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Blue Ocean Strategy for South Caucasus

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The recent arrival of Russian peacekeepers in Nagorno-Karabakh has underlined the difficulties for a number of international institutions–the United Nations (UN), the Organization for Security and Co-operation in Europe (OSCE), the European Union (EU) and the Eurasian Economic Union (EAEU)–to provide a diplomatic answer to violent conflicts that emerged in the aftermath of the collapse of the Soviet Union.

Nagorno-Karabakh is the latest example, as most of the ethnic quarrels in the South Caucasus are still ongoing since 1991, with Abkhazia and South Ossetia remaining de facto [1] independent from Georgia, while only one of the three recognized countries (Armenia, Georgia, and Azerbaijan), Armenia, has managed to join a supranational framework [2].

In over three decades, the political-economic context of the region has deteriorated with a continuous decline in birth rates coupled with emigration, difficult economic recovery and the rise of autocratic political regimes and confirmed cronyism. Some experts believe it is time for the South Caucasus countries to develop a Blue Ocean strategy [3] and abandon the idea of joining the Euro-Atlantic institutions (the EU and NATO) or Russian-led alternatives (the EAEU and the CSTO). This may seem challenging, but given the economic and diplomatic achievements of the past decade and the political crisis in the context of the COVID-19 pandemic, it is perhaps a viable option for restoring prosperity and stability in this part of the world.

What is the Blue Ocean Strategy and how can it be applied in international politics?

The Blue Ocean Strategy is a concept developed at INSEAD by Renée Mauborgne and W. Chan Kim. Although the approach usually applies to business strategy, it can be combined with a SWOT analysis to develop new geopolitical alternatives and provide innovative thinking in politics.

Therefore, by looking at the SWOT matrix for the South Caucasus, we can establish similarities between the countries and see how the Blue Ocean strategy approach can develop the “opportunity” part in the region:

SWOT Matrix of the South Caucasus
StrengthsLocated between great players – Russia, Turkey, EU and Asia – the South Caucasus can be successfully used as a platform for the production, transfer and transformation of goods; Favorable climate for the development of renewable energies and products in with a high demand on international markets (e.g. Georgian wine on the Chinese market).
WeaknessesDifficulties to overcome the events following the break-up of the Soviet Union (e.g. rhetoric regarding separatism in Georgia) and political repetition compulsion; Insufficient resilience to international influence, as highlighted by the interest of all parties in joining an alliance (e.g. the European Union), which makes it ambiguous for the state(s) to develop an independent international policy; Corruption and cronyism in governments resulting in a paucity of innovation by the institutions and little support for the growth of innovative businesses.
OpportunitiesUnder-explored markets such as renewable energy, biological agriculture and high-tech; Affordable and skilled labour resources available; Possible regional cooperation between the three main countries – Georgia, Armenia, Azerbaijan – instead of seeking different alliances outside the South Caucasus
ThreatsRemaining ethnic tensions (internal and external) and the constraint of continuous political repetition compulsion regarding the de facto autonomous territories; Laissez-faire the corruption and cronyism at all levels of the state hampering the development of innovative thinking and increasing the human capital flight (brain drain); An emphasis is on external actors to solve internal problems (e.g. the European Union to solve economic issues instead of investment in higher education and entrepreneurship).

By analyzing the SWOT matrix, we can establish similarities between the three recognized countries and the three de facto/partially recognized states–Abkhazia, South Ossetia, Nagorno-Karabakh–having close SWOT profiles.

As such, the SWOT matrix underlines the countries’ profiles in the South Caucasus, and difficulties seem to stem from weak institutions, with an enforced political repetition compulsion [4] by elites and citizens alike, rather than from external threat(s) [5]. Nonetheless, the external threat is presented as the main one (e.g. Russia in Georgia and Turkey/Azerbaijan in Armenia), while the problems seem to be mostly domestic, having a lot to do with corruption or difficulties to accept the change of borders in the post-Soviet order.

Towards the effective implementation of a Blue Ocean strategy in the South Caucasus

A major obstacle to effective implementation of a Blue Ocean strategy in the region will come from the phenomenon of repetition compulsion and the fact that elites and citizens are not used to listening to another political discourse, often asking for outside help to solve domestic issues. As such, we can assume that states in the South Caucasus will be more likely to continue to focus on finding external alliances instead of using their own internal resources to develop their potential.

This phenomenon is linked to the in-group bias, which is the tendency to assume that ‘your’ problems are coming from the outside (e.g. Russia in Georgia) instead of assuming the responsibility related to ‘your’ own failing policy [6]. Thus, a nation will tend, even more so in times of crisis, to assume that the problem is due to an outside event.

The second obstacle that states will face in the South Caucasus is that neighboring countries have an incentive in keeping the states located next to them under control. At present, the main outsiders–Russia, the EU/NATO and Turkey– have little or no interest in seeing the South Caucasus enjoy greater autonomy.

In fact, some have even developed the rhetoric of ‘grandiosity [7],’ which refers to an unrealistic sense of superiority, characterized by a sustained view of oneself as better than the other, which is expressed by disdainfully regarding them as inferior. This approach is implemented in numerous forms through instruments of power, such as the Eastern Partnership (EaP) which aims to promote European values without taking into account the possibility that a state in the South Caucasus may differ in the way it wishes and should develop.

In the eyes of many EU citizens, the EaP is a means of promoting EU’s identity such as democracy, while non-Europeans would point out such an instrument has been implemented to achieved an economic and/or political superiority (the rhetoric of ‘grandiosity’) over participating states as they can only wish, in the mind of the one implementing them, to be like the EU member states [8]. The rhetoric of grandiosity is identified when the proponent refuses to assume that it may be wrong (cognitive dissonance).

The South Caucasus nations will therefore have to change their internal thinking and concentrate more on what they have and develop strengths instead of waiting for outside assistance. For instance, rather than focusing on how to get the separatist territories back and who could help them achieve this geopolitical goal, in order to increase their internal performance and economic capacities they could focus on fighting corruption, thus making themselves in fine more attractive in the eyes of autonomist regions (soft power) and a valuable political alternative.

Once this is achieved, there will be resistance from the major players–Russia, the West, and Turkey–to seeing the South Caucasus states outside their sphere of influence, which will be another obstacle to the long-term development and continued implementation of the Blue Ocean strategy for self-development.

In many ways, the strategy for the South Caucasus can be inspired by South Korea, a country that, instead of focusing on recovering control over North Korea and explaining a poor economic performance because of the difficult regional context (proximity to the USSR and the People’s Republic of China), managed to see its national advantages and emerge as a self-sustaining economic power.

While North Korea remains a priority in foreign affairs, as does the relationship with Beijing, Seoul has focused on internal development after 1953, subsequently or complementarily on international alliances. Like South Korea, the South Caucasus might focus on solving internal issues before outside matters, especially considering the stagnation with para-states for already more than three decades.

  • [1]de jure according to some states such as Russia, Syria and Venezuela
  • [2]Armenia is a member of the Eurasian Economic Union, however without Nagorno-Karabakh which is recognised to be de jure part of Azerbaijan.
  • [3]Blueoceanstrategy
  • [4]Edward Bibring (1943). The Conception of the Repetition Compulsion. The Psychoanalytic Quarterly. 12 (4): 486–519.
  • [5]The situation in Abkhazia and South Ossetia is stabilised since 2008, and the rhetoric of a Russian interest in occupying the whole Georgia does not goes in line with a geopolitical reality. As such, Tbilisi could develop its internal policy on the short run and focus on the two “occupied” territories (Abkhazia and South Ossetia) on the long run instead.
  • [6]Hall. Taylor, Donald M.; Doria, Janet R. (April 1981). Self-serving and group-serving bias in attribution. Journal of Social Psychology. 113 (2): 201–211.
  • [7]Elsa F. Ronningstam (2005). Identifying and Understanding the Narcissistic Personality. Oxford University Press.
  • [8]Women’s rights, democracy, freedom of expression, human rights are all examples of what EU citizens believe they can bring to the South Caucasus through the Eastern Partnership. This does not mean that they are not valuable to the countries, but rather that the lack of debate on whether and why to promote them expresses ‘grandiosity’, the assumption of values superior to any others, similar to what happened during colonialism, when Europeans considered Christianity to be superior to any other religion in colonised countries.

From our partner RIAC

Ph.D. in History of Europe & International Relations, Sorbonne University - INSEAD Business School, (Geo)political scientist working on Sino-European/Russian relations and soft power in the 21st century

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Eastern Europe

Unhappy Iran Battles for Lost Influence in South Caucasus

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Events that might not matter elsewhere in the world matter quite a lot in the South Caucasus. Given a recent history of conflict, with all the bad feelings that generates, plus outside powers playing geostrategic games, and its growing importance as an energy corridor between Europe and Central Asia, the region is vulnerable. 

This has been worsened by the two-year-long Western absence of engagement. In 2020, Europe and the U.S. were barely involved as the second Nagorno-Karabakh war broke out between Armenia and Azerbaijan, leaving about 7,000 dead. With tensions now on the rise between Azerbaijan and Iran, Western uninterest is again evident, even though this might have wider ramifications for future re-alignment in the South Caucasus. 

The drumbeat of Iranian activity against Azerbaijan has been consistent in recent months. Iran is getting increasingly edgy about Israel’s presence in the South Caucasus — hardly surprising given Israel’s painfully well-targeted assassination and computer hacking campaigns against nuclear staff and facilities — and especially its growing security and military ties with Azerbaijan, with whom Iran shares a 765km (430 mile) border. Iran has also voiced concern about the presence in the region of Turkish-backed Syrian mercenaries, who were used as Azeri assault troops last year.  

Much of the anger has been played out in military exercises. The Azeri military has been busy since its victory, exercising near the strategic Lachin corridor which connects the separatist region to Armenia, and in the Caspian Sea, where it has jointly exercised with Turkish personnel. Iran, in turn, sent units to the border region this month for drills of an unstated scale. 

This week, the Azeri and Iranian foreign ministers agreed to dial down the rhetoric amid much talk of mutual understanding. Whether that involved promises regarding the Israeli presence or a pledge by Iran to abandon a newly promised road to Armenia was not stated. 

Iran’s behavior is a recognition of the long-term strategic changes caused by the Armenian defeat last year. Iran has been sidelined. Its diplomatic initiatives have failed, and it has been unwelcome in post-conflict discussions. 

It is true that Iran was never a dominant power in the South Caucasus. Unlike Russia or Turkey, the traditional power brokers, it has not had a true ally. Iran was certainly part of the calculus for states in the region, but it was not feared, like Russia or Turkey. And yet, the South Caucasus represents an area of key influence, based on millennia of close political and cultural contacts. 

Seen in this light, it is unsurprising that Iran ratcheted up tensions with Azerbaijan. Firstly, this reasserted the involvement of the Islamic Republic in the geopolitics of the South Caucasus. It was also a thinly-veiled warning to Turkey that its growing ambitions and presence in the region are seen as a threat. In Iran’s view, Turkey’s key role as an enabler of Azeri irridentism is unmistakable. 

Turkish involvement has disrupted the foundations of the South Caucasian status quo established in the 1990s. To expect Turkey to become a major power there is an overstretch, but it nevertheless worries Iran. For example, the recent Caspian Sea exercises between Azerbaijan and Turkey appear to run counter to a 2018 agreement among the sea’s littoral states stipulating no external military involvement. 

The Caspian Sea has always been regarded by Iranians as an exclusive zone shared first with the Russian Empire, later the Soviets, and presently the Russian Federation. Other littoral states play a minor role. This makes Turkish moves in the basin and the recent improvement of ties between Azerbaijan and Turkmenistan an unpleasant development for Iran — fewer barriers to the Trans-Caspian Pipeline threatens the Islamic Republic’s ability to block the project.  

This is where Iranian views align almost squarely with the Kremlin’s. Both fear Turkish progress and new energy routes. The new Iranian leadership might now lean strongly toward Russia. With Russia’s backing, opposition to Turkey would become more serious; Iran’s foreign minister said this month that his country was seeking a “big jump” in relations with Russia. 

The fact is that the region is increasingly fractured and is being pulled in different directions by the greater powers around it. This state of affairs essentially dooms the prospects of pan-regional peace and cooperation initiatives. Take the latest effort by Russia and Turkey to introduce a 3+3 platform with Armenia, Azerbaijan, and Georgia, as well as Iran. Beyond excluding the West, disagreements will eventually preclude any meaningful progress. There is no unity of purpose between the six states and there are profound disagreements. 

Thus, trouble will at some point recur between Iran and Azerbaijan, and by extension Turkey. Given the current situation, and Iran’s visible discontent, it is likely it will take some kind of initiative lest it loses completely its position to Turkey and Russia. 

Author’s note: first published in cepa

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Eastern Europe

Right-wing extremist soldiers pose threat to Lithuania

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It is no secret that Lithuania has become a victim of German army’s radicalization. Could this country count on its partners further or foreign military criminals threaten locals?

It is well known that Germany is one of the largest provider of troops in NATO. There are about 600 German troops in Lithuania, leading a Nato battlegroup. According to Lithuanian authorities, Lithuania needs their support to train national military and to protect NATO’s Central and Northern European member states on NATO’s eastern flank.

Two sides of the same coin should be mentioned when we look at foreign troops in Lithuania.

Though Russian threat fortunately remains hypothetical, foreign soldiers deployed in the country cause serious trouble. Thus, the German defence minister admitted that reported this year cases of racist and sexual abuse in a German platoon based in Lithuania was unacceptable.

Members of the platoon allegedly filmed an incident of sexual assault against another soldier and sang anti-Semitic songs. Later more allegations emerged of sexual and racial abuse in the platoon, including soldiers singing a song to mark Adolf Hitler’s birthday on 20 April this year.

It turned out that German media report that far-right abuses among the Lithuania-based troops had already surfaced last year. In one case, a soldier allegedly racially abused a non-white fellow soldier. In another case, four German soldiers smoking outside a Lithuanian barracks made animal noises when a black soldier walked past.

Lithuania’s Defence Minister Arvydas Anušauskas said later that the investigation was carried out by Germany and that Lithuania was not privy to its details. The more so, Lithuania is not privy to its details even now. “We are not being informed about the details of the investigation. […] The Lithuanian military is not involved in the investigation, nor can it be,” Anušauskas told reporters, stressing that Germany was in charge of the matter.

Ms Kramp-Karrenbauer, German defence minister, said that these misdeeds would be severely prosecuted and punished. Time has passed, and the details are not still known.

It should be said Germany has for years struggled to modernize its military as it becomes more involved in Nato operations. Nevertheless problems existed and have not been solved yet. According to the annual report on the state of the Bundeswehr made in 2020 by Hans-Peter Bartel, then armed forces commissioner for the German Bundestag, Germany’s army “has too little materiel, too few personnel and too much bureaucracy despite a big budget increase.” Mr Bartels’ report made clear that the Bundeswehr continues to be plagued by deep-seated problems. Recruitment remains a key problem. Mr Bartels said 20,000 army posts remained unfilled, and last year the number of newly recruited soldiers stood at just over 20,000, 3,000 fewer than in 2017. The other problem is radicalization of the armed forces.

Apparently, moral requirements for those wishing to serve in the German army have been reduced. Federal Volunteer Military Service Candidate must be subjected to a thorough medical examination. Desirable to play sports, have a driver’s license and be able to eliminate minor malfunctions in the motor, to speak at least one foreign language, have experience of communicating with representatives of other nationalities, be initiative and independent. After the general the interview follows the establishment of the candidate’s suitability for service in certain types of armed forces, taking into account his wishes. Further candidate passes a test on a computer. He will be asked if he wants study a foreign language and attend courses, then serve in German French, German-Dutch formations or institutions NATO.

So, any strong and healthy person could be admitted, even though he or she could adhere to far-right views or even belong to neo-Nazi groups. Such persons served in Lithuania and, probably, serve now and pose a real threat to Lithuanian military, local population. Neo-Nazism leads to cultivating racial inequalities. The main goal of the neo-Nazis is to cause disorder and chaos in the country, as well as to take over the army and security organs. Lithuanian authorities should fully realize this threat and do not turn a blind eye to the criminal behaviour of foreign military in Lithuania. There is no room to excessive loyalty in this case.

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Eastern Europe

Lithuanian foreign policy: Image is everything

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It seems as if Lithuanian government takes care of its image in the eyes of EU and NATO partners much more than of its population. Over the past year Lithuania managed to quarrel with such important for its economy states like China and Belarus, condemned Hungary for the ban on the distribution of images of LGBT relationships among minors, Latvia and Estonia for refusing to completely cut energy from Belarus. Judging by the actions of the authorities, Lithuania has few tools to achieve its political goals. So, it failed to find a compromise and to maintain mutually beneficial relations with economic partners and neighbours. The authorities decided to achieve the desired results by demanding from EU and NATO member states various sanctions for those countries that, in their opinion, are misbehaving.

Calling for sanctions and demonstrating its “enduring political will”, Lithuania exposed the welfare of its own population. Thus, district heating prices will surge by around 30 percent on average across Lithuania.

The more so, prices for biofuels, which make up 70 percent of heat production on average, are now about 40 higher than last year, Taparauskas, a member of the National Energy Regulatory Council (VERT) said.

“Such a huge jump in prices at such a tense time could threaten a social crisis and an even greater increase in tensions in society. We believe that the state must take responsibility for managing rising prices, especially given the situation of the most vulnerable members of society and the potential consequences for them. All the more so as companies such as Ignitis or Vilnius heating networks “has not only financial resources, but also a certain duty again,” sums up Lukas Tamulynas, the chairman of the LSDP Momentum Vilnius movement.

It should be said, that according to the Lithuanian Department of Statistics, prices for consumer goods and services have been rising for the eighth month in a row. According to the latest figures, the annual inflation rate is five percent.

Earlier it became known that in 2020 every fifth inhabitant of Lithuania was below the poverty risk line.

Pensioners are considered one of the most vulnerable groups in Lithuania. In 2019, Lithuania was included in the top five EU anti-leaders in terms of poverty risk for pensioners. The share of people over 65 at risk of poverty was 18.7 percent.

In such situation sanctions imposed on neighbouring countries which tightly connected to Lithuanian economy and directly influence the welfare of people in Lithuania are at least damaging. The more so, according Vladimir Andreichenko, the speaker of the House of Representatives of the Belarus parliament, “the unification of the economic potentials of Minsk and Moscow would be a good response to sanctions.” It turned out that Lithuania itself makes its opponents stronger. Such counter-productiveness is obvious to everyone in Lithuania except for its authorities.

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