168 DSCFC 06 E - NATO'S ROLE IN SOUTH CAUCASUS REGION
FRANK COOK (UNITED KINGDOM)
TABLE OF CONTENTS
A. INTERNAL CONFLICTS WITH BREAKAWAY REGIONS AND RELATIONS WITH RUSSIA
B. SECURITY SECTOR REFORM AND NATO ASSISTANCE
A. ARMENIA'S RELATIONS WITH NATO
A. INTEGRATION INTO EURO-ATLANTIC INSTITUTIONS AND PARTNERSHIP WITH NATO
B. POLITICAL AND SECURITY SECTOR REFORM
C. AZERBAIJAN'S SECURITY CONCERNS AND RELATIONS WITH NEIGHBOURING STATES
1. Georgia, Armenia and Azerbaijan sit quite literally on a strategic crossroads. Energy from the Caspian Sea region will increasingly flow through some of those countries on its way to the global market. Drugs from Afghanistan and elsewhere in Central Asia transit through the South Caucasus region as well. Terrorist groups and extremist Islamist organizations operate in nearby regions and view the Southern Caucasus as a potential conduit to Europe and a source of potential recruits.
2. The three countries are also tied into a web of commercial and diplomatic interests that complicate the role of NATO in the region when dealing with all three. Armenia has close relations with Russia and depends on Russia for much of its energy. Armenia also has a tense relationship with its neighbours Turkey and especially Azerbaijan. Azerbaijan for its part remains closer to Turkey and retains good relations with Russia. Georgia, on the other hand has a tense relationship with Russia and is the most western-oriented of the three, preferring closer relations with NATO and other institutions. All three countries maintain good relations with neighbouring Iran. As NATO builds its relationship with the region and each country individually, it must take into account the interlocking interests of the regional actors.
3. It also must be mindful of the effect that its relations with the states of the South Caucasus have on the NATO-Russia relationship. NATO is involved in the region at the request of the states in question, but many in the Russian political class view NATO's activities with suspicion. There may be little that can be done to alleviate suspicion in some quarters, but it is important for NATO to continue to act in a completely transparent manner, emphasizing the mutual gains to all parties resulting from increased regional stability.
4. All of those interactions play against a volatile background. The South Caucasus region is home to struggling, nascent democracies, unresolved ethnic conflicts that have uprooted hundreds of thousands, high unemployment and high levels of corruption. Targeted assistance, incentives and pressure could help push the region toward stable democratic governance and self-sustaining economic development. But failing to do so could allow the region to slide in the other direction into autocracy, ethnic strife and economic stagnation. This would clearly have negative consequences for the members of NATO who all have an interest in seeing the South Caucasus region become a stable transit route for energy resources and a bulwark against drug smuggling and extremist organizations.
5. It should come as no surprise, therefore, that NATO is heavily involved in the South Caucasus Region. That involvement takes several forms. Most importantly, NATO has several forms of partnership with those countries to assist their armed forces to develop in a manner consistent with democratic governance. But questions remain about NATO involvement in the region. How effective are those programmes and what have they accomplished so far? What more can and should NATO do to promote the reform agenda in the region? How well are NATO's efforts integrated with other organizations' efforts in the region, and are there more opportunities for co-operation?
6. This report will attempt to provide some answers to those questions. It is largely based on the information garnered during the visits of the Sub-Committee to Armenia and Georgia and to Azerbaijan.
7. Georgia regained its independence in 1991 when an overwhelming majority of Georgians voted to secede from the Soviet Union. The country's first elected leader, Zviad Gamsakhudia was removed in a 1992 coup that brought Eduard Shevardnadze to power. He remained as president of the country until 2003.
8. The "Rose Revolution" of late 2003 ushered in a new era in Georgian political development. Public dissatisfaction with the corrupt governance and deeply flawed elections of the post-Soviet period finally culminated in several weeks of intense popular protest that led to the collapse of the Shevardnadze administration. Mikhail Saakashvili won the election held in January 2004 with an overwhelming majority and he continues as president today. He has pushed for economic reforms and a crackdown on corrupt practices. Most importantly from NATO's perspective, he has pushed for closer integration into Euro-Atlantic institutions. Saakashvili is a western-educated, post-Soviet leader who appears committed to making Georgia a more western-orientated country based on rule-of-law, while at the same time improving its relationship with Russia.
9. The Sub-Committee visited Georgia in June and met with a range of government representatives who cited the many achievements of the Rose Revolution. Giorgi Baramidze, State Minister for European and Euro-Atlantic Integration, briefed the delegation on the progress Georgia has made since 2003, noting that it was nearly a failed state three years ago. He outlined the reform process including efforts to increase the effectiveness of the police force. The police force has been cut in half and salaries have doubled for the remaining officers. This has reduced the incentive for corrupt behaviour and the public shows increasing trust in law enforcement officials. Public expenditures have also increased nearly five-fold since 2003. In part this is financed by a cut of 30 percent of the government workforce, but increased tax revenues from a growing economy are also a factor. GDP grew by more than 9 percent last year and is projected to be 11 percent in 2006. Mr. Baramidze attributed much of this growth to the economic policies of the government, which are designed to create favourable conditions for foreign investment and minimize government interference in the private sector.
10. In economic policy, the government is committed to a privatization programme of its remaining state-owned enterprises. The president launched a major privatization drive in 2004 that is slated to sell off 1800 enterprises. Although a boon for the government's budget, the privatization process has come with allegations of corrupt practices. This has weakened investor confidence. Several non-governmental organizations, including Transparency International, have given Georgia low scores on perceptions of corruption and cited it as one of the least favourable business environments of those surveyed. On a positive note, however, the World Bank recently noted that Georgia has made substantial reforms that improve the business climate and ranked it as one of the top ten most rapidly reforming countries.
11. Some members of the delegation expressed concerns at the overwhelming weight of the governing coalition and the protection of the rights of the opposition. Nino Burjanadze, Chairperson of the Georgian Parliament, reassured the delegation on this point, explaining that several mechanisms existed to guarantee a fair representation and participation of the opposition in Parliament.
12. Despite those assurances, several foreign diplomats, have been critical of the direction of the country in recent months. They are concerned about what they see as retrograde motion after the initial wave of reforms in the wake of the Rose Revolution, noting the lack of an independent judiciary and an effective opposition to the government. Non-Governmental Organizations such as the Georgian Young Lawyers Association and Article 42 echo many of those sentiments and confront the government on a regular basis on those issues. Georgian officials acknowledge many of these problems, but note that there is only so much that can be done at any one time. Regardless, it is important to note the concerns and maintain pressure and support for ongoing reforms so that progress continues.
13. Upcoming local elections in the fall were presented by several speakers as an important moment for Georgia. They expressed hope that these elections would provide a showcase of self-governance which could later facilitate negotiations with Abkhazia and South Ossetia about their own status. However, foreign diplomats viewed the upcoming elections with some concern. Important issues still remained to be solved, including the preparation of voter lists and the setting of a precise date. The voting system, which combines proportional and majority rule, was also said to be far from ideal. When those elections were held in October, however, international observers were generally satisfied with the process and noted the significant progress made since previous elections.
A. INTERNAL CONFLICTS WITH BREAKAWAY REGIONS AND RELATIONS WITH RUSSIA
14. Georgia is faced with three regions that have become autonomous or have declared independence that is not recognized by other countries. Ajara on the Black Sea coast bordering on Turkey is the least problematic region and has returned to its status as an autonomous region in Georgia. Abkhazia and South Ossetia, however, share a history of bloody warfare and the displacement of hundreds of thousands of ethnic Georgians, Ossetians and Abkhazians from their homes in the course of wars fought with Georgia in the early 1990s. The unresolved situation with Abkhazia and South Ossetia threatens to undermine the security of the region and Georgia's relations with Russia.
15. The troubled relationship between Georgia and the breakaway regions of South Ossetia and Abkhazia may have deep roots, but the current situation is based on the violent confrontations that occurred in the wake of Georgia's independence from the Soviet Union. After an intense war and a decade-long standoff, little has been resolved. Neither region is internationally recognized as an independent state, but they have some elements of elected government and manage much of their own internal affairs.
16. The conflict between South Ossetia and Georgia began with disagreements over the autonomy of the region. Some Ossetians, a minority group with its own language, pushed for greater autonomy from Georgia. Georgian leaders at the time were insisting on removing some of the autonomy the region enjoyed in Soviet times, such as the right to use Ossetian as an official language. Violent conflict began in 1991 and more than 100,000 refugees - Georgian and Ossetian - were created. The issue of internally displaced persons and refugees remains a serious problem. One complicating factor is that Ossetia is not a contiguous area. It is a patchwork of areas populated by Georgians and Ossetians, which makes it very difficult to define ethnically homogeneous regions without creating still more internally displaced persons.
17. Relations between Georgia and the Abkhazian region followed a similar unfortunate trajectory. Concerns over losing the autonomy of the region-led to violent clashes between Georgians and Abkhazians in the early 1990s. In 1992 Abkhazian leaders effectively declared the independence of the region and Georgian troops moved in to take back the capital city. Heavy fighting between Georgian forces and Abkhazian forces supported by paramilitary volunteers from Russia left thousands dead and some 250,000 refugees, mainly ethnic Georgians.
18. Over the past year, the South Ossetia region has become something of a flashpoint. On 22 January, two natural gas pipelines on the Russian side of the border in North Ossetia exploded under mysterious circumstances in the middle of one of the coldest winters in recent memory. On 1 February there was a car accident involving Georgian civilians and Russian peacekeepers that degenerated into a brawl and on 8 February some Russian peacekeepers were detained by Georgian authorities for lacking the proper papers. Those are just some recent examples of the tense situation in the region.
19. President Saakashvili has declared his intent to reunite South Ossetia and Abkhazia with Georgia, and Georgia's parliament is pushing for the withdrawal of Russian peacekeeping forces from the region. The parliament passed a non-binding resolution in 2005 that called for the removal of Russian peacekeeping forces from South Ossetia by February 2006 unless there is substantial progress on resolving the status of the region. Some within the Georgian government have been more in favour of a military solution to the situation, but they are kept in check by more moderate voices and pressure from some NATO members. Russia - which supports the separatist movement in South Ossetia - reacted angrily to the increased Georgian pressure on South Ossetia. As long as Russia remains materially supportive of South Ossetia as a separate entity from Georgia, little progress can be made that will satisfy Georgian concerns.
20. A Georgian peace plan for South Ossetia featuring a substantial amount of autonomy was offered in 2005, but this was not enough to arouse interest in opening talks among the leaders of South Ossetia. Georgia has also suspended its participation in the Joint Control Commission (JCC), the body responsible for maintaining stability in the region and working toward a solution. But the JCC is composed of representatives from South Ossetia, Georgia, Russia and North Ossetia, an autonomous region of Russia. The Georgian government is seeking to find another international forum for the negotiations because they believe the composition of the JCC favours maintaining the current situation. President Saakashvili has called on the United Nations and the European Union to become more involved in settling the situation in South Ossetia.
21. Georgia's relationship with Abkhazia is somewhat more stable. Abkhazia seems to be a stronger entity and Georgia appears to be taking a more restrained approach to the region than with South Ossetia. Georgia and Abkhazia have worked on mutually beneficial economic arrangements, including reopening rail links. Nevertheless, the situation remains unresolved: hundreds of thousands of individuals remain displaced as a result of the conflict and Abkhazia is not internationally recognized as an independent country.
22. The relationship between Georgia and Ajara is far less problematic. The reintegration of Adjara is generally considered to be a major achievement of Mr. Saakashvili's government. The delegation was able to witness the transformations under way in this region and meet with representatives of the local administration. It was clear from the delegation's visit that the Georgian government wishes to present Adjara as a showcase of the benefits of the Rose Revolution and of the government's policy of regional development. In their view, this success story should provide an incentive and a model for the future reintegration of the two remaining breakaway regions of Abkhazia and South Ossetia.
23. There is considerable evidence to support this view. Adjara's economy is relatively robust, mainly due to the major Black Sea port of Batumi. Since the reintegration of Adjara, Georgian authorities have invested considerably in reconstruction and infrastructure development. Foreign investments have also assisted in the renaissance of Adjara. It enjoys an autonomous status in Georgia with self-governing institutions. Georgia hopes that South Ossetia and Abkhazia can be persuaded to accept a similar arrangement, but this appears unlikely given the current level of hostility and the recent history of violence.
24. The withdrawal of Russian troops from the military base in Batumi is another important issue in Adjara. In accordance with an agreement signed by the Russian and Georgian governments in March 2006, the Batumi base, together with other Russian military bases and facilities in Georgia, should be closed by 2008. Georgian authorities assured the delegation that the withdrawal was under way according to the planned schedule.
B. SECURITY SECTOR REFORM AND NATO ASSISTANCE
25. Georgia has expressed its clear desire for a close partnership with NATO culminating in eventual membership in the Alliance. Before joining the Intensified Dialogue process, Georgia was within the Partnership Action Plan for Defence Institution Building programme (PAP-DIB), the main aim of which is to improve the operational capability of the military while simultaneously subordinating the military to civilian authorities. This has been a long-standing aspect of NATO's engagement with potential members. In the early 1990s NATO worked closely with the governments and militaries of Central and Eastern Europe to assist in the construction of military forces that were firmly under civilian control.
26. This is not a simple task as the countries in question all came from a Soviet-style model of civil-military relations that subordinated the military to the Communist Party. Changing to a model appropriate for democratic governance required a wholesale change in the thinking of military officers. It also required building a cadre of civilians capable of managing defence ministries.
27. Ultimately, however, this programme was successful across Central and Eastern Europe. NATO is able to exploit this success in working with Georgia and other countries in the region. Latvian, Lithuanian and Estonian military officers, for example, are currently advising their Georgian counterparts on how to implement the reform process. As a new NATO member that was formerly part of the Soviet Union, Latvia, as well as Lithuania and Estonia, can offer advice that is highly relevant to the Georgian military reform effort.
28. Georgia, as well as Azerbaijan and Armenia, is part of the Individual Partnership Action Plan (IPAP). The purpose of IPAP is to spell out an individual programme for reforms spanning the range of civil and military issues. The first chapter deals with democratic, judicial, economic and other civil reforms. The second chapter focuses on defence reform, in particular, budgeting and planning, equipment standardization and improving interoperability with NATO member militaries. The third chapter of the plan looks at civil emergency planning and scientific co-operation. In some ways this chapter may offer the most tangible benefits to the partner country. NATO's Euro-Atlantic Disaster Response Coordination Centre (EADRCC) has proven to be an important resource for partner countries in coping with natural disasters. NATO reviews indicate that Georgia has completed much of its PAP-DIB and IPAP programme, which opened the door to what is known as Intensified Dialogue. On September 21, NATO announced a decision to engage in Intensified Dialogue with Georgia.
29. Georgia's ambition to become a fully-fledged member of the Euro-Atlantic community was a major theme of discussions during the Sub-Committee's visit. Gela Bezhuashvili, Minister of Foreign Affairs of Georgia, stated that Euro-Atlantic integration was Georgia's foreign policy priority. NATO integration would allow Georgia to consolidate the model of democracy it has developed and is promoting in the region, through such forums as the Community of Democratic Choice or the Black Sea-Baltic Sea summit in Vilnius in May this year.
31. Romualds Razuks, NATO Liaison Officer for the South Caucasus, briefed the delegation on the evolution of NATO's partnerships with the three countries of the South Caucasus, Armenia, Azerbaijan and Georgia. He emphasized the defence institution building aspect of NATO's engagement in the region. NATO has moved on from promoting democratic values to assisting the countries of the region in establishing the foundations for modern democracies with civilian control of the armed forces. As such, programmes to assist in legislative oversight of the armed forces and implementing transparent budgeting processes are increasingly important. The IPAP also gives some direction to reforms in personnel management, resource management and generally establishing an affordable and sustainable defence strategy.
32. Of the three countries of the South Caucasus, Georgia is the most advanced in the implementation of its IPAP. The March 2006 full assessment was very positive, highlighting the tremendous progress achieved by Georgia since the Rose Revolution. Mr. Razuks noted that Georgia has established full civilian control over the Ministry of Defence.
BOX 1: A PRIMER ON NATO PARTNERSHIPS
EAPC: Euro-Atlantic Partnership Council
Countries who choose to participate in the PfP programme become simultaneously members of the EAPC, although the organisations are separate and PfP officials report to the EAPC in a roughly similar way to how NATO officials report to the North Atlantic Council.
In broad terms, there are three levels of NATO PfP co-operation. The first level is formulating an IPP. The IPP is constructed from a huge list of activities in which the partnering country can choose to participate. Every year there are around 1,500 events that include everything from assuming observer status at NATO military manoeuvres to basic military training and/or language training at various NATO-affiliated or NATO-run officer schools such as the NATO school at Oberammergau. There are many training schools, most run by NATO Allies, with centres in Ljubljana, Budapest, Ankara, and elsewhere. A partnering country typically selects the activities that fit its programme and then submits its list. NATO then checks the selection and approves or rejects specific projects. NATO then has to ensure that the partnership country actually participates in the events it chooses because oftentimes funding is an issue. NATO countries provide some assistance and sometimes end up funding 100% of the participation costs
Should a partnering country choose to deepen its relationship with NATO, it can choose to participate in the PAP-DIP. NATO created PAP-DIB at the June 2004 Istanbul Summit as a way of promoting concrete defence reform among PfP countries. The 'ten commandments' of PAP-DIP reform, listed on pages 76-77 of the Istanbul Summit Reader's Guide, include developing transparent and democratic control of defence activities (the first objective), promoting civilian participation in defence and security policy development (the second), and establishing legislative and judicial oversight over the defence sector (the third).
Ostensibly, all partnering countries - even those following only an IPP - can participate in the PAP-DIB, choosing IPP activities in accordance with a PAP-DIB strategy that concentrates on institutional reform. In practice, countries following a PAP-DIB also choose to participate in the PfP PARP and may adopt an IPAP. The PARP and an IPAP constitute the primary instruments for pursuing PAP-DIB objectives. A PARP, for its part, is designed on a country-by-country basis to identify and evaluate forces and capabilities in a PfP member's military that could be made available for multinational training, exercise and operations with Alliance forces. It is a qualitatively higher degree of co-operation than an IPP that concentrates on upgrading capabilities with a view towards eventual interoperability.
The adoption of an IPAP constitutes, roughly speaking, the third and most intensive level of PfP co-operation. As distinct from the PARP, an IPAP contains political reforms such as enhanced judicial oversight and democratic and civilian control over a PfP member's defence sector. Many countries with IPAPs have already co-operated with alliance members in peacekeeping and peace support operations. Kazakhstan, for example, has recently adopted an IPAP and currently contributes a 29-man-strong de-mining unit to the Polish-led division in Iraq. The adoption of a MAP could involve a PfP member more intimately with Alliance activities. This would, however, place that member on the road to full Alliance membership.
33. Armenia regained its independence in 1991 after the non-communist Armenian National Movement led by Levon Ter-Petrosian gained a majority of seats in the Armenian Supreme Soviet. Mr. Ter-Petrosian was elected as the first president of Armenia that same year. Re-elected in 1996, Mr. Ter-Petrosian led the country until 1998 but became less tolerant of opposition parties, banning some that challenged his leadership. Suspicions of electoral fraud led to increased popular discontent.
34. But the final blow to Mr. Ter-Petrosian's presidency came in 1998 when he appeared to accept a plan for settling the Nagorno-Karabakh conflict. That peace plan was opposed by the leaders of Nagorno-Karabakh and many in the Armenian government, including the prime minister at the time, Robert Kocharian. Mr. Kocharian was elected in 1998 and remains president today.
35. Mr. Kocharian was re-elected in 2003 for a five-year term. But that election was criticized by international monitors and the main opposition parties did not accept the outcome. Parliamentary elections held in May 2003 were also judged by election monitors as having failed to fully meet international standards for free and fair elections. As a result the opposition parties began a boycott of the parliament starting in 2004 and organized street demonstrations. Those protests failed to unseat Mr. Kocharian and some opposition parties returned to parliament to discuss the proposed changes to the constitution that would in large part distribute some power away from the presidency. The reforms were put to a referendum in late 2005 and passed by a majority of the voters.
36. With the assistance of many Western partners, Armenia is struggling to become a stable democracy, but several problems are notable and cannot be overlooked. As with its neighbours in the region, unemployment and corruption remain serious concerns. Elections have been judged as significantly flawed by international monitoring organizations. Other broad civil reforms need to be addressed.
37. When the Sub-Committee visited Armenia in June, it received contrasting briefings about the state of democracy in Armenia. Although government officials focused on Armenia's achievements, many NGO representatives highlighted the flaws in implementation of democratic reforms. As one NGO representative stated, Armenia was at a crucial moment in its history, where it must choose between "managed democracy" and "real democracy". Several other NGO representatives underlined that this was a time of transition for Armenia. Tigran Torosyan, Speaker of the Armenian Parliament, also acknowledged the lack of maturity of Armenia's political system, which tainted relations between majority and opposition parties, as well as between political parties and NGOs.
38. According to many NGO representatives, freedom of the media provides a good example of the ambiguity of the situation in Armenia. Overall, media legislation is in conformity with democratic standards, but the implementation of the laws provides room for governmental interference. Newspapers, for example, enjoy extensive freedom in their activities, but they only reach a limited audience. Television is the main source of information and the government's ability to direct broadcasting licenses to certain individuals and companies restricts the freedom of the media, according to some NGO representatives.
39. The parliamentary elections in 2007 will likely represent a crucial test for Armenia. Many NGO representatives criticized the absence of any investigation into alleged violations in previous elections. However, Mr. Torosyan assured that judicial proceedings were in place for examining electoral complaints. Moreover, draft amendments to the electoral code were currently under consideration and would follow the recommendations of the Venice Commission of the Council of Europe.
40. Armenia's foreign policy is based on maintaining a balance between their ambitions to be part of the wider European community and their close relationship with Russia. Government representatives and members of parliament repeatedly addressed this theme of "complementarity". They see no reason why Armenia should be put in the position of making choices that will alienate any of their partners. As Vardan Oskanyan, the Minister of Foreign Affairs, explained to the Sub-Committee, a small country such as Armenia with only two open borders must maintain flexibility in its foreign relations. Several members of the delegation questioned this position, noting that this appears difficult to sustain and that a policy of complementarity is simply a euphemism for indecisiveness, but Armenian officials maintained that complementarity is a sound basis for the conduct of the country's foreign affairs.
41. Armenian officials were clear in their intention to move toward integration into European institutions. They emphasized that they understand that Armenia is not yet ready to be considered for EU membership, but that they have long-term ambitions for closer integration. Membership of NATO however is not on the agenda. Discussions with several speakers revealed that Armenia seems to be more interested in the benefits of the integration process, including a dialogue on values and the achievements of certain standards, rather than in the final goal of membership. This position reflects a consensus between the major political parties in Armenia, as well as in public opinion.
42. Armenia maintains good relations with its regional neighbours Russia, Georgia and Iran. Russia is one of Armenia's largest trading partners, an important source of energy and other products critical to Armenia's economy. Under a partnership agreement between the two counties, Armenia also hosts a Russian military base that is all the more significant now that Georgia and Russia have agreed to remove Russian bases from Georgia. Armenia also maintains solid relations with the United States and the European Union. It is close to finalizing its Action Plan for the EU Neighbourhood policy and the EU is Armenia's largest trading partner.
43. Its relationship with Turkey, however, is strained. Several Armenian officials discussed the tense relationship with Turkey. The Minister of Foreign Affairs emphasized his desire to see a pragmatic relationship develop with Turkey and believed that the two countries should deal with their relationship separately from that of other complex issues such as Armenia's relationship with Azerbaijan. Some Armenian members of parliament, however, were less inclined to take this view and regarded Turkey as a potential security threat.
44. Nevertheless, it is clear that Armenia's relationship with Turkey turns on several points of conflict. One is historical, related to the controversy over the culpability for the massive number of deaths among Armenians during the final years of the Ottoman Empire, but the other two relate to the border between the two countries and the ongoing Nagorno-Karabakh conflict. The meetings in Armenia demonstrated that all of those issues remain extremely sensitive and show little indication of being resolved in the foreseeable future.
45. The delegation also enquired about Armenia's relations with Iran. Armenia recently signed an agreement for the construction of a gas pipeline, which would allow Armenia to reduce its dependency on Russian gas. Foreign diplomats who met with the delegation raised concerns regarding Armenia's relationship with Iran in the context of the current crisis regarding Iran's nuclear programme. But they note that Iran is a lifeline for Armenia, serving as one of its two open borders. As long as the borders with Turkey and Azerbaijan remain closed, Iran will remain an important link to the outside world for this land-locked country.
46. The Nagorno-Karabakh conflict featured prominently in the discussions with Armenian officials. Many expressed the hope that some progress could be made with the recent meetings of the presidents of Armenia and Azerbaijan in Rambouillet, France and in Bucharest, Romania, but those meetings did not move the two toward a solution. Varuzhan Nersessian, Head of the OSCE Division in the Ministry of Foreign Affairs of Armenia explained that because of political and electoral cycles, 2006 represented a window of opportunity for negotiations. However a number of outstanding issues remain. In particular, there was still no agreement as to how best to reconcile the well-established principles of territorial integrity on the one hand and that of self-determination on the other. Mr. Nersessian insisted that creating an atmosphere of confidence and trust was crucial to the success of the negotiation process. The current state of negotiations, however, does not leave much room for optimism for significant progress in the near future.
A. ARMENIA'S RELATIONS WITH NATO
47. For the time being, Armenia has no plans to seek full membership, owing in part to its status as Russia's principal partner in the region. Despite this, Armenian government officials emphasize that they see the partnership with NATO as vital to their security interests. Armenia has developed a fairly intensive degree of co-operation with the Alliance, particularly over the past few years. Armenia joined the PfP programme in 1994 and NATO and Armenia approved an IPAP in December of last year. Armenia is participating in NATO missions and has troops deployed as part of international missions in Kosovo and Iraq. Armenia also plans to implement security sector reforms including civil emergency and crisis management programmes, and build on its National Security Concept. Armenia is also working with the International Security Advisory Group. The group has made comments and suggestions at recent meetings that Armenian officials describe as a highly valuable. For its part, NATO has expanded its relationship with Armenia by opening an information office in the country in 2006.
48. The familiar litany of problems regarding the conversion of Soviet-style to all-volunteer professional militaries under civilian control applies no less for Armenia. Armenia is, however, an enthusiastic participant in its PfP activities, and Armenian officers participate in a variety of NATO-sponsored training programmes.
49. The delegation met with Michael Harutyunyan, Chief of Staff of the Armenian Armed Forces. He outlined the history of Armenia's co-operation with NATO and its current activities in defence reform. Armenia began a programme of co-operation with NATO in 2000 and has intensified its engagement since then. It entered the PARP in 2002 and has gone through several iterations of the process since then. Another milestone in Armenia's co-operation with NATO was hosting a military exercise in 2003. In December 2005 NATO accepted Armenia's plan for defence reform. Armenia has been working steadily since then to implement its defence reforms including creating an interagency commission to oversee the military. A national security strategy is under development and will be submitted to the parliament for its consideration in the coming year. Once the strategy is approved, the military will begin implementation in 2008.
50. Armenia is already taking steps to make its military more compatible with NATO and is participating in NATO operations. Armenia has created a demining centre and has deployed forces to Kosovo with the Greek contingent. Armenia aims to have one brigade at NATO standards by 2015. The Chief of Staff emphasized the willingness of Armenia to co-operate with NATO and underlined the many bilateral programmes it has with NATO members, particularly Greece and the United States.
51. The Chief of Staff noted that Armenia spends approximately 3 percent of GDP on defence and the military is a mix of conscripts and professionals, although some units are entirely professional. The total size of the armed forces is 44,000. The military is accountable to parliament and the Chief of Staff noted that he has been called on to testify in parliament and answer questions about defence expenditures. As with other Armenian officials, he emphasized that the relationship with Russia does not affect Armenia's ability or willingness to co-operate with NATO.
52. Azerbaijan is also a significant player in the South Caucasus region, not least because it is an exporter of oil and gas, and its weight will increase as more pipelines from the Caspian region come on line in the next few years. Azerbaijan is also a predominantly Muslim country with ties to Central Asia. As NATO increasingly engages with countries with largely Muslim populations, it may become important to have partner militaries with that cultural and ethnic background who will have an intuitive understanding of issues that must otherwise be taught to European and North American militaries.
53. Azerbaijan shares a number of similarities with its neighbours. It is struggling to develop the institutions that will allow it to more closely integrate with the European Union and NATO. It maintains a balance between its relations with the West, Russia, and Iran. But what separates Azerbaijan from Armenia and Georgia is that it is an increasingly important exporter of oil and gas. This has potentially positive and negative aspects. On the positive side, the revenues from those natural resources could be poured into public goods such as education and infrastructure in a way that would let the country develop a diversified economic base. On the negative side, some regional experts warn that Azerbaijan could go the way of all too many countries that find themselves as the beneficiaries of oil wealth: an over reliance on the easy money resulting from current high oil prices, squandered financial resources, and governments that use the revenue to placate the population and reduce demands for political and economic reforms that would benefit the country in the long term.
54. Azerbaijan held its most recent elections for parliament in November 2005. Those were judged by international observers to be deeply flawed. A wide range of irregularities was reported by the OSCE and other monitoring groups, leaving many with concerns about the direction of Azerbaijan's political development. This is part of a trend - previous elections were marred by serious irregularities. At the same time, the opposition to the ruling party does not appear to have the popular support to confront the situation and bring about the sort of political transformation that occurred in Ukraine or Georgia after similarly flawed elections. In fact, the ruling party appears to be genuinely popular, which makes the unwillingness to allow truly free elections all the more curious.
The Caspian Basin has long since been an exporter of oil and natural gas, but recent developments will make it a more significant region for global energy markets. Azerbaijan is the main producer in the South Caucasus region, but Georgia also stands to gain considerably from the pipelines being constructed across its territory. Those pipelines will carry energy resources from Azerbaijan and Central Asia to the Mediterranean where they will enter the global market.
The main conduit for oil is the Baku-Tiblisi-Ceyhan pipeline project that spans the three countries of the South Caucasus. It is already operational and is expected to transport 800,000 barrels per day (BPD) starting in 2007. The South Caucasus pipeline for natural gas is being constructed alongside the oil pipeline. It is expected to carry a considerable volume of natural gas for consumption in Europe and elsewhere.
Another aspect of the two pipelines is that they decrease the reliance of the South Caucasus on Russia for energy. The disruption of the pipelines from Russia to Georgia in the winter of 2005 demonstrated the vulnerability of that supply line. By diversifying its supply of gas and oil, Georgia may find its relations with Russia assuming a different shape.
Nonetheless, this is a relatively small amount of production compared to the major producers or global demand. Saudi Arabia, the largest producer, is currently pumping 10 million BPD. The entire Caspian Basin will produce approximately as much oil as moderately large producers such as Iraq or Venezuela. Global consumption is currently over 81 million BPD and is expected to continue to rise albeit at a somewhat slower pace than recent years.
Despite the relatively small volume, the fact that the region is going to produce significant amounts of oil for export in the next year or two is potentially significant for global oil prices. The 800,000 BPD in the Baku-Tiblisi-Ceyhan pipeline will nearly double the current global excess production capacity, which will likely have a calming effect on oil prices.
55. When the Sub-committee visited Azerbaijan in October, Azerbaijani officials consistently stressed their desire to integrate into Euro-Atlantic institutions as rapidly as possible. Members of parliament, including members of the opposition, underlined that integration into those structures is a consistent priority across political divisions in Azerbaijan. Ziyafat Asgarov, head of the delegation to the NATO PA, noted that Azerbaijan participated in twice as many partnership activities with NATO as other regional partners in 2005 and sends hundreds of officers to NATO courses each year. Azerbaijan adopted its IPAP in 2005 and is working on substantial reforms in cooperation with NATO. This builds on a pattern of engagement that began in the 1990s. Azerbaijan joined the PfP in 1994 and the PARP in 1997. In 1999 it sent a platoon of troops to Kosovo in support of the NATO peace-keeping effort.
56. Elmar Mammadyarov, the Minister of Foreign Affairs, further outlined Azerbaijan's strategy for Euro-Atlantic integration. The integration process is seen as a driver of political reform in the country as it works toward European standards. He especially highlighted the role of Azerbaijan in peacekeeping operations, noting that the country has approximately 200 troops deployed as part of missions in Afghanistan, Iraq and Kosovo. He pointed out the importance of developing and maintaining public support for the process of Euro-Atlantic integration and the role of the government in educating the public through conferences and events. Public support for joining both NATO and the EU is high in the general public, but he stressed the need to maintain it at high levels in the future.
57. Other members of parliament stressed the desire of Azerbaijan to integrate into the European Union as well as NATO. They indicated their intention to apply European standards across the spectrum of government affairs. But they noted that Azerbaijan's unresolved conflict with Armenia is a drag on progress. Samad Seyidov, Chairman of the Standing Commission on International Relations and Inter-Parliamentary ties, noted Azerbaijan's participation in the EU neighbourhood policy and its expectation that it will sign an agreement regarding this with the EU in the near future. He also stressed the balanced nature of their relations. Azerbaijan is able to maintain a good relationship with Georgia and at the same time enjoys some cooperation with Russia. It maintains good relations with its neighbour Iran but also with Israel. The one exception is of course its relationship with Armenia, which remains tense because of the ongoing conflict over Nagorno-Karabakh.
58. Mr Seyidov and others discussed the importance of Azerbaijan to European economic interests. Azerbaijan's ability to supply energy has recently increased with the opening of the Baku-Tiblisi-Ceyhan pipeline is currently pumping hundreds of thousands of BPD to the port of Ceyhan on the Mediterranean. That is expected to increase to 1 million BPD over the next few years, eventually topping out at 1.75 million BPD. In addition, officials at the Ministry of Industry and Oil noted the large volume of untapped natural gas reserves. In addition to energy resources, Azerbaijan is slated to be an important transit route for goods between Europe and China. A new railroad system is being planned that will reduce the travel time to two weeks for goods travelling from China to Europe.
59. Azerbaijani Officials in the Ministry of Industry and Oil as well as Members of Parliament were conscious of the need to diversify the economy and use the revenues from energy production to develop other industries. As representatives from the OSCE and ambassadors from NATO countries noted, however, foreign investment will be hindered by widespread corruption. Members of parliament noted that Azerbaijan has redrafted its laws to be in compliance with international conventions on corruption and has established a special commission on combating corruption in government. Azerbaijan has also increased government salaries to check corrupt practices among government employees. OSCE officials acknowledged that the government is taking steps to combat the problem, but stressed that it will take considerable time to minimize the problem because it is pervasive across different levels of society.
60. This relevance of this issue to the further economic development of the country underscores the importance of judicial and political reforms to ensure the uniformity of the legal system. OSCE representatives noted some progress in this area and the assistance offered by a range of bilateral arrangements and by international organizations. They stated that there should be more coordination of those efforts to maximize their effectiveness.
B. POLITICAL AND SECURITY SECTOR REFORM
61. Mr Asgarov stressed that Azerbaijan is undertaking wide-ranging political reforms. The parliament has passed new legislation on the management of classified information and military service, as well as created an accounts committee that supervises expenditures and calls government ministers to account for spending. He also underlined that they are trying to develop their parliamentary democracy, but that the ongoing conflict over Nagorno-Karabakh slows the democratic reform process.
62. Colonel General Safar Abiyev, the Minister of Defence, discussed Azerbaijan's security sector reforms. He underlined that the military is closely involved in a range of activities with NATO in the context of the IPAP and stressed that the army will soon have a brigade up to NATO standards. His goal is to fully apply NATO standards across the army by the end of 2007, and he anticipates a further development of the Azerbaijani armed forces' relationship with NATO.
63. In the context of IPAP, the General stated that Azerbaijan recently completed drafting its National Security Concept. Azerbaijan is also upgrading its airfields to NATO standards and participating in programmes with NATO to neutralize hazardous rocket fuel left over from the Soviet era as well as demining operations. He reported that Azerbaijani officers are eager to participate in NATO training programmes and that the Azerbaijani armed forces are receiving considerable assistance on a bilateral basis from NATO member countries, particularly Turkey, the United Kingdom and the United States. Turkey plays an important role in training non-commissioned officers (NCOs) and the UK and US are assisting in the construction of a training center in Azerbaijan. The US is assisting in upgrading Azerbaijan's naval capabilities, and a special training session with UK experts is planned for the end of November.
64. Questions from the delegation focused on military expenditures, the professionalization of the military and the degree of civilian control of the armed forces. Colonel General Abiyev stated that the military budget has increased, but that it is still not enough to bring the armed forces up to the appropriate level of quality. In particular, he highlighted the need to increase the procurement budget. The military will remain based on conscripts but currently approximately 20 percent of the force is professional. He also noted that civilians are an integral part of the Ministry of Defence and stated that some 200 civilians work in the ministry.
C. AZERBAIJAN'S SECURITY CONCERNS AND RELATIONS WITH NEIGHBOURING STATES
65. The primary security concern discussed by Azerbaijani authorities is the conflict over Nagorno-Karabakh. Government officials and members of parliament were united in their emphasis on this issue and its centrality to Azerbaijan's security and the security of the region. The Minister of Foreign Affairs, Minister of Defence, and Members of Parliament stated the following points. First, that Azerbaijan is a victim of an occupation by Armenian forces that have seized 20 percent of the national territory. Second, that approximately 1 million refugees and internally displaced persons have been created by the conflict including a quarter million ethnic Azerbaijanis who fled from Armenia. Third, that four UN Security council resolutions as well as reports from the Council of Europe call for the removal of all occupying forces from the region. They also note recent events such as a wave of suspicious forest fires in the region as examples of continued aggression against their national territory.
66. Azerbaijani officials expressed hope for a peaceful resolution to the conflict. They consistently stressed their willingness to grant the region a high degree of autonomy. The Minister of Foreign Affairs noted that in offering autonomy Azerbaijan has shifted away from its maximal position and that progress will only take place when Armenia shifts away from its maximal position as well. But Azerbaijani authorities expressed little confidence in the future of the Minsk group process given its lack of results so far. Mr. Asadov, the speaker of the parliament, stated that the Minsk group came to resolutions several times in the past only to see them scuttled by changes in government or assassinations in Armenia that removed the moderate elements willing to compromise on the issue.
67. In addition to being the major security issue for Azerbaijan, Government Officials and Members of Parliament discussed the international significance of Nagorno-Karabakh. Mr Asgarov noted that the region is uncontrolled and can serve as a place for drug smuggling, human trafficking and terrorist activities. Lieutenant-General Elchin Guliyev, Chief of the State Border Service, underlined the same issue. His agency is charged with securing the borders and preventing the use of the national territory for illicit transit, but Nagorno-Karabakh constitutes a region that his agency cannot patrol, region including a border with Iran.
68. Nagorno-Karabakh was also discussed in the context of Azerbaijan's relations with Russia. Several members of parliament noted that Russia fuels conflicts across the region to prevent the South Caucasian states' democratic consolidation and integration in Euro-Atlantic institutions. They view the regional conflicts as linked by the common role of Russia in supporting separatist and disruptive elements. With particular regard to the conflict over Nagorno-Karabakh, Azerbaijani officials state that Armenia has received considerable military assistance from Russia in the past decade. Therefore, they view the Russian role in the region as critical, but see Russian policy as designed to frustrate the independent development of the region.
69. The countries of the South Caucasus region share some similarities. All are struggling to implement the necessary political, economic, and defence reforms necessary for closer integration into Euro-Atlantic institutions. But the differences between them mean that the nature of NATO's involvement will vary considerably from country to country. Georgia clearly desires to join NATO as soon as possible, but neither Armenia nor Azerbaijan has expressed such a desire. Azerbaijan's oil wealth may help or hinder its reform process. Armenia's difficult relationship with Azerbaijan and Turkey may slow economic progress across the region. NATO at some level is already drawn into the complex nexus of reform, ethnic conflict and delicate relations with Russia that characterize the Southern Caucasus. How NATO as an organization manages its engagement in the region will have lasting effects.
70. To a large extent, the speed and depth of NATO's involvement in the region must be determined by the individual states. It must always be that NATO's presence and involvement in the South Caucasus - or any partner country for that matter - is in response to specific requests by the countries in question. This is critical to assuring Russia that NATO is not seeking to surround or intimidate Russia. On the contrary, the intention is to assist in the development of stable democracies whose militaries conform more closely to western standards. Russia, as well as the members of NATO, benefit from such developments in the region.
71. NATO's role is therefore somewhat limited. Clearly it does not have a role in attempting to resolve the conflicts between the states of the region such as Nagorno-Karabakh. The OSCE has the lead role in that negotiation process and is an appropriate forum. NATO can assist in the sense that the benefits it offers would likely be removed if hostilities were to be renewed, but its role is necessarily secondary and indirect.
72. At the same time, it is worth considering whether NATO should expand its advisory presence on the ground. NATO has a special representative for the region in the person of Ambassador Robert Simmons, who has by all accounts done an excellent job in representing NATO. Ambassador Razuks played an important role on the ground. But he was only one person, based in Tiblisi, responsible for all three countries. Given the very different relationships that NATO has with each country and the varying level of involvement, it might be sensible to expand his office to include separate representatives for each country.