How to create conditions for new models of cooperation in the Caucasus unlike the ones of the past?
The South Caucasus region is a political and economic unity. Notwithstanding curren conflicts, we have witnessed times when the region lived and developed in peace. So, how to create conditions for new models of cooperation in the Caucasus unlike the ones of the past?
There are many initiatives aimed at creating such unity: the CIS, within the frames of which Russia boosts integration processes, "Eastern Partnership" a project of the EU aimed at establishing association of the South Caucasus states, and the Turkish proposals on creating a joint security platform - the Caucasus pact of stability and cooperation. Each of these projects has powers of reason and the best model of unity could become one which combines particular features of all of them. But as a first step it is indispensable to remove obstacles for further cooperation among states in the region. In the first place this means the Nagorno-Karabakh conflict, which not only hinders the development of the region, but also works against economic activity, increases defense expenditures and prevents investment in the development of regional infrastructure. Closed borders just worsen perspectives of the international processes in the Caucasus region.
The Madrid principles of the Karabakh conflict, formulated by the OSCE and supported by leaders of the "G8", can move the situation in the region from the dead-end and open the way for social and economic cooperation in the South Caucasus, involving not only Georgia, but also Turkey in the process.
Turkey already participates in some projects implemented by Azerbaijan and Georgia. This trilateral alliance could become an example of cooperation, a basis to boost economic integration. The three states are connected by gas and oil pipe-lines, and the railway Baku-Tbilisi-Kars is currently under construction. And this is by no means all the projects of the three states, in which Armenia, isolated from economic cooperation, could be involved.
The participation of Armenia in regional cooperation and turning a trio into a quartet is of a great importance for Russia as a Caucasus state and regional power. Russian and Armenian businesses have close ties. Under the program "Liabilities in exchange for assets" almost half of the Armenian resources passed into the ownership of Russian companies. It's obvious that closed borders are an obstacle for business.
Another dimension of regional cooperation is the development of Russian-Turkish relations, which were strengthened by the recent visit of Russian President Dmitry Medvedev to Ankara. This process transforms the Caucasus region from a quartet into a strategic alliance of five states. This could be a perfect model for the region. In this context, the absence of official diplomatic relations between Russia and Georgia is worth mentioning. Only at first sight the recognition of Abkhazia and South Ossetia reduced tensions in the region. The conflict between Moscow and Tbilisi leaves security issues unresolved. Moreover two more states have appeared on the Caucasus political map from Russia's point of view. However the recognition of Tskhinval and Sukhumi can't be compared to the situation in Nagorno-Karabakh. Russia upholds the territorial integrity of Azerbaijan and counts on peaceful settlement by means of negotiations.
Ways of economic cooperation
It is important to mention several spheres in the context of cooperation in the South Caucasus. Firstly, this is energy and energy resources - the foundation of the economic wealth of Azerbaijan, which provided a high level of economic development in comparison to its neighbor states. It is noteworthy that Azerbaijan carries out several ambitious energy projects, which have become a backbone of relations with Russia and Georgia, in particular regarding spheres of energy production and delivery. The transportation infrastructure of the region desperately needs modernization. But in general work in this direction is not coordinated, apart from the construction of a railroad Baku-Tbilisi-Kars.
The development of the telecommunications sector, including IP-telephony and internet, obviously needs regional coordination. Several Russian leading companies have arrived in the market of the South Caucasus, but this is not enough to speak about full network integration.
The financial system also develops less successfully as it could be in the case of open borders. Russia and Azerbaijan are the only countries which have not joined the WTO. Russia's largest banks are making efforts to get to the markets of the South Caucasus states; nevertheless this process is fraught with difficulties.
The stock market system is in an embryonic state in the South Caucasus. Exchange markets are barely involved in the economic regulation and providing of financial support to economic projects. International interpenetration of capital is also insignificant. The so-called joint Georgian-Azerbaijani projects in fact are unilateral and consist of the expansion of the Azerbaijani assets to the markets of the neighboring states.
The Caspian region of the Caucasus is also worth mentioning. The development of cooperation in the Caspian Sea region is a top priority issue both for Russia and Azerbaijan. Transit opportunities of the South Caucasus region, located between the two seas, are not being realized to the full extent.
Energy.
Let's take a close look at each aspect of the potential of energy cooperation in the South Caucasus. The extraction of energy resources in Azerbaijan determined the creation of the energy resources transportation infrastructure on the route Azerbaijan-Georgia-Turkey. But taking into consideration the potential of oil production enhancement on the Caspian oil-fields (here we should mention not only Azerbaijani projects, but also the projects of Kazakhstan) the existing transportation routes may be insufficient.
Every energy-supplying country is interested in the diversification of its transit routes, as much as consumers are interested in the availability of different sources of raw feedstock. And here the transit potential of the region offers a variety of opportunities. Probably, in the case of the Azerbaijani-Armenian conflict settlement and rapprochement between Yerevan and Ankara, Azerbaijani oil-suppliers would weigh the pros and cons of operating the export routes through the territory of Georgia and Armenia.
Nowadays it is not uncommon to encounter the ideas that in case of the conflict settlement part of the transit infrastructure for the Azerbaijani oil export could run through the territory of Armenia. In particular, along the river Araz, reaching Nahichevan, could guarantee the security of energy supplies to this region Currently it is difficult even to imagine the implementation of some of these projects, but they do deserve attention as a possible impetus for peaceful Karabakh conflict settlement. Meanwhile, this theme is widely discussed in the West, regarding gas projects, in particular "Nabucco". Without doubt in the even of the Karabakh issue resolution, Armenia would become one of the main gas and oil transit states in the region.
In this context the perspectives of electric networks unification should be examined. Every country of the region has enough sources for energy production, though there are ups and downs in production. The unification and synchronization of the electric networks could become a solution for this problem. The foundation of such cooperation is underdeveloped by Russia, Azerbaijan and Iran. The latter has increased energy production. Within the framework of energy cooperation, Azerbaijan provides Russia's Caucasus republics with electricity. The entire region, including Iran, can be involved in this cooperation, providing new opportunities for business. The process has already started, though didn't receive region-wide character.
The next publication of VK will develop themes of perspective projects in the spheres of transportation, telecommunications, finances, tourism and cooperation in the Caspian and Black Sea regions.
Aleksei Vlasov, Ismail Agakishev, Evgenii Krishtalev.
