WHAT THE SOUTH CAUCASUS REGION COULD BE:
EXPLORING THE ROLE OF ECONOMIC INITIATIVES AS PEACE BUILDING
TOOLS IN THE NAGORNO-KARABAKH CONTEXT
SECOND STAKEHOLDER CONSULTATION ROUND WITH
POST-CONFLICT SCENARIO BUILDING WORKSHOP
BERLIN, 07-08 JULY 2014
European Geopolitical Forum's Research on:
ECONOMIC INCENTIVES AS CONFLICT MANAGEMENT/ RESOLUTION TOOLS IN
THE SOUTH CAUCASUS: THE CASE OF NAGORNO-KARABAKH
Briefing by Mr. George Niculescu,
Head of Research, EGF, Brussels,
PHASE 1- 2012
THE FULL RESEARCH PAPER AVAILABLE ON
HTTP://GPF-EUROPE.COM/
The Overall Finding of Phase1 :
Economic incentives, cannot, on
their own, substitute a political
settlement
to
the
conflict,
including its territorial dimensions.
However, they could play a key
role in confidence building.
PHASE 2- 2014

VISION:


“A peaceful South Caucasus reinforced by comprehensive, integrated
and sustainable cooperation, which would ultimately enable free
movement of people, goods, services and capital at the regional level,
lead to economic integration and the opening of all closed borders.“
AIMS:


to identify possible pilot projects enabling potential economic cooperation between
Armenia and Azerbaijan.
to create a platform for exchange of information on economic issues between Armenian
and Azerbaijani experts and businesses as Track 2 Diplomacy on conflict resolution.
THE PILOT PROJECTS THREAD
Key Questions for Phase 2 of Research:
1. Which regional projects involving both
Armenia and Azerbaijan might better
respond the requirements of a postconflict scenario aiming at South
Caucasus regional integration?
2. Could such projects provide incentive
sufficient for Armenia and Azerbaijan to
alter their respective positions towards
the Nagorno-Karabakh peace process?
Potential Regional Economic, Energy and Infrastructure Projects of Common Interest
To Both Armenia and Azerbaijan
No.
Title of the Project
Existing Feasibility
Study
Data for Feasibility Study
Available
Links with the situation
of IDPs
Potential International
Stakeholders
Partial
Mirimanova
Partial
Mirimanova
Yes
Turkey, EU,
Russia
EU, Russia,
Turkey
EU, Russia,Turkey
1.
Baku-Fizuli- Megri- Nakhitchevan-(Yerevan)-Gyumry-Kars railway
2.
Baku-Ijevan-Diljan-Yerevan-Nakhichevan railway
N/A
N/A
No
3.
Baku- Bharda- Aghdam- Stepanakert/ Khankendi- Sisian
(Armenia)-Nakhichevan highway
N/A
N/A
Yes
4.
Establishing a regional electricity grid covering Georgia-ArmeniaNK-Azerbaijan
N/A
Partial
Various sources
Yes
EU, Turkey,
Russia, Iran
5.
Baku- Aghdam – Khankendi/Stepanakert – Shusha – Lachin –
Goris – Sisian – Nakhichevan - Turkey gas pipeline
N/A
N/A
Yes
EU, Turkey,
Russia,
stakeholders of
Shah Deniz II
6.
Restoration of transport infrastructure in the territories
surrounding NK
Partial
Muzafarli,
Ismailov
Partial
Muzafarli,
Ismailov
Yes
EU, Russia,
Turkey, Iran
7.
Restoration of telecommunications network in the territories
surrounding NK
Partial
Muzafarli,
Ismailov
Partial
Muzafarli,
Ismailov
Yes
EU, Russia,
Turkey, Iran
8.
Restoration of social facilities in the territories surrounding NK
Partial
Muzafarli,
Ismailov
Partial
Muzafarli,
Ismailov
Yes
EU
9.
Legalization and modernization of the Sadakhlo market in
Georgia
N/A
N/A
No
EU, Georgia,
Turkey
IMPACT OF THE NK CONFLICT ON REGIONAL DEVELOPMENT







Opportunity costs of unrealized trade and investment;
Non-engagement of the most efficient trans-regional
lines of transport and communications;
Closed borders, demographic shifts, over-sized defence
budgets undermine regional development;
The status of economy used in the information war;
Armenia has partially diffused the economic pressure
created by the blockade;
The dynamics of the global demand for oil and gas set
to further prop up Azerbaijani economic growth;
The main challenge is not so much the threat of
economic collapse, but rather “building-up a sound
framework for economic governance”.
THE STRATEGIC PLAN FOR REGIONAL DEVELOPMENT THREAD
- A public debate amongst NK stakeholders on the
advantages & disadvantages of choosing peace and
regional economic development over the current state of
hostility might facilitate political compromise. Could a
SPRD trigger such a debate?
- Turn the “Armenian-Azerbaijani economic dialogue” from
an instrument of information war into an incentive for
future peace:
- What scope for a blueprint for regional development?
- What key priorities? What other topics could be included?
- What regional frameworks might enable joint planning, funding, and
management of economic projects?
- What impact might have the on-going European and Eurasian
integration processes?
- How to inter-connect the process of resettlement of the IDPs and
refugees communities of both ethnicities with it?
- Are the prospects for regional development strong enough to change
the current security concerns across the South Caucasus region?
INITIAL THOUGHTS ON A STRATEGIC PLAN FOR REGIONAL DEVELOPMENT
•
•
•
•
•
•
•
•
•
A scenario building exercise rather than a political/legal document;
Build upon previous attempts (i.e. Stability Pact for the Caucasus,
Caucasus Stability and Cooperation Platform, etc.) without
duplicating them;
Underpinned by the principles of the Brussels Consensus on PostConflict Regional Integration Scenarios for the South Caucasus;
Keep eyes open at the dynamics of the regional context, but focus
on Armenia, Azerbaijan and Nagorno-Karabakh; inclusive approach
against other regional actors;
Address the dichotomy of European and Eurasian integration
processes;
Consistency with the political and security aspects of conflict
resolution scenarios is vital;
Involve to the largest extent possible interested business circles;
Enshrine relevant political and diplomatic feedback.
LOOKING TO THE FUTURE

“Armenian and Azerbaijani authorities could initiate steps now aimed at rooting the
mutual tolerance and openness for dialogue in both societies.[…] Perhaps it would
be more pragmatic to proceed based on the principle “territory in exchange for
Nagorno-Karabakh security” rather than “territory in exchange for independence of
Nagorno-Karabakh”. Such a stance of Armenia could be reciprocated by Azerbaijan
with the renouncing of the policy of isolating Armenia from international and regional
energy and transport projects in the South Caucasus. It is evident that regional
economic and energy cooperation running parallel with the conflict resolution
efforts, could serve as a fertile soil for softening the position of both sides, regional
common Armenian-Azerbaijani interest could take shape which might eventually
bring about a final and mutually acceptable resolution to the Nagorno-Karabakh
conflict.”*


* Analytical Centre on Globalization and Regional Cooperation, Yerevan, Armenia - “Armenian Foreign Policy
Agenda for 2014-2015”, 2014, p.43, http://www.acgrc.am.
The Way Forward
Ideas generated during this seminar will enter the scope of EGF’s new
study on the economic dimensions of the Nagorno-Karabakh conflict
resolution process.