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A Grey Swan: Is There a New Conflict in Donbass?

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The prospect of a new exacerbation in Ukraine’s Donbass region has worried market players. It is difficult to talk about the strong influence of bellicose statements on the currency and stock markets. However, investors have again started talking about “geopolitical risk”. The key concern stems from the fact that the resumption of a large-scale armed conflict will inevitably lead to new sanctions against Russia. Moreover, the scale of such restrictions is difficult to predict, which gives rise to the uncertainty of expectations. Should strict sanctions be viewed as a baseline scenario? What is to be expected from the development of the situation?

Ceasefire violations in Donbass were already evident in winter. The ceasefire has been in effect since July 27 last year. However, on March 31, in the Contact Group on Conflict Resolution, the Ukrainian side raised the issue of a new ceasefire statement. In fact, this meant that Kiev considered the existing agreement invalid, citing cases of shootings and military losses. Moscow criticised this initiative. All this is happening against the background of the concentration of Ukrainian troops in the conflict zone. Russian troops are also moving to the state border. Statements by Ukrainian officials, who cited a conversation between ministers, about US support in the event of a war with Russia, added fuel to the fire.

A military exacerbation may well be viewed as one possible scenario. At least it is not devoid of precedent. During the August 2008 war in in Georgia, Mikheil Saakashvili launched a military campaign, citing the support of the United States, among other things, as one of his motivations. Later it turned out that such support was only conditional, but confidence in it could become a trigger for radical decisions. There is also the experience of the recent war in Nagorno-Karabakh. For a long time it was believed that it would be difficult for both sides to win in the conflict. As a result, Azerbaijan won a victory using new tactics: with the help of unmanned aerial vehicles. Ukraine also plans to use Turkish drones, although they have not yet appeared in large quantities in service in the Armed Forces of Ukraine. Kiev may also believe that a new conflict will have a high cost for Russia. Even in the event of the defeat of the Ukrainian Armed Forces, Moscow is unlikely to go beyond the existing boundaries of the DPR and LPR. New sanctions will be imposed against Russia. Perhaps the Ukrainian leadership also hopes for good luck. Even tactical successes in Donbass will strengthen the Ukrainian position.

However, this scenario is still extremely risky for Kiev. In recent years, Russia has shown that it is ready to take decisive action. Force can be used without undue hesitation. Moscow understands that the West will side with Ukraine in any scenario. But political support is one thing, and military intervention is quite another. The United States and its allies are unlikely to agree to such an intervention. Even the supply of lethal weapons will have its limits. Without a doubt, they increase the combat readiness of the Armed Forces of Ukraine. However, they are unlikely to allow it to achieve qualitative and quantitative superiority, even on the scale of the alleged theatre of military operations. The Russian army has undergone a high degree of modernisation. It is capable of rapidly concentrating well-trained and well-armed small units, units and large units. The threat of sanctions will also fail as a deterrent. There’s no doubt they will damage the economy. However, Moscow is unlikely to be stopped if it comes to a military conflict. In addition, Russia has a certain amount of space to vary the degree of its involvement. It can range from active support of the forces of the LPR and DPR to direct involvement in the conflict and the defeat of the Armed Forces of Ukraine in the conflict zone.

Apparently, the Ukrainian leadership does not intend to bring the matter to a direct clash. It is escalating the situation, trying to attract the attention of Western partners and gain points for the future. Most likely, the Kiev authorities initiated the current manoeuvres of their own accord, and they are not the result of the “insidious game” of the West. However, the American and EU diplomats may well use such manoeuvres to put pressure on Russia. The main threat is the loss of control over the situation, should the symbolic whipping turn into a real conflict.

In the end, full-scale military operations in Donbass in the near future are not the baseline scenario. Russia is a strong adversary; the risk of big losses for Ukraine are great. Accordingly, it is hardly worth considering a scenario of a sharp tightening of sanctions against Russia. No radical aggravation—no radical sanctions.

At the same time, politics likes surprises. Erroneous assessments, the personal ambitions of leaders, the peculiarities of group decision-making with their “shift to risk”, random incidents and much more can give rise to an extreme scenario. War in this case is a “grey”, rather than a “black swan”. It is unlikely, but its parameters are quite clear. Low chances of winning a war can be offset by high expectations of its consequences. Is it not an attractive scenario to give Russia a military slap in the face during an election year? However, in Moscow, such a scenario is also, apparently, expected. With appropriate organisational conclusions.

From our partner RIAC

RIAC Director of Programs, RIAC Member, Head of "Contemporary State" program at Valdai Discussion Club, RIAC member.

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Eastern Europe

Relations between Azerbaijan and the European Union

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The crises, revolutions, and wars of the first half of the 20th century led to serious geopolitical upheavals, economic crises, and serious violations of social justice. Formally formed after the end of World War II in 1945, liberal economic organizations such as the United Nations, GATT and the European Union focused on the formation of liberal internationalism in international relations and the transition to a global system of government (Dower & Williams, 2002). The failure of the liberal steps taken by the League of Nations in 1920 led to major economic crises in the second half of the 20th century. As a result of these economic crises, the end of socialism in international relations with the USSR in the 1990s, the emergence of independent states and liberal internationalism’s efforts to reach a global level reshaped both geopolitical positions in international relations and global economic forces and the system of international relations (Christopher S. Browning, 2013). After the degradation of the left ideology with the USSR, the emergence of independent states moving towards liberal values made the role of international organizations formed in the post-World War II period even more important. This article also provides information on the liberal relations between the Republic of Azerbaijan, which gained independence in the 1990s and the European Union.

General introduction to relations between Azerbaijan and European Union

The wave of democratization that began in 1974 began to radically change international relations. This democratization mainly covered the former USSR states; namely, the former communist states, geographically. After leaving the USSR, these states entered a very difficult process of democratization. Because for many years they lived in a totalitarian political system, as well as in a communist-planned economy. This directly prevented their transition to liberal multi-party democracy as well as to the “laissez faire” capitalist economy. Because, initially, the reforms were carried out with instructions from abroad. (namely, with instructions from global organizations, such as the International Monetary Fund, the World Bank, etc.). Second, these countries did not have a strong economic base that would suddenly transition to market capitalism. Third, a culture of respect for individual freedoms was not ingrained in the policies of these states (Heywood, 2013). Therefore, after the collapse of the USSR, the newly independent states began to work closely with the European Union to accelerate the transition to globalization and democratization. Azerbaijan, one of these states, also became an active participant in international relations and international politics in 1991, building its relations with the West and the European Union on the principles of mutually beneficial cooperation, good neighborliness and peaceful coexistence.

The prospects of Azerbaijan’s relations with the European Union were mainly based on internal and external factors. Unlike other countries in the South Caucasus, Azerbaijan’s relations with the European Union are mainly in support of economic and political reforms, the establishment of the East-West transport and communication corridor, infrastructure development, etc. (SAM, Main directions of Foreign Policy of the Republic of Azerbaijan, 2017). Azerbaijan’s strategic transit position in the South Caucasus region, its location at the crossroads of land and air routes between Europe and Asia, and its role as a major distribution hub in Eurasia are of great importance to the European Union (Azerbaijan’s gas policy: challenges and dilemmas, 2009). One of the main tools for the European Union to interact with the countries of the South Caucasus was the European Neighborhood Policy. The inclusion of the Republic of Azerbaijan in the ENP program in 2004 enabled Azerbaijan to implement many of its economic, political, legal and administrative reforms within the ENP, and for this purpose Azerbaijan received financial and technical support from the European Union (SAM, Main directions of Foreign Policy of the Republic of Azerbaijan, 2017). It should be noted that in addition to the European Neighborhood Policy program in its relations with the European Union, the Azerbaijani state joined the Eastern Partnership project at the 2009 summit in Prague. As the Eastern Partnership is an initiative of Poland and Sweden to improve relations with the CIS countries within the framework of the European Union’s neighborhood policy, it initially played a very important role in Azerbaijan’s foreign policy (EEAS – European External Action Service, 2018).

However, neither the European Neighborhood Policy nor the Eastern Partnership promised security guarantees for Azerbaijan’s foreign policy in the next stages of Azerbaijan’s foreign policy, so Azerbaijan did not sign the Association Agreement and began negotiations with the EU for a new comprehensive agreement such as the Strategic Partnership Agreement (Shahin Abbasov, Jan18, 2011). Because in the foreign policy of Azerbaijan, there were economic and political reasons for not signing the Association Agreement of the European Union. Initially, the Association Agreement was not successful on the example of Azerbaijan. Because both sides had different requirements and needs. Secondly, this agreement was of no economic or political benefit to official Baku. However, Azerbaijan has been pursuing numerous projects with the European Union since the 1990s in many areas (energy, transport, education, culture, agriculture, regional development, economic, political and institutional reforms). As oil and gas from the Caspian Basin play an important role in ensuring the EU’s energy security, the European Union itself understands the geopolitical realities of Azerbaijan and acts accordingly (Elkhan Suleymanov. EU-Azerbaijan relations, 2011). Azerbaijan has existed with the European Union not only in the energy and economic spheres, but also in the social and political spheres. However, the relations within this framework have gradually weakened and lost their value. Although the European Union has taken an open position on Azerbaijan’s territorial integrity, IDPs, Armenia’s occupation policy and existing UN resolutions, and has even adopted declarations, these principles have subsequently weakened. The first reason is that since both Azerbaijan and Armenia are parties to the Eastern Partnership, the European Union’s inaction in the conflict has affected the activities of the Eastern Partnership. In addition, although Azerbaijan itself is a modern and secular country, it often faced double standards of the European Union.

Historical and legal basis of Azerbaijan-EU relations

After gaining independence in 1991, Azerbaijan began to take an active part in building relations with Western countries and in international politics on the basis of the protection of statehood and national interests, as well as the principles of mutually beneficial cooperation, good neighborliness and peaceful coexistence. The fundamental requirements of state-building after the collapse of the USSR created a good basis for building relations between Azerbaijan and the European Union member states at both bilateral and multilateral levels. Due to its geographical proximity, important geostrategic location, availability of significant energy resources, Azerbaijanis a country of traditional interest to European countries (Sadigov R. The South Caucasus factor in the Eastern policy of the European Union. Politicale.ü.fddissertation, Baku, 2011, p.52). In general, in the first years of independence, the prospects of Azerbaijan’s relations with the European Union were based on internal and external factors. Internal factors included the continuation of reforms in the political, economic and social life of Azerbaijan to achieve the standards of the European Union, the full liberalization of the domestic market, production and services, and the completion of the country’s democratic transformation. External factors included the settlement of the conflicts in the South Caucasus, including the settlement of the Armenian-Azerbaijani Nagorno-Karabakh conflict, joint cooperation between the countries of the region, security cooperation, the formation of a unified legislative, executive and judicial authorities in all three countries (Mammadov N, p.285). In general, the Republic of Azerbaijan declared in 1993 that Azerbaijan was interested in establishing relations with the EU. By signing the “Partnership and Cooperation Agreement” with the European Union, Azerbaijan began official relations with the EU. The European Union sent its first representative to Azerbaijan in 1998, and in 2000 the Permanent Mission of Azerbaijan to the EU was opened in Brussels. The Representation of the EU Commission in the Republic of Azerbaijan has been operating in Baku since February 4, 2008. This body was later renamed the Delegation of the European Union to the Republic of Azerbaijan. The appointment of the EU Special Representative for the South Caucasus on 7 July 2003 was a step towards increasing the organization’s activity in the region (Ahmadov E, p. 227).

The European Union has developed a “Technical Assistance to the CIS” program to provide financial assistance to countries belonging to the new group of democracies, such as Azerbaijan, to implement democratic reforms, create a market economy, develop interstate trade and transport relations and improve the customs system. In 1992-2006, more than 414 million euros in humanitarian, technical and food assistance was provided to Azerbaijan within the framework of the EU’s TACIS and other assistance programs (E. Ahmadov, 241). In addition, serious steps have been taken between Azerbaijan and the European Union in the field of human rights and politics. The Partnership and Cooperation Agreement between the European Union and the Republic of Azerbaijan was signed in Luxembourg on 22 April 1993, providing for cooperation in trade, investment, economy, legislation, culture, immigration and the prevention of illicit trade and laying the legal basis for bilateral relations. This agreement can be considered as one of the most successful pages in foreign policy, as it is the legal basis for expanding relations between Azerbaijan and EU institutions. The EU-Azerbaijan Partnership and Cooperation Agreement entered into force in 1999 after ratification by the Azerbaijani Parliament.

European Neighborhood Policy

One of the main tools for the European Union to interact with the countries of the South Caucasus was the European Neighborhood Policy. In 2004, the Republic of Azerbaijan was included in the ENP program. The central element of the ENP is the Action Plan agreed between the EU and each partner country, which sets out a number of short- and medium-term priorities for the country. The “Azerbaijan-EU Action Plan” was adopted at the meeting of the Azerbaijan-EU Cooperation Council held on November 14, 2006 in Brussels (E. Ahmadov, p. 240). The action plan identifies a number of priority areas of cooperation between the European Union and Azerbaijan. These are: mainly the peaceful settlement of the Nagorno-Karabakh conflict; strengthening democracy; strengthening the protection of the rule of law, human rights and fundamental freedoms; improving the business and investment climate; improving the work of the customs service; support for balanced and sustainable economic development; improvement of economic legislation and administrative practice; Deepening energy and transport cooperation between the European Union and Azerbaijan; strengthening cooperation in the fields of justice, freedom and security, including border issues; strengthening regional cooperation (Mammadov N. Foreign policy: realities and vision for the future. Baku: QANUN, 2013, p.212).The cooperation carried out within the ENP allows Azerbaijan to establish economic relations with EU countries, establish preferential trade and credit regimes, labor, market relations and migration, fight against drug trafficking and organized crime, promote investment, attract new financial sources, etc. opened up opportunities such as (N. Mammadov, p. 287).

Eastern Partnership

The Eastern Partnership initiative was launched by Poland and Sweden at a meeting of EU foreign ministers in Brussels on 26 May 2008. The initiative covers Azerbaijan, Georgia, Armenia, Ukraine, Moldova and Belarus. A joint declaration was adopted at the EaP Summit in Prague on May 7, 2009, and the EaP officially began operations. The EaP intends to raise relations between the European Union and the member countries of the program to a higher level, to continue and expand existing cooperation in bilateral and multilateral formats. Azerbaijan also joined the Eastern Partnership program at the 2009 summit in Prague. The EaP program was a different framework from the Partnership and Cooperation Agreement. Thus, in order to establish closer ties with each partner country within the EU, the signing of new association agreements instead of existing partnership and cooperation agreements within the bilateral format, the establishment of a Deep and Detailed Free Trade Zone with a partner country in the WTO, as well as gradual visa requirements. liberalization, deeper cooperation to strengthen the energy security of partner countries and the EU, etc. planned. In other words, the EaP program did not promise the prospect of EU membership, but only a free trade agreement and associative political cooperation with this body, which provided for deep economic integration. However, neither the ENP nor the EaP did not sign the Association Agreement and began negotiations with the EU for a new comprehensive agreement, such as the Strategic Partnership Agreement, as Azerbaijan did not promise EU membership or any security guarantees. Because both the ENP and the EaP were programs that reflected the interests of the EU and the political and economic interests of the partner countries. On the other hand, the signing of the Association Agreement was not economically attractive for Azerbaijan. Because Azerbaijanis not a member of the World Trade Organization, which is one of the main requirements for signing the “Deep and Comprehensive Free Trade Agreement”. On the other hand, the Association Agreement would not give a significant vote to Azerbaijan within the EU Customs Union. In addition, membership in the association would not reduce the share of oil and gas exports, which account for more than 90% of Azerbaijan’s exports, in the short and medium term. In general, Azerbaijan views the entry into any customs zone from three perspectives: political independence, economic efficiency and the Nagorno-Karabakh conflict.

In addition, the European Union must accept that both sides have different requirements and needs. Therefore, before the EA Summit in Riga in 2015, Azerbaijan submitted a proposed document on the Strategic Partnership Agreement to the EU. Azerbaijan, like Georgia, Moldova and Ukraine, did not sign the Association Agreement, so it preferred to sign an agreement that has a separate legal force and reflects the national interests of the country. On 14 November 2016, the EU Council of Ministers mandated the European Commission and the High Representative for Foreign Affairs and Security Policy to begin negotiations on behalf of the EU member states on the signing of an agreement between the EU and Azerbaijan. It should be noted that the new agreement will replace the 1999 TES and will be a new large-scale agreement with a legal obligation. Unlike other framework documents, the STS will address the common problems and goals facing Azerbaijan and the EU and will create a new basis for mutually beneficial cooperation and political dialogue between the two sides. The STS is a practical example of the “difference” approach outlined in the context of pursuing Azerbaijan’s interests in relations with the EU and in the updated version of the ENP (SAM, Main Directions of Foreign Policy of the Republic of Azerbaijan, pp. 324-326, 2017).

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Fundamental Reform Can Secure Armenia’s Long-Term Future

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In the past year, the world has changed an unfathomable amount; every country has faced new challenges in the face of the Covid-19 pandemic and the subsequent economic recession. The new global situation presents not only challenges but also the opportunity to think about new ideas, to work out how our energy and focus can be used to create a better future for individuals across the world.

Armenia is one country that has faced existential crisis in the past year; the pandemic, the economic crisis and of course the war in Artsakh. The war has exacerbated socio-economic issues, aggravated social division and resulted in ongoing political instability –all factors that have raised questions about Armenia’s future as a nation and on the global stage. Despite the pain of the last year, it has also given us the opportunity to reflect and rethink our model for fundamental reform in Armenia.

I have long argued that for Armenia to be truly successful, we need to unite and focus on the country’s future. We have a historic responsibility to our ancestors, those who faced persecution, to heal from the past and build a successful country for our children. By building on our unique identity and historic experiences, we can use them to guide our future. However, first we must face up to serious questions on how we would like Armenia to look in twenty to thirty years’ time.

Currently, lack of opportunity is causing Armenians to vote with their feet and leave the country, with an estimated 200,000 intending to leave Armenia this year. To stop this, we must together provide a future of opportunity and belief in success stemming from a change in mindset.

I do not believe that all of the problems we face can be solved by the Armenian state. Instead, both the Armenian authorities and the diaspora should leave political disputes aside in order to consolidate and, alongside international specialists and humanitarian organisations, assist in the building of new institutions, good governance and the development of the country. Engaging with international partners is critical to raising standards and finding effective solutions.

So far, attempts at developing Armenia have been blighted by a failure to unite and mobilise both the nation and diaspora. It is not an easy task, currently there are roughly 10 million Armenians living in over 100 nations. However, we must transform the relationship to one of interdependence and trust.

Until now, members of the diaspora have largely been viewed as a source of charitable aid – this causes disconnect and indifference. Instead of charity, which I believe is detrimental to Armenia’s future as it prevents organic, conducive reforms, the diaspora should invest in long-term projects with meaningful impacts. I believe a shared vision and hope for Armenia can be created through collaboration and the implementation of impact investment. However, a strong Armenian diaspora must become more aware of their responsibility in helping the Armenian nation develop, and by updating and strengthening their institutions, enhance and ensure the preservation of Armenian worldwide heritage.

Commitment and shared responsibility will encourage desire for success and provide a crux for wider development. A blend of commercial, social and philanthropic projects will help build a better more sustainable future for Armenia. Multi-purpose anchor projects – breakthrough projects used to serve the interests of the nation and its people – will help societal evolution.  Anchor projects in the education, technological, scientific and tourism sectors will serve as a way to unite a fragmented nation, by drawing people together through communication and exchange of ideas. Long-term investment and visionare necessary, as social impact investments slowly manifest themselves over 20-25 years. Therefore, close working relationships are essential, investors need to want to be part of the conversation and want to see the projects evolve to impact the wider community.

Re-establishing Armenia as a hub of excellence in education would not only aid development and attract investment, it would attract others to the country. Investment into educational projects is investing in Armenia’s future, and promotes talent, trust, collaboration and multiculturalism –in doing so educational projects have wide-ranging personal, local and global impact. Armenia has already shown it has the potential for success in the educational sphere; with the Tumo Centre, American University in Armenia, Russian-Armenian University, French University and United World Colleges movement all having centres in Armenia. We must utilise the opportunities we have for the implementation of further educational projects.

Additionally, investment into the science and technological space would have wide reaching effect. The development of science and technology is both tangible and lucrative.It will also drive explosive growth in the health, environment and knowledge economies. The FAST Foundation is leading the way in innovation in Armenia, numerous projects support budding scientists, technologists and innovators in Armenia and the global stage. It will amplify and empower scientific advancement in the country, aiming to position Armenia as the technical and scientific hub of the region.

By fostering a competitive economy in Armenia, we can attract further foreign direct investment and also immigration. Additionally, we need to encourage good governance by developing effective and accountable governmental and societal institutions, which commit to excellence and professionalism. Impact investment and the championing of good governance will create an attractive Armenia, where not only Armenians want to live, but also the diaspora, international students and businessmen and women. This would bolster demographic security by dampening the desire for emigration and creating the social and economic atmosphere needed to raise the birth rate in the country. A growing population would mean a larger workforce, which would allow Armenia to become a self-sufficient global player, one that can build regional and global alliances.

Whilst our geographical location at the crossroads of civilisations brings many benefits, we also face regional security threats, which was painfully evident during last year’s 44-day war. In order to bolster Armenia’s position regionally, we must first acknowledge our security situation and construct a more effective and forward-looking defence system. This will take a shift in thinking and a significant increase in spending, but more modern military thinking is needed to protect our borders and people. A reinforced and innovative security system will allow us to look forward and act to guarantee Artsakh’s physical freedom and security.

Armenia faces many challenges, but it also has a number of strengths and competitive advantages – which we must use; not only do the diaspora provide resources and experience of other systems, we are bilingual nation and a nation located at the cross-roads of four civilisations. Armenia’s geography between the Middle East, Europe and the Caucasus means we can take advantage ofa working relationship with the European Union through the Eastern Partnership whilst being a member of the Eurasian Economic Union and Commonwealth of Independent States. Russia in particular is interested in Armenia being competitive, and at the same time is the right ally to ensure regional security.

If we build on these advantages and focus on inter-dependency and responsibility, Armenians and the Armenian diaspora, in collaboration with international partners and humanitarian institutions, can build a successful country. By developing on a local level, we can look to eradicate inequality and push for a fairer more open society, one that is beneficial for all Armenians.

A strong Armenia with modern institutions and a well-educated society will improve the country’s position regionally and on a global scale; allowing Armenia to become a bridge between cultures and organisations.

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Eastern Europe

Shocking results of survey in Lithuania

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Lithuanian authorities in recent future could face harsh criticism from society and disagreement with current foreign and domestic policies.

The recent opinion poll has become the clear indicator of people’ dissatisfaction with government’s policy which resulted in loss of sovereignty of the country.

Lithuanian analysts were very confused with the results of the latest survey. On November 7-30, 2020, a representative survey was conducted by the company Baltijos tyrimai: 1004 residents of the country participated in it, the error of the results does not exceed 3.4%. The results of this survey shocked the researchers.

The study called “Lithuanian society’s susceptibility to disinformation. Narrative analysis.” (“Lietuvos visuomenės paveikumas dezinformacijai Naratyvų analizė”) made by Vilnius Institute for Policy Analysis was presented by one of its author – Gintaras Šumskas.

In an interview with Delfi, he admitted that this time the respondents were not given prepared statements with which they had to agree or not, they were not asked questions so that they could be interpreted ambiguously.

The analysis revealed the following narratives: COVID-19 destroyed the health care system in Lithuania, COVID-19 is used to manipulate and rule the society, Lithuania does not have an independent foreign policy, the Lithuanian educational system lays down the wrong values, the collapse of the USSR did not bring anything good, NATO takes away from members states money that would be better spent on the social sphere.

According to the results, it could be said that Lithuanians not only observe the situation but they analyse and make conclusions.

In time when COVID-19 pandemic almost seriously interfered with the normal daily life, the government wastes money conducting military exercises, deploying foreign troops and even increase military expenditures. The more so, in time when people have no money to burn their relatives who died from coronavirus, Lithuanian authorities declare that military threat is stronger than COVID-19.

The most surprising are the general answers. For example, 66% of the survey participants agree with the statement that “Lithuania is in vain to quarrel with Belarus and Russia, since bad relations will bring economic damage”, and more than half (54%) are convinced that “Lithuania does not have an independent foreign policy – everything is dictated by Brussels (EU) “, and 32% believe that Washington is in charge of Lithuania’s foreign policy.

There is nothing to add. Everything is said by ordinary people during survey.

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