Report: Karabakh separatism has no prospects

In post-war period, the Armenian population of Azerbaijan living in the zone of responsibility of the Russian peacekeepers has no alternatives left to full-fledged integration into the Azerbaijani economy: the separatist regime, which has been chronically dependent on the illegal exploitation of the resources of the occupied regions and funding from Armenia and the Armenian diaspora for three decades, today has no survival prospects, according to the report by the Center for Economic Reforms Analysis and Communication titled "The Armenian population in the mountainous part of Karabakh has prospects for sustainable development within the single economic space of Azerbaijan" seen by Vestnik Kavkaza.

First of all, it is necessary to understand how much the situation has changed for the separatists of Nagorno-Karabakh compared to the times when the Azerbaijani territories were occupied by Armenian troops: if before they had the seized natural resources of 20% of the Azerbaijani territory at their disposal, including the fertile fields of  Karabakh lowlands, mountain mines, forests and rivers, now the Russian peacekeepers are responsible for the least habitable lands. Separatism has lost its illegal ways of providing itself, and without integration into the economy of Azerbaijan, it will become fully dependent on outside assistance.

In financial terms, the fake NKR regime created on the Azerbaijani territories has always depended on external assistance. According to the report, estimates show that $200-250 million is needed annually to finance it, of which 50-60% came from the Armenian budget. In 2019 alone, Yerevan transferred $120 million as a budget transfer to the budget of the so-called regime as an "interstate debt". In addition to the direct transfer to its puppet regime, Armenia has also provided other forms of assistance, from vehicles to computer servers, including periodic donations.

The total amount of donations from Armenian Diaspora organizations, another major source of funding to initiatives in the Nagorno Karabakh, are not reflected in any official documents. The Hayastan Foundation has provided about $15 million for the construction of the highway from Armenia's Vardenis to Azerbaijan's Aghdere. At the same time, neither Armenia nor the Diaspora were actively developing the region due to "neither war, nor peace" state, which made any economic projects in the occupied Azerbaijani territories unprofitable. Thus, supporters of the Karabakh occupation provided the separatists with a minimum standard of living.

Now, after the defeat of the Armenian army and the collapse of the Armenian economy, which could not withstand the pressure of both the pandemic and excessive spending on occupation needs, the supporters of separatism in the Russian peacekeepers' zone of responsibility will lose funding from Armenia. The report notes that unemployment in Armenia reached 21%, 23.5% of citizens live below the poverty line, its GDP fell by 5% over the year, its foreign debt exceeded 66% of GDP. In such conditions, Armenia's high foreign debt lowers its international credit rating and makes it less likely to get new loans from international financial institutions.

The separatists themselves can no longer earn a living, since earlier their earnings were based on the exploitation of the occupied regions of Azerbaijan, which were liberated from the invaders during the Second Karabakh War. According to the report, in 2019 the sectors in the so-called "NKR" with the largest share in GDP were mining, hydropower and agriculture. Now the separatist regime is deprived of all three sectors, since production mostly took place outside the territory of the former NKAO AzSSR.

In particular, in the occupied territories, copper and molybdenum were illegally mined in the Tartar region, gold - in the Kelbajar region. Illegal mining at these fields, whose resources were previously exported through Armenia to foreign markets, has been stopped.

The invaders also collected mineral waters from well-known Azerbaijani sources, such as Upper and Lower Istisu, Bagirsag in Kalbajar region, Iligsu, Minkend in Lachin region, Turshsu in Shusha region - the waters were collected from areas rich in mineral waters, transported to Armenia and packed and exported as an Armenian product. Now, as Azerbaijan has restored its sovereignty in these areas, the transportation and export of the mineral waters as an Armenian product has been impossible.

The largest wine producers have lost over 50% of vineyards as these land are now controlled by Azerbaijan. They are no longer able to operate normally as they are short of manpower and raw materials. None of the industries based in the mountainous part of Karabakh has the development perspectives without integrating into the Azerbaijani economy. The analysis shows that raw materials supply, sales market and investments in this area is possible only if it is a part of the single economic space of Azerbaijan.

During 30-year occupation of Karabakh, 36 HPPs generating 187.5 megawatts of electricity have been operating in the area with now only 6 of them with a total capacity of 75 MW being limitedly accessed by the so-called regime. The analysis shows that Armenians living in the mountainous regions of Karabakh, which have lost over 60% of its energy generation potential, have no alternative but to join energy-rich Azerbaijan's energy generation, transmission and distribution networks. 

The mountainous part of Karabakh is not self-sufficient in any type of food products. Kalbajar- Lachin economic region accounted for a large share of the output of main agricultural products and raw materials. The same trend is followed in livestock, another element of food security. Kalbajar, Lachin, Zengilan and Gubadly account for the greater part of pastures and agricultural lands for fodder production. The separatist regime failed to address self- sufficiency in agriculture, livestock, food and beverages over the past 30 years, and this problem is likely to be solved only within the food security framework of Azerbaijan.

The report emphasizes that with the liberations of the lands from Armenian occupation in 2020, Azerbaijan saved from the hostage of occupation the 50,000-60,000 Armenians living in the mountainous part of Karabakh, creating conditions for the growth of their living standards. In particular, it is bringing transport infrastructure to the region, including highways and airports. ... "Investments, resources and a clear strategy are required to restore and develop the mountainous areas of Karabakh. The Azerbaijani government has already developed Karabakh’s development strategy and launched projects to this end. The Armenian population in the mountainous part of Karabakh has prospects for sustainable development within the single economic space of Azerbaijan, a country that enjoys the largest economy in the Caucasus," the authors of the report concluded.