South Caucasus 20 Years of Independence South Caucasus – 20 Years of Independence Published by Friedrich-Ebert-Stiftung The authors are solely responsible for the content of their articles. The opinions expressed are not necessarily those of the Friedrich- Ebert-Stiftung. © Friedrich-Ebert-Stiftung ISBN 978-9941-0-3793-1 Table of Content Preface and Introduction Gernot Erler Europe's interest in a peaceful and stable South Caucasus . 6 Matthias Jobelius Introduction . 12 From Soviet Rule to Post-Soviet Governance Archil Gegeshidze Georgia's Political Transformation: Democracy in Zigzag . 25 Mikayel Zolyan Armenia's "Velvet Revolution": Successes and Failures . 41 Arif Yunusov Twenty years of independence in Azerbaijan . 60 Authoritarianism and Democratic Perspectives Matthias Jobelius Georgia’s authoritarian liberalism . 77 Boris Navasardian Politics and Governance in Armenia: The Prospects for Democracy . 92 Shahin Abbasov Azerbaijan: Achievements and missed opportunities . 108 Territorial Confl icts and Resolution Strategies Dieter Boden Confl ict Settlement for Abkhazia and South Ossetia: Lessons and prospects . 124 Thomas de Waal The Confl ict of Sisyphus – The elusive search for resolution of the Nagorno-Karabakh dispute . 137 TABLE OF CONTENT Stepan Grigoryan Armenian-Turkish relations under the new geopolitics . 151 Economic Transformation Kakha Gogolashvili In search of Georgia’s economic model . 173 Ara Nranyan Armenia: 20 years of integration into capitalism – consequences and challenges . 194 Anar Valiyev Azerbaijan’s Economic Model and its Development since Independence . 218 Role and Interests of Global and Regional Players Richard Giragosian US National Interests and Engagement Strategies in the South Caucasus. 241 Andrey Ryabov Russian interests and strategies in the South Caucasus . 259 Burcu Gültekin Punsmann Turkey's Interest and Strategies in the South Caucasus . 280 Europe and European Perspectives Uwe Halbach The European Union in the South Caucasus: Story of a hesitant approximation . 300 Nicu Popescu ENP and EaP: relevant for the South Caucasus? . 316 Stefan Meister and Marcel Viëtor Southern Gas Corridor and South Caucasus . 335 Matthias Jobelius Closing remarks . 354 Preface and Introduction Europe's interest in a peaceful and stable South Caucasus Gernot Erler Meanwhile, we are able to look back on twenty years of independence of the three South Caucasian states. However, there is no other region of the former Soviet Union in which the emergence of state sovereignty was connected with so much bloodshed as in South Caucasus. Thus, the happiness about the act of national self- determination is at the same time subdued by the failure to resolve the diverging interests peacefully. General perception was determined most by the confl icts between Armenia and Azerbaijan on the Armenian exclave Nagorno-Karabakh and the inner-Georgian disputes surrounding the meanwhile completely separatist regions of Abkhazia and South Ossetia. Both confl icts resulted in tens of thousands of deaths and hundreds of thousands of internally displaced persons, many of whom still have to live under inhumane conditions even today. Only those who remember the events that took place on the territories of the three republics Georgia, Armenia and Azerbaijan in the late 1980s and early 1990s know about the diffi culties and the dramatic challenges faced by the region even today. Unfortunately, it does not seem like all the political players are aware of how playing with fi re may end up in an inferno once more, instead of moving closer towards a political settlement. 6 GERNOT ERLER Europe's interests with regard to South Caucasus are varied. They comprise both the interest in a secure and diversifi ed energy supply (Azerbaijan) as well as in political reforms/democratization and a peaceful settlement of the confl icts. With the Eastern Partnership (EaP) an instrument was created in May 2009 that lives up to the wish of the eastern partner countries, including the three South Caucasian countries, for a further approximation towards the European Union (EU). At the same time, prerequisites are to be established for accelerated political association and further economic integration. All the countries encompassed in the EaP as regarded a potential candidates for accession. Thus, the EaP reaches beyond the European Neighborhood Policy (ENP), which does not envisage this step. Still, the issue of concrete EU accession negotiations will not be on the agenda for the foreseeable future. On the one hand, the EU is so busy dealing with its own issues that any notion of an enlargement round going beyond the commitments entered thus far is fallacious. On the other hand, the elementary prerequisites for such a step are not yet in place in the three South Caucasian countries. Just to mention the democratic defi cits, which represent a weighty legacy, but also the unresolved ethno-territorial confl icts, whose peaceful solution seems to be a long way off. Furthermore, at least Azerbaijan has indicated clearly that is not overly keen on EU membership. Thus, it has to be the EU's priority to lend the best possible help to all three countries in conducting the necessary political reforms and in overcoming the confl icts mentioned. Already in 2008, the Black Sea Synergy set up was an expression of the heightened interest of the EU in promoting regional cooperation around the Black Sea. The framework conditions for a trusting cooperation among the countries of the region are still extremely diffi cult. Still, the EU has 7 GERNOT ERLER managed to put on the road a reform partnership, even though the implementation is sometimes stagnating. The "Five-Day War" between Russia and Georgia in August 2008 represented a bitter setback in the efforts to overcome the regional tensions. Up until that point, people referred to Abkhazia and South Ossetia as a so- called "frozen confl ict". The assumption prevailing at the time that confl icts of this nature are not resolved but do not represent an immediate danger either was rendered deceptive, at that point at the latest. At the end of this violent clash, there were only losers. The attempt undertaken by Georgia to recover the area of South Ossetia, previously removed from its own direct infl uence, by means of a surprise coup using military force was an utter failure. The internationally binding principle of resolving territorial confl icts by mutual agreement and with peaceful means only was disregarded recklessly. Not only that South Ossetia was lost for good but also Abkhazia. A re-integration of these two entities into the Georgian state territory has become less probable than ever before. However, the assumption that Russia emerged from this confl ict the victor does not hold up to close scrutiny either. With the premature recognition of South Ossetia and Abkhazia as independent states, Moscow did itself a disservice. This act violated the principle of territorial integrity otherwise held high by Moscow, and may yet prove a challenging legacy in view of the efforts of secession undertaken in North Caucasus. What is more, neither Abkhazia nor South Ossetia will ever be able to exist on their own. Both politically as well as economically, they will remain on the drip-feed of Russia for an indefi nite period of time. There has not been a diplomatic recognition by a representative number of states to the present day. Immediately after the outbreak the war, the EU reacted swiftly in August 2008. By dispatching the EU-Monitoring 8 GERNOT ERLER Mission, it was possible to keep apart the hostile parties to the confl ict and to prevent a renewed eruption of the fi ghts. The main task of the mission was to monitor the stability, to observe and analyze the situation, especially adherence to human rights and humanitarian international law, as well as the implementation of the Six-Point Plan of 12 August 2008. In the years to come, efforts need to concentrate on achieving practical progress, which will benefi t the people directly. Germany and Europe are able to lend assistance based on their own experience. However, these offers need to be requested locally. And there is a further confl ict that shadows the entire region: the Nagorno-Karabakh confl ict. The EU has so far not been engaged directly as a mediator here. Up until now, it has left the fi eld to the Organization for Security and Co- operation in Europe (OSCE), which has not been able to achieve a breakthrough with the two confl icting parties in meanwhile twenty years either. What gives rise to concern is the growing war rhetoric on both sides. Azerbaijan has been using its economic potential for a military arms build- up, for years, connected with verbal threats, which are matched by the Armenian side in no lesser manner. Neither of the two sides has displayed any recognizable serious intention to resolve the confl ict peacefully and to enter into any painful political compromise in doing so. Those responsible in the two countries obviously fear being branded traitors by their own followers and thus maneuvered to the political sidelines. They prefer to insist on their maximum demands securing their own political survival, however, at the price of keeping alive a confl ict that may break out again at any time and may lead to new bloodshed. The EU should consider seriously whether it should enter the scene as an independent player earlier and preventatively instead of as fi refi ghters later on. The area of political reforms and democratization is another issue. All three countries are characterized by more or less severe defi cits in this respect. There can only be an 9 GERNOT ERLER approximation with the option of later EU membership if the democratic standards, as they are binding within the EU, are applied also in South Caucasus. The levers to exert any pressure are limited, at least with regard to Azerbaijan, as it is not seeking EU membership thus far.