Caucasus

A boy injured by a hand grenade sits on the front porch of his home in Nagorno-Karabakh, Azerbaijan. © UN Photo/Armineh Johannes

Losing the peace: The Armenian-Azerbaijani stalemate in Nagorno-Karabakh

“If the occupier, Armenia, does not liberate our lands, a great war in the South Caucasus is inevitable.”

(Azerbaijani Defence Minister Safar Abiyev, February 25, 2010)

The Armenian-Azerbaijani ceasefire agreement and the internationally mediated Minsk Group negotiations have maintained an unsteady peace in Nagorno-Karabakh for 16 years.1 This summer, the International Institute for Strategic Studies, the International Crisis Group and other respected observers highlighted the rising risk that the military stalemate between Armenia and Azerbaijan might degenerate into crisis or even renewed war.

By all accounts, the status quo greatly disadvantages Azerbaijan, which has in effect lost control of some 20 percent of its internationally recognized territory. However, both sides have steadily ratcheted up their rhetoric regarding renewed conflict. Much of this has to do with appealing to or appeasing domestic political constituencies who might favour a military resolution to the Nagorno-Karabakh stalemate. Yet in Baku, the militarist discourse has been accompanied by a dramatic increase in defence procurement spending. From 2003 to 2009, the Azerbaijani authorities increased armaments expenditure by nearly 500 percent;2 in mid-October, the Finance Minister announced that 2011 defence spending would be almost 90 percent higher than in 2010.3 With Baku planning to spend 3 billion dollars next year on its armed forces, the risk of recidivism appears to be rising.

While an increase in military capabilities is not predictive of state intentions, it is safe to assume that the risk of war initiation is higher for Baku than for Yerevan. In an ideal world, Armenian officials would like an internationally legitimized settlement that partitions Nagorno-Karabakh from Azerbaijan, and Karabakhi leaders—perhaps cheered by the International Court of Justice’s ruling on the secession of Kosovo4 from Serbia—aspire to international recognition of their region’s independent status. However, these aspirations are deeply unrealistic, and in comparison with Azerbaijan, Armenia is relatively satisfied with the status quo.

For Azerbaijan, the fundamental concern is the inviolability of its territorial integrity. As long as Nagorno-Karabakh exists as a de facto autonomous statelet, and as long as Armenian forces continue to occupy seven other regions of Azerbaijan, its territorial integrity and unity as a state remain deeply undermined. However, the use of military force to reintegrate Nagorno-Karabakh with the rest of Azerbaijan is neither the only nor the most likely resolution. On the contrary, the ideal solution for the Azerbaijani authorities would be the peaceful reintegration of a semi-autonomous Nagorno-Karabakh under Baku’s authority. This would buoy the tremendously solid popular support for President Ilham Aliyev, while potentially facilitating a solution for the nearly 1 million Azerbaijanis directly or indirectly displaced by the 1992-94 conflict. Yet even as Azerbaijan’s global profile rises thanks to its relative macroeconomic stability and centrality to Caspian energy exports, confidence in the probability of a favourable negotiated settlement may be waning—understandably, given that talks have yielded little progress since their inception.

Russia and the military balance

Russia is the one outside state actor with sufficient leverage to help prevent a military escalation, as well as sufficient national interests in the South Caucasus to motivate this kind of intervention. Moscow regards the maintenance of its wide-ranging political and economic initiatives in the region as essential to the security of the former Soviet space, and is highly anxious about the impact of a hypothetical conflict in Nagorno-Karabakh on its own national security. With an estimated 3,000 troops stationed in Armenia on a near-permanent basis, the Russian authorities are well aware that in the event of a new Nagorno-Karabakh war, they would face international pressure to deploy a peace-keeping force to quell the conflict—and heightened international scrutiny as to whether these forces might be used to assist actively the Armenian side.

Aside from direct security interests, Russia’s commercial ties with both Azerbaijan and Armenia are robust: Russia is Yerevan’s single-largest foreign trade partner in value terms, and among Baku’s largest. With public and private energy giants including Gazprom, Rosatom, Inter RAO UES and Lukoil heavily invested in Armenia and Azerbaijan—not to mention growing trade and investment in agriculture, manufacturing, telecommunications—Russia also has compelling reasons for ensuring that commerce is not disrupted by renewed violence.

For these reasons, Russian President Dmitry Medvedev has stepped up attempts to mediate between the Armenian and Azerbaijani heads of state, hosting trilateral talks seven times since he took office in May 2008. In what may have reflected Russia’s perception that these negotiations did not yield the desired results, Medvedev shifted strategies in late summer 2010. Moscow’s new approach has focused not on economic ties and ‘soft’ power, but instead on maintaining a military balance between Armenia and Azerbaijan. Its strategy for reducing the risk of conflict is simple but potentially powerful: by maintaining a balance of military capabilities between the Armenian and Azerbaijani armed forces, the costs of prospective war will (in theory) rise to a level sufficient to deter either side from provoking or launching offensive operations:

  • Armenia’s defence agreement. In August 2010, Medvedev signed a new defence agreement with Yerevan that (among other things) pledges support for Armenia’s ‘territorial integrity’ and guarantees the presence of Russia’s 102nd Military Base near Gyumri until 2044. Allies of Armenian President Serzh Sargsyan have claimed that the new accord obliges Russia to support Armenia in the event of a second Nagorno-Karabakh war. The crucial question is not whether they are correct. To deter a hypothetical Azerbaijani offensive, decision makers in Baku must be convinced that Russian military involvement in such a conflict is a realistic and highly undesirable possibility. The signature of such a far-reaching defence accord with Russia was also facilitated by the breakdown in the Turkish-Armenian diplomatic rapprochement in late 2009. Moscow had been anxious that the once much-vaunted normalization of ties between Turkey and Armenia would diminish the importance of the latter’s alliance with Russia. Now that this normalization is off the table, the case for Russian-Armenian defence cooperation has only been strengthened.
  • Azerbaijan’s air defence systems. Less than a month after the signature of the Russian-Armenian defence accord, respected Moscow media outlets reported the sale of two batteries of Russian S-300 air defence systems to Azerbaijan. The aim of the apparent sale is to send a warning signal to Armenia, which has little interest in restarting a war. However, in a hypothetical conflict, Armenian forces could try to expand the theatre of operations beyond Nagorno-Karabakh and the other territories they currently occupy. For international interlocutors and investors in the South Caucasus, the ‘nightmare scenario’ is that an Armenia in danger of losing control of Nagorno-Karabakh would retaliate via ballistic missile strikes on critical civilian infrastructure—for example, pipeline pumping or compressor stations, or the Mingacevir reservoir—in Azerbaijan proper. The transfer of highly capable S-300 systems to Azerbaijan would significantly complicate any Armenian contingency plans for strikes on these targets.

Is military balancing enough?

Are efforts to maintain the military balance in the South Caucasus sufficient to prevent a new war, and is this the right approach to convince both sides to maintain the status quo? The answer requires an inquiry into why states start wars in general, and what Azerbaijan’s longer-term interests might be in restarting this particular war.

One argument often deployed against conflict re-initiation is the potential for such a war to hinder long-term economic development prospects. The logic is that, in addition to the direct financial, material and human costs of war, a new Nagorno-Karabakh conflict would seriously reduce foreign direct investment (FDI) inflows to Azerbaijan, divert state resources away from infrastructure and other long-term investments, and thus hinder the country’s long-term development prospects. Regarding FDI, the assumption is that international investors in the hydrocarbons sector and elsewhere would be deterred from expanding existing projects or launching new ones if war is raging on Azerbaijani territory. With inward FDI reaching 7.4 percent of GDP in 2008, these calculations would suggest that the economic consequences of a renewed Nagorno-Karabakh conflict are a significant deterrent to such a conflict actually transpiring.

The costs of civil and inter-state wars

Yet the calculations are not as simple as they may appear. In addition to the difficulty of assessing foreign investors’ aversion to an open versus a ‘frozen’ conflict—that is, a prospective war versus the already politically uncomfortable status quo—there is reason to question the conventional assumption that a new Nagorno-Karabakh war would dent Azerbaijan’s development prospects. Paul Collier’s seminal study of civil wars indicated that while conflict itself reduces GDP by an average of 2.2 percent per capita (compared to a counterfactual model in which such a war had never happened), there is a substantial ‘peace dividend’ in the years following a protracted war, wherein ‘war-vulnerable activities experience very rapid growth’.5 Of course, it is far from clear that a future conflict in Nagorno-Karabakh could be best classed as a civil war—even though the region has never been recognized as a sovereign entity by any state (including Armenia), and even though the 1992-94 war appears to meet the Geneva Conventions’ four criteria for ‘conflict not of an international character.’

On the other hand, it is evident that the primary combatants in any realistic future conflict would be the armed forces of Armenia and Azerbaijan.6 Though the next war would be fought within Azerbaijan’s internationally recognized territory and would centre on the fundamental question of Nagorno-Karabakh’s status, combat operations and any post-war settlement talks would be inter-state in nature. Yet as with civil wars, cross-border conflicts also appear not to dent economic prosperity over the long term. Indeed, most scholars of the relationship between economic growth and inter-state war suggest that such conflicts actually bolster per capita GDP expansion in the post-war years, thanks mostly to the need to rebuild infrastructure and other resources, technological innovation and an increase in corporate and personal savings rates.7 The so-called ‘phoenix effect’ is particularly pronounced for the losing side.

While it is difficult to disentangle effects directly attributable to the cessation of the 1992-94 war from the remarkable increase in output and exports from Azerbaijan’s oil and gas fields, the country’s reported per-capita GDP increased more than ten-fold between 1998 and 2008. This suggests—at a minimum—that the conflict did not do lasting damage to prospects for economic prosperity. For neighbouring Georgia, international pledges of 4.55 billion dollars in aid have undoubtedly mitigated the damage from the August 2008 war with Russia; GDP in 2010 is expected to grow by 5 percent—a higher growth rate than what is projected for Armenia, Azerbaijan, or Russia.

Outlook

From 2004 to 2009, Azerbaijan underwent one of the world’s most dramatic economic expansions. Oil wealth did not resolve entrenched problems of rural poverty, income inequality or inadequate fixed investment, but it did provide the basis for the emergence of a small middle class in the public sector, and served as a bulwark for the continued popularity of President Aliyev. Rapid growth has come to an end: the economy is expected to expand by a modest 1.8 percent in 2011, and it is not likely to return to double-digit growth until the second phase of the Shah Deniz Caspian gas field comes on stream in 2017.

This suggests that the risk of Nagorno-Karabakh reigniting is particularly acute in the next several years—when defence expenditure in Azerbaijan is at record levels (thanks in part to robust fiscal capacity), but overall GDP growth remains moderate or non-existent. Russian-led efforts to balance between Armenia and Azerbaijan’s military forces may have staved off a crisis this autumn, but Moscow’s ability to mediate between the two sides will always be hampered by its support for Yerevan during the 1992-1994 war—and understandable perceptions in Baku that Russia is far from a neutral arbiter. Multilateral talks are one helpful approach, but a longer-term strategy must focus on the need for Azerbaijan to diversify economically and to find a new, non-hydrocarbon-based engine for growth. Absent such reforms, the risk is that the authorities in Baku will bank on the ‘phoenix effect’—the expected revival of Azerbaijan’s economic development trajectory following a renewed conflict in the South Caucasus.

Sarah Michaels is the Senior Editor, Russia/CIS at Oxford Analytica and a PhD candidate in the War Studies Department, King’s College London. The views expressed herein are the author’s alone, and do not reflect those of Oxford Analytica.


1 In addition to the Minsk Process, which is conducted under auspices of the Organization for Security and Cooperation in Europe, Nagorno-Karabakh has been the subject of numerous resolutions of the United Nations General Assembly (most recently UNGA resolution 62/243 of 2008), as well as of the UN Security Council (e.g., UNSC resolutions 822, 853, 874, and 884, of 1993).

2 Stockholm International Peace Research Institute, SIPRI Yearbook 2009: Armaments, Disarmament and International Security, Oxford: Oxford University Press, 2009. pp. 193, 227.

3  TREND News Agency, ‘Azerbaijan to double defence expenditure in 2011 – state budget’, October 12, 2010.  Accessed on 15 October 2010.

4 Hereafter referred to in the context of the UN Security Council Resolution 1244 (1999).

5 Paul Collier, ‘On the economic consequences of civil war,’ Oxford Economic Papers 51 (1999), pp. 168-183.

6 The Nagorno-Karabakh Self-Defence Forces would certainly participate, but the Armenian armed forces are numerically larger, possess more sophisticated equipment and have superior training.

7 The best empirical study is Vally Koubi, ‘War and Economic Performance,’ Journal of Peace Research 41:1 (2005), pp. 67-82.

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Border management is not only about security but also about freer trade and transit. © OSCE

Border management, the EU, and UNDP

Border management has become a significant line of external assistance for the European Union, and for cooperation between member states, the European Commission, and the UN, particularly in the former Soviet Union (FSU). The funding comes from European Commission budget lines devoted to implementation of regional political strategies,such as the European Neighbourhood Programme and the Central Asia Strategy. Border management has also come to represent a major focus of UNDP multi-country programming in this region. Including related drug action programmes, since 2002 UNDP has initiated work in Ukraine and the Republic of Moldova, Belarus, Georgia, Azerbaijan and Armenia, Turkmenistan, Kazakhstan, Tajikistan, Kyrgyzstan and Uzbekistan. Broadly speaking, UNDP’s work to date has been understood as successful.1 Among other things, UNDP has implemented nearly 150 million Euros’ worth of EU border management programming during the past decade.

There is no question that the EU wishes to export its ‘soft power’ via these border management programmes. But what exactly does this entail? And what dangers and opportunities are presented for the UN’s development work by this cooperation?

For some EU member states, these programmes began as an important component of a broader agenda to develop European policy and capacity on security. Border management was (and still is) seen as an acceptable vehicle for common action against mutual threats: drug trafficking, movement of Islamic extremists, etc. However, some EU Member States and Commission officials remain opposed to UNDP implementation of these programmes, due in part to concerns about trying to advance that agenda under a UN rather than directly European umbrella. The different management arrangements for the EUBAM, SCIBM and BOMCA Programmes (click here for more information on these) therefore represent various Commission attempts to satisfy the EU Member States and keep UNDP’s role to that of ‘administrative support platform’ for the application of ‘visibly’ European expertise.

Many in the Commission recognize that only the UN has the operational capacity on the ground to deliver border management assistance on a multi-country basis. However, others see utilizing development assistance to enhance security as a somewhat quixotic enterprise: Commission rules of aid assistance do not allow the transfer of key equipment or expertise; drugs and militants flow like water, taking the easiest route, so that reinforcing certain border areas merely displaces (rather than eliminates) activities of concern; it is next to impossible to establish objectively verifiable indicators in regard to countering security threats; and the whole venture may be undermined by corruption within the border services, which can only be tackled through direct budget support to pay salaries, as part of a broader developmental approach to public administration reform.

Likewise, engaging UNDP to the projection of EU soft power in the FSU risks jeopardizing the neutrality and impartiality of the UN system in the eyes of other stakeholders. Russian concerns in regard to border security in its ‘near abroad’ are inter alia expressed operationally through its leadership of the Council of Border Guard Commanders of the countries belonging to the Commonwealth of Independent States. With a Secretariat based in the Lubyanka in Moscow (to which all CIS countries have attached liaison officers), the Council meets bi-annually. It has a mandate to coordinate joint efforts of Border Guards in relation to external CIS borders, as well as the reinforcement of internal border cooperation. Specific areas of work include harmonization of national legislation on border issues, mutual exchange of information, personnel training, and military/technical policy.

Suggestions for the future

In spring 2010, the Council of CIS Border Guard Commanders signed a memorandum of understanding with FRONTEX (the EU’s Border Agency), but the technical and institutional details of cooperation with the UNDP-implemented EU aid programmes have yet to be resolved. Significant discrepancies between the regulatory and technical models for border management being offered to CIS countries therefore remain. Most CIS countries seek to strike a balance between the ‘near abroad’ and the ‘new neighbourhood’: in autumn 2010, in the context of the SCIBM project, Armenia agreed to a European integrated border management strategy only weeks after extending the presence of Russian border forces within the country for a further 39 years.

But if the dangers here are obvious, so also are the opportunities—if the EU and UNDP can agree on a different, more collaborative agenda for the export of European border management to the CIS countries. The European model of border management has twin objectives: increased security, plus improved trade and transit facilitation. These objectives are seen as mutually reinforcing: stability and security attracts trade foreign investment; freer movement of goods and people enhances stability and security.

During the Andijan events of 2005 in Uzbekistan, the local community at Karasuu, a town in the Fergana Valley divided between Kyrgyzstan and Uzbekistan, opened a border crossing spontaneously, to support continued visits of relatives and to maintain what had previously been one of the largest cross-border markets in Central Asia. The BOMCA Programme acted immediately to secure agreement from the governments to keep the crossing open, with offers to provide the necessary means to ensure security. Within weeks up to 40,000 border crossings a day were being made, including multiple trips by small traders.

Apart from the economic support this provided to households in one of Central Asia’s poorer regions (e.g., providing residents of Kyrgyzstan with fresh fruit and vegetables in the winter; providing residents of Uzbekistan with access to manufactured goods from China) BOMCA helped defuse a direct challenge to state power at a critical moment and created a safety valve in the explosive environment of the Fergana. In this way, border management programmes can allow the EU and UN(DP) to express a voice on behalf of the most vulnerable households and help governments to strike critical balances between security and development.

Border areas are often comprised of large ethnic minorities (linked to neighbouring countries), communities that are marginalized in many respects. Beyond the Fergana Valley, frozen conflicts in the FSU countries—Transnistria, Nagorno-Karabakh, Abkhazia, South Ossetia—are all located in border areas. While the full resolution of these conflicts is not in prospect, progress can be made by allowing local populations to cross borders with ID cards rather than passports. In addition to being familiar to many FSU countries from Soviet times, such systems can also be drawn from the experience of European integration. Modern European integrated border management methodologies can provide the technical means and cross-border procedures required.

Separating transit of local populations from international transit and cargo trade at border crossing points in the FSU countries could bring significant reductions in journey times and delays experienced at borders. Reconfiguring border crossing point infrastructure, providing modern equipment to automate processes, and introducing integrated border management practices such as joint control by border agencies, could further reduce travel times and delays.

Prosperity in Europe was built on the incremental removal of such barriers to trade and transit. The border management programmes could therefore do more to mobilize civil society and private enterprise—road hauliers, freight forwarders—to promote the free trade agreements signed between EU and FSU countries, as well as those trade agreements concluded among FSU countries (e.g., the EurasEC customs union). Freer trade and transit, democracy building and security can be advanced together.

Without abandoning its multi-country programming approach, the EU and UNDP may wish to consider targeting assistance more discriminately within these border management programmes. This might also help define clearer exit strategies for programming. In most FSU countries, the key border agency remains the Border Guards—a military force within each national security service. In the poorer FSU countries, transition to European border management standards will ultimately require EU direct budget support for border guard salaries. A prerequisite for this should be conversion from a largely conscript-based military force to professional civilian border police serving as an arm of the Ministry of Interior, accountable to parliaments, not presidencies.

People hate borders—uncertainties over laws and procedures, conforntation with state power, men with uniforms and guns. The Schengen arrangements therefore represent both the EU’s true soft power and a culturally iconic aspiration for many citizens in FSU countries. The EU-UNDP border management programmes can export to the CIS many of the principles and practices behind the Schengen arrangements, with enormous development potential: facilitating movements of local populations to reduce social tensions and resolve frozen conflicts; supporting trade as a smart and quick way to alleviate poverty; building democratic governance through support for civil society and private enterprise; and promoting security sector reform.

The EU-UNDP border management programmes flow from a powerful concept. They are well-funded and usually well-implemented. They should be better articulated to reflect a clearer and more developmental agenda, acceptable to all stakeholders in the FSU countries.
Philip Peirce is an independent consultant to UNDP for border management and migration projects.


1 See, for example, George Gavrilis, “Beyond the Border Management Programme for Central Asia”, EU Central Asia Monitoring, no. 11,November 2009.

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Border guards stamping documents in Osh, Kyrgyzstan. © BOMCA

EU-UNDP Border Management Programming in Europe and Central Asia

Border management is a key focus of development work, and partnerships between UN agencies, the European Union, and programme countries, in the developing and transition countries of Europe and Central Asia. In the past decade, EU-funded border management projects implemented by UNDP have delivered more than €140 million.

Specific projects include the following:

BOMCA:The Border Management for Central Asia programme  promotes the gradual adoption of integrated border management methods in the region by enhancing border security and facilitating legal trade and transit. The introduction of European integrated border management methodologies, based inter alia on the experience of the Schengen process (combining firm but modern ‘external’ border management with liberalized ‘internal’ border movements) is an important emphasis. Activities include policy advice on legal and institutional reforms, procurement of border infrastructure, and strengthening national border management capacities. BOMCA, which has delivered some €26 million in programming since its inception, is now moving into its eighth phase (with an €8 million budget). Implementation of BOMCA 8 will rely on a partnership between the European Commission, EU member states, UNDP, the Vienna-based International Centre for Migration Policy Development (ICPMD), and other development partners. UNDP has also helped implement phases of the EU’s Central Asia Drug Action Programme, budgeted at €14 million.

Border Management in Badakhshan: Whereas BOMCA has focused primarily on internal borders within Central Asia, the European Commission is now adopting an approach similar to BOMCA’s vis a vis  the Tajikistan – Afghanistan border. The focus is on border regions in eastern Tajikistan’s mountainous Badakhshan province. UNDP has helped implement nearly €4 million under this programme.

EUBAM: The EU Border Assistance Mission to Moldova and Ukraine supports the two countries in better managing the 1,222 kilometre Ukrainian – Moldovan border, in particular focusing on the Transnistrian region segment. The mission trains and supports border guards and customs services in their efforts to facilitate the legal, efficient, cross-border movement of goods and persons, and contributes to the international community’s efforts to peacefully resolve the Transnistrian conflict. On-the-job training and advice to Moldovan and Ukrainian officials provided by more than 100 customs and border guard experts from 22 EU member states have proved to be effective capacity- building tools. UNDP has since 2005 been implementing EUBAM, which employs over 200 staff. Current commitments under this €55 million programme run until 2011.

BOMMOLUK: EUBAM has also coordinated the Improvement of Border Controls at the Moldova-Ukraine Border, a €9 million programme which is likewise UNDP implemented and co-funded. The project has focused on equipment procurement, risk analysis, and training for officers at joint border crossing points. The EU has funded technical assistance through direct procurement of goods and services by the EU delegations, and through direct budget support (in Ukraine). These initiatives are designated ‘EUBAM flanking measures’.

SCIBM: The South Caucasus Integrated Border Management programme , has since 2009 been supporting the implementation of integrated border management strategies by the governments of Armenia, Azerbaijan, and Georgia. Whereas overall contractual responsibility vis-à-vis the European Commission rests with UNDP, implementation of project components is delegated to border management agencies in the Czech Republic, Estonia, France, Latvia, Lithuania, and Poland, as well as ICMPD.

BOMBEL (Enhancing Border Management in Belarus), BOMUK (Enhancing Border Management in Ukraine), and EBCMP (Enhancing Border Control Management in Moldova) have followed essentially the same pattern as BOMCA, offering a package of capacity building measures for each country’s state border guard service, including training, creating European-standard accommodation centres for irregular migrants, upgrading dog training centres, and introducing sophisticated technology, such as the biometric identification of travellers. Some €20 million in has been delivered under these programmes.

SCAD: The South Caucasus Anti-Drug Programme  combines integrated border management to prevent narcotics trafficking (supply-side interdiction) with support for national efforts to prevent drug abuse and care for drug addicts (demand-side management). UNDP has helped implement nearly €6 million under this programme.

BUMAD: Prevention of Drug Abuse and Fighting Drug Trafficking in Belarus, Ukraine, and Moldova takes a similar approach to drug abuse and trafficking in the Western CIS countries. UNDP has helped implement €7 million under the first three phases of this programme.

Customs Modernization in Azerbaijan: UNDP has since 1999 been helping the State Customs Committee to automate its work via the introduction of modern ICT instruments, as well as simplify border and customs regulation  EC funding of €800,000 has supported this multi-million dollar initiative.
Vitalie Vremis (UNDP Moldova) and Zuzana Aschenbrennerova (UNDP Regional Centre, Slovakia)

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