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The Nagorno-Karabakh conflict and an estimate of war damages for Azerbaijan

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[yt_dropcap type=”square” font=”” size=”14″ color=”#000″ background=”#fff” ] T [/yt_dropcap]he conflict between Armenia and Azerbaijan over the Nagorno-Karabakh became as one of the most tragic and complicated conflicts contributing to instability in the entire region. The conflict has claimed thousands of lives and over one million people became refugees and internally displaced persons (IDPs).

Twenty percent of Azerbaijani territory has been occupied and material damages worth billions of dollars as the whole infrastructure devastated or destroyed in the occupied regions. A ceasefire agreement has been signed on May 1994 to halt the bloody conflict. However, four-day April 2016 war showed once again that peace agreement between the warring parties is extremely fragile.

If we look at the war damage in Azerbaijan, it is worth noting that the socio-economic damage caused by Armenian aggression negatively affected all spheres of the Azerbaijani economy. According to the calculations, 890 cities, villages and settlements, 102 thousand dwelling houses, 7000 public buildings, 695 healthcare facilities, 693 secondary schools, 927 libraries, 310 industrial and building enterprises, 464 historical monuments and museums, 6 state theaters and concert studios have been devastated or destroyed in the occupied territories.

TABLE 1: Infrastructural and telecommunication damages

1.

Railroad

240,4 km

2.

Motor road

800 km

3.

Bridges

160

4.

Water Reservoirs

3 (main Sarsang)

5.

Water-line

2,300 km

6.

Air

4 airports ( main Khojali airport)

7.

Gas distribution stations

35

8.

Gas-pipe

Baku-Khankendi (Stepanakert)-Nakhichevan

9.

Transformer stations

2,500

10.

Electric lines

15,000 km

11.

Telecommunications

for more than 35 000 subscribers

Source: http://karabakh.org and own construction

It is worth also noting that the occupied territories of Nagorno-Karabakh represented a large agricultural region within Azerbaijan, as about 70% of summer pastures of the country remain in the occupied areas. In general, grain-growing, fodder production, vine-growing, tobacco-growing, potato-growing, cotton-growing, dairy farming and meat farming, particularly sheep-breeding dominated in the agriculture. Agricultural sector played always important role in national economy, thus after aggression during years 1990-1994 GDP of the country decreased about 63% in total due to agriculture output falling about 43%. Percentage of population dependent on agriculture in the country used to be always high (36.8% –2014), therefore, loss of fertile agricultural lands resulted in high unemployment. The occupied regions had quite strong progress in agricultural production and productivity growth. However, all those production facilities destroyed and remained in the occupied territories. Preliminary calculations show that the total damage to Azerbaijan caused by Armenian aggression estimated around $60 billion.

It should be also highlighted that the illegal economic and other activities carried out by Armenia and the third states in the occupied territories of the Republic of Azerbaijan are contrary to the core principles of the OSCE and the UN. As the Armenia is the occupant of Azerbaijan’s territories and its armed forces are illegally situated in the occupied territories, it grossly violates the core principles of international law. Armenia encourages and facilitates resettlement of Syrian Armenians in the occupied territories. Government agencies of Armenia, including its Ministry of Diaspora, as well as other organizations of Armenia, in particular the Armenian Revolutionary Federation (ARF), which designed special Yerevan-headquartered “Help your Brother” program for this purpose. Armenians from Syria (many from Qamishli and Aleppo in Syria) are settled mainly but not exclusively in the occupied Zangilan, Gubadly and Lachyn districts (“Illegal Economic and other activities in the occupied territories of Azerbaijan”: Report by the MFA of the Republic of Azerbaijan, 2016, pdf, pp. 11).

Armenian diaspora organizations, including the Lebanon-based Artsakh Roots Investment (“ARI”) company, play a major role in enabling and facilitating the occupation. A large amount of funding for settlements and other activities is provided by foreign private investors, mostly of Armenian origin, and from charity non-profit organizations such as the US-based Tufenkian Foundation, Armenian General Benevolent Union (AGBU), Cherchian Family Foundation are channeling large amounts into the illegal activities and settlements throughout the occupied territories. Hayatsan All-Armenian Fund designed and implemented a special “Re-population of villages of Artsakh” project. Building new infrastructure and communication facilities as well as illegal activities in the field of ICT and banking sectors are well-known facts. For example, the Armenian banks such as “Artsakhbank”, Converse Bank, Ardshininvestbank, Armbusinessbank, Armeconombank, Araratbank, Unibank and Ameriabank are operating in the occupied territories. Armenia’s mobile operators such as Armentel (a subsidiary of the Russian Vimpelcom under the “Beeline” brand), Viva Cell MTS and Orange Armenia, a subsidiary of Orange Group France, provide roaming services with reduced rates to “Karabakh Telecom CJSC” (ibid, pp. 10- 24).

Armenia is also a transit route to export goods illegally produced in the occupied territories to international markets. The goods produced in the Nagorno-Karabakh and other occupied areas are being exported to the European, Russian, Ukrainian, the U.S. markets etc. under a fake label ‘made in Armenia’ or by companies operating in the Nagorno-Karabakh but registered in Armenia. It pursued illegal policy on development and operation gold deposit located in the occupied Kalbajar region of Azerbaijan by Base Metals CJSC, which is a wholly owned subsidiary of Armenia’s Vallex Group CJSC, registered in Liechtenstein. Another company Gold Star CJSC reportedly started exploitation of the gold mine in Zangilan district (ibid, pp. 14). All these facts are a clear violation of international law.

The occupation of Azerbaijani territories is significant obstacle to regional cooperation, and its policy leads Armenia to isolation. Consequently, the country will have no opportunity to participate in regional projects. On the contrary, due to a rapid economic growth, Azerbaijan has been realizing important energy and transport projects of regional and global importance. Important projects, such as the Baku–Tbilisi–Ceyhan pipeline (BTC), the Baku-Tbilisi-Erzurum gas pipeline (BTE), Trans-Anatolian Natural Gas Pipeline (TANAP) and the Baku-Tbilisi-Kars railway (BTK) which bypassed Armenia, realized due to cooperation between Azerbaijan, Georgia and Turkey. Occupation of Azerbaijani territories caused socio-economic damage not only for Azeri but also for Armenian people too, and it is obvious that the current situation damages the Armenian economy. It is worth underlining that as long as this country continues its aggression against Azerbaijan, it will stay away from all regional projects, and inclusive regional cooperation in the South Caucasus will be impossible.

After last year’s April bloody clash between Azerbaijan and Armenia in the Nagorno-Karabakh region, the economic damage of war on Azerbaijanis became again increasingly important. As a result of only four-day clash, 6 civilians were killed, 26 people injured, 445 houses, 5 schools, 2 medical centers, 2 kindergartens and other social and administrative buildings were seriously damaged. These figures are only “a drop in the bucket”, therefore, a careful calculation of the whole war damage caused by Armenian aggression since the start of war is extremely important.

Undoubtedly, Azerbaijani government has the list of all devastated and destroyed infrastructures, production facilities and cultural heritage in the occupied zones. Also geography, history, and culture of the occupied territories have a great potential for the tourism industry, but Azerbaijan cannot benefit from this sector. To make exact calculation, it is very important to liberate all occupied territories and attract international organizations to calculate the exact amount of damages.

In addition to the foregoing, as a result of Armenian aggression, the blockade of the Nakhchivan Autonomous Republic (Azerbaijani exclave) has been continuing for almost 28 years. The blockade of the region actually prevents realization of the full economic potential of this region. Therefore, the damage to this region should be also calculated, and abolishing the blockade should be the subject of discussions and adopted documents by international organizations. Accordingly, while calculating the final amount of damages and costs, all direct and indirect costs should be calculated, and undoubtedly, the final actual costs will exceed the preliminary estimated costs by several times.

The conclusion must be that although the war caused both human suffering and economic losses for Azerbaijanis and Armenians, unfortunately, additional losses will be in the future due to the ongoing conflict. As many Armenian journalists and human rights activists underline Azerbaijanis and Armenians suffer a lot from the Nagorno-Karabakh conflict, and this conflict should be resolved so that both Armenian and Azeri people could live peacefully there. According to journalist and social activist Susan Jaghinyan –“the Armenian people had their share of grief. Only occupiers (Armenian authorities) benefited from the conflict”. All these facts once again confirm that both Azeri and Armenian people are continuing suffering from the bloody conflict. The fastest peaceful resolution of the Karabakh conflict will restore regional integration, and the people of the region will be able to benefit from regional economic development.

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Eastern Europe

The phenomenon of the Islamic world- Ilham Aliyev

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At the end of the twentieth century – at the beginning of the 21st century, world politics differ by its complexity and diversity. It is too important that Azerbaijan, which proclaimed independence twice during the twentieth century, maintained its this independence during the period full of globalization, international integration and social contradictions. Under such complicated historical circumstances, the prominent politician and statesman, the well-known and respected person in the world – Ilham Aliyev’s commitment and successful realization of this responsibility can be characterized as the golden age of modern Azerbaijan history. Conduction of successful foreign policy during his term as head of state has had a significant impact on the future life of Azerbaijan.

The Republic of Azerbaijan, established normal international relations with all the countries of the world after gaining independence, and in the frame of good relations with the Muslim countries, it also protects the interests and interests of the Islamic world within the Organization of Islamic Cooperation and continues to cooperate with these countries in accordance with the requirements of international law. In this regard, strengthening of Islamic solidarity in the world is one of the priority issues in the foreign policy of Azerbaijan. Namely from this point of view, declaration of 2017 year as “Islamic Solidarity Year” by decree of the  President Ilham Aliyev dated January 10, 2017, is an indicator of  humanistness of our state leader and at the same time it is a positive example of our country’s sensitive attitude to the Islamic Countries Union. Islamic solidarity does not only mean the solidarity of Islamic countries. This is a kind of challenge, regardless of religion, to the world’s people to live in friendship, brotherhood and multiculturalism conditions.

It is well known that sectarian wars, civil wars in the Middle East and as a result, emerged certain socio-political tensions indicate that Muslim countries are in great need of moral solidarity. The controversial political processes happening in the world, the emergence and increasingly widespread of warlike states in different countries, the strengthening of religious confrontation, and the deepening of the prejudiced attitude towards Muslims emphasize the necessity level for solidarity among people, nations and states. It can be said that one of the main reasons for exacerbating the myth of Islamic terrorism, the threat of Islamophobia, and strengthening the oppression of Islamic countries should be sought in the absence of unity and solidarity among these countries. Faith differences, contradictions in interests and positions and etc. leads to serious disagreements, and sometimes severe confrontations. Islamic religion, its sacred values, are insulted by the Islamophobia and those who are exposed to the poisonous propaganda against Islam. The bloody events that took place in the Islamic countries during last years, especially in Iraq, Bahrain, Yemen, and Syria are confirmation of our opinions. Cradles of ancient Eastern culture such as Baghdad, Damascus, Aleppo, Kirkuk, Basra and other cities are subject to serious destruction as a result of wars in Iraq and Syria and constant clashes, monuments of Islamic culture in these cities are destroyed. Caricatures of the Prophet Muhammad are given in the Western media, mosques, the holy book-Koran is burnt. The Western world’s official structures do not just condemn the acts of vandalism, but on the contrary, they protect, honor, and appreciate the performers of those acts.

The main purpose of the “Islamic Solidarity Year” is to strengthen the unity of the Muslim world and to show that Islam is a religion of peace and culture, and to achieve this goal, as President of the Republic of Azerbaijan Ilham Aliyev said, first of all, reconciliation between different sects that have historically damaged Islam should be established. The announcement of the year 2017 as the “Year of Islamic Solidarity” in Azerbaijan is a challenge to the West, which is strengthening its attacks on the Islamic world annually and promoting a new “crusades” in the 21st century. This is also a call for Islamic countries to be vigilant against the crafty intentions of the West, to demonstrate unity and solidarity. Ilham Aliyev made this important step and expressed the his own position and the position of the state of Azerbaijan. As Azerbaijan has distinguished from other states with its multicultural and tolerant values throughout its history. Islamic solidarity is also a part of this context, and this shows that President Ilham Aliyev gives great importance to the solidarity of the Islamic world. As political scientists point out, some initiatives have been made to call Muslim countries to get unified around religion. For the first time in history, the head of our state has sent a political message to the Islamic world, pointing to the importance of acting from unified position, to achieve unity and at the same time integrate into the world. It should be noted that the Order of the President of the Republic of Azerbaijan on the declaration of 2017 year as“Year of Islamic Solidarity” states: “The Republic of Azerbaijan has established mutually beneficial relations with the Islamic world by being selected as a member of the Organization of Islamic Cooperation, ISESCO and other respected organizations joining muslim countries and has been an organizer of a number of important cultural forums of global importance. Azerbaijan has made a great contribution to the founding of tolerance environment, multiculturalism, intercultural and intercivilizational dialogue, and the promotion of Islamic values in the world. The prestige gained by Azerbaijan in the Islamic world got its expression in this results that Baku and Nakhchivan cities declared as a capital of Islamic culture in 2009 and 2018 respectively. And the decision to hold the IV Islam Solidarity Games in Baku in 2017  create favorable conditions for our country to take the next practical steps in strengthening the Islamic solidarity. ”

Only state leader of the country like Azerbaijan,  where multiculturalism and solidarity are established, and citizens of different nationalities, religions and sects live in peace, has a moral right to give such a decree. The promotion of the Islamic Solidarity initiative is related to the challenges of the present and controversial processes that take place because of various reasons in the Islamic world. As it is seen here, the importance of Azerbaijan’s reputation in the Islamic world, as well as the need to strengthen the solidarity of Islamic countries, as well as the actuality of holding the Islamic Solidarity Games in Baku, the capital of the Republic of Azerbaijan in 2017, have been extensively and logically expressed in this decree. With Islamic solidarity policy, Azerbaijan, as unifying facility of the Islamic world, confirms that these religious values are indeed, humanistic, moral values and reinforces belief to being of these ideas are an effective means of creating a shared living and stability environment not only in the Islamic geography but also in the entire world. Azerbaijan, which has created a partnership of cultures and ideas between East and West, fulfills the function of a of solidarity bridge, thus demonstrates its commitment to universal values, as well as its commitment to the highest values of the Islamic religion, which had a special place in the past and continuing to keep its value today. Thus, Azerbaijan uses all the means to establish steady stability in a globalizing world and propagates the peacekeeping, reconciliatory position in a unique way that is essential for today.

We suppose that this humanist initiative of the President of Azerbaijan, Mr. Ilham Aliyev, will promote the expansion of cooperation relationship between Muslim countries in the world and further strengthening of the Islamic solidarity. The strengthening of Islamic solidarity, in its turn, will play an important role in ensuring tranquility and peace in the Middle East and other regions.

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Economic Growth of Ukraine Depends on Completing Pending Reforms Quickly

MD Staff

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Ukraine’s economy grew by 2.5 percent in 2017, the second year of modest growth, according to the World Bank’s latest Ukraine Economic Update.  Growth in manufacturing, services, and construction was robust, but weaknesses in the agriculture and mining sectors, together with delays in key reforms to further strengthen investor confidence contributed to the modest overall growth performance.

“Faster growth is needed to improve living standards for the people of Ukraine who continue to hurt from the economic crisis of 2014-2015,” said Satu Kahkonen, World Bank Country Director for Belarus, Moldova and Ukraine. “This will require decisive measures in the next few months to complete pending reforms to bolster investor confidence and safeguard macroeconomic stability.”

Economic growth is projected at 3.5 percent in 2018 if pending reforms in anticorruption, land markets, state-owned banks, and privatization can be advanced in the next few months. This would provide an important signal to investors. If reforms are delayed, growth could drop below current levels in an uncertain macroeconomic environment as financing risks rapidly increase.

Ukraine faces major financing needs to repay public debt and fiscal pressures from higher public sector wages and social benefits in 2018 and 2019. Mobilizing adequate international financing by completing pending reforms in the months ahead will be important to maintain macroeconomic stability.

Meeting the fiscal deficit target of 2.5 percent of GDP in 2018 will require improving targeting of housing utility subsidies, making further wage increases contingent on measures to optimize the school and hospital network and public-sector staffing, and identifying affordable options to update public sector pensions.

Fiscal Pressures and Reform Options …

According to the World Bank’s Special Focus Note on fiscal pressures and reform options, Ukraine has made progress in reducing its large public spending since 2014. However, sustaining these gains while also improving the effectiveness of public services will require implementation of reforms in education, health, public administration, pensions, and social assistance in a fiscally affordable manner.

Public expenditures increased significantly in 2017, by 11.7 percent in real terms, reaching 41.5 percent of GDP, due to the doubling of the minimum wage and over 40 percent increase in wages of teachers and doctors. Spending on social programs also increased.

The recently adopted reforms in education, health, and public administration seek to improve compensation for teachers, doctors, and public servants to strengthen incentives and attract quality personnel. Achieving this in a fiscally affordable manner will require coordinating further increases in salaries with time-bound measures to optimize staffing and the school and hospital network.

The social assistance package in Ukraine is not only fiscally costly—costing 5 percent of GDP in 2017, but is also poorly targeted—with only 30 percent of assistance going to the bottom 20 percent of the population. Fixing this will require improved targeting of the large HUS program.

The recently adopted pension reform helped improve adequacy of benefits and stabilize fiscal costs. Additional initiatives going forward should avoid undermining these core objectives of the pension system. The timeline to create a funded pillar system by January 2019 needs to be reconsidered since this will undermine contributions to the pay-as-you-go system, create contingent fiscal liabilities, and face inadequate availability financial instruments.

Background

Since May 2014, the World Bank Group has provided a total of more than US$5 billion to Ukraine (including 4 development policy loans, 7 investment operations and 1 guarantee) from the International Bank for Reconstruction and Development (IBRD).

The World Bank’s current investment project portfolio in Ukraine amounts to US$2.5 billion.  Investments support improving basic public services that directly benefit ordinary people in areas such as water supply, sanitation, heating, power, roads, social protection and healthcare, as well as private sector development. Since Ukraine joined the World Bank in 1992, the Bank’s commitments to the country have totaled over US$12 billion in about 70 projects and programs.

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Eastern Europe

Baltic States: Missed opportunities in global politics

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We are living in the world where the facts “who makes” and “where it is made” are much more important than “what for” issue. Nowadays the world political scene is divided between superpowers supported by their allies. In order to punish each other for having opposite views the sides criticize any step made by the opponent.

Unfortunately, this happens even in case of evident necessity. It is not the secret that the modern system of international security is unable to perform all demanded functions any more. It needs to be reformed. Another question is who and where will decide.

The most likely political platforms for this are the United Nation Organization and OSCE. But the preparatory stage for any new decision should become different forums and conferences, such as the Munich Security Conference and the Moscow International Conference on Security.

This year the Munich Security Conference took place on February 16-18. More than 30 heads of state and government and over 100 cabinet ministers from across the globe came together at the forum for discussions on major international security challenges. As far as the Baltic States concerns, President of Estonia, as well as Lithuanian and Latvian ministers of defence did not miss the event because it was of great importance for the future of their countries and all Europe.

Just another situation developed in March. In Moscow an annual International Conference on Security was held on April 4-5. The fight against terrorism and other pressing security challenges were one the agenda. There is not a single person who is not affected by the discussed topics.

Many European countries considered it unnecessary to visit the event. It makes no sense to blame them for this choice. They have a strong and common view on what is happening in the world. But if abstract from the current geopolitical situation and confrontation between Russia and the West, politicians should see such kind of forums as a chance to find even weak possibilities to make the world safer. Probably the main reason for not attending the event is in the fact that politicians forgot how to listen to each other. They forgot that only discussing controversial issues makes possible to reach a consensus.
Another issue that deserves attention is the list of participants, which is of great interest to the analysts. According to the Russia’s Defense Ministry, representatives from at least 95 countries, three deputy prime ministers, 30 defense ministers, 15 chiefs of staff, 10 international organizations and military delegations have come to participate in the International Conference on Security. They include defense ministers of India, South Africa, Iran, Iraq, Pakistan, Vietnam, Azerbaijan, Belarus, China, Armenia, Mozambique, Serbia, and Israel. Thus, almost half of the UN member-states (total number is 193) sent representatives to the Conference.

It becomes evident that Russia really has powerful partners and allies that are ready to discuss even difficult questions and find mutually beneficial solutions. Those who came do not necessarily agree with Moscow and support its foreign policy but they clearly understand that unfortunately without Russia it is impossible to improve the International Security system.

This fact admitted Thomas Greminger, secretary-general for the Organization for Security and Co-operation in Europe. He stressed that Russia is a key partner in issues of the European security. But the Baltic States blinded by hatred to Russia ignore ignored the event thus putting political ambitions higher than common sense.

It is obvious that Russia is not satisfied with NATO’s actions near its borders. NATO in its turn disputes the lawfulness of Russia’s behavior. Every day confrontation becomes harder and leads to the arms race. The only way out is to discuss things and find the way out. The Baltic States as usual lost the possibility to express their position on key international security issues and be the active actors in global politics.

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