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The Trans-Caspian International Transport Route in the face of New Danger

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The recent skirmishes along the border of Armenia and Azerbaijan pose significant threats to the development of East-West trade and transport corridor.

On July 12, another military confrontation sparked between Armenia and Azerbaijan. This time, the parties of the three-decades-old conflict over occupied territories of Azerbaijan by Armenian Armed Forces fought along international state border on the site of Tovuz region and Nakhchivan Autonomous Republic of Azerbaijan, not the “Line of Contact” around the Nagorno-Karabakh region. Fitful skirmishes involved artillery fire and aerial drones which is sufficient enough to characterize it as the most severe incident since the “April War” in 2016. According to the Ministry of Defense of Azerbaijan, 12 Azerbaijani servicemen and 1 civilian died including a major-general and a colonel while the Armenian Ministry of Defense reported that their number of deaths constituted for 5, which is surprisingly low considering the tense of confrontation.

The both sides immediately accused each other of initiating the fire. However, taking into consideration potential drawbacks of the armed clashes to international projects due to close proximity of strategic facilities to the border area, it is crystal-clear that escalation of military engagement fails to represent any interests of Azerbaijan, unlike Armenia which does not carry much responsibility as it is out of main regional connectivity projects in South Caucasus. More particularly, in accordance with goals embodied on “Strategic Road Map for the development of logistics and trade” approved in 2016, stability and security around the respective state border is of vital importance for Azerbaijan which, on the other hand, fills a gap of Armenia’s leading motive in choosing this place for new skirmishes. Namely, the last stop of Baku-Tbilisi-Kars railway in Azerbaijan before it arrives at Rustavi station in Georgia is the Aghstafa station that is situated within approximately 33-45 km away from Dondar Qushchu and Kokhanabi villages of Tovuz region where Armenian Armed Forces were shelling along the border. In addition, the distance between the Baku-Alat-Qazakh-Georgia Highway and another suffering villages such as Ashagi Qushchu and Aghdam is more or less 4-5 km.

The recent developments in the East-West trade as a driving factor behind the clashes.

It is essential to lay an emphasis on the coincidence of clashes with the latest events occurred on the Trans-Caspian International Transport Route (TITR) in order to draw correlation. Azerbaijan, as one of originators of the TITR along with Kazakhstan and Georgia, gradually advances its connectivity role thanks to the efficient use of Baku-Tbilisi-Kars railway as well as Baku Alat Port. Recently, the TITR achieved a new freight transportation record in compliance with its2020 development plan on cargo tariffs, delivery time and volume of container traffic according to the report of Azernews. Citing to the press service of Trans-Caspian International Transport Consortium on July 15, Azernews informs that shuttle trains consisting of 47 containers arrivedin Istanbul from Xi’anin 16 days, 3 days earlier than the relevant time of the last year due to further harmonization and electrification of the Baku-Tbilisi-Kars railway line.

In addition, the Azerbaijan Railways CJSC confirmed to Trend News Agency on July 16 that between January and May 2020, there were 149,137 tons of cargo delivered via the Baku-Tbilisi-Kars railway, which was 3.9 times higher compared to the same period of 2019.Such improvement was also noticeable on the Global Competitiveness Report 2019 of the World Bank Group where Azerbaijan was ranked the 11th among 141 countries in the category of “Efficiency of train services”. It is important to note that the BTK has yet reached its maximum operational capacity as it is expected to carry 3-5 tons by the end of 2020 and up to 17 tons of cargo and 3 million passengers by 2023.

Furthermore, in early July, there was a meeting held among presidents of three countries– Azerbaijan, Afghanistan and Turkmenistan to discuss cooperation on the integration of Lapis-Lazuli Transport Corridor to the TITR which connects landlocked Afghanistan with Europe. As soon as the BTK railway was linked to the Lapis-Lazuli route in 2018, products from Afghanistan began to flow through Turkmenistan to Azerbaijan and further to the west. In particular regards to the volume of containers throughout the first half of 2020, President Aliyev stated that 55,500 tons of cargo were shipped through Azerbaijan towards Afghanistan and back during the specified time.

A frequent use of pro-war rhetoric entails a direct threat to Azerbaijan’s strategic facilities onthe TITR.

It is no secret that positive resonance of Azerbaijan’s participation in transnational projects makes Armenian government concerned about the change of balance of power in Armenia-Azerbaijan conflict. Such anxiety was also explicitly stated by the former leader of Armenia, Serzh Sargsyan on his interview to Armenia TV when he noted that Armenia had to purchase Russian-made 9K720 Iskander-M ballistic missile with nuclear warheads with a caliber of striking any facilities within 300 miles (500 km) in order to balance the situation with Azerbaijan. Commenting on the demonstration of ballistic missiles during a military parade in Yerevan, Head of the Operational Department at the Armenian army’s General Staff, Major-General Artak Davtian revealed that Armenia’s missile systems were in the capability of targeting “all strategic facilities in Azerbaijan”.

On one hand, it is reasonable to have such a concern. Because in marked contrast to Armenia where political and economic unrest sprawled all around the country and a real “game of thrones” arises for the current government, Azerbaijan seems to be more equipped with opportunities for fast recovery during the post-pandemic period owing to a potential rise of the volume of international trade and transportation. According  to president of Kazakhstan Temir Zholy (KTZ), Askar Mamin, Azerbaijan can gain a net profit of US$600-700 million from transit route alone, while net profit of all member states is worth US$1 billion. The corridor also improves trade turnover of Azerbaijan with several countries along the route, especially China. Shahin Mustafayev, Minister of Economy of Azerbaijan confirmed on his interview to Global Times that the trade turnover between Azerbaijan and China reached US$1.7 billion from January to September in 2019, a rise of 96 percent compared to the same period of 2018.

In conjunction with such hostilities being conducted at regular intervals along the “Line of Contact” and state border, Armenian leadership also actively takes advantage of the pro-war rhetoric in a bid to discredit Azerbaijan’s competitiveness and create a notion of its insecurity. During the flare up along the border, Davit Tonoyan, Defense Minister of Armenia confirmed to Shushan Stepanyan, spokesperson of the relevant ministry “personal and command of the Armenian Army are instructed to be restrained for time to seize new advantageous positions in case of provocations received by the enemy on the borders of the Republic of Armenia.” Another aggressive and provocative statement of Minister was received in the gathering of Armenian community members in last March in New York. At the meeting, Tonoyan announced his dream for “new territories in the event of a new war” and promised that the option of return of “territories for peace” (regarding the occupied territories of Azerbaijan) would no longer be on the table.

Furthermore, some threats of Armenian leadership with a risk of more catastrophic consequences also targets to destabilize the region. In this regard, the statement of the “Defense Minister” of self-proclaimed Nagorno-Karabakh Republic, Levon Mnatsakanyan may serve an example. On 24 July 2018, Mnatsakanyan noted in a press conference that oil and gas installations as well as Mingachevir hydroelectric station of Azerbaijan, the largest dam in South Caucasus was included in tactical plans of the “Defense Army” of the self-proclaimed Nagorno-Karabakh Republic. Besides, some direct threats have already been put into force too. For example, when MP Hrant Bagratyan, ex-Prime Minister of Armenia said in his press conference on 29 April 2016that Armenia had to create its atomic weapons to fight against Azerbaijan and Turkey, very few people would believe that his words had actually incapsulated the partial truth until an unexploded 122-millimeter ordnance consisting of chemical code of white phosphorus was used against civilian population of Askipara village of Tartar region of Azerbaijan on 27 July 2016.

Conclusion

All aspects stated above lead us to some inferences regarding correlation between recent skirmishes and regional development and security in South Caucasus. Firstly, it reveals an obvious clarification that Azerbaijan as a promising contributor to the East-West transport corridor cannot be an interested party in escalation of military confrontation along the border as it constitutes an impediment to Azerbaijan’s strategic goal to become a logistics and trade hub not to mention further political and legal repercussions for the country. This fact generates the second deduction that Armenia, by undermining Azerbaijan’s connectivity role between Asia and Europe tries to keep the power dynamics of Armenia-Azerbaijan conflict balanced which ultimately aims at maintaining the status-quo. Nevertheless, in my opinion, it still requires another investigation to uncover additional motives of the Armenian government in conducting such provocations, especially from the perspective of aggravated domestic situation and its membership in the Collective Security Treaty Organization. The third and the most important takeaway note of this article is that Armenian provocations not only attempt to distract international and domestic community from the ground of Armenia-Azerbaijan conflict by opening another hot zone, but also pose significant risks to the development of regional connectivity projects as well as threaten economic incentives of all countries involved along the TITR due to any attacks on infrastructure facilities of Azerbaijan.

It is no doubt that such clashes stick all efforts of negotiation process of Armenia-Azerbaijan conflict; similarly, keep alive a risk of waging into a full-scale war in such an important region. Therefore, the time has come for international community not only to react Armenian aggression in the same way with other cases of violation of territorial integrity and sovereignty around the world, but also to immediately ensure the peaceful settlement of the conflict based on principles and norms of international law.

Javid Alyarli (@javidalyarli) received an M.A. in China Studies from Zhejiang University in 2019. His current research interests include Belt and Road Initiative, Trans-Caspian International Transport Route, "Digital Silk Road" and Chinese investments in South Caucasus.

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Eastern Europe

Latvia developed new tasks for NATO soldiers

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Member of the Latvian Saemas’ national association “Everything for Latvia!” and Freedom”/LNNK Jānis Dombrava stated the need to attract NATO troops to resolve the migration crisis. This is reported by la.lv.  In his opinion, illegal migration from the Middle East to Europe may acquire the feature of an invasion. He believes that under the guise of refugees, foreign military and intelligence officers can enter the country. To his mind, in this case, the involvement of the alliance forces is more reasonable and effective than the actions of the European border agencies. Dombrava also noted that in the face of an increase in the flow of refugees, the government may even neglect the observance of human rights.

The Canadian-led battlegroup in Latvia at Camp Ādaži consists of approximately 1512 soldiers, as well as military equipment, including tanks and armoured fighting vehicles.

Though the main task of the battlegroup in Latvia is country’s defence in case of military aggression, Latvian officials unilaterally invented new tasks for NATO soldiers So, it is absolutely clear, that Latvian politicians are ready to allow NATO troops to resolve any problem even without legal basis. Such deification and complete trust could lead to the full substitution of NATO’s real tasks in Latvia.

It should be noted that NATO troops are very far from being ideal soldiers. Their inappropriate behaviour is very often in a centre of scandals. The recent incidents prove the existing problems within NATO contingents in the Baltic States.

They are not always ready to fulfill their tasks during military exercises and training. And in this situation Latvian politicians call to use them as border guards! It is nonsense! It seems as if it is time to narrow their tasks rather than to widen them. They are just guests for some time in the territory of the Baltic States. It could happen that they would decide who will enter Latvia and who will be forbidden to cross the border!

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Eastern Europe

Changes are Possible: Which Reforms does Ukraine Need Now?

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Photo: Robert Anasch/Unsplash

The past 16 months have tested our resilience to sudden, unexpected, and prolonged shocks. As for an individual, resilience for a country or economy is reflected in how well it has prepared for an uncertain future.

A look around the globe reveals how resilient countries have been to the COVID-19 pandemic. Some have done well, others less so. The costs of having done less well are almost always borne by the poor. It is for this reason the World Bank and the international community more broadly urge—and provide support to—countries to undertake economic and structural reforms, not just for today’s challenges but tomorrow’s.

One country where the dialogue on reform has been longstanding and intense is Ukraine. This is particularly true since the economic crisis of 2014-2015 in the wake of the Maidan Revolution, when the economy collapsed, and poverty skyrocketed. Many feared the COVID pandemic would have similar effects on the country.

The good news is that thanks to a sustained, even if often difficult, movement on reforms, Ukraine is better positioned to emerge from the pandemic than many expected. Our initial projection in the World Bank, for example, was that the economy would contract by nearly 8 percent in 2020; the actual decline was half that. Gross international reserves at end-2020 were US$10 billion higher than projected. Most important, there are far fewer poor than anticipated.

Let’s consider three reform areas which have contributed to these outcomes.

First, no area of the economy contributed more to the economic crisis of 2014-2015 than the banking sector. Powerful interests captured the largest banks, distorted the flow of capital, and strangled economic activity. Fortunately, Ukraine developed a framework to resolve and recapitalize banks and strengthen supervision. Privatbank was nationalized and is now earning profits. It is now being prepared for privatization.

Second, COVID halted and threatened to reverse a five-year trend in poverty reduction. Thanks to reforms of the social safety net, Ukraine is avoiding this reversal. A few years back, the government was spending some 4.7 percent of GDP on social programs with limited poverty impact. Nearly half these resources went to an energy subsidy that expanded to cover one-in-two of the country’s households.

Since 2018, the Government has been restructuring the system by reducing broad subsidies and targeting resources to the poor. This is working. Transfers going to the poorest one-fifth of the population are rising significantly—from just 37 percent in 2019 to 50 percent this year and are projected to reach 55 percent in 2023.

Third, the health system itself. Ukrainians live a decade less than their EU neighbors. Basic epidemiological vulnerabilities are exacerbated by a health delivery system centered around outdated hospitals and an excessive reliance on out-of-pocket spending. In 2017, Ukraine passed a landmark health financing law defining a package of primary care for all Ukrainians, free-of-charge. The law is transforming Ukraine’s constitutional commitment to free health care from an aspiration into specific critical services that are actually being delivered.

The performance of these sectors, which were on the “front line” during COVID, demonstrate the payoff of reforms. The job now is to tackle the outstanding challenges.

The first is to reduce the reach of the public sector in the economy. Ukraine has some 3,500 companies owned by the state—most of them loss-making—in sectors from machine building to hotels. Ukraine needs far fewer SOEs. Those that remain must be better managed.

Ukraine has demonstrated that progress can be made in this area. The first round of corporate governance reforms has been successfully implemented at state-owned banks. Naftogaz was unbundled in 2020. The electricity sector too is being gradually liberalized. Tariffs have increased and reforms are expected to support investment in aging electricity-producing and transmitting infrastructure. Investments in renewable energy are also surging.

But there are developments of concern, including a recent removal of the CEO of an SOE which raised concerns among Ukraine’s friends eager to see management independence of these enterprises. Management functions of SOE supervisory boards and their members need to remain free of interference.

The second challenge is to strengthen the rule of law. Over recent years, the country has established—and has committed to protect—new institutions to combat corruption. These need to be allowed to function professionally and independently. And they need to be supported by a judicial system defined by integrity and transparency. The move to re-establish an independent High Qualification Council is a welcome step in this direction.

Finally, we know change is possible because after nearly twenty years, Ukraine on July first opened its agricultural land market. Farmers are now free to sell their land which will help unleash the country’s greatest potential source of economic growth and employment.

Ukraine has demonstrated its ability to undertake tough reforms and, thanks to the COVID-19 pandemic, has seen the real-life benefits of these reforms. The World Bank looks forward to providing continued assistance as the country takes on new challenges on the way to closer European integration.

This article was first published in European Pravda via World Bank

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Eastern Europe

Liberal Development at Stake as LGBT+ Flags Burn in Georgia

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Photo: Protesters hold a banner depicting U.S. Ambassador to Georgia Kelly Degnan during a rally against Pride Week in Tbilisi, Georgia July 1, 2021. Credit: REUTERS/Irakli Gedenidze

Protests against Georgia’s LGBT+ Pride parade turned ugly in Tbilisi on July 5 when members of the community were hunted down and attacked, around 50 journalists beaten up and the offices of various organizations vandalized. Tensions continued the following day, despite a heavy police presence.

On the face of it, the Georgian state condemned the violence. President Salome Zourabichvili was among the first with a clear statement supporting freedom of expression, members of parliament did likewise and the Ministry of Internal Affairs condemned any form of violence.

But behind the scenes, another less tolerant message had been spread before the attacks. Anxiety about this year’s events had been rising as a result of statements by the government and clergy. Prime Minister Irakli Garibashvili suggested the march “poses a threat of civil strife.” The Georgian Orthodox Church meanwhile condemned the event, saying it, “contains signs of provocation, conflicts with socially recognized moral norms and aims to legalize grave sin.”

For many, these statements signified tacit approval for the abuse of peaceful demonstrators. Meanwhile, the near-complete absence of security at the outset of the five-day event was all too obvious in Tbilisi’s streets and caused a public outcry. Many alleged the government was less focused on public safety than on upcoming elections where will need support from socially conservative voters and the powerful clergy, in a country where more than 80% of the population is tied to the Georgian Orthodox Church.

The violence brought a joint statement of condemnation from Western embassies. “Violence is simply unacceptable and cannot be excused,” it said. The Pride event was not the first and had previously been used by anti-gay groups. Violence was widespread in 2013 — and the reality of attacks against sexual minorities in Georgia remains ever-present.

In a socially conservative country such as Georgia, antagonism to all things liberal can run deep. Resistance to non-traditional sexual and religious mores divides society. This in turn causes political tension and polarization and can drown out discussion of other problems the country is marred in. It very obviously damages the country’s reputation abroad, where the treatment of minorities is considered a key marker of democratic progress and readiness for further involvement in European institutions.

That is why this violence should also be seen from a broader perspective. It is a challenge to liberal ideas and ultimately to the liberal world order.

A country can be democratic, have a multiplicity of parties, active election campaigns, and other features characteristic of rule by popular consent. But democracies can also be ruled by illiberal methods, used for the preservation of political power, the denigration of opposing political forces, and most of all the use of religious and nationalist sentiments to raise or lower tensions.

It happens across Eurasia, and Georgia is no exception. These are hybrid democracies with nominally democratic rule. Armenia, Georgia, Kyrgyzstan, and others have increasingly more in common, despite geographic distance and cultural differences.

Hungary too has been treading this path. Its recent law banning the supposed propagation of LGBT+ materials in schools must be repealed, European Commission President Ursula von der Leyen said on July 7. “This legislation uses the protection of children . . . to discriminate against people because of their sexual orientation . . . It is a disgrace,” she said.

One of the defining features of illiberalism is agility in appropriating ideas on state governance and molding them to the illiberal agenda.

It is true that a mere 30 years since the collapse of the Soviet Union is not enough to have built a truly liberal democratic state. Generations born and raised in the Soviet period or in the troubled 1990s still dominate the political landscape. This means that a different worldview still prevails. It favors democratic development but is also violently nationalistic in opposing liberal state-building.

Georgia’s growing illiberalism has to be understood in the context of the Russian gravitational pull. Blaming all the internal problems of Russia’s neighbors has become mainstream thinking among opposition politicians, NGOs, and sometimes even government figures. Exaggeration is commonplace, but when looking at the illiberal challenge from a long-term perspective, it becomes clear where Russia has succeeded in its illiberal goals. It is determined to stop Georgia from joining NATO and the EU. Partly as a result, the process drags on and this causes friction across society. Belief in the ultimate success of the liberal agenda is meanwhile undermined and alternatives are sought. Hybrid illiberal governments are the most plausible development. The next stage could well be a total abandonment of Euro-Atlantic aspirations.

Indeed what seemed irrevocable now seems probable, if not real. Pushback against Georgia’s Euro-Atlantic choice is growing stronger. Protesters in front of the parliament in central Tbilisi violently brought tore the EU flag. Twice.

The message of anti-liberal groups has also been evolving. There has been significant growth in their messaging. The anti-pride sentiment is evolving into a wider resistance to the Western way of life and Georgia’s Western foreign policy path, perhaps because it is easily attacked and misrepresented.

To deal with this, Western support is important, but much depends on Georgian governments and the population at large. A pushback against radicalism and anti-liberalism should come in the guise of time and resources for the development of stronger and currently faltering institutions. Urgency in addressing these problems has never been higher — internal and foreign challenges converge and present a fundamental challenge to what Georgia has been pursuing since the days of Eduard Shevardnadze – the Western path to development.

Author’s note: first published at cepa

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