THE SOUTH CAUCASUS: A REGIONAL OVERVIEW AND CONFLICT ASSESSMENT
REGIONAL OVERVIEW

Political Situation

General Political Evolution

The three South Caucasian states can be described neither as democracies nor as full-fledged authoritarian states. All three had early attempts at introducing democratic systems, and held relatively free elections in the 1990-92 period. Yet under the pressures of war, economic collapse, and because of their inexperience with participatory politics, the Caucasus backtracked in the mid-1990s to increased authoritarian rule. This process was welcomed by large tracts of the population, who after experiencing an initial euphoria following independence, came to identify democracy as a cause of the declining economic and political situation that came to characterize their countries. Order and stability became priority matters for the majority of the population, and authoritarian leaders showed to be more capable of providing that. Yet the seeds of democracy had been sown in the political systems of the Caucasus, ensuring (together with dependence on the West) that authoritarian-minded leaders were unable to establish total control over the political arena in the South Caucasus in the manner they have done in Central Asia. Hence with economic stabilization, the opening up of the region to the world, and rising popular frustration with the leadership in the mid- to late 1990s, democratic tendencies again gained strength and began to seriously challenge the ruling elites. Forces leading towards democratization were boosted by membership in the Council of Europe – an organization that to western European countries seems of little influence, but whose role in this region is highly significant.

Upon Armenia’s independence, the leader of the Armenian National Movement, Levon Ter-Petrossian, was elected President in November 1991, and led Armenia through the war with Azerbaijan, in which Armenia secured the de facto annexation of Mountainous Karabakh. Armenia’s first constitution was adopted in 1995, establishing strong presidential powers that can nevertheless be limited by parliamentary majority, on the French model. In 1996, President Ter-Petrossian was re-elected in elections that were marked with widespread irregularities and fraud. In the Fall of 1997, Ter-Petrossian accepted the OSCE’s Minsk group’s proposal for a solution to the Mountainous Karabakh conflict. The proposal envisioned the withdrawal of Armenian military forces from the occupied territories, the restoration of economic and trade links between Armenia and Azerbaijan and Turkey, and the postponement of the decision on Mountainous Karabakh’s status. Ter-Petrossian’s decision to accept the proposal caused much anger and dissatisfaction among the nationalist wing of his government, headed by Prime Minister Robert Kocharian – the former President of the unrecognized Republic of Mountainous Karabakh.

United in triumvirate with Defense Minister Vazgen Sarkisian and Interior and National Security Minister Serzh Sarkisian, Kocharian staged a “velvet coup” forcing President Ter-Petrossian to resign in February 1998. Kocharian was subsequently elected President in the second round of presidential elections. Vazgen Sarkisian formed an election block called Miasnutiun (Unity) with former Communist leader Karen Demirchian’s People’s Party ahead of the Parliamentary elections of 1999, which grew immensely popular and won a comfortable majority of seats in the National Assembly. Demirchian was elected the speaker of Parliament and Sarkisian was appointed Prime Minister. Presidential power was now, for the first time, limited by parliamentary majority.

Political stability in Armenia, however, collapsed on October 27, 1999, when six gunmen burst into the Parliament in full session and shot dead Demirchian, Sarkisian and six other deputies. Their motives were unknown. The chain of command and political hierarchy was broken, and Armenia fell into political chaos as accusations were even leveled against President Kocharian for masterminding the deed and for obstructing the work of the Prosecutor investigating the tragedy. Kocharian nevertheless managed to split the Miasnutiun bloc and build a pro-presidential majority in the Parliament, thereby strengthening his political power. Stepan Demirchian’s People’s Party, Aram Sarkisian’s Republic Party and Artashes Geghamian’s National Accord Party currently form the major opposition force in the Parliament. Armenia acceded to the Council of Europe in January 2001. In Fall 2001, the opposition sought to impeach the President, an initiative that nevertheless failed. In April 2002, authorities decided to close down the independent and popular TV channel "A1+". The public and opposition reacted by mass protests in the streets, demanding the resignation of the President.

When Azerbaijan declared its independence in August 1991, the leaders of the country sought to develop a secular democracy with a market economy. Azerbaijan’s establishment in 1918-1920 as the first democratic republic in the Muslim World also played a role in forming a vision for the statehood and political identity of post-Soviet Azerbaijan. The pro-independence and anti-Communist Popular Front took over power in May 1992, forcing Azerbaijan’s Communist leader Ayaz Mutalibov to resign. In elections in June, Popular Front leader Abulfaz Elchibey was elected President in the most democratic elections ever held in Azerbaijan. His administration took radical steps to democratize the country on the Turkish model. However, reforms failed due to mismanagement, heavy military losses in the war with Armenia, and economic collapse. A military commander’s revolt in May 1993 subsequently led to chaos - 20% of the territory fell into Armenian hands, and separatist movements among the Lezgin minority in the north and the Talysh in the south threatened to fragment the country further. Elchibey surrendered power to Azerbaijan’s former Communist leader and former Politburo member Heydar Aliyev, whose return marked the beginning of a new era.

Aliyev developed a pragmatic approach both in his foreign and domestic policy in an attempt to bring stability. As a result, he successfully managed to crush separatism in the Lezgin and Talysh areas, establish a cease-fire with Armenia in 1994, and he managed to attract foreign investments into the oil and gas sector. However, this came at the expense of democracy and freedom of speech, and the strengthening of Aliyevs’ presidential power. Azerbaijan adopted its first constitution in 1995, which provided for the division of power among three branches of government and guaranteed the rights and freedoms of the citizens. Parliamentary elections were held in 1995 and 2000, Presidential elections in 1998 and the first municipal elections in 1999. Despite significant improvements in legislation, massive amounts of fraud favoring the governing New Azerbaijan Party and its candidates were present in all of these elections at all levels. The 2000 elections showed the strength of the opposition, in particular the Musavat Party, which according to observers garnered the largest number of votes. The official results nevertheless left the major opposition parties outside the parliament. In spite of this, Azerbaijan was accepted to the Council of Europe in 2001, together with Armenia. Today, Azerbaijan is still in a transition period from authoritarian regime to full democracy. There are over 40 political parties in the country, yet President Aliyev has established a tight hold on power and faces little challenge from the fragmented opposition. The development of democratic institutions and insurance of a smooth transition of power in the post-Aliyev period are the major challenges that the country faces.

Of the three republics, it is commonly accepted that Georgia has made the furthest progress in building a democratic polity. Few former Soviet countries, except the Baltic states, have likely made as much progress as Georgia has, in spite of the severe hardships it has experienced. Georgia declared independence before most other Soviet republics in April 1991, under the leadership of the democratically elected President Zviad Gamsakhurdia. Gamsakhurdia’s popularity nevertheless eroded due to his eccentric style of leadership, which alienated most erstwhile allies. The conflict with South Ossetia that began in 1989 worsened matters, and a shady paramilitary junta forced Gamsakhurdia into exile in early January 1992 after a brief civil war in central Tbilisi. This coup delayed Georgia’s entry into the United Nations, and the junta invited former Communist leader and Soviet Foreign Minister Eduard Shevardnadze to lead the ‘State Council’. Shevardnadze gradually forced out the coup-makers from power, but only after having lost a war in Abkhazia. He also faced imminent state collapse during a large-scale army mutiny led by Gamsakhurdia in Fall 1993, necessitating him to give in to Russian pressure and allow the stationing of Russian military bases in Georgia and the stationing of Russian border guards on the Turkish border. Shevardnadze also conceded to membership in the CIS. However, Shevardnadze managed to gradually restore some stability and build Georgia’s statehood and international standing.

Georgia has a strong executive presidency, based on the 1995 constitution. The President is directly elected to a maximum of two five-year terms, and appoints a council of ministers headed by a minister of state. In both the 1995 and 2000 Presidential elections, Shevardnadze was overwhelmingly elected as president. In the same manner, Shevardnadze’s party, the Citizens’ Union of Georgia (CUG), won the largest number of seats in the 1995 and 1999 legislative elections. International observers judged the 1999 elections to be a step towards compliance with OSCE commitments, but noted that the election process did not meet all commitments. The 2000 presidential elections, on the other hand, were marred by serious irregularities.

Over the last several years, hard social and economic conditions and large-scale corruption  have made the President and his team extremely unpopular. Abortive assassination attempts in 1995 and 1998, as well as military revolts in 1998 and 2001 showed that the President could confront violent opposition. Shevardnadze has increasingly relied on the large Ministry of Internal Affairs and on the Ministry of State Security to secure his power. These forces, led until Fall 2001 by ministers widely believed to be engaged in large-scale corruption, tried to encroach on the political rights of government opponents. Their raid against the leading independent TV station Rustavi-2 in October 2001 resulted in a political crisis. After massive demonstrations, the President was forced to dismiss the entire government after reformist leader and Speaker of Parliament Zurab Zhvania resigned. The President soon came into confrontation with the reformers’ wing of the CUG, and the party disintegrated. In local elections in June 2002, they received only 2% of the votes in Tbilisi, whereas the opposition Labor Party (led by Shalva Natelashvili) and the National Movement (led by ex-minister of Justice Michael Saakashvili) got 25% and 24%, respectively. In Summer 2002, the President pardoned leaders of the paramilitary organization Mkhedrioni sentenced for an assassination attempt on the President and the murder of several political figures. It is feared that this may be a step to regenerate the Mkhedrioni in order to shore up support against the opposition, something which would put Georgia in crisis again. Shevardnadze’s term ends in 2005, while much uncertainty surrounds the country’s future developments.

Political and Economic Reform Processes in The Region

The process of political and economic reform in the South Caucasus is painstakingly slow and burdened by widespread corruption and the reluctance of Soviet-style bureaucracies to adopt any type of reform. Pressures for reforms from the west have been the major driving force behind what little reform has taken place. The states are all still recovering from the collapse of the Soviet Union, economic hardship, war, and various periods of political chaos. Corruption is widespread in all spheres of life, caused mainly by low salaries, inadequate punishment, and shortcomings in the legislation. Council of Europe membership since 1999 in Georgia’s case and since 2001 for Armenia and Azerbaijan nevertheless form recognition for the relative progress of these states, but even more represent a potentially powerful motor of reforms. All three are now parties to the European Convention on Human Rights, giving individuals the right to demand responsible action from their governments. International organizations and financial institutions are actively supporting the reform process in the region, funding and directing large aid programs.

In May 2001, the Armenian government received a US$345,000 grant from the World Bank to prepare a plan to combat bribery and nepotism in the country. In January 2001, the IMF agreed to provide Armenia with $90 million in loans for the implementation of a "Poverty Reduction and Growth Loan" program. Armenia, together with five other CIS countries, was selected by the IMF to participate in Poverty Reduction Strategy Programs, which are aimed at reducing the poverty level in the country. International financial institutions, specifically the World Bank, have long urged structural reform in Armenia’s pension system and energy sector. The latter includes the privatization of four major electricity networks, a move that was very unpopular among many parliamentarians. Membership in the Council of Europe is also expected to bring political reforms to the country.

Azerbaijan has also stepped up the process of political and economic reforms. Political reforms focus on legislative improvements, structural reforms in the Cabinet of Ministers, and the conduct of free and fair elections. Economic reforms mainly aim at improving the tax, customs and banking sectors, at implementing a new stage of the privatization program, and at ensuring the transparency of the newly established State Oil Fund. Structural reforms have been identified as the main policy tool of the government to achieve more balanced economic growth by developing the non-oil sector, strengthening governance, enhancing financial discipline and fostering private sector development, and on that basis, fighting poverty. Important political reforms include a new electoral law that was passed in 2000 in order to prepare for Membership in the Council of Europe. The Parliament also ratified the European Convention on Human Rights. The government reformed the structure of the cabinet to ease development of the non-oil sector, by creating a unified Ministry for Economic Development. Another economic reform was the adoption of the long-awaited Tax Code in January 2001, which sought to promote the development of small and medium-sized businesses by decreasing most tax rates. Other reforms in the economy include the banking sector, where the central bank continues to impose tight control on the activity of small banks and attempts to consolidate them by raising capital requirements. Recently, the second stage of privatization was inaugurated, with which larger enterprises will be set for privatization. While Azerbaijan has made several major reforms in the political and economic sectors, these are still not sufficient to keep Azerbaijan abreast with global developments. In the military sphere, Azerbaijan has been gradually reforming its armed forces from scratch with large-scale assistance from the Turkish Armed Forces, which among other activities, run the military academy of Azerbaijan.

The Georgian Government seeks to demonstrate its commitment to European ideals. In order to co-operate efficiently with the CoE and to coordinate the process of fulfillment of its commitments, a special division of CoE and Human Rights was created at the International Law Department of the Ministry of Foreign Affairs of Georgia. Numerous state organs are engaged in day-to-day cooperation with CoE bodies. The cooperation programs and the activities of the Georgian representatives in the committees of the Council of Europe highly contributed to the accomplishment of undertaken commitments.

Georgia has tried to implement Judicial Reforms, and young reformers were brought to leading positions, such as former Justice Minister Michael Saakashvili. Yet these reforms remained abortive. Efforts to create a more independent judiciary were undercut by failure to pay judges in a timely manner. Political reforms did not touch the ‘power institutions’, and prosecutor and bar reform was stalled. Prosecutors continue to direct criminal investigations, supervise some judicial functions as well as represent the State in the trial. Parliament’s attempts to reduce prosecutors’ authority, increase the rights of defense attorneys, and enhance the independence of the judiciary have not succeeded. The Criminal Procedures Code, which was passed in 1997, was amended in 1999 and 2000 in response to complaints by security forces that legislated reforms hampered criminal investigations. A planned anti-corruption law has not been submitted to Parliament.

In the military sphere, Georgia has embarked on an ambitious national effort to restructure and modernize its army along NATO standards. The program envisages to form an increasingly civilianized staff at the Ministry of Defense; a transition to a smaller active-duty force built around a core of commissioned and non-commissioned officers and contract soldiers, supplemented by reservists; the education of the Armed Forces on the role of military forces in a democratic society, and ensuring that troops are well trained and provided for; and finally to enhance the defensive capabilities of the Georgian Armed Forces. In conducting this restructuring, Georgia has made good use of the opportunities provided by NATO through its Partnership for Peace (PfP) program, as well as bilateral assistance from Western countries, most prominently the U.S., Great Britain and Turkey.

Foreign Relations

The foreign relations of the three Caucasian states are conditioned by their location at an international crossroads wedged between three regional powers as well as by their relations with one another. This web of relations has dictated different threat perceptions and therefore differing orientations in the foreign relations of the three South Caucasian states. This has implied both threats and opportunities. The latter include international interest in the oil and gas industry of the region as well as plans to make the Caucasus a key transportation crossroads between Europe and Asia. Foreign policy commonalities among the three states include a general orientation toward integration with Europe and good relations with the United States. With regard to the major regional powers, however, Armenia has followed a different course than Azerbaijan and Georgia. The foreign policies of Armenia and Azerbaijan mainly flow from the war on Mountainous Karabakh, and in Azerbaijan’s case from the urge to export its oil resources. Georgia’s foreign policy is chiefly determined by its perceived Russian threat and its internal weakness. Due to the conflict-ridden regional environment, it is no exaggeration to state that the main foreign policy priority of all three states is to preserve their sovereignty and independence. This has entailed a preoccupation with domestic and regional conflicts that has prevented the building of a strong economic base, the basis of a high international status in the contemporary era.

In many ways foreign policy formulation in the South Caucasus has been characterized by a game of balancing allegiances. These states are caught between honoring Soviet relationships with Russia and a practical dependence on Russia as a trading partner, and a desire to decrease dependence on Moscow by securing Western support in the form of economic and security guarantees. In order for this to happen, the South Caucasus needs Western support not as a short-term policy game, but rather a long-term commitment. The west has yet to show a commitment to realize its myriad of motivations in the South Caucasus, including reducing Russia’s sphere of influence, securing access to Caspian resources, and securing the South Caucasus as the geographical gateway to Central Asia.

Most of Armenia’s external relations are dominated by attempts to convince the international arena of the legitimacy of its claim to Nagorno-Karabakh. For Armenia, Turkey is the largest perceived threat to its security. Turkey’s support for Azerbaijan in the conflict, condemning Armenian occupations of Azerbaijani territories and imposing a partial trade embargo on Armenia have added to Armenia’s accusation of Turkish responsibility for massacres of Armenians in the First World War. Diplomatic efforts of the Armenian Diaspora and government are geared toward achieving international recognition of the alleged genocide and compensations. Turkey, however, denies the Armenian accusations and is irritated by unofficial Armenian territorial claims on the Kars and Erzurum areas of Turkey. Given its state of war with Azerbaijan and closed border with Turkey, Armenia has leaned on Russia as a guarantor of its security, and has been an active participant in the Collective Security Treaty of the CIS. For most of its independence, Armenia has followed a self-isolating, pro-Moscow foreign policy. Moscow has regarded Armenia as an important ally in the Caucasus, and most Armenians regard a close relationship with Moscow necessary. Russia currently maintains its 102^nd military base, a division of S-300 missiles and a squadron of the Russian air force with MIG-29 fighters in Armenia.

Greece and Iran, both with hostile relations to Turkey, are other allies of Armenia. Greece provides military and economic assistance to Armenia and could potentially promote Armenian interests in the EU and NATO. Iran provides Armenia valuable trade opportunities and access to the outside world. In spite of being a Shi’a Muslim country, Iran has managed a benevolent neutrality to Armenia vis-à-vis Azerbaijan. However, in the aftermath of 9/11, Armenia’s ties with Iran created problems as the U.S. imposed trade sanctions on several Armenian private enterprises for trading with and providing nuclear materials to Iranian companies. On the whole, however, Armenia’s policy of ‘complimentarity’ has been relatively successful at maintaining close ties with these three powers. The large and wealthy Armenian lobby in the U.S. has managed to effectively lobby the U.S. congress to secure an earmarked $90 million annual assistance for the Armenian government. Armenia is member of NATO’s Partnership for Peace program, but has remained more cautious with regard to NATO than Georgia and Azerbaijan. Armenia has a tense relationship with Georgia due to secessionist claims in Georgia’s Armenian province of Javakheti and the participation of ethnic Armenian guerrilla forces in the Abkhaz-Georgia war on the side of the Abkhaz. Nevertheless, the two countries have managed to keep peaceful relations because Armenia heavily depends on Georgia for communication routes and trade.

Azerbaijan’s dominant foreign policy concerns are the conflict with Armenia; territorial disputes with Turkmenistan and Iran over oil fields in the Caspian Sea and the legal status of the Sea; and the development of East-West transport and trade corridors. Relations with Russia have suffered because of perceived Russian support for Armenia in the conflict; weapons worth US$1 billion were transferred from Russia to Armenia between 1994-96. Bilateral relations have nevertheless improved since President Putin came to power. Moreover, Iran and Azerbaijan have struggled to find a common language. Like Russia, Iran feels threatened by Azerbaijan’s cooperation with the U.S., especially in the military arena. Tehran is also weary of Azerbaijan’s reliance on Turkey and its open calls for NATO troops to be based in the country. Iran also fears secessionist tendencies among its own over 20 million-strong Azeri minority. As a result it has attempted to slow down Azerbaijan’s developments by trading with Armenia, hosting Azeri exiled rebels, and financing covert Islamic groups in the country. Bilateral relations reached a low point in the Summer of 2001 when Iranian naval forces attacked an Azerbaijani exploratory ship in the Caspian sea and Iranian fighters regularly violated Azerbaijan’s air space.

Turkey, on the other hand, has been Azerbaijan’s strongest ally both in the politico-military and economic sectors. Turkey has close cultural and linguistic ties with this republic and has been Azerbaijan’s staunchest supporter in its conflict with Armenia. Turkey was one of three countries (the other being Israel and Pakistan) that openly took Azerbaijan’s side in the conflict. Iran’s aggressive stance in 2001 made Turkey and Azerbaijan even closer. Azerbaijan has also placed great emphasis on cooperation with the US and NATO, becoming a PfP member in 1994. The U.S. and other Western countries play a major role in oil and gas investments in Azerbaijan. After September 11, Azerbaijan was one of the first countries to render assistance to the US, by providing valuable transportation routes and security information. The U.S. Congress then finally waived Section 907 of the Freedom Support act, a bill passed at the behest of the Armenian lobby in Congress in 1992 that restricted U.S. aid to Azerbaijan. This has undoubtedly opened up new opportunities for military and economic cooperation.

Georgia’s relations with Russia were marred from Georgia’s independence by the blatant covert and occasionally overt Russian support for secessionism in South Ossetia and Abkhazia. Georgia regards Russia as an imperial power that seeks to undermine Georgia’s statehood and independence. In response, Georgia has tried to market its role as a gateway from the Black Sea to the larger Caspian region. Tbilisi has therefore reached out to its other neighbors, and it has increasingly looked to the West in search of new, alternative, opportunities. Relations with Europe and especially the U.S. have been and continue to be excellent. Georgia’s western orientation and efforts to avoid entanglement in the Chechen War are under severe Russian pressure, as Moscow has repeatedly cut off gas supplies, stalled negotiations on Abkhazia, delayed negotiations for the withdrawal of Russian military bases, complicated external debt rescheduling, and imposed a discriminatory visa regime that exempts secessionist areas of Georgia from the requirement of a visa. Currently, steps are being taken to provide Russian citizenship to citizens of the secessionist areas of Abkhazia and South Ossetia.

Georgia’s relations with Turkey were marked by historical tensions, but these are being gradually overcome and in the late 1990s, Georgia has forged a strategic partnership with Turkey. Georgia and Azerbaijan have been at the forefront of creating a Caucasian ‘bridge’ between Turkey and the Black sea, to the Caspian Sea, and on to Central Asia in the energy, transportation, political and military sectors. Western interests have largely been determined by the exploitation of the Caspian resources, and corresponding projects such as the ‘Silk Road’ and the EU-financed TRACECA (Transport Corridor Europe-Caucasus-Asia). As the westward export of Caspian oil and gas gradually materializes through Azerbaijan and Georgia, geopolitical and geo-economic interests will simultaneously rise, and the region’s importance to the west is subsequently predicted to grow. Azerbaijan and Georgia hope that this will ensure their security and stability, and promise conflict resolution and the restoration of their territorial integrity. Georgia and Azerbaijan thus share a similar outlook on the world and on relations with their neighbors.

The relationship between Baku and Tbilisi has strengthened significantly since independence, as both understand that their security is connected. Azerbaijan cannot export its oil without Georgia, which connects it to Turkey and the West; while Georgia partially relies on Azerbaijan’s oil exports for its economic and political security. The two have been motors in the GUUAM (Georgia Ukraine Uzbekistan Azerbaijan Moldova) alliance that developed since 1997 as a counterbalance to Russian hegemonic tendencies within the CIS. Armenia, on the other hand, has remained largely isolated from regional transportation schemes and cooperative efforts due to its conflict with Azerbaijan. Geographically, Azerbaijan and Georgia are better positioned as a transport and communications route as they form the corridor between the Black and Caspian seas, hence any transport conduit can easily bypass Armenia. International pressure has mounted on Azerbaijan and Turkey to open economic relations with Armenia, yet Azerbaijan refuses to do so as long as Armenia occupies almost 20% of its territory.

Political And Economic Relations with Sweden.

Sweden’s bilateral relations with the Caucasus have been relatively low-key. The height of Swedish involvement in the region was in the mid-1990s when Sweden, as chairman of the Minsk Group, played the role of a mediator in the Armenian-Azerbaijani conflict. Swedish diplomats played a crucial role in the cease-fire of April 1994 that ended the large-scale hostilities between Armenia and Azerbaijan, and that has held ever since. Sweden continues to be a member of the Minsk Group, but its activity in the process is relatively low, as Russia, France and the U.S. have sidelined other members of the Minsk group and conduct most of the current negotiations in the form of a troika.

Apart for Sweden’s involvement in the Minsk Group, its cooperation with the states of the South Caucasus is limited to some economic activity, the participation of Swedish delegations in international organizations’ relations with the Caucasian countries, and the activity of honorary consulates. Students from Caucasian countries have been given the opportunity to study in Sweden, especially in recent years under scholarships from the Swedish Institute. There are several Swedish companies operating primarily in Baku and Tbilisi. These businesses are mainly local branches of major Swedish companies often operating from Istanbul, such as Volvo and Ericsson. Swedish NGOs also work in the Caucaus, such as ‘Kvinna till Kvinna’, active in gender issues.

Swedish diplomats from the Ministry of Foreign Affairs and employees of Swedish governmental organizations, including SIDA, regularly visit the region for various diplomatic purposes. The only high-level visit, however, was Ms. Anna Lindh - the Swedish Foreign Minister – who visited the region in 2001, during Sweden’s presidency of the EU, as part of the EU’s troika delegation.

Regional security: Changes after 9/11

The South Caucasus was one of the regions in the world that was most affected by the geopolitical upheaval that occurred immediately following the terrorist attacks in New York and Washington, DC on September 11, 2001. Over the past decade, the Clinton and Bush administrations had both considered the Caucasus an area of American interests. Since the mid-1990s the U.S. has focused its engagement in the Caucasus on supporting independence, and directing large amounts of development aid and investment into the region. Armenia and Georgia have been among the highest per capita recipients of U.S. aid in the world, while Azerbaijan received billions in direct investment by American and other western companies. In particular, the U.S. vigorously supported Georgia’s independence, and strongly criticized Russian bullying of Georgia as late as winter 2000-2001. Despite this involvement, however, by 1999-2000 the United States concluded that it had no vital interests at stake in the Caucasus and Central Asia.

After September 11, however, Washington was forced to reassess its interests in the region because of the central role Central Asia came to occupy in world politics. As American military units were deployed to Central Asia in preparation for the war in Afghanistan, the Caucasus acquired unexpected importance. Georgia and Azerbaijan immediately offered the U.S. and its allies unrestricted use of their airspace and refueling facilities for aircraft headed from bases in the continental United States and Europe toward Central Asia and Afghanistan. Russia and Armenia also offered their airspace, with some limitations. As a result, all military aircraft flying from Europe to Afghanistan and back transited the airspace of Georgia and Azerbaijan. The deployment of U.S. military bases in Uzbekistan, Tajikistan and Kyrgyzstan also led to an increasing awareness of the strategic location of the South Caucasus. As these bases could be supplied only from Turkey through the Caucasus, from the Arabian Sea, or from bases in Oman via Pakistan and Afghanistan, the stability of the South Caucasus became a priority for the United States. The strategic importance of the South Caucasus for the U.S. in the post 9/11 environment was especially evident when in response to the suspected presence of Chechen rebels and criminal groups with links to international terrorism in Georgia’s Pankisi Gorge, the Caucasus itself became a theater of American anti-terrorist operations. Thus U.S. thus quickly sent a limited contingent of troops to Georgia to train the Georgian army for anti-terrorism operations in the Pankisi Gorge.

These developments caused much antagonism in military and political circles in Moscow, who saw it as another step in limiting Russia’s role in its "near abroad" and bringing Central Asia and the Caucasus under American dominance. President Putin nevertheless refrained from criticizing the American military deployment. Armenia granted the U.S. overflight rights, but also voiced concerns about the increasing role of the U.S. in the Caucasus. Yerevan fears a possible collapse of the balance of power in the region, and fears that an increased U.S. presence in the region could lead to increased Turkish military presence as well. Meanwhile, the U.S. punished several Armenian companies for their trade with Iran in the sphere of nuclear energy. The deployment of U.S. troops in Georgia will lead to the creation of a contingent of up to 3,000 well-trained and supplied Georgian elite forces – something that has worried the breakaway areas of Abkhazia and South Ossetia, who fear these troops may be used against them after completing anti-terrorist operations in Pankisi.

In addition to changing geopolitical developments in the South Caucasus, regional governments have also appeared to make use of the war on terrorism to advance their own domestic political agendas. Georgia and Azerbaijan have linked separatism with terrorism by arguing that uncontrolled secessionist areas are ‘black holes’ where international crime and terrorism are nurtured. By suggesting that they are fighting terrorism, and preventing the rise of militant Islam, the governments of the South Caucasus have essentially been given a blank slate of support by Western coalition nations. The rising suppression of political and non-state sanctioned Islam in these countries ironically threatens to produce the seeds required to feed the emergence and support of terrorist organizations. Both the United States and the South Caucasian governments have exaggerated the presence of militant Islamic activity in the region, including unfounded exaggerations of the presence of al-Qaeda terrorists in Georgia’s Pankisi Gorge. These allegations have served an important role in Washington’s justification for sending troops to Georgia; and for the Georgian government to seek military aid. While focusing on the role of Pankisi, the Western coalition is overlooking the role of Azerbaijan, a major transit route for arms, money and mujahideen fighters traveling between the North Caucasus and Afghanistan. Baku has sought to curb the international militant Islamist and criminal network running through its territory, but these efforts have also been used by the government to continue their suppression of political opposition. 

The general confusion concerning the aims and motivations of the U.S. military presence in the region is another source of contention. Given little indication about a U.S. exit strategy in the South Caucasus and Central Asia, there is growing concern among some populations of these regions that Washington is seeking to secure a de facto empire throughout the world within the framework of a ‘war on terrorism’. Although these attitudes are rather conspiratorial, it is important not to disregard these concerns. Fears of Washington manipulating its war on terrorism are real throughout both the Caucasus and Central Asia, and as such need to be understood as an alternative perception that plays a role in analyzing the prospects for regional stability.