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April victory: How important it is for Azerbaijan

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The fighting that broke out in the Karabakh conflict zone in early April 2016 was the heaviest since the 1994 ceasefire agreement between the belligerent sides, Armenia and Azerbaijan. Part of the long-lasting Karabakh war, the recent clashes, in which the warring parties used heavy weapons took the lives of hundreds of combatants and civilians. The conflict continued for four days and ended with ceasefire.

Ethnic clashes between Armenians and Azerbaijanis living in Nagorno-Karabakh, a mountainous province inside the Soviet Socialist Republic of Azerbaijan, arose in 1988, toward the end of Soviet rule. The conflict, which started on a local scale developed into a full-fledged bloody war between newly independent Armenia and Azerbaijan after the collapse of the Soviet Union: Azerbaijan tried to maintain its control over the region, while Armenia backed the separatist movement of the ethnic Armenians.

Although Azerbaijan was admitted to the United Nations with its Soviet-era territory that included Nagorno-Karabakh, the Armenian side managed to occupy both the province and the adjacent districts and proclaimed the so-called Nagorno-Karabakh Republic. As a result of the conflict, which cost the both sides more than 30,000 lives, nearly one million Azerbaijanis were expelled from their homes in the occupied territories and since then have dwelled as refugees in their own country.

The Russia-brokered negotiations secured a truce in 1994 and ceased the hostilities between Armenia and Azerbaijan, but failed to ensure sustainable progress. Controlled by the Armenian separatists, Nagorno-Karabakh has maintained de facto autonomy ever since, while the region is internationally recognized as part of Azerbaijan.

Official mediators of the Nagorno-Karabakh conflict, Russia, the USA and France, initiated several proposals and organized direct meetings of Armenian and Azerbaijani presidents. Yet any attempts to finally resolve the conflict have failed: Baku has repeatedly offered a wide autonomy for Nagorno-Karabakh as part of Azerbaijan, while the Armenian side demands independence for the breakaway region.

Although border shootouts and skirmishes were not unusual all along the Armenian-Azerbaijani frontline in Nagorno-Karabakh since 1994 and claimed dozens lives every year, the April clashes labeled as ‘Four-Day War’ marked a new chapter in the history of the conflict. Along with the tangible results they brought, the clashes and the events around them were accepted as a victory in Azerbaijan for the following outcomes.

The most tangible result of the four-day battles was the liberation of several territories by Azerbaijani armed forces that managed to re-capture a few strategically important heights- the first change in the frontline since the inconclusive ceasefire 22 years ago. Responding to Armenian statements on the loss of 800 hectares of territory, the officials from Baku reported that the Azerbaijani military took control of 2000 hectares of territory. However, strategic positions inside Karabakh, which the Azerbaijani troops seized allow them to control more territories now, are considered the major gains of the Azerbaijani side.

The blitzkrieg also became an opportunity for Azerbaijani military to display its capability and hardware. Azerbaijan’s forces have been heavily modernized in the past 10 years since the beginning of the oil boom in the 2000s. Relying on weighty military investments and boasting with their military budget, which was equal to or more than the entire national budget of Armenia, the Azerbaijani authorities would regularly utilize bellicose rhetoric and threaten to unfreeze the conflict. In April, the Azerbaijani troops finally obtained a chance to exhibit the expensive, exclusive and state-of-the-art weaponry they have been affording from various sources.

Furthermore, Azerbaijan finally overcame the syndrome of the defeated: the active phase of Karabakh war (1988-1994) ended with the victory of Armenia that occupied 20 per cent of Azerbaijani territories. The defeat and loss of territories to the neighboring country, which is much smaller in terms of territory, population and natural resources, has been perceived in Azerbaijani society as a disgrace for years, while the local society would always try to explain the failure by different arguments (such as domestic chaos and anarchy, Russia`s military aid to Armenia). The feelings of humiliation that lasted 20 years were finally downplayed and replaced by self-confidence in the aftermath of the April victory.

The Azerbaijani party could also demonstrate that it still considers Karabakh as an integral part and has no plans to abandon the hopes and opportunity to reclaim the territory. That was a message to both domestic and international community that the conflict is not ‘frozen’ as claimed, and can unravel at any time again. Although a new generation has grown up during the 20 years since Karabakh was occupied, the memory and knowledge of what belongs to Azerbaijan is still strong in society: this was proved by the active participation of young soldiers in the offensive and eagerness of thousands of moreto enlist in the army.

Another important nuance related to the conflict could be the parity Azerbaijan managed to attain in informational conflict. Possessing strong diaspora across the world and actively lobbying in many countries, including France, Russia and the United States, which are the official mediators of the Nagorno-Karabakh conflict, the Armenian organizations, political groups and media organs have been promoting the Armenian viewpoints and propagating against Azerbaijan. Their activities used to be hundred times more effective than Azerbaijan`s. At present, media war could be estimated more or less equal. The access of Azerbaijani politicians and journalists to foreign media and their opportunity to address to wider audience has become greater and greater; these opportunities were utilized maximally throughout the four-day conflict. Moreover, during many international events held during and/or after the conflict Azerbaijan`s position was openly and clearly expressed.

Azerbaijan managed to attain superiority in foreign policy as well. Turkey and Pakistan backed Azerbaijan ‘to the end’ against Armenia, while Ukrainian and Georgian authorities expressed support Azerbaijan`s territorial integrity. Furthermore, Israeli Minister of Defense Avigdor Lieberman blamed Armenia for provoking the clashes and said ‘Azerbaijan’s position in the conflict is justified.’ Pedro Agramunt, President of the Parliamentary Assembly of the Council of Europe, called for “the withdrawal of all Armenian armed troops from occupied Azerbaijani territories in compliance with UN Security Council resolutions”. The Organization of Islamic Cooperation also supported Azerbaijan and made a similar statement on “the withdrawal of Armenian troops.“

Meanwhile Armenia found itself abandoned even by its formal allies: Belarus and Kazakhstan- Armenia`s close partners within Eurasian structures (Eurasian Economic Union, Collective Security Treaty Organization)- stated their respect to Azerbaijan`s territorial integrity. The Belarusian ambassador was therefore summoned to Armenia`s Foreign Ministry to be informed that Yerevan was “deeply bewildered” by Minsk`s statement. A planned summit of the Eurasian Economic Union (EEU)in Yerevan got cancelled after Kazakhstan, one of the bloc`s member-states, refused to attend it in an apparent show of support for Azerbaijan. Although the Russian authorities formally called on parties to end hostilities, the Armenian people feel dissatisfied with Russia`s attitude and sales of arms to Azerbaijan. As anti-Kremlin sentiment grew in Armenia, mass rallies were organized in Yerevan against Russia.

Territorial gains, military and moral victory should bring Azerbaijan additional advantages on the negotiation table, experts and ordinary people think, especially on the Azerbaijani side. Baku made it obvious that it would no longer tolerate endless negotiations with no results. Rich military budget, state-of-the-art weaponry and international support put Azerbaijan in a much advantageous situation, which should be taken into account in Yerevan. How the April clash will influence the future Karabakh talks and to what extent Azerbaijani diplomats will be able to utilize its benefits are open questions, which will find their answers in the upcoming months.

Rusif Huseynov is the co-founder of the Topchubashov Center. His main interest is peace and conflict studies, while his focus area covers mainly Eastern Europe, Middle East, Caucasus and Central Asia.

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Eastern Europe

As Georgians Fight Each Other, Russia Gleefully Looks On

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Earlier today, the leader of Georgia’s major opposition party – United National Movement (UNM) – was detained at his party headquarters by government security forces, the most recent escalation in a drawn-out political crisis. This could well be the beginning of a new troubled period in the country’s internal dynamics, with repercussions for the country’s foreign policy.

The optics favor the opposition. Images of armed and armored police storming UNM’s headquarters was damaging to the ruling party, Georgian Dream (GD). Western diplomats expressed grave concern over the events and their repercussions. Protests have been called, and will likely be covered closely in Western media.

What comes next, however, is not clear.

Much will depend on what long-term vision for the country the opposition can articulate in the aftermath of the most recent events. It was not that long ago that UNM was declining as a political force in Georgian politics. There is a real opportunity here. But the burden is on the opposition to make a play for the loyalty of voters beyond its circle of already-convinced supporters.

Appealing to ordinary Georgian voters is ultimately the key to resolving the crisis. Beyond the intra-party clashes about the legitimacy of the most recent elections, there is a growing chasm between political elites and the challenges faced by people in their daily lives. And tackling these challenges successfully will not be easy.

Both the ruling party and the opposition have been facing declining support from the public at large. Long-term economic problems, which have been greatly exacerbated by the pandemic, have not been credibly addressed by either side. Instead of solutions, both sides have engaged in political theatrics. For many voters, the current crisis is more about a struggle for political power, rather than about democracy and the economic development of the country. No wonder that most people consider their social and economic human rights to have been violated for decades no matter which party is in power. These attitudes help explain high abstention rates during the most recent election. Despite remarkable successes in the early years after the Rose Revolution, Georgia has lacked a long-term policy for reimagining its fragile economy since its independence and the disastrous conflicts of the 1990s.

None of this, however, should minimize the threats to Georgian struggling democracy. Today’s arrests reinforce a longstanding trend in Georgian politics: the belief that the ruling party always stands above the law. This was the case with Eduard Shevardnadze, Mikheil Saakashvili, and is now the case with the current government. For less politically engaged citizens, plus ça change: Georgian political elites for the last 30 years have all ended up behaving the same way, they say. That kind of cynicism is especially toxic to the establishment of healthy democratic norms.

The crisis also has a broader, regional dimension. The South Caucasus features two small and extremely fragile democracies – Armenia and Georgia. The former took a major hit last year, with its dependence on Moscow growing following Yerevan’s defeat in the Second Karabakh War. Today, Russia is much better positioned to roll back any reformist agenda Armenians may want to enact. Armenia’s current Prime Minister Nikol Pashinyan has been weakened, and easily staged protests are an easy way to keep him in line.

Georgia faces similar challenges. At a time when Washington and Brussels are patching things up after four years of Trump, and the Biden administration vigorously reiterates its support for NATO, Georgia’s woes are a boon for Moscow. Chaos at the top weakens Georgia’s international standing and undermines its hopes for NATO and EU membership. And internal deadlock not only makes Georgia seem like a basket-case but also makes a breakthrough on economic matters ever more unlikely. Without a serious course correction, international attention will inevitably drift away.

At the end of the day, democracy is about a lot more than finding an intra-party consensus or even securing a modus vivendi in a deeply polarized society. It is about moving beyond the push-and-pull of everyday politics and addressing the everyday needs of the people. No party has risen to the occasion yet. Georgia’s NATO and EU aspirations remain a touchstone for Georgian voters, and both parties lay claim to fully representing those aspirations. But only through credibly addressing Georgia’s internal economic problems can these aspirations ever be fully realized. The party that manages to articulate this fact would triumph.

Author’s note: first published in cepa.org

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Eastern Europe

A Fateful Step Towards Annexation

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It’s easy to lose sight of regional developments amid high political drama. The story of Alexei Navalny’s poisoning, flight to Germany, return, and arrest has dominated Russia coverage in the West. Specialists have also been focusing on the struggle over the Nord Stream 2 pipeline, and the fallout of the Nagorno-Karabakh War. Meanwhile, when in November of last year Georgia’s Russian-occupied region of Abkhazia signed a 46-point agreement to create a unified socio-economic space with Moscow, not many took note. While pitched as a move to alleviate the territory’s economic troubles, the program marks a huge step toward eventual annexation of Georgia’s region by Russia.

Multiple new provisions feature in the new document which were absent in the 2014 military agreement. The new pact creates various provisions for the sale of local real estate, among them a stipulation on dual citizenship allowing Russians to get Abkhaz passports. A whole range of laws will be introduced whereby Russian investors will be able to invest money into and buy majority shares in what still remains valuable in Abkhazia.

The latest agreement also proposes allowing the Russians to buy into Abkhazia’s energy sector. Additionally, the Abkhaz will make legislative and administrative amendments according to the Russian law in social, economic, health, and political spheres. There is also a stipulation on simplification of law procedures for Russian investors.

While this may end up giving a shot in the arm to a decrepit Abkhaz economy, the high level of harmonization with Russian laws lays the groundwork for a future merger with Russia. It is this dilemma between closer cooperation with Russia and deep fear of Russian intentions that will haunt the Abkhazian political class for the foreseeable future. Though officially the new “socio-economic” program does not involve a change in Abkhazia’s political status, Abkhaz elites fret they are heading down the path to eventual incorporation into Russia.

Criticism of the pact in Abkhazia forced the region’s leader Aslan Bzhania to forcefully deny that Abkhazia was losing any sovereignty. Instead, he emphasized the positive elements of the document, especially the re-opening of Sukhumi airport. Bzhania also cited Abkhazia’s chronic energy shortages and the acute need for Russian assistance as justification for the deal. Still, fears persist. After all, unlike South Ossetia, the other Russian-occupied region in Georgia, Abkhazia has never entertained the idea of merging with Russia.

But Russia is playing a long game. Pressure on Abkhazia has been building up gradually over the course of 2020. After the resignation of Moscow’s preferred client Raul Khajimba, Bzhania’s candidacy was regarded with suspicion by Kremlin officials. As a result, when he won, Bzhania had to make multiple visits to Moscow to kiss the ring, even as Russian funding continued to dry up amid the pandemic. The cost of resuming aid, it appears, was increasing economic harmonization and with the looming threat of eventual assimilation.

With Russian investments into the energy sector and land purchases, Abkhazia will slowly lose its last vestiges of de-facto independence. On an economic level, Abkhazia is far richer than South Ossetia. But controlling it has other virtues. Out of all the separatist regions Russia controls, Abkhazia is arguably the most strategically located. A passage from the North to the South Caucasus, the region is also famous for its harbors and military infrastructure. Control over it gives Russia capabilities to check NATO/EU expansion into the region.

Russian plans in Abkhazia should be also seen within the context of Russia’s push to solidify its presence in the South Caucasus, especially in the aftermath of events in Karabakh and Russia’s peacekeeping mission there. Economic inroads into Abkhazia also mean a further distancing of other potential players such as Tbilisi and the collective West.

Author’s note: first published in cepa.org

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Eastern Europe

In Azerbaijan, Human Capital Investments are the Key to Resilient Growth in the era of COVID-19

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Photo: World Bank

By limiting access to health, education, social protection, and jobs, the COVID-19 pandemic threatens to reverse human capital gains in Azerbaijan. In a recently published report, Survive, Learn, Thrive: Strategic Human Capital Investments to Accelerate Azerbaijan’s Growth, the government of Azerbaijan and the World Bank identify the main challenges to building and activating human capital and put a spotlight on high-impact interventions that respond to constraints.

Fadia M. Saadah, World Bank Human Development Regional Director for Europe and Central Asia, reflects on the success and challenges of the past, and opportunities for the World Bank Group to partner with the government of Azerbaijan in ensuring resilient growth, powered by human capital investments.

Q. What do you see as the main challenges facing human capital formation and activation in Azerbaijan?

The government of Azerbaijan has achieved a great deal in terms of human capital development. Over the last five years, enrollment in higher education rose 21 percent. The introduction of mandatory health insurance supported an increase in the use of essential primary care level and improvements in efficiency. Contributory pensions and poverty-targeted social transfers raised the incomes of the bottom 40 percent substantially, facilitating household-level investments in health and education.

Despite this progress, gaps in human capital investments persist. On standardized tests, students from wealthier families score the equivalent of three years of schooling above students from poor families, an indication of wide inequalities in learning outcomes. Out-of-pocket payments remain high, despite the launch of mandatory health insurance, reducing access to services needed to control the rise of noncommunicable diseases. Only one in five households in the poorest quintile benefits from the targeted social assistance program, and labor force participation remains low, especially among women.

Azerbaijan’s Human Capital Index is 0.58, meaning that a child born today in Azerbaijan would be 58 percent as productive as she could have been as an adult if she had enjoyed full health and had benefited from a complete education. The COVID-19 pandemic has reduced access to social services and is projected to lead to an economic contraction of 4.2 percent in 2020. The government has risen to the challenge of recovering the gains in health and learning outcomes and ensuring that human capital development remains central to the political agenda.

Q. Azerbaijan faces the dual challenge of recovering from the COVID-19 pandemic and strengthening health, education, learning, and employment services to facilitate growth. What strategic investments do you recommend for the human development sector in the short and medium term?

The government aims to balance the medium-to-long term objective of reforming social systems with the ongoing COVID-19 pandemic response. Hence, in the health sector, we recommend the digitalization and interoperability of health information systems to support comprehensive surveillance and facilitate continuity of care in the treatment of noncommunicable diseases. Reforming health financing to increase public health spending and protect households from out-of-pocket costs will be important to increase health care access.

As schools reopen, Azerbaijan is investing in remediating learning losses. Doing so may involve ensuring that schools follow health protocols to reduce their risks of becoming the source of group infections, providing students with financial and nonfinancial incentives not to drop out of school, and equipping schools and training teachers to better manage in-person and distance learning. We also recommend establishing a fund to support innovation in higher education.

Social assistance will be essential to ensuring that the most vulnerable households are able to access social services. Improving the coverage of the targeted social assistance program and increasing public financing for these transfers will further improve households’ resilience to consumption shocks. Including employers in the design and implementation of active labor market programs will help link people to jobs.

The potential for human capital investments to drive growth and resilience in Azerbaijan is significant. An analysis by the World Bank, The Changing Wealth of Nations 2018, reports that human capital comprises 64 percent of global wealth. If Azerbaijan ensured complete education and healthcare among children and adults, its long-run per capita gross domestic product could be 1.67 times higher than it is today.

Q. The World Bank has partnered with Azerbaijan on landmark reforms since independence. How do you see the engagement evolving over the next few years?

The next phase of the human capital policy dialogue in Azerbaijan can benefit from a focus on putting this agenda into practice through investments in human capital. The World Bank Group remains committed to providing technical and financial support for operationalizing and implementing this ambitious strategy. We highlight important areas of engagement in education, health, social protection, and jobs below.

Education: The World Bank Group has long supported the government in the development of the education system, including reforms in general education and formulation of the country’s education sector development strategy. The government has introduced per capita financing in tertiary education and a remuneration and quality assurance system in secondary education.

The Second Education Sector Development Project, which closed in 2016, focused on improving the quality of teaching and learning in general education. Through ongoing policy dialogue, the World Bank Group will continue to support education reforms, especially to increase access to early childhood education and spur innovation in tertiary education.

Health: The World Bank Group has engaged in the health sector over the past few years through policy dialogue and provision of technical expertise to support health financing reforms. At the request of the government, it is facilitating knowledge exchanges that may inform the implementation of mandatory health insurance, drawing on the experiences of Kazakhstan, the Republic of Korea, and Costa Rica.

With funding from the Japan Policy and Human Resources Development Fund, the World Bank Group is supporting efforts to improve the governance of digital data and leverage claims data to strengthen provider payment mechanisms within the mandatory health insurance system. Over the next few years, the World Bank Group will continue to engage in policy dialogue on priority issues, including health insurance, e-health and telemedicine, and the development of an integrated claims management system.

Social Protection and Labor: In the past few years, the World Bank Group has supported efforts by the government to raise the most vulnerable people in Azerbaijan out of poverty, by investing in the implementation of the National Employment Strategy and critical social assistance and disability reforms.

A recently approved Employment Support Project aims to improve vulnerable people’s access to employment by enhancing the scope and effectiveness of the government’s Self-Employment Program, enhancing employment services and programs, and building public sector capacity.

The Internally Displaced Person Living Standards and Livelihoods Project and Additional Financing, which closed in 2019, helped improve the living conditions and increase the economic self-reliance of internally displaced persons. The World Bank Group will continue to support Azerbaijan through ongoing policy dialogue to strengthen the social protection system as a platform to improve human capital outcomes and households’ resilience to shocks.

World Bank

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