AFB-TEXTE

Introduction *

The breakup of the Soviet Union and the end of the cold war considerably changed the geopolitical situation in Eurasia and started a completely new process of a fundamental transformation of the world political system. Although the first years of the dissolution of the communist power in the Soviet Union generated an essentially unstable political, economic and social environment throughout the region, the international community recognized the sovereignty and independence of all the former Soviet republics at the end of 1991. The collapse of the Soviet Union and the creation of the Commonwealth of Independent States (CIS) have meant the beginning of a new era for all of the formerly Soviet-ruled countries, including the three Caucasian states of Armenia, Azerbaijan, and Georgia. ¹

In the final years of the Soviet Union, the Caucasus gained wide recognition as the location of disputed territories and armed conflicts. The region's chronic instability was viewed by the world as a morass of ethnic conflicts and bloody power struggles. Despite the idea that the Nagorno-Karabakh conflict triggered a cycle of destabilizing events that led to the disintegration of the Soviet Union and accelerated the liberation of the former Soviet republics, in fact it was a distraction for the countries of the Caucasus and Central Asia. It distorted the struggle for sovereignty and independence from Moscow and totalitarian rule into a bloody war over patches of territory, and started a chain of wars and conflicts all over the territory of the former Soviet Union. Thus, democratic processes, market economy efforts, and constructive political and social developments were obstructed by the ethnic and territorial conflicts in the region.

Maintaining and consolidating stability on the territory of the former USSR remain formidable tasks, involving both domestic developments in the new states and their external interactions. ²

*

The author is deeply grateful to the Alexander von Humboldt Stiftung/Foundation for providing him with the opportunity to conduct research in the Arbeitsstelle Friedensforschung Bonn (AFB). Special thanks are extended to Dr. Regine Mehl, who made this fellowship possible, and to the entire AFB staff for their support in bringing this working paper to publication.

1

Belarus, Russia and Ukraine proclaimed the establishment of the Commonwealth of Independent States (CIS) on 8 December 1991 in Minsk. The CIS member states are: Armenia, Azerbaijan, Belarus, Georgia, Kazakhstan, Kyrgyzstan, Moldova, the Russian Federation, Tajikistan, Turkmenistan, Ukraine and Uzbekistan.

2

Vladimir Baranovsky, “Russia: Conflicts and Peaceful Settlement of Disputes,” SIPRI Yearbook 1998: Armaments, Disarmaments and International Security (Oxford University Press: Oxford 1998), p. 111.

In the post-Cold War era, as leaders and the foreign policy elites in Moscow examine the real power situation in the international arena, the significance of the CIS territory (the so-called "near abroad") becomes abundantly clear to them.

The former satellite states in Eastern Europe are scrambling to become part of Western economic, democratic and security systems. Western Europe and the United States have maintained their strong strategic ties emanating from their membership in the European Economic Union and NATO. ³

The only remaining region in which Russia wants to strengthen its strategic significance as a great power is its immediate neighborhood, the geopolitical setting of the CIS. The Kremlin knows full well that the security of Russia is inextricably linked to political developments in the former Soviet territories. In order to emerge as a great power, Russia wants to concentrate on building closer strategic ties with the former Soviet republics. The Kremlin insists that the newly independent states should not only retain but also strengthen security arrangements with Moscow. The main purpose of these arrangements is to make sure that these states do not develop security relations with NATO, Western democracies, and especially the United States.

In the present-day struggle for influence in this area of the world, the post-Soviet Caucasus has taken a special place within Russia’s substantial foreign policy priorities. In fact, the region has become vitally important to economic and security interests, both regionally and globally.

Apparently, due to renewed attention by the West, the Caucasus has reappeared on the international stage. A lot of news stories about ethnic conflicts and Caspian oil fields in the Caucasus that had previously buried in the major world newspapers and journals have been featured in front-page articles and lead editorials since the demise of the Soviet Union.

In the case of the post-Soviet Caucasus, as Zbigniew Brzezinski stresses, “there is an altogether new reality. We are dealing with historic nations, which are now independent. These countries have deep roots and a deep sense of their identity. And yet, paradoxically, they are just now engaged in the process of modern nation-building. The creation of the Soviet Union delayed that process for them”. ⁴

The three independent states of the Caucasus – Armenia, Azerbaijan, and Georgia, grappling with the difficulties of rapid economic and social transition, are indeed searching for the keys to independence, stability, and development. They are nowadays free to plot their future but yet all of them attempt to manage numerous impediments to their independent nation building.

In the eyes of the world community the dominant issues in the Caucasus in recent years have been violent conflicts that erupted in the region during the final years of the Soviet Union and in the aftermath of its dissolution. In addition to the search for peaceful solutions to the ongoing ethnic conflicts, the geopolitical complexities, oil and natural gas

3

“Itogi”, broadcast, NTV Russian television network, 4 December 1998.

4

Zbigniew Brzezinski, “The Caucasus and New Geo-Political Realities – How the West Can Support the Region,” Azerbaijan International , Summer 1997 (5.2)

resources and pipeline politics in the Caspian Basin are some of the most vital issues in the Caucasus region.

Strikingly, many of the political science scholars have voiced grave concerns about broader strategic issues in the Caucasus, including ongoing military campaign in Chechnya, the role of the Russian military in the ethnic conflicts, Russia's strategic relations with Iran, and of course, increasing US and NATO engagements in the region. The establishment of a new political and economic order as well as stable balance of forces in the post-Soviet Caucasus is a disturbing challenge for the newly independent states, which are striving today to consolidate their international position.

International and regional policy-makers in recent years have increasingly raised questions focusing on the future of the Caucasus. Will the young states of the Caucasus be able to preserve their independence in the twenty-first century? Will the Caucasus be a region of peace, trust, and cooperation, or a zone of chronic conflicts, rivalry, and suspicion?

These questions are closely interrelated. The answers to them will determine the fate of these nascent states for the next several decades. Foreign policy-makers and academics frequently bring them to the attention of the world community because the new geopolitical game is afoot for great and regional powers as well as the newly independent states of the former Soviet Union and many other countries in the Southern Tier as a whole.

Historical Geopolitical Importance

The Caucasus is a vast mountain area consisting of many ranges. It stretches for 1.500 kilometres from the Black to the Caspian Seas, forming part of the traditional border between Europe and Asia. It is an area rich in history, culture, and tradition. The region certainly deserves special attention as it cradles many civilizations.

The three Caucasian countries – Armenia, Azerbaijan, and Georgia - that became independent states in the wake of the Soviet Union’s disintegration in December 1991 previously had only a brief experience with statehood, which lasted from 1918 to 1920. By the time the Soviet Union collapsed, these countries had for nearly two centuries been under Czarist and later Communist Russian rule. Prior to falling under Russian domination during the first three decades of the nineteenth century and for most of their long history, these countries had formed part of other great empires, such as the Persian, Roman, and Ottoman. ⁵ During the Soviet epoch the Caucasus was probably the most flourishing region of the Soviet Union. At that time, however, it remained largely unknown and very little investigated by the rest of the world. With regard to the modern period, the region has reasonably become a very important scholarly source to many of international academics.

The Caucasus region with its more than fifty indigenous peoples and languages and controversial boundaries, has been resisting the hegemonic expansions within one of the most puzzling and anarchic “games” in history. Consequently, the policies of “Russification”, “Ottomanism”, and “Persian expansion” have only been temporarily successful and have left the region prone to instability due to endless rivalries. The region has tra-

Shireen Hunter, “The Trans-Caucasus in Transition: Nation-Building and Conflict,” Washington, D.C.: Center for Strategic and International Studies, 1994.

ditionally been volatile due to competition between Russia and Persia, China, or Great Britain. During World War I, after the collapse of the Russian Empire, the desire to control Baku's oilfields caused fierce competition among German, Turkish, and British forces. During World War II, the oil fields were a strategic objective in Nazi Germany's campaign against the Soviet Union. ⁶

The Caucasus region has over many centuries been a kind of arena for confrontation and was the object of disputes and wars between many powers, especially the three regional powers: Iran, Turkey, and Russia. Western players have always had an interest in the region; they came to the region for a short period of time and left it.

Analysis of the history of the region reveals an extremely complicated and problematic historical and political inheritance that has made the Caucasus one of the most unstable world regions, even during the age of the great empires. Control over the energy resources and export routes out of the Eurasian hinterland has quickly become one of the central issues in post-Cold War politics. Similar to the “Great Game” of the late nineteenth and early twentieth centuries, which pitted the British interests against those of the Russian Empire and the German Reich, a new geopolitical game in the Transcaucasus and Eurasia has emerged after the collapse of the Soviet Union in 1991. This new version of the "Great Game" differs from the original nineteenth century version between Russia and Great Britain in that this version has more players, including Russia, Iran, Turkey, and the Western democracies. The contemporary rivalry involves oil and geopolitics as well as many state and non-state actors. Accordingly, the region is again in very complicated situation like that was in the recent past, that is in early twentieth century and, most importantly, the region is now in the geopolitical shambles due to its unstable transition period following the breakdown of the USSR and its abundant, unexploited natural resources. ⁷

Nevertheless, the collapse of the Soviet order has created a unique opportunity for the countries of the Caucasus – Armenia, Azerbaijan, and Georgia – to play a new and significant role as independent forces between the dominant Eurasian power in the north, Russia, and the rival powers in the south, Turkey and Iran. With the founding of the new independent states in the region, the three most powerful countries - Russia, Iran, and Turkey - gained vast opportunities for cooperation and partnership with their new neighbors. At the same time, they faced new challenges as several armed conflicts erupted in the region. Inevitably these affected regional powers and the geopolitical situation in the CIS space.

History has now given the countries of the Caucasus a chance to act as a bridge between north and south and as a major transportation and communication link between East and West. Whether these countries will succeed as an independent force will depend heavily on the capabilities and ingenuity of their leaders. Success will also depend on the role that Russia, Turkey, and Iran will play. If these powerful neighbors pursue constructive policies toward the region and contribute to its development, the countries of the Cauca

6

Elkhan Nuriyev, “The Ongoing Geopolitical Game in the Caucasus and the Caspian Basin: Towards War or Peace?” Turkistan-Newsletter, Volume 99: 3-084, 16 April 1999.

7

Ibid.

sus will have a good chance of success. If, however, traditional hegemonic policies predominate, the region may succumb again to domination by its powerful neighbors.

In 2000, nine years after the dissolution of the USSR, the new states of the Caucasus have continued to face numerous security-related challenges in domestic developments, in conflict resolution efforts and in establishing long-lasting peace and stability in the post-Soviet geopolitical space.

Chronological overview of current ethnic conflicts in the region clearly testifies the similarity of the course of recent events in early twentieth century. Oil pipeline and conflict complexes, as well as the ongoing uncertainty and unpredictability remain the most serious threats to regional security in the post-Soviet Caucasus and the whole NIS space. This is indeed a troubling and dangerous tendency that may result in repeating the past history already in early twenty-first century.

Ethnic Conflicts, Caspian Oil, and NATO

The twentieth century's most protracted conflict, the Cold War, also provided the longest and most stable peace in the history of the modern world - a fragile peace that came at the price of national freedom for many. With the demise of the Cold War, new nearly unknown countries, long ignored or suppressed, came to the world's attention, as ethnic and national conflicts rooted in the newly independent states' own multiethnic populations emerged. ⁸

Obviously, ethnic conflicts, humanitarian crisis, instability, porous boundaries, and regional disintegration present a new cycle of problems in which the Caucasian states are becoming more and more involved. The nations inhabiting the region – innocent people are still trapped in terrific conflicts and have not found the lasting peace and stability. These conflicts, which until recently have devastated the Caucasus, took a heavy toll in terms of human lives. Many refugees even now live in squalid conditions, and there is therefore growing pressure to address the problem. Furthermore, the present-day extremely complicated situation in the southern border of the Russian Federation and the ongoing conflict in Chechnya, which is still an acute problem and a source of instability for Russia increasingly resemble Lebanon or former Yugoslavia, complete with hostages, refugees, and vendettas. In general, Chechnya, as Pavel Baev notes, “will certainly remain a major security challenge to Russia – and not only because of the unresolved issue of its status but much more because of the permanent risks of destabilization.”⁹

The lucrative geographical position and rich natural resources definitely make the Caucasus a tempting piece in the struggle for the division of influence. Nowadays the region has actually become a battlefield for powerful countries, which continue to exert their influence on the new states in the region. Traditional geopolitical rivalries with Turkey and Iran, and Caspian oil were two of a number of compelling factors that focused Moscow’s attention on re-establishing its dominance of the Caucasus. From the very

8

James Minahan, “Miniature Empires: A Historical Dictionary of the Newly Independent States,” Greenwood Press. Westport, Conn. 1998. 360 pages.

9

Pavel Baev, “Challenges and Options in the Caucasus and Central Asia,” Strategic Studies Institute,

U.S. Army War College, 22 April 1997, pp. 11-12.

beginning of founding the CIS, Baku and Tbilisi took strict centrifugal positions and tried to leave the Russian sphere of influence. Although the main initial orientation in the foreign policies of Azerbaijan and Georgia was to the West, Baku and Tbilisi did not receive any political support from the Western democracies and were left alone in their struggle for independence. Unlike Armenia, which rapidly turned to Russia, its traditional historical ally, and has been striving to gain control over Nagorno-Karabakh from Azerbaijan, both Georgia and Azerbaijan suffered invasion by Soviet troops (April 1989 and January 1990), whose aim was to oppress national democratic movements and both countries suffered bloody wars with more powerful adversaries as well as several coups d’etat that repeatedly threatened to their sovereignty and territorial integrity. All of the above-mentioned factors and the ongoing conflict developments in Nagorno-Karabakh and Abkhazia have made the fates of Azerbaijan and Georgia very similar. Unlike Armenia, which became the most homogenous former Soviet Union republic after the Azeri minority fled in 1988-89, Georgia and Azerbaijan are ethnically diverse states that are easily vulnerable to Russian manipulation.

Russian military presence in the Caucasus continues to remain a significant challenge for the newly independent states. In 1995, Georgian President Eduard Shevardnadze, who has been threatened with death on several occasions, permitted Moscow to establish four Russian bases on Georgian soil. ¹⁰ A year earlier, in 1994, Russian peacekeep ing forces were deployed in the conflict zone in Abkhazia with the agreement of the Georgian government and the Abkhaz secessionist movement. Similarly, a Russian peacekeeping force has been in South Ossetia since 1992. Despite the presence of Russian peacekeepers in both Abkhazia and South Ossetia, ethnic conflicts in these areas remain unresolved. The Georgian government has no effective control over Abkhazia and much of South Ossetia. Georgia has long been upset with Russia’s unofficial support of the Abkhazian secessionist movement. Georgia has not only hinted it will leave the CIS Collective Security Treaty, but has also pursued the withdrawal of Russian troops from two bases on Georgian soil. It has also urged replacement of Russian peacekeepers in Abkhazia with NATO troops. ¹¹

Unlike Georgia, Armenia voluntarily signed a military agreement with Russia in 1995, and has allowed Moscow to deploy at least 20,000 Russian 4^th Army troops on its terri tory, concentrated around two major bases. ¹²

The situation with Russian military bases in Georgia is now optimistically changing. Under an agreement signed on the sidelines of the OSCE Istanbul summit in November 1999, Moscow undertook to withdraw its military equipment and forces from Vaziani near Tbilisi, and Gudauta in Abkhazia by 1 July 2001. ¹³ In mid October 2000, Russian Deputy Prime Minister Ilya Klebanov arrived in Tbilisi to discuss the issue of closure of all Russian military bases in Georgia. ¹⁴ In a fourth round of talks, Georgian and Russian

10

Russian military bases were established in the Georgian regions of Vaziani near Tbilisi; Akhalkalaki; Batumi; and Gudauta.

11

“Itogi”, broadcast, NTV Russian television network, 16 January 2000.

12

A number of military agreements were concluded between Russia and Armenia in 1995. In November 1995 Armenia ratified the agreement on the establishment of a single CIS air defence system.

13

RFE/RL Transcaucasia Report, 19 October 2000.

14

Ibid.

government representatives reached agreement in Tbilisi that the Russian military base in Gudauta, Abkhazia is to be transformed into a rehabilitation center for the CIS peacekeeping force, which is composed of entirely of Russian troops. Georgia insists, however, that the military hardware currently at that base in Abkhazia must be withdrawn under the OSCE supervision. A final decision on handing over the Gudauta base to the CIS peacekeeping force and on the timetable for closure of the Russian bases in Akhalkalaki and Batumi will be taken at the next round of talks in December 2000. ¹⁵ On the other hand, the third and last stage of the withdrawal of the Russian hardware from the Vaziani military base in Georgia was recently completed, and the Russian forces plan to remove additional armored vehicles and ammunition before the end of the year. ¹⁶

Simultaneously, two convoys of Russian armored vehicles moved on October 20 and 23 from Russia’s Akhalkalaki base in Georgia to Russia’s base at Gyumri in Armenia for permanent deployment there. The convoys, consisting of ten vehicles each – a mix of armored personnel carriers and infantry fighting vehicles – are the first in a series of Russian equipment transfers from Akhalkalaki. By November of this year, seventy-six armored vehicles and other equipment will have been redeployed to Gyumri, which is located on the Turkish border, and other Russian-supplied hardware is deployed with Armenian units in areas seized from Azerbaijan. ¹⁷ Azerbaijan welcomes the agreement to withdraw Russian military bases from neighboring Georgia within the framework of the Conventional Forces in Europe (CFE) Treaty. The transfer of Russian military equipment to Armenia, however, elevates new serious troubles. It is obvious that such deployments can only add to already existing geopolitical tension in the region while complicating efforts to negotiate a peaceful solution of the conflict between Armenia and Azerbaijan.

Azerbaijan is the only former Soviet Union Caucasian republic, which has no Russian military bases since 1992. ¹⁸ Baku has come under severe pressure from Moscow to allow Russian bases on its territory, but thus far has refused to do so. Azerbaijani foreign policy elite led by Heidar Aliyev has advocated conducting a foreign policy that is much more balanced between Russia, Iran, and Turkey. The Kremlin, however, considers Heidar Aliyev’s foreign policy to be too independent and is trying to attempt to prevent Azerbaijani leadership from moving out of the Russian orbit.

Nevertheless, the twelve-year-old Armenia-Azerbaijani conflict over Nagorno-Kara-bakh, which is situated on a potentially strategic oil route from the Caspian Sea to Turkey, is the longest-running conflict in the CIS space. Armenian forces along with the forces of the self-styled “Republic of Nagorno-Karabakh” continue to occupy 20 per

15

RFE/RL Transcaucasia Newsline, 20 October 2000. Also see RFE/RL Transcaucasia Report, 18 October 2000.

16

Europe Information Service, European Report, Section No. 2535, 14 October 2000.

17

Armenia’s President Robert Kocharyan and Defense Minister Serge Sarkisian consented to the redeployment during the meetings with their Russian counterparts, Vladimir Putin and Igor Sergeev, in Moscow in September 2000. See Monitor, Volume VI, Issue 198, 24 October 2000.

18

In Azerbaijan, it has been agreed that the early-warning “military facility” in Gebele, leased by Russia, will not qualify as an army base. Azerbaijan was, nevertheless, the first former Soviet-ruled republic, which freed its territory from the Soviet military bases. Also, Azerbaijan was the first to resist the allocation of Russian border troops and Russian peacekeeping forces.

cent of Azerbaijani territory. A fragile cease-fire halted the fighting in 1994. ¹⁹ Since then, the peace process has continued. However, the conflict remains unresolved and peace talks are deadlocked. There are about one million Azerbaijani refugees and inter nally displaced persons (IDPs) who cannot return to their homes. ²⁰ Ethnic Azeris from the part of Azerbaijan controlled by Armenian forces are prevented from returning to their homes by a heavily militarized ruling structure. This increasingly complicates the peace process and results in a situation of no war, yet no peace in the conflicting area. The Armenian government demands that Azerbaijan recognizes Karabakh’s independence and deals with the leadership of the self-styled “Republic of Nagorno-Karabakh” directly as a full-fledged party to the conflict. Additionally, Yerevan refuses to recog nize that the territorial integrity of Azerbaijan should be restored. Azerbaijan, in turn, strongly insists on preserving its sovereignty and territorial integrity. ²¹

The political temperature of the Caucasus has begun to shoot up with the recent reports of vast arms shipments from Russia to Armenia, which have focused international attention on the importance of peace and stability in the Caucasus. The scandal, comparable to the Iran-Contra affair, actually began in 1997, when Russia secretly shipped more than $1 billion worth of arms to Armenia, apparently to be used against Azerbaijan and to keep the Azerbaijanis and their strategic oil reserves within the Russian sphere of interest. The case was investigated during a closed session of the Russian Duma in April 1997, and a number of influential Russian officials, including former Defense Minister Igor Rodionov, acknowledged that during 1996-97, Moscow had supplied Armenia with 84 T-72 battle tanks, 72 heavy howitzers, 24 Scud missiles with eight launchers, 50 armored personnel carriers, 1,000 hand-fired Strela-2 and Strela-3 anti-aircraft missiles and millions of rounds of ammunition, which were transported by ship across the Caspian Sea, th en sent overland through Iran to Armenia, free of charge. ²² Many of the weapons had allegedly been deployed in Nagorno-Karabakh. ²³

19

Tensions between Armenia and Azerbaijan escalated in 1988 and full-scale war broke out in 1992. The 1994 truce ended the war, which was the first serious ethnic conflict on former Soviet territory, and in which over 20,000 people were killed.

20

When the Armenia-Azerbaijani conflict started in 1988, there were about 170,000 residents of Nagorno-Karabakh and, in particular, there were about 120,000 Armenian and about 50,000 Azerbaijani populations. Unfortunately, since 1988, the Azerbaijani population of Nagorno-Karabakh was driven from this territory and no single Azerbaijani lives in Nagorno-Karabakh today. Besides the above, in 1988, there were 175,000 Azerbaijani people living in Armenia. All of them were evicted in 1988-89 that, in turn, caused a wave of violence between the two former Soviet republics. Later in 1992, when Armenia and Azerbaijan became independent, seven regions outside of Nagorno-Kara-bakh, where no Armenian population ever resided, were occupied by Nagorno-Karabakh and Armenian Republic armed forces. About 700,000 Azerbaijani people were evicted and their houses were destroyed from all seven regions.

21

At the OSCE Summit in Lisbon in 1996, the fifty-three OSCE state-participants, except Armenia acknowledged the necessity of the conflict resolution based on the principle of territorial integrity and the highest degree of autonomy for Nagorno-Karabakh within Azerbaijan. Soon after the Lisbon Summit, then President of Armenia Levon Ter-Petrossian actually agreed with the decision of the international community to use the three major principles on the Armenia-Azerbaijani conflict over Nagorno-Karabakh, but he was unfortunately ousted from his office and the peace process was therefore stalled.

22

Daily News Review, Azerbaijan television network, 5 May 1997. Also see RFE/RL Newsline, Volume 1, No. 131, Part I, 3 October 1997.

Nevertheless, in 1997 and 1998 several top Armenian officials strongly denied Russian media reports that Moscow has been providing Yerevan with large-scale military assistance. However, Armenia’s former Defense Minister Vazgen Sarkisian, speaking at Yerevan State University, specifically noted that Armenia's defense capability had been "doubled" in the past two years "at no cost to the budget."²⁴

Azerbaijan has repeatedly protested continuing shipments of Russian arms to Armenia and initially demanded that all weapons supplied in the recent years be returned. As Moscow ignored Azerbaijan's protests, Baku officially demanded that the countries that signed the CFE Treaty investigate alleged illegal arms supplies from Russia to Armenia.

Azerbaijan, an oil-rich republic, remains very concerned about Russian-Armenian military cooperation. The Azerbaijanis fear that the Armenians are preparing to attack them with support from Russia. The recent arms transfers played a crucial role in Armenia's seizure of large areas of Azerbaijan, resulting in a million refugees, more than from any other armed conflict in Europe since World War II – including Yugoslavia's recent "ethnic cleansing" of Kosovo. ²⁵

The tremendous imbalance created by the illegal arms shipments is an extremely destabilizing development that actually threatens not only Azerbaijan but other neighboring countries as well. It is noteworthy that the problem of Russia’s arms transfers to Armenia plays extraordinarily negative role on the situation in the entire Caucasus and critically damages prospects for peaceful resolution of the Armenia-Azerbaijan conflict.

Azerbaijan has already suggested it might invite NATO to set up bases near Baku, and has threatened to shut down Russia's early warning radar on Azerbaijani soil. ²⁶ Some top Azerbaijani officials said that Azerbaijan "does not deny the possibility that a Turkish, US, or NATO military base will be built on the Azerbaijani territory." They also made it clear that "Armenia is trying to dictate its terms to Azerbaijan, seeking to preserve the results of its aggression against Azerbaijan." In particular, Azerbaijani Defense Minister Safar Abiyev noted that a large number of arms that remain at the Russian military bases in the Transcaucasus "will certainly be used in Nagorno-Kara-bakh, if Armenia resumes combat actions against Azerbaijan." He also said that Nagorno-Karabakh is a place where "terrorists and saboteurs are trained." About 200 Kurdish terrorists are being trained in the Lachin region of Nagorno-Karabakh and another 457 Kurdish militants are being trained in Armenia in order to infiltrate and destabilize Turkey, according to Abiyev. ²⁷

Although Russia's military support for Armenia in its long conflict with Azerbaijan has been well known, the extent of arms shipments and Kurdish terrorist training groups is surprising. For that reason, it is quite clear that behind the calls for peaceful resolution,

23

Moskovskii Komsomolets, 14 February 1997.

24

Turkistan-Newsletter, Volume 98: 2-004, 8 January 1998.

25

Elkhan Nuriyev, “The Coming Crisis in the Caucasus,” The Providence Journal, April 16, 1999, B 6; Providence, R. I., USA.

26

Simon Saradzhyan, “Baku Wants Out of CIS Defense Treaty,” Moscow Times, 13 February 1999, Section: No. 1643.

27

Elmira Akhundova, “Azerbaijan – Waiting for NATO,” Obshchaya Gazeta, 12 February 1999, pp. 1, 5.

the Armenia-Azerbaijanian conflict remains part of Russia's ruthless attempt to keep the Caucasus weak, unstable and divided - and to prevent an oil route from materializing. With Russian links to Armenia getting stronger and with growing military cooperation between Moscow and Yerevan, it is highly doubtful that this tragic conflict will be settled anytime soon. Armenia’s ties with Moscow have been among the best of the four teen other ex-Soviet states and the new friendship pact, dubbed a declaration of joint cooperation in the twenty-first century, was aimed at cementing this relationship. ²⁸ During his recent meeting with Russian President Vladimir Putin in Moscow, Armenian President Robert Kocharyan said he wanted Moscow’s involvement in the peace proc ess. Robert Kocharyan also added “for Armenia, Russia is not only a strong northern neighbor but a country with which there is a spiritual connection.” ²⁹

In the meantime, the recent proposal of some Azerbaijani officials for presence of US and NATO forces in Baku has set off a wave of reactions and debates.

The issue raises a simple question that may be of interest from regional standpoint: are NATO interests limited to Central Europe, or we can also talk about possible NATO enlargement towards CIS territory in the future?

Many representatives from various NATO structures have visited the Caucasus region in recent years, including former NATO Secretary-General Javier Solana. In this respect, there is a certain inequality in the preparedness of the three Caucasian states to cooperate with NATO. Unlike Armenia, which basically advocates broadening its ties with NATO within the framework of the Partnership for Peace Program (PFP), Azerbaijan and Georgia seek a special partnership with NATO and are eager to promote their cooperation with the alliance. In bringing up the issue on a special partnership with NATO, for instance, Azerbaijan uses as political leverage its position on the Caspian coast and the existing level of the republic’s cooperation with the Western world. Robert Hunter who visited Baku in 1997 in capacity of the US Ambassador to NATO specifically noted, "NATO has a big stake in broadening contacts with Azerbaijan." ³⁰

Azerbaijan, in turn, is ready to cooperate more fully with NATO and believes that as the oil exporting infrastructure is developed, security concerns will draw Azeris closer in the pursuit of true regional stability. Azerbaijan has started training its armed forces to NATO standard to enable ease cooperation and partnership in peacekeeping and security operations. Baku sees NATO as a stabilizing factor and generally supports the concept of NATO enlargement. Baku believes that the construction of the Baku-Ceyhan pipeline and development of the East-West corridor will provide another excellent opportunity for Azerbaijan to launch more active cooperation with NATO under the Partnership for Peace Program. ³¹

Predictably, the security of the region has become extremely influenced not only by domestic developments in the new states but also by their rapidly growing military cooperation with NATO institutions. This is particularly true for Azerbaijan and Georgia, which became recipients of military aid from NATO member-states. Incidentally, Tur

28

Reuters, 26 September 2000.

29

ITAR-TASS, 26 September 2000.

30

Interfax Daily News, 18 October 1997.

31

Interview with Azerbaijan Foreign Ministry source who requested anonymity, 20 April 1999.

key and the United States initiated in 1998 a number of regional cooperation projects to assist Azerbaijan and Georgia in training their armored forces and in carrying out arms modernization programs. In June 1998, as part of this assistance, Turkey, for instance, donated $5.5 million to Georgia . ³² Three month earlier, in March, Georgia had con cluded an agreement on military and security cooperation with the United States, which envisaged financial assistance for the purchase of military and communications equip-ment. ³³ Azerbaijan and Georgia have further used the favorable political environment of the year 1999 and entered a new phase of closer cooperation with NATO. In 2000, the two young states have reached a new quality of cooperation with NATO structures.

The recent and current developments clearly illustrate the point that there has been an increasing NATO engagement in the region. NATO’s interest toward the three post-Soviet Caucasian states in the past several months has been indeed gradually growing and in fact, the development of cooperation with these countries has taken an important place in the NATO policy.

In mid-August 2000, Interfax-Russian News Agency reported that 250 NATO service men had arrived in Azerbaijan to protect Azerbaijani borders from a possible attack by Iran. ³⁴ Earlier, the Azerbaijani media reported that Iran plans to deploy 6,000 soldiers, 75 armored vehicles and tanks, eight fighter planes and 12 radars on the border with Azerbaijan, as well as 34 patrol craft, two boats, one small frigate and one submarine on the Caspian Sea. ³⁵ Azerbaijani officials denied reports of Azerbaijani and Russian news agencies. In answer to this provocative news, the Iranian embassy official also strongly denied military build up on the Caspian region. The interesting fact, however, is that Iranian embassy representative refuting all of these reports actually defended Iran’s right to set up its defense potential in the face of a possible dangerous situation emerg ing on its borders. ³⁶

At the same time, Russia recently expressed a serious concern about the U.S. intention to grant Azerbaijan two patrol boats. The speaker of the Russian parliament Gennady Seleznev voiced his strong opposition regarding possible military presence of the United States in the Caspian Basin. ³⁷ The senior U.S. Foreign Service official replied to the Russian speaker saying that “Russia’s concern is groundless and Washington is willing to develop partnership with Baku in the struggle against international terrorism and assist Azerbaijan with strengthening the state borders”. ³⁸ Azerbaijani and U.S. for eign policy officials usually meet in a round of the annual Azerbaijan -U.S. Security Dialogue in order to discuss the issues of regional security, nonproliferation, and joint

32

Foreign Broadcast Information Service, Daily Report – West Europe, FBIS-WEU-98-163, 12 June 1998.

33

RFE/RL Newsline, Volume 2, No. 58, Part I, 25 March 1998. Also see Gennady Chufrin, “The Caspian Sea Basin: The Security Dimensions,” SIPRI Yearbook 1999: Armaments, Disarmaments and International Security (Oxford University Press: Oxford 1998), p. 224.

34

Interfax Daily News, 11 August 2000.

35

Turan News Agency, 10 August 2000.

36

Interfax Daily News, 11 August 2000.

37

ANS News, 16 September 2000.

38

Turkistan-Newsletter, Volume 4: 171, 21 September 2000.

anti-terrorist efforts. The both sides pay a special attention to further development of regional cooperation within the GUUAM framework. ³⁹

Alternatively, American General Henry Shelton, who is a chairman of the joint U.S. Chiefs of General Staff visited Georgia in mid-September 2000 and held a few meetings with President Shevardnadze and other Georgian officials. While in Tbilisi, General Shelton noted that the U.S. government has proposed military aid to Georgia in 2001 worth $12 million, including 10 helicopters and financial assistance for retired army personnel. ⁴⁰ Georgian President Shevardnadze, calling for military cooperation with the United States, said that with out U.S. assistance, “it would be impossible to carry out military reform in Georgia.” ⁴¹

Although NATO increasing interest toward the post-Soviet Caucasus in recent years has heard some protests from the Kremlin, NATO top officials continue to seek ways to make relations between South Caucasian states and NATO much firmer. Strikingly, NATO new chief Lord George Robertson paid an official visit to Tbilisi in his current capacity in order to speak at the NATO-organized forum on the prospects for regional cooperation and partnership with NATO in late September 2000. He postponed his visits to Azerbaijan and Armenia because of the possible tension in Yugoslavia. ⁴² While meeting with President Eduard Shevardnadze, Lord George Robertson had advocated further development of cooperation between the South Caucasian states and NATO, stating, “the intensification of the partnership adds stability and reassurance to all the countries of the region.” He also stressed that multilateral organizations, including GUUAM, play a vital role in facilitating peace processes in the region. ⁴³

Georgia pays much attention to the interaction with NATO and calls for upgrading cooperation between NATO and South Caucasian countries. Georgian Foreign Minister Irakly Menagarishvili, speaking at the Tbilisi conference proposed to form a consulta tive group of Georgia, Azerbaijan, Armenia, and NATO to consider cooperation pros-pects. ⁴⁴ Moreover, the issues of holding international military exercises within the framework of the Partnership for Peace Program in Georgia in the spring of 2001 has practically been resolved. A 10-strong group of NATO experts is already working in Tbilisi on verifying the details for planning these exercises. ⁴⁵

There is another interesting nuance, which is worth to be mentioned. All the three Caucasian leaders recently participated in the UN Millennium Summit in New York and

39

A regional organizational unity GUUAM (Georgia, Ukraine, Uzbekistan, Azerbaijan and Moldova) was formally founded as a political, economic and strategic alliance designed to strengthen the independence and sovereignty of these former Soviet Union republics. Cooperation among delegations of Azerbaijan, Georgia, Moldova and Ukraine started in 1996 in Vienna, Austria, at the CFE Treaty Conference, where four states – Georgia, Ukraine, Azerbaijan and Moldova (GUAM) issued joint statements and proposed common initiatives. When Uzbekistan joined this unity later, it became GUUAM.

40

RFE/RL Transcaucasia Newsline, 15 September 2000.

41

RFE/RL Transcaucasia Newsline, 19 September 2000.

42

ITAR-TASS, 26 September 2000.

43

Habarlar-L Digest No. 1698, 21 October 2000. Also see GUUAM News, No. 1, 19 October 2000.

44

ITAR-TASS, 26 September 2000.

45

Kavkasia-Press, 25 September 2000.

held a number of meetings with the U.S. top officials. Heidar Aliyev, Robert Kocharyan, and Eduard Shevardnadze tried to use the opportunity to secure Washing-ton’s more active involvement in resolving the conflicts in the Caucasus. While meeting with the three post-Soviet Caucasian leaders in New York, U.S. Secretary of State Madeleine Albright strongly assured them of America’s support and made it clear that all future American administrations will continue to consider the post-Soviet space a zone of the U.S. strategic and vital interests. ⁴⁶

All of these developments demonstrate the seriousness of the situation in the Caucasus and create new challenges and options in the region. Western orientation of the two newly independent nations - Azerbaijan and Georgia – has garnered the attention of the NATO key member-states, and simultaneously has caused strong irritation in Russia where the degree of distrust between Moscow and the two Caucasian states became very high. The clash of conflicting interests over the geopolitical issues extraordinarily deteriorates the security situation and emphasizes the threat of militarization in the Caucasus, which has been further exacerbated by unresolved conflicts in Nagorno-Kara-bakh, Abkhazia, and Chechnya.

Accordingly, Russia feels threatened by the sudden move of NATO and other Western military structures into an area, which was very much part of its own backyard. Russia views American involvement and NATO’s rapidly growing interest in the post-Soviet Caucasus with suspicion. Some Russians are afraid that conservative US politicians may have an interest in containing Russia, if not actually preventing Russia from pursuing normal economic and traditional relationships in its own neighborhood. While but recently the US government did not respond in any way to the idea of participating in the peace-keeping efforts in the region, in the summer of 1997 the Clinton administration itself proposed sending the American military to supervise the settlement in the Nagorno-Karabakh area within the framework of the operation under the auspices of the OSCE, together with contingents from Russia and a number of European countries. ⁴⁷ Furthermore, in 1998, some U.S. and Turkish high-ranking officials made statements regarding consideration of the possible deployment of a peacekeeping force in the Caucasus under the aegis of NATO. ⁴⁸ Perhaps, one of the main reasons for such an action might be to ensure the safety of oil routes from Azerbaijan across Georgia to the Black Sea coast and to Turkey.

Meanwhile, Russia and Iran, powerful players in the Caucasus region, have strongly criticized Azerbaijan's recent invitation to the Western powers and have also cited negative consequences of moving NATO bases to Azerbaijan.

Moscow, in particular, reproved Azerbaijan's attempt to involve US military forces in the Caspian Sea region, stating "Baku had nothing to fear from Russian troops' presence in the Caucasus." ⁴⁹

46

ANS News, 20 September 2000. ⁴⁷ G.Chufrin, H. Saunders, “The Politics of Conflict Prevention in Russia and the Near Abroad,” The

Washington Quarterly, Fall 1997, p. 43. Also see Vitaly Naumkin, “Russia and Transcaucasia,” Cau

casian Regional Studies, Volume 3, Issue 1, 1998, p. 6.

48

RFE/RL Newsline, Volume 2, No. 130, Part I, 9 July 1998.

49

Agence France Presse, 12 February 1999.

Thus, while Azerbaijan is seeking outside help from both the United States and Turkey in order to offset Russia's bases and weapons in Armenia, Moscow is hardening its line and attempting to decrease pro-Western activity by Azerbaijani authorities.

At the same time, Iran recently warned Azerbaijan to drop any plans to welcome US and NATO bases on its territory to counter alleged Russian support for its rival, Armenia. Former Iranian President Hashemi Rafsanjani, who is now a top aide to Iranian Supreme Leader Ayatollah Ali Khamenei, has already warned Azerbaijan against allowing NATO forces on its soil, saying that "it will pay a high price" if the forces reach the Caucasus and the Caspian Basin region. ⁵⁰

As a hedge, Baku is proceeding with talks with Ankara about military cooperation between Azerbaijan and Turkey. In mid-February 1999 Azerbaijani Defense Minister Safar Abiyev visited Ankara where he discussed a potential military pact with neighboring Turkey. After a meeting in Turkey with high-ranking officials, Abiyev said, "among other things, we worked on the possibility of creating a military alliance between Baku and Ankara, similar to the Russian-Armenian military agreement". ⁵¹

Turkish Defense Minister Sabahattin Cakmakoglu, in turn, paid an official visit to Baku in mid-September 2000 and following the bilateral talks, an intergovernmental agreement “On cooperation in the defense industry” was signed between Azerbaijan and Turkey. The document calls for using Turkey’s experience for the development of Azer-baijan’s military-industrial complex. The two countries started their defense cooperation in 1996 when they signed an agreement on military-technical cooperation. Azerbaijan and Turkey also have an agreement on the training of Azerbaijani military personnel. ⁵²

On the other hand, Azerbaijan concurrently seeks to deepen its cooperation with countries, which are included in the GUUAM group. Azerbaijan's Defense Minister Safar Abiyev recently discussed with his Ukrainian counterpart Oleksandr Kuzmuk in Kyiv the creation of a joint battalion of GUUAM countries. Current plans envisage fielding that battalion in 2002 for missions, which range from protection of oil and gas pipelines to participation in peacekeeping operations. Georgia and Azerbaijan favour using joint GUUAM units as part of international peacekeeping in the South Caucasus, once the OSCE or the U.N. authorize such deployment in Nagorno-Karabakh or internationali zation of the Russian operation in Abkhazia. Ukraine has signalled the intention to con tribute troops to such operations under an international mandate. ⁵³

Still, development of the Russian-Armenian military cooperation is jeopardizing Azerbaijan. Addressing his CIS counterparts at the meeting in Dushanbe, Tajikistan, Azerbaijani Defense Minister Safar Abiyev once again raised the problem of Russian mili tary build-up in Armenia. He specifically pointed out transfers of part of the equipment onto the territories of Azerbaijan under Armenian military occupation. ⁵⁴ Many in Azer baijan are even now concerned that the recent vast arms shipments could further destabilize the situation in the region, possibly leading to a new large-scale war in the Cauca

50

United Press International, 12 February 1999.

51

Agence France Presse, 12 February 1999.

52

ITAR-TASS, 20 September 2000.

53

The Jamestown Foundation, The Fortnight in Review, Volume VI, Issue 20, 20 October 2000.

54

Habarlar-L Digest No. 1704, 27 October 2000.

sus. Perhaps, this can be explained by the stalemate of the peace talks and most importantly, in the absence of a settlement, the risk of renewed fighting will likely always increase, since the problem is becoming particularly serious and acute. In a worst-case scenario, Baku expects Armenia to renew hostilities against Azerbaijan, possibly in the region where the borders of Azerbaijan, Armenia, and Georgia meet, near the cities of Yevlakh and Kazakh. In this respect, Azerbaijan may face a new threat to its territorial integrity. Such a move would cut off the route for the East-West Caspian oil pipeline (from Baku to Supsa on Georgia’s Black Sea coast or from Baku to Ceyhan on Turkey's Mediterranean coast) and force Azerbaijan to export oil by way of Russia or Iran. If this takes place, the Kremlin will enlarge its influence in Azerbaijan, and there will be severe pressure to bring Russian troops back to Azerbaijan. Even if this does not happen, if no agreement on Karabakh is reached soon, Western governments and US businesses engaged in the Caucasus will likely begin to reconsider their plans regarding oil deals in Azerbaijan and the pipeline system for the whole region.

Notwithstanding the fears of a new wave of instability in the region, there is some kind of optimism on resolving the long-stalled conflict between Armenia and Azerbaijan. During the recent meeting in Yalta, Ukraine in August 2000 both Robert Kocharyan and Heidar Aliyev confirmed that they had agreed to continue the dialogue to try to hammer a final peace settlement to the long-lasting Karabakh conflict. While reiterating their commitment to peace, the two presidents repeatedly said that they should settle the conflict peacefully through mutual compromises. ⁵⁵ They also held bilateral talks in the UN Millennium Summit in New York in early September 2000 but neither Armenian nor Azerbaijanian officials could give details of the meeting between the two presidents.

Similarly, the Kremlin recently expressed its intention to help both of nations solve the conflict. Russian President Vladimir Putin, speaking at the press conference in Moscow said, “Russia is interested in achieving peace in Nagorno-Karabakh”. ⁵⁶ He also told media about Russia’s wish to resolve this difficult conflict for the good of the nations of both states, stating “Russia does not have the power to impose a solution and will agree to any version of the conflict resolution that perfectly suits the peoples and leaders of Armenia and Azerbaijan”. ⁵⁷

There is no doubt that Russia has played and continues to play a key role in the region. Russian efforts and contribution to achieving a peaceful solution of the ethnic conflicts in the Caucasus are of course appreciated. The only question, however, is whether Russia will be able to make a valuable contribution to activities aimed at promoting long-lasting peace and security in the region.

So far, despite all the above geopolitical problems, the post-Soviet Caucasian states strongly believe in intensifying role of the international organizations in the region and hope that UN, OSCE, and other European structures will help them end conflicts and pursue peace in the region.

In Russia’s view, international organizations will not be able to introduce any security structure for the Caucasus or even to provide a framework for conflict resolution. They

55

Armenpress, 22 August 2000.

56

ITAR-TASS, 26 September 2000.

57

Reuters, 26 September 2000.

are rather perceived as vehicles for penetration into the region for such real players as the United States, France or Turkey. ⁵⁸

Eventually, the solutions to the conflicts depend not only on the warring parties but also on whether the great powers can resolve conflict between themselves. It would be, however, a mistake to believe that the Kremlin will work closely with the United States, OSCE, and the UN to settle conflicts in order to bring about lasting peace and stability in the region. The present-day military campaign in Chechnya, and the military and political situation in the Caucasus generally, clearly attest to this fact. Moreover, Russia is historically prone to aggravate ethnic conflicts in order to expand its influence in the region. Consequently, without adequate Western support aimed at strengthening the nascent democratic institutions in the region, small countries of the Caucasus, and specifically those Western-oriented states will be much more susceptible to domination by their external powerful neighbors.

The post-Soviet geopolitical space and, in particular, the Caucasus, is still an area of conflict despite numerous peacekeeping activities in the region. The continuing compe tition between the West and Russia over mediation of the conflict creates new geopoliti cal obstacles for long-term stability and development of the region. ⁵⁹

Yet at present, we have no answer on one important question: whether the Western democracies and regional powers can work closely on establishing a balanced interplay of international competition in the Caucasus region. By now it is clear that the resolution of the ongoing conflicts will depend on how successfully the international community absorbs the lessons from the recent war in former Yugoslavia and the conflict in the Middle East and creates the external conditions for the conflict resolution in the Caucasus, provided that the leaders and people of these countries refer, not to the past or present, but to their common future.

In the meantime, any discussion of conflict resolution in the Caucasus would be remiss if it did not discuss oil developments in the Caspian Basin and this new source of energy supply in the twenty-first century.

The collapse of the communist bloc has led to unprecedented international competition for access to the vast oil and gas resources of the Caspian Sea region. Since the dissolution of the USSR, hydrocarbon resources, and in particular, oil and gas reserves have been identified as the most important source of economic revival of the newly independent states. This has been especially applied to Azerbaijan, whose population is dwarfed by its massive energy reserves. In the past several years a series of events on the energy front has contributed to a palpable shift in Azerbaijan’s prospects for realizing substantial energy revenues in the near future as well as in its respective strategic orientation.

The transportation of Caspian energy resources to international markets is one of the most controversial and pressing issues in the global economic integration process.

58

Pavel Baev, “Can Russia Do IT Alone in the Caucasus,” Perceptions (Journal of International Affairs), Volume 2 – Number 3, September-November 1997.

59

For a more detailed analysis of this issue, see Elkhan Nuriyev, “Conflicts, Caspian Oil, and NATO: Major Pieces of the Caucasus Puzzle,” in Crossroads and Conflict: Security and Foreign Policy in the Caucasus & Central Asia, edited by Gary K. Bertsch, Cassady B. Craft, Scott A. Jones & Michael Beck; Routledge, Inc., 2000, New York, NY, USA, pp. 140-151.

International corporations are presently investing billions of dollars to develop the resources of Azerbaijan, Kazakhstan, and Turkmenistan. The evolution of the energy sector is closely tied to efforts by these new democracies to establish viable states independent of Russian control. In the post-Cold War transition period, political and security problems both on the regional and international levels have greatly hampered efforts to develop the resources of the Caucasus and the entire Caspian Basin region.

The region’s vast oil and gas reserves have caught the attention of Russia, the United States, and many other powerful countries, which are all competing for influence in the Caucasus and Central Asia. These struggles force leaders and policy-makers in the Caucasus and Central Asia to consider the positions of great powers while crafting their foreign policies. The current struggle for the energy resources in the Caspian Basin is a complex of security, geopolitical, and economic variables.

The most formidable challenge to the regional security situation in the Caspian Basin is the fragility of the new states, which are not capable of managing conflict developments on their territory. Despite the growing competition between powerful countries over the vast oil and gas reserves in the region, among major obstacles to the use of those resources are the dispute over the existing Caspian Sea legal regime and the different approaches to it of the littoral states (Azerbaijan, Iran, Kazakhstan, Russia, and Turkmenistan) and the problem of the transport of oil and gas to outside consumers. What is more important, the security of oil pipeline routes passing across zones of conflicts in Nagorno-Karabakh, Abkhazia, and Chechnya has become increasingly linked to the resolution of these conflicts. ⁶⁰ The secessionist areas prone to violent conflict in the war-torn Caucasus threaten to disrupt oil flow to international market.

Presently, the key question for many oil businesses and politicians is “What is the real future of pipeline politics in Azerbaijan, the Caucasus and in Eurasia?” The Western participants in Azerbaijani and Kazakhstani pipeline projects frequently raise an interesting, yet sensitive question: will Russia dominate the development of Eurasian oil and its exports in an alliance with the radical regime of Iran, or will Russia be an equal and fair player in the region, together with Turkey, Azerbaijan, Kazakhstan, Georgia, Turkmenistan, and possibly, in the future, Iran? Another issue has drawn the attention of the major US companies working in Azerbaijan under the oil consortia, namely, which route across the Caucasus can ensure a reliable flow of oil to world petroleum markets?

Azerbaijan has since its independence in 1991 gained in prominence in the international arena. Oil has increased Azerbaijan’s importance in the eyes of the world, including Western corporations, and in fact has intensified the competition over Azerbaijan as part of a sphere of influence. Although Azerbaijan is a relatively small country, its strategic location, abundant natural resources, and political circumstances ensure that it will be at the center of international politics for the years to come. All of its neighbors maintain strong interest in what happens to Azerbaijan. Baku, in turn, has endeavored to maintain its independence by maneuvering among regional powers such Russia, Turkey, and Iran, while securing harmonious relationships with both the East and West.

Adam Daniel Rotfeld, “Rethinking the Contemporary Security System,” SIPRI Yearbook 1999: Armaments, Disarmaments and International Security (Oxford University Press: Oxford 1999), pp. 8-9.

Today Azerbaijan looks like first big winner in Caspian oil race. By signing the oil contract in 1994, Azerbaijan significantly contributed to the realization of such major regional projects as TRACECA, the Great Silk Road, and alternative pipeline routes. ⁶¹ Since the Azerbaijani government faces some geopolitical obstacles, and considering that security issues are crucial in the region, Baku has proposed that a system of several pipelines be used in the region. In other words, it is much better to have an alternative not depending on one single route.

International consortium – Azerbaijan International Operating Company (AIOC) ⁶² has started oil export on November 12, 1997 through the first pipeline, from Baku-Novoros-siysk on Russia’s Black Sea coast and within a year through the second pipeline, from Baku to Supsa on the Georgian Black Sea coast, totaling 10 million tones a year. The third route Baku-Ceyhan is a 1,730-kilometer pipeline designed to carry Caspian Sea oil from Azerbaijan through Georgia to Turkey’s Mediterranean port of Ceyhan. The pipe line, estimated to cost $2.4 billion, could be finished as early as 2004. ⁶³

In mid-September 2000, Azerbaijan celebrated the sixth anniversary of the signing of the production-sharing contract for the exploration and development of the Azeri, Chi-rag and the deepwater portion of Gyuneshli oil fields. Since signing the 1994 oil contract, the AIOC shareholders have invested $2.2 billion in the project, of which $1 billion have been invested directly in Azerbaijan’s economy. About 11 million tones of oil have been extracted in total since the beginning of production in November 1997 and

6.5 million tones were pumped via the Baku-Supsa pipeline and 3.6 million tones via the Baku-Novorossiysk pipeline. Sixty tankers with the AOIC oil have been dispatched from Supsa and 43 from Novorossiysk. ⁶⁴

In the meantime, the question of the routes and relative centrality of various existing and future oil pipelines for transporting Caspian oil has emerged as one of the hottest issues in the Caucasus and Central Asia.

In this context, Baku-Ceyhan oil route, which was recently under new scrutiny, has become both politically and economically much more important to Azerbaijan and its allies in the region. In mid-2000, the State Oil Company of Azerbaijan (SOCAR) started

61

TRACECA (Transport Corridor for Europe, Caucasus and Asia); in September 1998 representatives of fourteen nations signed the Baku Declaration thus voting for the restoration of “The Great Silk Road.” The project proposes to develop comprehensive transportation and communications infrastructure closely integrating all countries of the region. This multi-billion dollar project is supported by the European Union (EU), other international organizations, and all industrialized democracies. In April 1999, the representatives of eight nations including Armenia, Azerbaijan, Georgia, Kazakhstan, Kyrgyz Republic, Tajikistan, Turkmenistan and Uzbekistan adopted a Silk Road Declaration and once again recognized the importance of mutual cooperation among the peoples of the ancient Silk Road, restoration of these historic relationships and economic ties between all of the countries in the region.

62

Azerbaijan International Operating Company (AIOC), a consortium of 10 major international oil companies and State Oil Company of Azerbaijan Republic (SOCAR), is developing the Azeri, Chirag and deep-water portion of Gunashli fields in the Azerbaijan sector of the Caspian Sea. Their 30-year Production Sharing Agreement (PSA) – “Contract of the Century” was signed on September 20, 1994, ratified by Parliament on December 2, 1994, and went into effect on December 12, 1994. The contract area has estimated reserves of more than 4 billion barrels of oil.

63

Associated Press, 25 September 2000.

64

Turan Agency, 19 September 2000.

to negotiate creation of a so-called sponsor group for Baku-Ceyhan pipeline that would pay for basic engineering. ⁶⁵ Heidar Aliyev reiterated his support for the Baku-Ceyhan pipeline, specifically noting, “there are still many forces to impede this project, and we face jealousy and opposition from countries which still don’t want to see implementa tion of this project.” ⁶⁶ Russia has lobbied heavily for the Baku-Novorossiysk pipeline that comes through its territory to carry both Caspian Sea oil and Kazakh oil from Tengiz, where the U.S. oil company Chevron has a prominent stake. Russia and Iran have generally opposed the U.S. backed plan to build an oil pipeline that would avoid both countries, passing through Azerbaijan and Turkey. ⁶⁷

At the same time, a completely new tendency in recent several weeks has started to develop in the Baku-based international consortium. While AIOC partners have expressed interest in moving forward with scheduled planning for the pipeline, David Woodward, AIOC president said they also would like the study to investigate other pipeline route options, in case Baku-Ceyhan proves to be financially unviable. ⁶⁸ There is some hesitation on the part of US oil business and government officials, who are concerned that the Azerbaijani fields in the Caspian Sea, while they show great promise, might not have the confirmed resources to justify a commitment by the oil companies to develop the Baku-Ceyhan route. Additionally, most oil company executives openly hope that Washington will ease or end its sanctions on Iran. In terms of the Caspian Basin, this would allow a cheaper oil export connection to be built than the estimated $2.4 billion Ceyhan route. AIOC shareholders are thought to believe that exports through Iran in addition to expansion of existing Azeri oil export pipelines to Georgian and Russian Black Sea ports would be sufficient to handle the volumes of oil they expect to discover in the Caspian Sea in the coming decade. ⁶⁹

Nevertheless, the Azeri, U.S. and Turkish governments continued to firmly back a pipeline to Ceyhan, a port on the Turkish Mediterranean. ⁷⁰ Azerbaijani top officials repeatedly claimed that Baku-Ceyhan route would be built with or without foreign investment. Azerbaijani government seems to be succeeded in accomplishing a deal on the Baku-Ceyhan pipeline route. In mid-October 2000, a long-awaited set of agreements, which bring the start of construction work on the oil export pipeline to Turkey’s Mediterranean port of Ceyhan was duly signed first in Azerbaijan, then in Georgia and in Turkey. A consortium of eight oil companies formed a sponsor group to finance engineering studies on the project. ⁷¹ The sponsor group’s immediate goal is to launch technical work on the pipeline in two phases: basic engineering at a coast of US$25 million over an eight-month period starting in November 2000, to be followed by

65

Baku Sun newspaper, 19 September 2000.

66

Robert Corzine and Lesia Rudakewych, “Oil Route Under New Scrutiny,” The Financial Times, 26 August 2000.

67

Baku Sun newspaper, 8 August 2000.

68

Turan Agency, 25 September 2000.

69

Baku Sun newspaper, 9 September 2000.

70

Ibid.

71

The sponsor group consists of State Oil Company of Azerbaijan Republic (SOCAR), British Petroleum Amoco, Unocal of the United States, Statoil of Norway, Itochu of Japan, Turkish Petroleum, Ramco of Britain, and Delta Hess - a partnership of Delta Oil of Saudi Arabia with Amerada Hess of the United States.

detailed engineering at a coast of US$120 million over an eleven-month period, leading directly to the start of construction work by mid-2002, to be completed by 2004, although the sources of finance for its construction have not yet been identified. ⁷²

In parallel, the sponsor group will negotiate the formation of a Main Export Pipeline Company (MEPCO), which will finance, construct and operate the pipeline on the territories of Azerbaijan and Georgia. The Turkish state company Botas will be in charge of the pipeline’s section on Turkey’s territory. Botas has already initiated the engineering work there. ⁷³ Turkish Prime Minister Bulent Ecevit who attended the signing cere mony in Ankara specifically noted, “the most important project of the twenty-first cen tury is now ready to be launched.” ⁷⁴

Beyond its economic significance, the project could move forward Azerbaijan and Georgia’s independence from Russia to the point of irreversibility, fasten them politically to the Western world and finally launch the two countries on the path to modernization and consolidate the group of pro-Western countries in an area stretching from the Black Sea to the Middle East, with Turkey as pivot of that group. Those considerations have motivated Russian and Iranian resistance to the Baku-Tbilisi-Ceyhan project. As Presidents Heidar Aliyev and Eduard Shevardnadze remarked during the signing pro ceedings, the event signified a victory over those “external forces”, which had sought to stop the project in its tracks. ⁷⁵

The United States-Turkey tandem seems to have worked successfully in Azerbaijan and Georgia. This is, however, not in evidence in Central Asia, and especially in Kazakhstan and Turkmenistan. Azerbaijan has long been attempting to persuade its Central Asian neighbors, Kazakhstan and Turkmenistan, to commit to cross-Caspian pipelines that will join the Baku-Ceyhan pipeline, thus making it more economically beneficial and efficient. The United States has been reportedly pressuring Kazakhstan in the past sev eral weeks in order to make a firm commitment to export up to 25 million tons of Kazakh crude via the Baku-Ceyhan pipeline. ⁷⁶ The United States government aptly used the opportunity to encourage oil producers and Western corporations in Kazakhstan and Turkmenistan to join the sponsor group and MEPCO. If this really takes place, Azer-baijan's geopolitical position particularly and geostrategic importance of the entire region generally will increase even further. Till then, the international consortium is merely steering toward Ceyhan route. The deal certainly may well keep on moving in that way only if U.S. hostility to Iran restricts its development alternatives. At present, the main question is how speedily and dynamically it will move down the Turkish route. The fact that various power centers are trying to settle the question according to their own interests has become increasingly clear. Likewise, it is obvious that the issue of Baku-Ceyhan oil route still remains geopolitically controversial and makes oil pipeline politics much more complicated in the Caspian Basin region.

72

Turkish Daily News, 20 October 2000; ANS Online News, 21 October 2000.

73

ANS, Prime-News, Anatolia News Agency, 20-22 October 2000. ⁷⁴ Associated Press, 19 October 2000. ⁷⁵ See Monitor, Volume VI, Issue 200, 26 October 2000.

76

Financial Times, 5 October 2000. Also see RFE/RL Transcaucasia Report, 19 October 2000.

Russia, Iran, Turkey, and the United States: Foreign Influences and Policies

Since the end of the Cold War, the post-Soviet Caucasus has emerged as a pivotal geostrategic area, in which Russia, Iran, Turkey, the United States, and many other outside countries are competing for influence and power. This factor - along with problematic relationships among the former Soviet-ruled states and long-lasting competition for ascendancy in the Caucasus among the regional and great powers have made geopolitical conditions unfavorable for the new states’ survival. What follows below is a discussion of the powerful players (Russia, Iran, Turkey, and the United States) and their strategic interests in the Caucasus region.

Noticeably, in the last several years the geostrategic profile of the Caucasus has influenced the foreign policy context of outside powers, fundamentally by intensifying the geopolitical interest of such major players as Russia, Iran, Turkey, and the United States. Outside powers meddling in the new states’ domestic affairs contribute ironically to both external and internal influences on the foreign policy of the small Caucasian states. Foreign influences on the development of the post-Soviet Caucasus region have been therefore fairly large.

So far the regional powers, Western democracies, and the United States have done very little to curb competition for influence and ameliorate conditions in the region. In contrast, the Caucasus has faced tremendous pressure from the outside powers, which have clashed with each other in order to reinforce control over the sphere of influence. Major competing powers within the region are normally identified as Russia, Iran, Turkey, and the United States, but these four are absolutely not equal. It is noteworthy that present-day roles and influences of all these external players, which compete to extend their primacy in the region, are completely different. Whereas Iran and Turkey are regional players, Russia, however, remains a global power and firmly sees the United States as a leading competitor in the region. More precisely, the contemporary geopolitical situation in the region explicitly illustrates the revival of the “great game” between Russia and Turkey, Iran and Turkey, and Russia and the United States. Such a very hazardous development, in turn, logically results in the creation of two conflicting military-politi-cal alliances in the region (Russia and Iran versus the United States and Turkey) in which small nations of the Caucasus are becoming growingly involved.

Clearly, Russia sees the Caucasus as her legitimate sphere of influence. Throughout its history, Russia has tended to compare itself to other nations and compete with other powerful countries, both East and West. It seems that this tendency is still part of Russian policy-making. Russia is trying to restore its hegemony, and is actively, yet subtly, competing for influence over its neighbors. Russia has concerns about security on her southern border and the potential alliance of Turkey and the Caucasian states; of particular concern is the possible spread of Islamic fundamentalism in Central Asia. Regarding the economic claims of the Caspian Sea, Russia desperately wants the pipelines to go through Russian territory. Finally, Russia is deeply suspicious and resentful of U.S. “encroachments” that promote democracy and development in the “near abroad”. Events in Russia will have a significant impact on the Caucasus and on the whole NIS, but which way will Russia go? Russia’s fate currently depends upon how internal politics play out and shape its future. Russia is presently at a crossroads, and has to make a historic choice as to whether it will become a more developed European democracy or a huge empire again. Ultimately, the fate of Russia’s new neighboring states will to a large extent depend on the fate of Russia itself. Russian politicians know well that the natural resources of the Caspian Sea and Azerbaijan make it a geopolitically important region. Ignoring Russian interests will therefore have dire consequences for countries like Azerbaijan, for Russia could easily manipulate ethnic factions within Azerbaijan and use its leverage over Armenia to start a war between Armenia and Azerbaijan. Russia might also join forces with Iran to impede natural resource development in Azerbaijan.

Obviously, the strategic importance of the region in the post-communist period put the Caucasian states under the permanent pressure of the ambitious but economically weak post-imperial Russia. Russia has played and will continue to play an active role in order to remain engaged in the region. Some Western foreign policy-makers predict further development of the Caucasus under the domination of Russia. ⁷⁷ Russia’s world outlook and political approach to problems at home and abroad are undergoing an accelerating transformation. Russian political and military assertiveness in the former Soviet republics and even beyond is growing. ⁷⁸ Despite Moscow’s desire to be one of the leading European democracies in the twenty-first century, Russia remains faithful to the traditional policies of “divide and rule.”

Turkey is another important regional player, since much of the Caspian oil will have to go through Azerbaijan to the Mediterranean port of Ceyhan. Turkey’s vital interests include making a contribution to oil and gas deals and transporting strategic resources. Although it has strong linguistic and cultural ties to the Caucasus and Central Asia, and it sees Azerbaijan and the Central Asian countries as natural allies in a loose confederation of secular Muslim republics, Turkey will have less impact in the region than other powers. Turkey is grappling with its own internal economic and political problems. Nevertheless, its geopolitical position gives Turkey a significant advantage over other players in the region. The lure of the oil potential in the region and the need for transportation to Western markets provide added incentive for involvement.

Turkey, which has had traditionally allied itself to the Western democracies, has become the most attractive partner for the newly independent states in the region. It serves as an effective model of developing new democratic institutions, including market economy reform efforts for the nations in the Caucasus. Turkey, as a member of NATO, played and continues to keenly play an important role in encouraging the participation of these countries in such NATO programs as the Partnership for Peace (PFP) and Euro-Atlantic Partnership for Cooperation (EAPC). Although Ankara remains active in the volatile Caucasus, Turkey's influence in the region is limited by its inability to provide significant support needed by the newly independent states. Furthermore, instability that frequently marks Turkish society has indeed obstructed any serious Turkish influence in the region.

Iran, another historic player in the “Great Game,” hoped to restore its former historical influence in the post-Soviet Caucasus. Iran, which is in a geostrategically sensitive and

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This point was made to the author by a high American official.

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Adam Daniel Rotfeld, “Introduction: The International System in Transition,” SIPRI Yearbook 1995: Armaments, Disarmaments and International Security (Oxford University Press: Oxford 1995), p. 10.

significant position between Central Asia, the Indian Ocean, the Transcaucasus, and Turkey, has economic and ideological interests throughout the Caucasus and Central Asia.

Iranian policy towards the Caucasus reveals the difficult geopolitical situation in which the Islamic Republic finds itself. ⁷⁹ Most probably, Iran has become involved in extremely risky maneuvers while developing its strategy in the region. Iran sees itself in a competitive position with Turkey. Iran has found an ally in Azerbaijan’s powerful northern neighbor – Russia. In the post-Cold War world, Russia and Iran have expanded their strategic partnership, and particularly trade relations and technical cooperation in the nuclear field, which in recent years has caused an imperative disturbance in Russian-American relations.

In the case of the Caucasus, Iran has been very precautious, however, like Russia, Iran, for instance, also has great concerns about what happens in Azerbaijan and in the Caspian Basin region. A strong, politically independent, secular, pro-Western and pro-American Azerbaijan is not in Iran’s interest. Iran’s territorial integrity could indeed be threatened if the 20 million Azeris living in Iran find a developed Azerbaijan increasingly attractive. Yet by developing its energy resources and emerging as a strong petro-leum-producing country, Azerbaijan will enter into competition with Iran. Azerbaijani ties with the United States, Turkey, and Israel will decrease Iran’s influence in the region; nevertheless, Azerbaijan must make a concerted effort not to isolate Iran, lest Iran and Russia cultivate a strategic alliance that could threaten Azerbaijan’s status as an independent republic. Isolation could also bring about enhanced rapprochement between Iran and Armenia, which has been taking place in the last few years. Because of the danger inherent in such a policy, Azerbaijan therefore should pursue cooperation with Iran.

The United States is the final important player in the region, despite its remoteness. The United States is increasingly turning its attention to the Caucasus as a zone of strategic significance. The U.S. government seems to recognize that the Caucasus region has a wealth of resources, including oil, gas, gold, and uranium. Likewise, the United States realizes that the Caucasus could serve as a conduit for small arms and light weapons to conflicts in the region, and strategic missile and nuclear technologies bound for Iran. And finally, the United States and the Western democracies clearly understand that the region could become a battlefield of competing civilizations.

Questions related to oil supplies, gas reserves, and the security of energy supplies are of vital national, economic, and geostrategic interest to the United States. The post-Soviet Caucasus has therefore taken an important place in the U.S. foreign policy priority. The United States has been increasingly displaying interest toward the Caspian oil and natural gas resources in the past several years. While Russian companies will be able to bid on contracts, the United States along with the Western democracies would like to ensure that the Caucasus and Central Asia remain independent, secular, Muslim countries. It is the tensions between the United States and Russia, and the United States and Iran that are forcing political alignments in the Caucasus.

The United States has become more active in the Caucasus and Caspian Basin over the past several years. The two new Caucasian states - Azerbaijan and Georgia consider the

Svante Cornell, “Iran and the Caucasus,” Volume V, Number 4, Middle East Policy, January 1998.

United States one of their main partners in the international system, and have firmly aligned themselves with the Western democracies. There is particularly a growing chorus of support in Washington to cement the Azerbaijani-American alliance, since politi cal and economic relations between Baku and Washington are important not only for the parties involved but also are also important from the regional security standpoint. ⁸⁰ Baku and Tbilisi believe that US objectives in the region will promote political and economic independence and ensure that Caspian oil does not come under the sole control of Russia. Likewise, the ability of Western-oriented Azerbaijan and Georgia to survive as independent states, and to build democratic institutions, will largely depend upon the presence of the West and especially the United States in the region. The United States should therefore reinforce support for the independence of such Caucasian states as Azerbaijan and Georgia, and this support should be at the very center of the US strategy toward the Caucasus region.

The United States’ recent activity in the region has focused on strengthening regional economic mechanisms, developing East-West energy and transportation processes, and supporting conflict resolution efforts. Although the United States is one of the biggest players in the region, it is still quite uninformed about basic issues within the Caucasus and in the geopolitical setting of the NIS. The United States is attempting to play a more assertive role in the resolution of the armed conflicts, but it has turned out to be a difficult task, since Russia considers the Caucasus to be within its sphere of influence.

In this context, Russia’s geopolitical behavior in the region in the last several years has caused serious doubts that conflict resolution is a priority in Kremlin’s policy in the Caucasus. It is conceivable that Russia does not want to see the United States as a major arbitrator in the region. At the same time, Russia’s incapability, or simply reluctance, to play a much more constructive role in the ethnic conflicts pushed the Caucasus, and particularly Azerbaijan and Georgia to seek an alternative ally in the West in order to address the major security concerns. Despite numerous efforts by the Caucasian states to wholly involve the United States and other Western democracies in the Caucasian affairs, the U.S. policy, however, mainly focuses on Russia. Development of such a tendency in the region, in fact, has utterly put the new Caucasian democracies in a very complicated situation vis-à-vis the regional powers generally, and Russia, a former Soviet superpower particularly. Perhaps, the West considers future development of the region as well as prospects for long-term stability and security under Russian domination. It is therefore obvious that U.S. policy towards Russia's behavior in the Caucasus is still vague. Perhaps, the 2000 U.S. presidential elections will demonstrate whether Washington’s strategy will impressively change in this part of the world.

Nonetheless, Russia should have intense interest in conflict resolution and economic revival in the Caucasus since the hot-spots tend to generate destabilizing spillover inside Russian territory. Conflict resolution in the Caucasus should be in the interest of the Russian Federation, which nowadays is facing new threats on the borderlines with emerging states. Although Russia’s reasonable interests are completely understandable and should, of course, be respected, the United States should strongly support security, free-market reforms, and democracy in the Caucasus.

Personal Interview, Zbigniew Brzezinski, former U. S. National Security Advisor, Counsellor, Center for Strategic and International Studies (CSIS), Washington, DC, USA, 20 December 1996.

Likewise, the United States needs to ensure free and fair access for all interested parties to the oil fields of the Caucasus and Central Asia. The United States should start thinking of how to secure its priorities and maintain peace, long-term stability, and security in the Caucasus and the Caspian Basin. It is in the interest of the United States to support its allies in the Caucasus. In light of Russian efforts to snuff out democratic forces and to control the Caspian Sea's lucrative oil reserves, the United States needs to devise a new strategy about how to protect its own interests in the region. It will undoubtedly allow the United States to safeguard its vital future multi-billion-dollar investments in energy resources.

As can be seen from the foregoing discussion, the future of the outside powerful forces

– Russia, Iran, Turkey, and the United States and relations among them, will depend in many ways on the course of developments in the Caucasus region. The primary strategic question hinges on whether the external forces will alleviate or aggravate situation in the region, decreasing or increasing the potential for confrontation. The region’s future is being decided now – at the close to the new century.

Conclusion

Today the international security environment is far more complex that it was in the cold war era of bipolarity. The end of the cold war, the break-up of the Soviet Union and the dissolution of the Warsaw Treaty Organization (WTO) in 1989-1991 brought the end of the bipolar system. However, that system was not replaced by a new order but was fol lowed by a transitional period that will probably continue in the years to come. ⁸¹

Still, it is uncertain which way the Caucasus will develop in the near future. Presumably, the most formidable challenge at the start of the new century will be regional insecurity and unresolved conflicts in this area of the world. In addition to the ethnic and geopolitical tensions cited above, there are other security threats lurking on the horizon. These issues have drawn the attention of regional policy-makers and academics that are actively seeking acceptable solutions to them.

Concerned about the human suffering the ongoing conflicts produce, as well as their economic effects and possible consequences for regional security, the international community should further seek all possible means to end them. While the stability in the region is still a matter of concern, regional and international scholars recently have begun to ask what factors might contribute to settlement stability. Some scholars have focused on the role of outside actors such as international and regional organizations and powerful countries (third-party guarantors). Others have sought to explore the importance of economic conditions to settlement stability, the significance of ethnic and other group identities and the influence of the absence of superpower conflict with the end of the Cold War.

The conflict is a big hindrance for the political and economic development of the entire region toward democracy and market economy. Business people are very doubtful

Adam Daniel Rotfeld, “Introduction: The International System in Transition,” SIPRI Yearbook 1995: Armaments, Disarmaments and International Security (Oxford University Press: Oxford 1995), p. 2.

whether they shall continue their activity since many of them are afraid of instability, which is detrimental and harmful for the region.

Certainly, political instability is very bad for business. All countries involved in conflict resolution and the pipeline debate must consider the ongoing uncertainty about regional stability and peace very carefully. Security issues are becoming very crucial in the region, particularly the security for the planned Baku-Ceyhan oil pipeline route and the Trans-Caspian gas pipeline. Furthermore, both these routes may be impossible to build without the United States playing some geopolitical role. Such US involvement in the region's economy will deter Russia and Iran from dominating their smaller pro-Western neighbors. There might be extensive US and NATO intervention in the region and opposing blocs may emerge as a result. In this respect, many will be concerned about Russia's reaction if unilateral policies are pursued or multilateral policies are enacted that exclude or attempt to marginalize Russia. This will be a very difficult, but perhaps not impossible, task for the United States.

The Caucasus, with its large natural resources and a huge market of more than 200 million people, could develop into a region of peace and prosperity. It could also become a huge area of economic, social and political instability, which would negatively affect the future of this region and the world. Therefore, the Western democracies and regional powers should work more closely to create a balanced interplay of international competition in the Caucasus and in the whole space of the Southern Tier. They should also try to focus much more attention on defusing the ethnic conflicts in the post-communist states.

Shaping a new system of regional security will be a long and difficult process. In making decisions that are of significance for ensuring security today and tomorrow, the crucial thing is to understand what is substantial in the ongoing process. Conflicts in the Caucasus demand speedy resolution and compromise must replace competition in the pipeline interests; otherwise a more provoked Caucasus will bring poverty and bloodshed to everyone in the region, with no clear winner. The conflict resolution in the Caucasus will largely depend on how successfully great powers seek to end the competition for primacy and control in the region. The great powers should foster cooperation instead of maintaining competition in the region. The Caucasian nations, too, should choose conciliation over confrontation. All parties should think of what could be done to prevent history from repeating itself in the new millennium. The future of the region and the character of the next century's international relations are at stake. The ongoing geopolitical game is quickly becoming a paramount challenge for the great powers and small nations on the eve of the new century.

In the last decade, both Russia and the United States have experienced the breakdown of a bipolar system. As these two great powers approach the twenty-first century, they are facing with new and complex geopolitical environment in a multipolar world. With transitional period brought by the end of the Cold War, the need for the United States and Russia to work together is greater than ever before. It is therefore vital that both Russia and the United States, along with their friends and allies, make significant contributions to reducing geopolitical tensions, resolving ethnic conflicts, and establishing a new system of regional security.

From the security point of view, the mutual dependence between stability and prosperity is of crucial importance for the area of Caspian Sea and the entire Caucasus. There are possibilities of creating a life in dignity for the new democracies in the region. Nations living there are people deeply in love with peace. They believe in a common and collective security for all of the nations in the region. They look forward to the success of the peace process. No less important, however, great powers and small nations must have the will to help each other in order to achieve a lasting peace in this dynamic part of the world.

Already now is the time to search for clearer and faster policy solutions. The United States, Russia and other key players should make the appropriate decisions without delay. Much more work is expected to be done by new generation, which must continue this difficult job in the coming millennium.