic Development.............................................................................................................31 Structural Reforms. ........................................................................................................................ 32 Transport and Communications: The ‘Silk Road’ ............................................................................. 33 Social Development, Health, Poverty .......................................................................................35 Refugees and IDPs ......................................................................................................................... 35 Poverty and Poverty Reduction ......................................................................................................... 36 Health37 Education ...................................................................................................................................... 38 Environmental Issues..................................................................................................................39 Pollution ....................................................................................................................................... 39 The Caspian Sea ........................................................................................................................... 40 Deforestation ................................................................................................................................. 40 Medzamor ..................................................................................................................................... 40 Measures....................................................................................................................................... 40 Ongoing Activities of Donors ....................................................................................................41 USAID Activities.......................................................................................................................... 41 Multilateral Donors ....................................................................................................................... 42 Bilateral donors ............................................................................................................................. 44 CAUCASUS: COUNTRY REVIEW 3 Conflict and Security Assessment ........................................................................ 45 Current Status of Active and Potential Conflicts and Security Threats ..................................47 Ethnic Relations and Ethnic Conflicts ............................................................................................. 47 Ongoing Conflicts ........................................................................................................................... 48 Processes and Situation in Minority Areas........................................................................................ 50 Civil Conflicts and Political Violence .............................................................................................. 53 Transnational Threats.................................................................................................................... 54 Narcotics and Arms Trafficking ...................................................................................................... 54 Islamic Radicalism........................................................................................................................ 56 The Pankisi Gorge ......................................................................................................................... 57 The Zaqatala Region ..................................................................................................................... 57 Geopolitical Competition and External Threats ............................................................................... 58 Roles and Interests of Regional Powers............................................................................................ 58 Competition over Natural Resources ................................................................................................. 61 Dangers for Future Instability ....................................................................................................62 General Aggravating Factors ............................................................................................................ 62 Weak State Structures .................................................................................................................... 63 Dire Socio-Economic Conditions ...................................................................................................... 63 Political Culture ............................................................................................................................ 64 Great Power Meddling ................................................................................................................... 64 Narcotics and Terrorism ................................................................................................................. 65 Specific Sources of