Armenia, Azerbaijan, and Georgia: Security Issues and Implications for U.S. Interests
Prepared for Members and Committees of Congress
The South Caucasus region has been the most unstable in the former Soviet Union in terms of the
number, intensity, and length of ethnic and civil conflicts. Other emerging or full-blown security
problems include crime, corruption, terrorism, the proliferation of weapons of mass destruction,
and narcotics trafficking. The regional governments have worked to bolster their security by
combating terrorism, limiting political dissent they view as threatening, revamping their armed
forces, and seeking outside assistance and allies.
The roles of neighbors Iran, Russia, and Turkey have been of deep security concern to one or
more of the states of the region. These and other major powers, primarily the United States and
European Union (EU) members, have pursued differing interests and policies toward the three
states. Some officials in Russia view the region as a traditional sphere of influence, while Turkish
officials tend to stress common ethnic ties with Azerbaijan and most of Central Asia. EU
members are increasingly addressing instability in what they view as a far corner of Europe.
Armenia has pursued close ties with Russia and Iran in part to counter Azerbaijan’s ties with
Turkey, and Georgia and Azerbaijan have stressed ties with the United States in part to bolster
their independence vis-a-vis Russia.
The United States has supported democratization, the creation of free markets, conflict resolution,
regional cooperation, and the integration of the South Caucasian states into the larger world
community. The Administration has backed regional energy and pipeline development that does
not give Iran and Russia undue political or economic influence. U.S. aid has been provided to
bolster the security and independence of the states, including substantial rebuilding aid after the
August 2008 Russia-Georgia conflict. In January 2009, the United States and Georgia signed a
partnership agreement to underline such U.S. support for Georgia. All three regional states have
supported the global war on terrorism and sent troops to assist the U.S.-led coalition in Iraq.
Congress has been at the forefront in supporting U.S. assistance to bolster independence and
reforms in the South Caucasus, but debate has continued over the scope, emphasis, and
effectiveness of U.S. involvement. Congressional support for the security of Armenia and
Nagorno Karabakh (NK; a breakaway region of Azerbaijan mostly populated by ethnic
Armenians) led in 1992 to a ban on most U.S. government-to-government aid to Azerbaijan.
Congress authorized a presidential waiver to the ban after the terrorist attacks on the United
States on September 11, 2001, to facilitate U.S.-Azerbaijan anti-terrorism cooperation.
Congressional support for U.S. engagement with the region also was reflected in “Silk Road
Strategy” legislation in FY2000 (P.L. 106-113) authorizing greater policy attention and aid for
conflict amelioration, humanitarian needs, economic development, transport and
communications, border control, democracy, and the creation of civil societies in the South
Caucasus and Central Asia. Congressional concerns about rising Russian military and economic
coercion against Georgia were reflected in legislation criticizing Russian actions and supporting
Georgia’s NATO aspirations. In the wake of the August 2008 Russia-Georgia conflict, Congress
condemned Russia’s invasion and provided boosted aid for Georgia’s rebuilding. Congress
regularly has earmarked foreign aid to Armenia and upheld a South Caucasus funding category to
encourage conflict resolution, provide for reconstruction assistance, and facilitate regional
Introduc tion ..................................................................................................................................... 1
Overview of U.S. Policy..................................................................................................................1
External Security Context................................................................................................................3
Overvi ew ....................................................................................................................... ............ 3
The Confluence of Outside Interests...................................................................................4
Internal Security Problems and Progress.........................................................................................5
Political and Social Disorder.....................................................................................................5
Crime and Corruption.......................................................................................................20
Illegal Narcotics Production, Use, and Trafficking...........................................................21
Non-Proliferation of Weapons of Mass Destruction.........................................................22
Economic and Defense Security.......................................................................................22
U.S. Policy and Issues...................................................................................................................30
Contributions to Operation Enduring Freedom in Afghanistan..............................................32
Georgi a .............................................................................................................................. 32
Azerbaij an ..................................................................................................................... .... 33
Arme nia ........................................................................................................................ .... 33
Support for Iraqi Freedom Operations....................................................................................34
After the August 2008 Russia-Georgia Conflict.....................................................................35
The U.S.-Georgia Charter.................................................................................................35
U.S. Peace and Security Assistance........................................................................................36
Safety of U.S. Citizens and Investments.................................................................................44 th
Issues for the 111 Congress...................................................................................................47
Should the United States Play a Prominent Role in the South Caucasus?........................47
What are U.S. Interests in the South Caucasus?...............................................................47
What Roles Should Outside Powers Play in the Region?.................................................48
How Significant Are Regional Energy Resources to U.S. Interests?................................48
What U.S. Security Involvement is Appropriate?.............................................................49
Should the United States Try to Foster Democratization?................................................51
Figure A-1. Armenia, Azerbaijan, and Georgia.............................................................................61
Table 1. Armenia, Azerbaijan, and Georgia: Basic Facts..............................................................37
Table 2. Security Funds Budgeted for Armenia, Azerbaijan, and Georgia, FY1992-
FY2007 ....................................................................................................................................... 38
Appendix. Selected Players...........................................................................................................53
Author Contact Information..........................................................................................................61
The countries of Armenia, Azerbaijan, and Georgia are generally considered as comprising the 1
South Caucasus region, which borders Russia, Turkey, and Iran. This isthmus between the Black
and Caspian Seas is an age-old north-south and east-west trade and transport crossroads. The
region has been invaded many times, quashing periods of self-rule. These invasions and other
contacts have resulted in many and diverse historical, cultural, ethnic, religious, and linguistic
links with neighboring peoples. Russian and Soviet tutelage over the region lasted nearly
unbroken from the early nineteenth century until the collapse of the Soviet Union in 1991, deeply
affecting economic and social development, borders, and nationality relations. Soviet control, in
particular, resulted in the isolation of the crossroads region from the rest of the world. After
gaining independence, all the states spiraled into economic depression and conflicts began or
intensified that threatened their existence, though in recent years the states have appeared more
stable. The regional states remain weak in comparison to neighboring powers in terms of
populations, economies, armed forces, and other capabilities.
This report discusses the internal and external security concerns of the South Caucasus states and
U.S. interests and policy toward the region. The ambitions of neighboring powers, particularly
Russia, have appeared to pose the greatest threat to the stability and sovereignty of the South
Caucasus states. It is also possible that internal security problems are greater threats. The states
are less able to ameliorate external threats because of internal weaknesses such as political and
economic instability, ethnic and regional conflicts, and crime and corruption.
U.S. security ties with the South Caucasus states increased in the latter part of the 1990s, as a
result of Russia’s military activities in Georgia, Russia’s first conflict in its breakaway Chechnya
region, and an emerging U.S. focus on the transport of Caspian regional energy resources to
Western markets. According to Deputy Assistant Secretary of State Matthew Bryza, “we’re not
embarrassed to say that energy is a strategic interest. We [also] have ... traditional security
interests—meaning fighting terrorism, fighting proliferation, avoiding military conflict, and
restoring (or preserving, in some cases) the territorial integrity of the states of the region.... And
then we have a third set of interests, in ... democratic and market economic reform ... based on
our belief that stability only comes from legitimacy. And legitimacy requires democracy on the 2
political side and prosperity on the economic side.”
The United States provided some security assistance to the region prior to the September 11,
2001, terrorist attacks on the United States, particularly to Georgia. This aid and the establishment
of military-to-military ties facilitated U.S. anti-terrorism cooperation with these states in the wake
of September 11, 2001. The United States obtained quick pledges from the three states to support
1 For background, see CRS Report 97-522, Azerbaijan: Recent Developments and U.S. Interests, by Jim Nichol; CRS
Report 97-727, Georgia [Republic]: Recent Developments and U.S. Interests, by Jim Nichol; and CRS Report
RL33453, Armenia, Azerbaijan, and Georgia: Political Developments and Implications for U.S. Interests, by Jim
Nichol. The Caspian region encompasses the littoral states Azerbaijan, Russia, Iran, Kazakhstan, and Turkmenistan, but
sometimes the region is viewed expansively to include Armenia, Georgia, Uzbekistan, and even Afghanistan. The
Black Sea region also has been viewed expansively to include Armenia and Azerbaijan.
2 “Caucasus: U.S. Says Aliyev, Kocharyan Must Show ‘Political Will,’” RFE/RL, June 23, 2006.
U.S. and coalition efforts in Afghanistan, including overflight rights and information sharing and
Azerbaijan’s and Georgia’s offers of airbases. The State Department has highlighted U.S. support
for Azerbaijan’s and Georgia’s efforts to halt the use of their territories as conduits by
international mujahidin and Chechen guerrillas for financial and logistic support for Chechen and 3
other Caucasian terrorists.
The United States has placed growing strategic significance on energy supplies from the Caspian
region. In the late 1990s, the Clinton Administration backed the building of east-west oil and gas
pipelines not controlled by Iran or Russia. The Bush Administration’s May 2001 National Energy
Report, concluded that oil exports from the Caspian region could reach millions of barrels per day
within several years, and suggested that greater oil production there could not only benefit the
economies of the region, but also help mitigate possible world supply disruptions. The Bush
Administration’s 2003 and 2006 National Security Strategy of the U.S.A. also emphasized these
themes, stating that U.S. energy security and global prosperity would be strengthened by 4
expanding the numbers of suppliers, including those in the Caspian region.
Most in Congress have supported U.S. assistance to bolster independence, security, and reforms
in the South Caucasus, but questions remain about the suitability, scope, emphasis, and
effectiveness of U.S. interest and involvement in the region. Attention has included several
hearings and legislation, the latter including regular earmarks of aid for Armenia and sense of
Congress provisions on U.S. policy toward the South Caucasus.
Congressional concern in the early 1990s over the Armenian-Azerbaijan conflict contributed in
1992 to the enactment of an aid prohibition for the government of Azerbaijan until the President
determines that Azerbaijan has made “demonstrable steps to cease all blockades and other
offensive uses of force against Armenia and Nagorno Karabakh” (NK; a breakaway region of
Azerbaijan mostly populated by ethnic Armenians). After September 11, 2001, Congress provided
a Presidential waiver of this provision in order to facilitate Azerbaijan’s assistance for the war on
terrorism, but emphasized its continuing attention to the peaceful resolution of the NK conflict.
Beginning with FY1998 appropriations, Congress created a South Caucasus funding category to
encourage conflict resolution, provide for reconstruction assistance, and facilitate regional
economic integration. In FY1998-FY2001, Congress specified funding for a border and customs
security program for Georgia, and some of this aid was used by Georgia to fortify its northern
borders with Russia and Chechnya. Congress also has directed humanitarian aid to NK. The
United States committed millions of dollars to facilitate the closure of Russian military bases in
Georgia. Congress initiated the Security Assistance Act of 2000 (P.L. 106-280) that authorized
nonproliferation, export control, border, anti-terrorism, and other security aid for the South
Congress was at the forefront in calling for greater Administration attention to energy issues in
the Caspian region as part of a broad engagement policy. This interest included a 1997 5
congressionally requested report on Administration energy policy. This interest was prominently
3 U.S. Department of State. Country Reports on Terrorism, April 2008.
4 The White House. National Energy Policy, May 17, 2001; The National Security Strategy of the United States of
America, April 29, 2003; The National Security Strategy of the United States of America, March 16, 2006. Unlike the
2003 edition, the 2006 edition does not specifically mention the Caspian region.
5 U.S. State Department. Caspian Region Energy Development Report to Congress, April 15, 1997, (required by the
conference managers on H.R. 3610, Omnibus Appropriations for FY1997, including Foreign Operations, P.L. 104-
reflected in the 1999 “Silk Road Strategy Act” authorizing greater policy attention and aid to
support conflict amelioration, humanitarian needs, economic development, transport and
communications, border controls, democracy, and the creation of civil societies in the South
Caucasus and Central Asia (P.L. 106-113). (See also below, “U.S. Policy and Issues.”)
Congressional concerns about rising Russian military and economic coercion against Georgia
were reflected in legislation criticizing Russian actions and supporting Georgia’s NATO
aspirations. In the wake of the August 2008 Russia-Georgia conflict, Congress condemned
Russia’s invasion and provided boosted aid for Georgia’s rebuilding.
Major outside players involved in the South Caucasus include the three powers bordering the
South Caucasus region (Russia, Turkey, and Iran), the United States, and the European Union
(EU). The outside players have both complementary and competing interests and policies toward
the three regional states. Some officials in Russia view the region as a traditional sphere of
influence, while some in Iran view Azerbaijan and Armenia as part of a “new Middle East,” and
Turkish officials tend to stress common ethnic ties with Azerbaijan and most of Central Asia. The
EU states have focused on the region as part of the wider “European Neighborhood” and as a
stable transport corridor and energy supplier, and the United States has focused on antiterrorism
in the post-September 11, 2001, period and on world energy diversity.
Neighboring states have been drawn into the region through threats they perceive to their
interests. Regional turmoil also has drawn in international security organizations such as the
U.N., Organization for Security and Cooperation in Europe (OSCE), NATO, and the
Commonwealth of Independent States (CIS). In the early 1990s, Iran became greatly concerned
about Azerbaijanis who called for Iran’s ethnic Azerbaijani areas to secede. Recently it has
stepped up efforts to suppress ethnic Azerbaijanis in Iran who advocate increased human rights,
regional autonomy, or secession. Instability in Chechnya and other areas along Russia’s North
Caucasus borders has threatened Russia’s security and created reasons and pretexts for Russian
intervention in the South Caucasus. At the same time, the instability along its southern borders
has hindered Russia in building trade and economic relations with the South Caucasus states.
Russia has attempted to retain influence in the South Caucasus since September 11, 2001, to
counter increased U.S. anti-terrorism assistance to the states. However, Georgia’s peaceful 2003
“rose revolution” witnessed closer U.S.-Georgia ties and reduced Russian presence. Russia
further reduced its presence in late 2007 when it closed its last military base in Georgia (although
Georgia retained concerns about the continued presence of Russian “peacekeepers” at the former
Russian base at Gudauta, Abkhazia). Russia’s presence in the region was strongly reasserted just a
few months later, when in August-September 2008 it invaded Georgia, recognized the
independence of Abkhazia and South Ossetia, and stationed thousands of troops at bases in the
Among other players, Western oil and gas firms have played a dominant investment role in
Azerbaijan, greatly supplementing assistance given to the region by outside governments or
international financial institutions. All three states have benefitted greatly from remittances by
their citizens who work in Russia and elsewhere, but Russia’s efforts to restrict labor by non-
citizens, as well as the 2009 economic downturn in Russia, threatens these remittances. Armenia’s
multi-million member world diaspora has provided important aid and expertise, and has
publicized Armenia’s plight.
Neighboring and other interested powers, while sometimes competing among themselves for
influence in the South Caucasus, also have cooperated in carrying out certain regional goals. All
the external powers seek influence over regional energy resources, possibly providing grounds for
a common understanding that no one power shall be predominant. Prominent powers Iran,
Turkey, and Russia might also come to agree not to foster instability that could spill across their
borders. Iran and Russia have cooperated somewhat in trying to retain regional influence by
impeding outside involvement in developing Caspian Sea oil resources or transit routes bypassing
their territories. More recently, the two countries have clashed over Caspian Sea border
delineation and regional export routes.
Dismissing views that the region is a mere playground for outside powers, many observers stress
that the regional states’ own strategic priorities and assessments of threats and opportunities have
influenced their ties with other countries. Given a long history of repeated foreign invasion and
occupation, the states are bound to be concerned with regional and international politics.
However, regional security cooperation has been slow to develop. Instead, conflict has driven the
states and separatist areas to search for outside supporters, often as leverage against each other
and creating risks of entanglement for outside powers. The security orientations of the states and
regions—whether toward NATO, the CIS, or some other group—have become of great concern to
neighboring and other states.
The Armenia-Azerbaijan conflict over NK heavily colors foreign lobbying by these states and by
NK. Armenia seeks close security and economic ties with Russia and Iran to counter Azerbaijan’s
close ties with Turkey. Armenia has relied more on Russia for such ties, given Iran’s lesser
capabilities. President Serzh Sargisyan has stressed that Armenia’s top priority in foreign policy is
friendly relations with Russia and that good relations with the United States, NATO, and the 6
European Union do not jeopardize the Armenian-Russian strategic partnership. Armenia’s
relations with Turkey are strained. Although Turkey has recognized Armenia’s independence, the
two countries have not established full diplomatic relations. President Sargisyan has called for
diplomatic ties with Turkey to be established without regard to preconditions, including Turkey’s
recognition of what Armenians term their national genocide at the hands of the Ottoman Empire
in the early 1900s, but Turkey has called first for Armenia to withdraw from Azerbaijani territory.
Besides its interest in garnering international support for bolstering sovereignty over NK,
Azerbaijan has a fundamental interest in links with and the well-being of Iran’s multi-million
population of ethnic Azerbaijanis. Azerbaijan’s agreement with Russia and Kazakhstan over
oilfield delineation in the Caspian Sea (see below) seemed aimed at least in part as a defense
against border claims by Iran.
6 Open Source Center. Central Eurasia: Daily Report (hereafter CEDR), June 30, 2008 Doc. No. CEP-9001; ITAR-
TASS, August 23, 2008.
Georgia appears more concerned about ending Russia’s control over Abkhazia and South Ossetia
and building ties with Turkey and the United States, than about enhancing relations with non-
bordering Iran. Georgia’s ports on the Black Sea link it to littoral NATO members Turkey,
Bulgaria, Romania, and (via the Turkish Straits) to countries around the Mediterranean Sea,
providing it with a geo-strategic orientation toward the West.
The United States has stressed even-handedness in mediating regional conflicts, though other
players have not, harming conflict resolution and regional cooperation. Another view is that the
United States is one of several powers in the South Caucasus that, in parallel with the
uncompromising stances of opposing ultra-nationalist elements in the three states, contributes to 7th
deadlock rather than the resolution of regional conflicts. (See also “Issues for the 111
The South Caucasus region has been the most unstable in the former Soviet Union in terms of the
number, intensity, and length of its ethnic and civil conflicts. Other internal security problems
include crime, corruption, terrorism, proliferation, and narcotics trafficking. There are few
apparent bases for regional cooperation in resolving security problems. The ruling nationalities in
the three states are culturally rather insular and harbor various grievances against each other. This
is particularly the case between Armenia and Azerbaijan, where discord has led to the virtually
complete displacement of ethnic Armenians from Azerbaijan and vice versa. Ethnic relations
between Azerbaijanis and Georgians, on the other hand, have been less contentious. The main
languages in the three states are mutually unintelligible (also, those who generally consider
themselves Georgians—Kartvelians, Mingrelians, and Svans—speak mutually unintelligible
languages). Few of the region’s borders coincide with ethnic populations. Attempts by
territorially-based ethnic minorities to secede have been primary security concerns in Georgia and
Azerbaijan. Armenia and Azerbaijan have viewed NK’s status as a major security concern. NK
has failed to gain international recognition of its independence, and Abkhazia and South Ossetia
have been recognized only by Russia and Nicaragua. NK receives major economic sustenance
from Armenia and diaspora Armenians, and Abkhazia and South Ossetia from Russia.
Azerbaijan and Georgia were engulfed in political turmoil during the early 1990s, but later in the
decade their leaders appeared to consolidate power. In both Azerbaijan and Georgia, new
constitutions in 1995 granted the presidents sweeping powers and their ruling parties held sway in
the legislatures. During the 2000s, however, these states again entered a period of political
instability. In Georgia, the “rose revolution” resulted in then-President Shevardnadze’s ouster in
November 2003 after a tainted legislative election. Further turmoil occurred in late 2007, when
President Saakashvili forcibly suppressed an opposition demonstration, resigned in the face of
worldwide criticism, and won re-election in early 2008. In Azerbaijan, a violent repression of
7 Bruno Coppetiers, Caucasian Regional Studies, vol. 5, 2000, available online at http://poli.vub.ac.be/publi/crs/eng/
oppositionists took place in the wake of the handover of power from Heydar Aliyev to his son, 8
Ilkham, in October 2003 after a tainted presidential election.
In contrast to Azerbaijan and Georgia, Armenia appeared somewhat stable until 1998, when then-
Armenian President Levon Ter-Petrossian was forced to resign by military and other forces
opposed to his rumored concessions to settle the NK conflict. Armenia also was roiled when
gunmen with apparently personal grievances assassinated the premier, legislative speaker, and six
other politicians in late 1999, but a new speaker and premier were chosen peacefully. Robert
Kocharyan, elected president in 1998, was re-elected in a contentious race in February 2003.
Oppositionists in Armenia in 2004 stepped up their protests against the legitimacy of Kocharyan’s
re-election and some were arrested. The opposition claimed that it had little input into drafting
constitutional changes that were approved in a popular referendum in November 2005. After a
presidential election in early 2008, opposition demonstrators claiming fraud were forcibly
The serious decline in the standard of living in all three South Caucasus states during the early
1990s affected their security by harming the health of the population, setting back economic
recovery. Although Armenia reportedly has resettled most of the refugees who fled Azerbaijan
after 1988, Azerbaijan has moved more slowly to improve housing conditions for refugees from
NK and surrounding areas. Many people in the regional states remain economically 9
disadvantaged, with a low quality of life. The widespread poverty has contributed to the
emigration or labor migration of hundreds of thousands of citizens from Armenia, Azerbaijan, and
Georgia. Azerbaijan obtains sizable revenues from oil exports, but some observers are concerned
that the ruling elite are not using such revenues to broadly raise living standards for the poor. The
economic damage suffered by Georgia during the August 2008 conflict has set back poverty-
reduction efforts, and the worldwide economic downturn in 2008-2009 has harmed economic
growth in all three states.
Regional analyst Elkhan Nuriyev has lamented that the South Caucasus states, because of ethnic
conflicts, have not yet been able to fully partake in peace, stability, and economic development 10
since gaining independence in 1991. The countries are faced with on-going budgetary burdens
of arms races and caring for refugees and displaced persons. Other costs of ethnic conflicts in the
South Caucasus include the threat to bordering states of widening conflict and the limited ability
of the region or outside states fully to exploit energy resources or trade and transport networks.
Some development advocates call for regional populations to repudiate exclusionary
ultranationalism and for outside powers to cease trying to exploit such views.
Azerbaijan has faced dissension by several ethnic groups, including Armenians in NK, Lezgins
residing in the north, and Talysh residing in the south. Some ethnic Lezgins have called for
8 Malkhaz Matsaberidze, Central Asia and the Caucasus, no. 2, April 30, 2005.
9 U.N. World Health Organization. The World Health Report 2005, Statistical Annex, April 7, 2005; U.N. Development
Program. Human Development Report 2004, July 15, 2004. According to the quality of life index (which includes ndst
measures of GDP per capita, life expectancy, school enrolment, and literacy), Armenia ranks 82, Azerbaijan 91, and th
Georgia 97 among 151 world countries, placing them among other developing countries with a “medium” quality of
life but far below other top-ranked European states.
10 Elkhan Nuriyev, in Gary Bertsch, et al., eds., Crossroads and Conflict, New York, Routledge, 2000, p. 151.
seceding and joining kindred Lezgins residing in Russia’s Dagestan, and formed a separatist
group called Sadval, while some Talysh have called for autonomy and have lobbied for the
legalization of a political party. Since 1988, the separatist NK conflict has resulted in about
15,000 casualties and hundreds of thousands of refugees and displaced persons in Armenia and
Azerbaijan. The U.N. High Commissioner for Refugees (UNHCR) reported that at the end of 11
Armenia has granted citizenship and acted to permanently house most of the ethnic Armenians
who fled Azerbaijan. The Azerbaijani government reported in April 2008 that there were 572,500 12
internally displaced persons in the country. Armenia has granted citizenship and acted to
permanently house most of the ethnic Armenians who fled Azerbaijan and who have subsequently
not emigrated from Armenia.
Georgia’s southern Ajaria region, populated by Islamic ethnic Georgians, was substantially free
from central control until 2004. Some residents of Georgia’s southern district of Javakheti,
populated mostly by ethnic Armenians, also have called for autonomy. Repressive efforts by
Georgian authorities triggered conflict in 1990 in Georgia’s north-central region of South Ossetia,
reportedly leading to about 1,500 deaths and tens of thousands of displaced persons, mostly
ethnic Georgians. Beginning in 1992, separatist fighting involving Georgia’s north-western
Abkhaz region has resulted in about 10,000 deaths and hundreds of thousands of displaced
persons, mostly ethnic Georgians. UNHCR reported that at the end of 2007 there were about
Georgia conflict led to nearly 200,000 displaced persons in Georgia and its regions, most of
whom were eventually able to return to their homes. However, about 37,500 displaced persons
either could not return to their homes in the conflict zones or their homes were damaged or
destroyed. Also, ethnic Georgians have continued to be coerced by Abkhaz and South Ossetian 14
militias to leave the regions. The Georgian government and international donors by early 2009
had finished building nearly 4,000 homes for some displaced persons (hundreds more were being
built), had rehabilitated over 9,300 homes and 1,500 apartments, or otherwise had provided 15
accommodations to displaced persons.
Since 1988, the separatist conflict in Nagorno Karabakh (NK) has resulted in about 15,000
casualties and hundreds of thousands of refugees and displaced persons in Armenia and
Azerbaijan. The non-governmental International Crisis Group estimates that about 13% to 14% of
Azerbaijan’s territory, including NK, is controlled by NK Armenian forces (the CIA World
11 U.N. High Commissioner for Refugees. 2007 Global Trends: Refugees, Asylum-seekers, Returnees, Internally
Displaced and Stateless Persons, June 2008.
12 Norwegian Refugee Council. Internal Displacement Monitoring Center. Country Page: Azerbaijan, at
13 UNHCR. 2007 Global Trends: Refugees, Asylum-seekers, Returnees, Internally Displaced and Stateless Persons,
14 Council of Europe. Special Follow-Up Mission To The Areas Affected By The South Ossetia Conflict:
Implementation of the Commissioner’s Six Principles For Urgent Human Rights And Humanitarian Protection,
December 16, 2008.
15 “95 Percent of IDPs to Celebrate New Year in New Homes,” Black Sea Press, December 24, 2008.
Factbook estimates about 16%).16 The OSCE’s “Minsk Group” of concerned member-states
began talks in 1992. A U.S. presidential envoy was appointed to these talks. A Russian-mediated
cease-fire was agreed to in May 1994 and was formalized by an armistice signed by the ministers
of defense of Armenia and Azerbaijan and the commander of the NK army on July 27, 1994 (and
reaffirmed a month later). The United States, France, and Russia co-chair meetings of the Minsk
The Minsk Group reportedly has presented four proposals as a framework for talks, but a peace
settlement has proved elusive. In late 1997, a new step-by-step peace proposal was recognized by
the presidents of Azerbaijan and Armenia as a basis for further discussion. This led to protests in
both countries and to the forced resignation of Armenian President Levon Ter-Petrosyan in early
1998 Minsk Group proposal embracing elements of a comprehensive settlement. The
assassination of Armenian political leaders in late 1999 set back the peace process. In April 2001,
the two presidents attended talks in Key West, Florida, and met with then-President Bush,
highlighting early Administration interest in a settlement.
In January 2003, Armenia’s then-President, Robert Kocharyan, proclaimed that its peace policy
rested on three pillars: a “horizontal”—instead of hierarchical—relationship between NK and
Azerbaijan; a secure land corridor between Armenia and NK; and security guarantees for NK’s 18
populace. Armenia’s then-Foreign Minister Vardan Oskanyan in October 2004 stated that the
continued occupation of NK border areas was necessary leverage to convince Azerbaijan to agree 19
to NK’s status as a “common state.” Since 2005, officials in both countries have reported
negotiations on a fourth “hybrid” peace plan to return most NK border areas prior to a referendum
in NK on its status.
The Minsk Group co-chairs issued a statement and made other remarks in April-July 2006 that
revealed some of their proposals for a settlement. These include the phased “redeployment of
Armenian troops from Azerbaijani territories around Nagorno-Karabakh, with special modalities
for Kelbajar and Lachin districts (including a corridor between Armenia and NK);
demilitarization of those territories; and a referendum or population vote (at a date and in a
manner to be decided ...) to determine the final legal status of NK.” International peacekeepers 20
also would be deployed in the conflict area.
At peace talks in Bucharest on June 4-5, 2006, the presidents of Armenia and Azerbaijan
reportedly agreed on some basic principles but failed to reach a settlement. In statements issued
after this meeting, the Minsk Group co-chairs raised concerns that the two presidents lacked the
“political will” to make decisions about a settlement and stated that they would wind down their 21
“shuttle diplomacy” until the two presidents demonstrated political will. Disagreeing with the
16 International Crisis Group. Nagorno-Karabakh: Viewing the Conflict from the Ground, September 14, 2005. Central
Intelligence Agency. The World Factbook. Azerbaijan, http://www.odci.gov.
17 CEDR, February 27, 2001, Doc. No CEP-262.
18 CEDR, January 17, 2003, Doc. No. CEP-338.
19 CEDR, October 13, 2004, Doc. No. CEP-11.
20 OSCE. Statement by the Minsk Group Co-Chairs, July 3, 2006.
21 In June 2006, the duties of the U.S. co-chair were transferred to the Deputy Assistant Secretary of State. On the
proposals, see RFE/RL, June 23, 2006; U.S. Embassy in Armenia, Statement by the Minsk Group Co-Chairs to the
OSCE Permanent Council, June 22, 2006; and Statement by the OSCE Minsk Group Co-Chairs, July 3, 2006.
According to polls conducted by the Armenian Sociological Association and the Georgian Institute for Polling and
Minsk Group settlement proposals, President Ilkham Aliyev in early July 2006 stated that the
withdrawal of NK forces from occupied territories (including NK itself) must be followed by the
return of Azerbaijani displaced persons. Then, he averred, Azerbaijani (including NK) citizens 22
would discuss the status of NK, but its secession from Azerbaijan was forbidden.
At a Minsk Group-sponsored meeting of the Armenian and Azerbaijani foreign ministers in Paris
on October 24, 2006, Armenia’s then-Foreign Minister Oskanyan proposed that all occupied
territories around NK (including Kelbajar and Lachin) could be returned if there was clarity on
the plan for a referendum to be held in NK on its status. Until the referendum, an interim status
for NK is to be agreed upon. Although the referendum must deal with NK’s independence from
Azerbaijan as one choice, he stated on October 26 that he considered an NK ultimately
independent from Armenia as artificial and not viable. Instead, NK would be persuaded 23
eventually to “fully integrate” with Armenia.
On October 27, 2006, Aliyev stated that Azerbaijan proposes that NK have a high level of
autonomy during the interim period before a referendum. He argued that NK should accept
Azerbaijan’s guarantees of political autonomy overseen by international peacekeepers. Otherwise,
he warned, Azerbaijan has the sovereign right, as the United Kingdom did in regard to the
Falkland Islands, to “retake our territory.” He also asserted that the international community
would not recognize NK even if independence was approved by a referendum, if Azerbaijan 24
opposed this referendum outcome.
At a meeting in Moscow between the Armenian and Azerbaijani foreign ministers on January 23,
2007, the Azerbaijani foreign minister reportedly termed the negotiations on a settlement of the
NK conflict “intensive” and said that they concerned “the last principle of the settlement.”
Armenian sources allegedly reported little progress. In May 2007, Aliyev reportedly stated that
only after all seven occupied areas around NK had been returned in phases, and Azerbaijani
displaced persons had returned to NK, could the question of NK’s status be determined (he ruled 25
out the status of independence). The presidents of Azerbaijan and Armenia met on June 11,
2007, for talks reportedly lasting over three hours, but no breakthrough on settling the NK
conflict was announced.
On November 29, 2007, the former Undersecretary of State Nicholas Burns, Russian Foreign
Minister Sergey Lavrov, and French Foreign Minister Bernard Kouchner presented the then-
Foreign Ministers of Armenia and Azerbaijan, Vardan Oskanyan and Elmar Mammadyarov with a
draft text—Basic Principles for the Peaceful Settlement of the Nagorno-Karabakh Conflict—for
transmission to their presidents. These officials from the Minsk Group co-chair countries urged
the two sides to accept the Basic Principles that had resulted from three years of talks and to 26
begin “a new phase of talks” on a comprehensive peace settlement. Although the text was not
Marketing in July 2006, the population of Armenia is overwhelmingly opposed to an autonomous status for NK within
Azerbaijan, and the population of Azerbaijan is overwhelmingly opposed to the independence of NK from Azerbaijan.
22 Leyla Tavshanoglu, Interview with the President of Azerbaijan, Cumhuriyet, July 4, 2006.
23 CRS Interview, October 26, 2006. See also Fariz Ismailzade, Eurasia Daily Monitor, October 31, 2006.
24 CRS Interview, October 27, 2006.
25 CEDR, May 4, 2007, Doc. No. CEP-950237.
26 U.S. Department of State. Office of the Spokesman. Media Note: Support for Basic Principles for Peaceful
Settlement of the Nagorno-Karabakh Conflict, November 29, 2007.
released, Azerbaijan’s then-Foreign Minister Mammadyarov reportedly claimed that the
principles upheld Azerbaijan’s territorial integrity and NK’s autonomous status as part of
Azerbaijan. Armenia’s then-Foreign Minister Oskanyan asserted, on the other hand, that the 27
principles accorded with Armenia’s insistence on respecting self-determination for NK.
In March 2008, the peace process faced challenges from a ceasefire breakdown along the NK
front that reportedly led to some troop casualties and from the passage of a resolution by the U.N.
General Assembly that called for Armenia to “immediately and unconditionally” withdraw from
“occupied” Azerbaijani territory. In the former case, each side blamed the other for breaking the
ceasefire. In the latter case, the resolution introduced by Azerbaijan in the U.N. General Assembly
was approved with a vote of 39 for and 7 against, with 100 abstentions. The United States voted
against the resolution in part because according to Deputy Assistant Secretary of State Matthew
Bryza it violated the provisions of the Basic Principles (see above) and thus harmed the peace
On May 6, 2008, France hosted a meeting between the Armenian and Azerbaijani foreign
ministers. The foreign ministers also met with the Minsk Group co-chairs. No details were made
available to the public. Armenian President Serzh Sarkisyan and Azerbaijani President Ilkham
Aliyev met briefly on June 6, 2008, while attending a meeting of the Commonwealth of
Independent States in St. Petersburg, Russia. The presidents stated that a certain degree of trust
had been reached during their first meeting, and they agreed that talks should continue on settling
the NK conflict.
Perhaps troubling, Azerbaijan staged a major military parade in late June 2008, at which Aliyev
stated that “the Azerbaijani people are tired of these [peace] talks.... We should be ready to
liberate our territories by military force at any moment.” Answering a congressional inquiry about
similar statements by Aliyev, Assistant Secretary of State Fried stated that U.S. diplomats had
advised Aliyev that such statements harm the peace process, that renewed conflict would
jeopardize Azerbaijan’s energy exports, that “in the judgment of the United States,” Azerbaijan 28
does not have military superiority, and that neither side could win in a renewed conflict. In the
wake of the Russia-Georgia conflict in early August 2008 (see below), Armenian President
Sarkisyan asserted that “the tragic events in [Georgia’s breakaway South Ossetia region] confirm
that every attempt in the South Caucasus to look for a military answer in the struggle for the right 29
to self-determination has far-reaching military and geopolitical consequences.”
Deputy Assistant Secretary Bryza reportedly stated on September 18 that the Minsk Group peace
process faced an uncertain period, since Russia had acted aggressively in the South Caucasus and
its reputation had been harmed, but that he hoped that the Minsk Group talks could continue. In
any event, he stated, the United States would continue to encourage the peaceful settlement of the
27 CEDR, December 10, 2007, Doc. No. CEP-950390; December 13, 2007, Doc. No. CEP-950360; December 19,
2007, Doc. No. CEP-950339.
28 U.S. House of Representatives. Committee on Foreign Affairs. Hearing: The Caucasus, Frozen Conflicts and Closed
Borders. Testimony of Daniel Fried, June 18, 2008.
29 Open Source Center. Europe: Daily Report, August 27, 2008, Doc. No. EUP-085016. However, Armenia’s former
Foreign Minister Oskanyan maintained in late 2006 that Article 4 of the CIS Collective Security Treaty (“in case an act
of aggression is committed against any of the member-states, all other member-states will render it necessary
assistance, including military, as well as provide support with the means at their disposal through an exercise of the
right to collective defense”) pertains to aggression from outside the CIS, so does not pertain to the Armenia-Azerbaijan
conflict (since Azerbaijan is a member of the CIS). Interview, October 26, 2006.
conflict.30 On October 14, Secretary Rice dismissed speculation that the Minsk Group had
become obsolete as the mediating body.
Turkish Prime Minister Recep Tayyip Erdogan visited Russia, Georgia, and Azerbaijan in mid- to
late August 2008 to propose the formation of a “Caucasus Stability and Cooperation” group to
discuss regional peace, economic cooperation, and energy security, and which would include
Turkey, Russia, Georgia, Azerbaijan, and Armenia, but would exclude the United States and the
EU. Turkish President Abdullah Gul visited Armenia and Azerbaijan in early September to further
discuss forming the group and to mediate the NK conflict. Armenian President Sargisyan
welcomed Turkey’s efforts as an attempt to create a favorable atmosphere in the region, but on
September 11 called for continuing the Minsk Group talks.
In July 1992, Abkhazia’s legislature declared the region’s effective independence, prompting an
attack by Georgian national guardsmen. In October 1992, the U.N. Security Council (UNSC)
approved the first U.N. observer mission to a Eurasian state, termed UNOMIG, to help the parties
reach a settlement. Russian and North Caucasian “volunteers” (who reportedly made up the bulk
of Abkhaz separatist forces) routed Georgian forces. Georgia and Abkhazia agreed in April 1994
on a framework for a political settlement and the return of refugees. A Quadripartite Commission
(QC) was set up to discuss repatriation and Russian troops (acting as CIS “peacekeepers”) were
deployed along the Inguri River dividing Abkhazia from the rest of Georgia. The conflict resulted
in about 10,000 deaths and over 200,000 displaced persons, mostly ethnic Georgians. In late
1997, the sides agreed to set up a Coordinating Council (CC) to discuss cease-fire maintenance
and refugee, economic, and humanitarian issues. The QC meets periodically and addresses
grievances not considered by the CC.
Abkhazia had resisted holding CC meetings since 2001, but the two sides finally met on May 15,
2006, and the Abkhaz “foreign minister” proffered a new peace plan. Georgia found the plan
“interesting” but rejected it, claiming that the plan was in effect a declaration of independence. In
late May 2006, Georgia proffered an alternative peace plan, which Abkhazia in turn reportedly 31
rejected as unconstructive.
The Deputy Assistant Secretary of State works with the Special Representative of the U.N.
Secretary General and other Friends of the U.N. Secretary General (France, Germany, Russia, the
United Kingdom, and Ukraine) to facilitate a settlement. A “New Friends” group was formed by
Bulgaria, Estonia, Latvia, Lithuania, Moldova, Poland, Romania, and Ukraine in 2005 to
advocate increased EU and NATO attention to a settlement. Sticking points have included
Georgia’s demand that displaced persons be allowed to return to Abkhazia, after which an
agreement on autonomy for Abkhazia would be negotiated. The Abkhazians have insisted upon
recognition of their independence as a precondition to large-scale repatriation. Since 2002,
Abkhaz authorities have refused to consider a draft negotiating document prepared by the U.N.
and the Friends of Georgia. In the UNSC, Russia in late January 2006 renounced the draft
negotiating document and agreed to only a two-month extension to UNOMIG’s mandate, raising
30 CEDR, September 18, 2008, Doc. No. CEP-950389.
31 U.N. Council on Resolving Abkhazia Dispute Meets for First Time in 5 Years, Associated Press, May 15, 2006;
“Georgian Peace Plan Unacceptable: Abkhaz Foreign Minister,” Interfax, June 1, 2006.
concerns among some observers that Russia might openly endorse Abkhaz “self-determination.”
The UNSC in March 2006, however, agreed to a normal six-month extension.
The Kodori Gorge. In July 2006, a warlord in the Kodori Gorge area of Abkhazia, where many
ethnic Svans reside, foreswore his nominal allegiance to the Georgian government. The Georgian
government quickly sent forces to the area and defeated the warlord’s militia. Saakashvili asserted
that the action marked progress in Georgia’s efforts to re-establish its authority throughout
Abkhazia, and he directed that the Abkhaz “government-in-exile” make the Gorge its home.
Georgia claims that its troops have left the Gorge, leaving only police, but Abkhazia asserts that
many troops are still present, in violation of the ceasefire agreement. The Abkhaz side broke off
revived meetings of the CC (which had been taking place almost every week) at the beginning of
August 2006, and all talks were suspended in October 2006. It has called for Georgia to remove
the government representatives and alleged military forces. The U.S. Mission to the OSCE issued
a statement in August 2006 that supported demilitarizing the Kodori Gorge and sending
international civilian police to Abkhazia and called on the government of Georgia and the Abkhaz
/de facto authorities to show restraint and to abide by the 1994 cease-fire agreement.
In October 2006, the UNSC approved a resolution extending the UNOMIG mandate for another
six months, until the end of April 2007. The Security Council criticized Georgia for introducing
military forces into the Kodori Gorge area of Abkhazia (see below) in violation of cease-fire
accords and for other “militant rhetoric and provocative actions” and called on it to abide by the
accords. Some violations by Abkhaz forces were also criticized. The UNSC stressed the 32
“important” and “stabilizing” role played by Russian peacekeepers and UNOMIG. Some
Georgian officials viewed the resolution as negating their calls for a wider international
composition of the peacekeeping forces. At a meeting hosted by the Friends in Geneva on
February 13, 2007, the Abkhaz de facto authorities reportedly reiterated that they would not
resume talks with Georgia until their conditions were addressed. On the night of March 11-12,
2007, unknown helicopters strafed several villages and the pro-Georgian Abkhaz government
building in the Kodori Gorge. Georgia claimed that the helicopters came from Russia and that the
incident demonstrated that Russian “peacekeepers” are not impartial and should be replaced by a
wider international force.
In January, April, and October 2007, the U.N. Secretary General reported that Georgia appeared
not to have heavy military weaponry in the Gorge. The Friends hosted a meeting in Germany in
late June 2007 that urged the sides to abide by the existing cease-fire agreement and to renew 33
talks, but talks remained suspended. In early December 2007, the Abkhaz “foreign minister”
allegedly threatened that the breakaway region would take control over the Kodori Gorge by 34
armed force if diplomacy failed.
In March and April 2008, President Saakashvili proposed new peace initiatives that included
international guarantees of autonomy for Abkhazia, quotas for Abkhaz representation in Georgian
executive and legislative bodies, the establishment of a special economic zone in the Gali region,
32 U.N. Security Council. Resolution 1716 (2006), Adopted by the Security Council at its 5549th meeting, October 13,
33 U.N. Secretary General. Report of the Secretary-General on the Situation in Abkhazia, S/2007/15, January 11, 2007;
S/2007/182, April 3, 2007; S/2007/439, July 18, 2007; S/2007/588, October 3, 2007. He stated in his July report that
UNOMIG had seen what appeared to be a Georgian military truck in the upper Kodori Gorge.
34 CEDR, December 4, 2007, Doc. No CEP-950466.
and more active involvement by the international community and Russia in a peace settlement.
The initiatives were rejected by the de facto Abkhaz authorities.
In March and April 2008, unmanned aerial vehicles (UAVs) from Georgia were shot down over
Abkhazia. Georgia claimed that Russians shot down the UAVs, but the Abkhaz claimed that they
shot them down. The Russian foreign ministry asserted that the UAVs had a military surveillance
mission and were banned under the 1994 ceasefire agreement, but the Georgians asserted that
they were non-threatening and permitted. After an investigation, UNOMIG concluded in late May
2008 that at least one of the UAVs had been shot down by a fighter jet flying into Abkhazia from
Russian airspace. UNOMIG stated that Georgia should not fly the UAVs over Abkhazia, but also
termed the shootdown by the Russian air force “fundamentally inconsistent” with the Abkhaz-
Georgia ceasefire agreement. At a closed meeting of the UNSC on May 30, 2008, Georgia stated
that it would end the flights of the UAVs.
The United States and others in the international community also raised concerns when the
Russian foreign and defense ministries announced on April 29, 2008, that the number of
“peacekeepers” in Abkhazia would be boosted up to the maximum permitted under ceasefire
accords. There also would be added military equipment and checkpoints. The ministries claimed
that the increases were necessary to counter the presence of a Georgian youth camp in a restricted
zone near the Abkhaz border, the flight of Georgian UAVs over Abkhazia, and a buildup of
Georgian “military forces” and police in the Kodori Gorge, which they alleged were preparing to
attack the de facto Abkhaz government. The defense ministry asserted that any Georgian
“violence against Russian peacekeepers and Russian citizens ... will be met with an appropriate 35
and robust response.” Georgia’s speaker objected that an increase in the number of
“peacekeepers” should be a subject of negotiation, and termed it another move toward Russia’s 36
“annexation” of Abkhazia. It was also troubling that 400 Russian paratroopers were deployed to
Abkhazia that Russian officials reportedly stated would be fully armed in order to repulse 37
possible Georgian attacks on Abkhazia. NATO reported on April 28, 2008, that its members
“support Georgia’s territorial integrity and regard Abkhazia as Georgia’s inseparable part. NATO
members believe that the unilaterally biased Russian peacekeeping contingent should be 38
Russia-Georgia tensions appeared to deepen in mid-May 2008 when the U.N. General Assembly
approved a resolution introduced by Georgia that called for displaced persons to be permitted to
return to Abkhazia and to reclaim their property. Tensions heightened in late May 2008 after
Russia announced that about 400 railway construction troops were being sent to Abkhazia for
“humanitarian” work. The U.S. State Department responded that the “announcement is
particularly difficult to understand,” in light of Georgia’s peace proposals, and objected that such
troops were not part of Russia’s “peacekeeping” force. These troops—whose role is to facilitate
military positioning—reportedly left Abkhazia at the end of July 2008 after repairing tracks and
bridges. According to Deputy Assistant Secretary Bryza, the railway was used in August 2008 by 39
Russia when its troops moved into Georgia.
35 CEDR, April 29, 2008, Doc. No. CEP-950318. By late 2007, Russia had bolstered its “peacekeeping” forces by
deploying some pro-Russia Chechen troops from the Zapad battalion.
36 CEDR, April 29, 2008, Doc. No. CEP-950329.
37 ITAR-TASS, May 6, 2008.
38 CEDR, April 28, 2008, Doc. No. CEP-950444.
39 Pavel Felgenhauer, Eurasia Daily Monitor, June 12, 2008; U.S. Department of State. Foreign Press Center. Briefing:
The Friends’ Abortive Peace Initiative. In late June 2008, growing concerns about Georgian-
Russian tensions led the Friends of the U.N. Secretary General to work out a new draft peace plan
for Abkhazia. The plan was formally presented by German Foreign Minister Frank-Walter
Steinmeier in July to EU, Georgian, Abkhaz, and Russian leaders. Indicating the shift in the
policy of the United States and other Friends, Deputy Assistant Secretary Bryza stated on July 21
that the Friends considered that Russian “peacekeepers” might continue to work with UNOMIG
in Abkhazia (if Russia and Georgia agree), but that these forces would be “complemented” by a 40
joint Abkhaz-Georgian police force, “with international oversight, be it U.N. or EU oversight.”
Russia appeared at first to support the peace plan, but during Steinmeier’s visit to Moscow on
July 18-19, Russian President Dmitriy Medvedev reportedly called for the retention of the
existing ceasefire talks and Russia’s “peacekeeping” role.
In 1989, the South Ossetia region lobbied for joining its territory with North Ossetia (in Russia)
or for independence. Repressive efforts by former Georgian President Gamsakhurdia triggered
conflict in 1990, reportedly contributing to an estimated 2,000-4,000 deaths and the displacement
of tens of thousands of people. In June 1992, Russia brokered a cease-fire, and Russian,
Georgian, and Ossetian “peacekeeping” units have set up base camps in a security zone around
Tskhinvali, South Ossetia. Reportedly, the units total around 1,100 troops, including about 530
Russians, a 300-member North Ossetian brigade (which is actually recruited locally and staffed
by South Ossetians and headed by a North Ossetian), and about 300 Georgians. OSCE monitors
do most of the patrolling. A Joint Control Commission composed of Russian, Georgian, and
North and South Ossetian emissaries promotes a settlement of the conflict, with the OSCE as
facilitator. According to one estimate, some 45,000 ethnic Ossetians and 17,500 ethnic Georgians 41
resided in a region that before the conflict contained over 98,000 residents. Many fled during
the fighting or migrated to Russia or elsewhere.
Saakashvili tightened border controls in 2004, ostensibly to stanch smuggling, which is a major
source of income for the Ossetians. He also reportedly sent several hundred police, military, and
intelligence personnel into the region. Georgia maintained that it was only bolstering its
peacekeeping contingent up to the limit of 500 troops, as permitted by the cease-fire agreement,
and stated that these peacekeepers were preventing smuggling and guarding ethnic Georgian
villages. Following inconclusive clashes, both sides by late 2004 had pulled back most
Saakashvili announced a new peace plan for South Ossetia in 2005 that offered substantial
autonomy and the creation of an international fund to facilitate repatriation and rebuilding. South
Ossetian “president” Eduard Kokoiti rejected the plan, asserting in October 2005 that “we [South 42
Ossetians] are citizens of Russia.” The plan has received U.S. and OSCE backing. In December
The Situation in the Republic of Georgia and its Implications for the Caucasus, August 19, 2008.
40 Brian Whitmore, Interview with U.S. Deputy Assistant Secretary of State for European and Eurasian Affairs
Matthew Bryza, RFE/RL, July 21, 2008.
41 Georgia: a Toponymic Note Concerning South Ossetia, The Permanent Committee on Geographic Names, January
42 CEDR, October 7, 2005, Doc. No. CEP-15001. Protesting against the extension of Russian citizenship to most South
Ossetians and Russia’s pledges to protect the interests of these citizens, Deputy Chief of the U.S. Mission to the OSCE,
2005, South Ossetia issued its own plan, which called for demilitarization, confidence-building
measures, and reconstruction aid. At a meeting of the Joint Control Commission (co-chaired by
the Georgian, Russian, North Ossetian, and South Ossetian sides, with the OSCE as a facilitator)
on May 11-12, 2006, the parties agreed to try to merge the two peace plans and approved a list of
rebuilding projects for an OSCE-sponsored donors’ conference in June 2006. The conference
garnered pledges of over $10 million for economic reconstruction in the conflict area, including
$2 million from the United States. A Steering Committee composed by the sides to the conflict
and donors met in October 2006 to discuss project implementation.
The U.S. Mission to the OSCE issued a statement on August 11, 2006, that urged “meaningful
progress” on the peace plan endorsed by the OSCE. It also called for international monitoring of
the Roki Tunnel (separating Russia from South Ossetia), a permanent checkpoint at Didi Gupta (a
South Ossetian village near Roki on a transport route), and an increase in the number of OSCE
monitors in the region. In late August 2006, Kokoiti announced that a popular referendum would
be held in the region on November 12, 2006, to reaffirm its “independence” from Georgia. After a
planned JCC meeting in mid-September 2006 fell through, the Georgian state minister argued that 43
the JCC format “was no longer of any use.” Emissaries at a JCC meeting on October 12-13,
2006, reportedly failed to agree on a communique. Georgia again insisted on changing the format
at a JCC meeting on December 27, 2006, which ended with no plans for a future meeting
South Ossetia’s separatists reported that 95% of 55,000 registered voters turned out and that 99%
approved the referendum on “independence.” In a separate vote, 96% re-elected Kokoiti. The
OSCE and U.S. State Department declined to recognize these votes. In “alternative” voting
among ethnic Georgians in South Ossetia (and those displaced from South Ossetia) and other
South Ossetians, the pro-Georgian Dmitry Sanakoyev allegedly was elected governor, and a
referendum was approved supporting Georgia’s territorial integrity. Sanakoyev demanded
representation on the JCC, which Kokoiti opposed. The hiatus in JCC meetings ended with a get-
together session in Istanbul on March 21, 2007. On March 26, 2007, Saakashvili proposed a new
peace plan for South Ossetia that involved creating administrative districts throughout the region
ostensibly under Sanakoyev’s authority, which would be represented by an emissary at JCC or
alternative peace talks.
Each side accused the other in mid-2007 of blockading water supplies in South Ossetia and other
“provocations,” including failure to hold JCC meetings. The OSCE Steering Committee financed
the building of a water pipeline. In July 2007, President Saakashvili decreed the establishment of
a commission to work out South Ossetia’s “status” as a part of Georgia. The JCC finally held a
meeting (with Georgia’s emissaries in attendance) in Tbilisi, Georgia, on October 23-24, 2007,
but the Russian Foreign Ministry claimed that the Georgian emissaries made unacceptable 44
demands in order to deliberately sabotage the results of the meeting. No further meetings had
been held before the outbreak of conflict between Russia and Georgia in August 2008.
Kyle Scott, stated that the moves “call into question [Russia’s] stated support for Georgia’s territorial integrity and
commitment to support a peaceful resolution of the South Ossetia conflict based on that principle.” U.S. Department of
State. The Washington File. U.S. Questions Russian Support for Georgian Territorial Integrity: Calls on Russia, South
Ossetians to Reciprocate Georgian Overtures, March 3, 2006.
43 CEDR, September 15, 2006, Doc. No. CEP-950088.
44 CEDR, November 1, 2007, Doc. No. CEP-950449.
Simmering long-time tensions erupted on the evening of August 7, 2008, when South Ossetia
accused Georgia of launching a “massive” artillery barrage against its capital, Tskhinvali, while
Georgia reported intense bombing of some Georgian villages in the conflict zone by South
Ossetian forces. Georgia claims that South Ossetian forces did not respond to a ceasefire appeal
but intensified their shelling, “forcing” Georgia to send in troops that reportedly soon controlled 45
Tskhinvali and other areas.
On August 8, Russian President Dmitriy Medvedev denounced Georgia’s incursion into South
Ossetia, asserting that “women, children and the elderly are now dying in South Ossetia, and most
of them are citizens of the Russian Federation” (Russia had granted citizenship to much of the
population). He stated that “those who are responsible ... will be duly punished.” Russia launched
large-scale air attacks across Georgia and dispatched seasoned troops to South Ossetia that
engaged Georgian forces in Tskhinvali later in the day. President Bush stated on August 9 that
“Georgia is a sovereign nation, and its territorial integrity must be respected. We have urged an
immediate halt to the violence [and] the end of the Russian bombings.” Reportedly, Russian
troops had retaken Tskhinvali, occupied the bulk of South Ossetia, reached its border with the rest
of Georgia, and were shelling areas across the border by the morning of August 10. Russian
warplanes bombed the Georgian town of Gori and the outskirts of the capital, Tbilisi, as well as
other sites. Russian ships landed troops in Georgia’s breakaway Abkhazia region and took up
positions off Georgia’s Black Sea coast.
On August 12, Medvedev declared that “the aim of Russia’s operation for coercing the Georgian
side to peace had been achieved and it had been decided to conclude the operation.... The 46
aggressor has been punished and suffered very heavy losses.” Medvedev endorsed some
elements of a European Union (EU) peace plan presented by visiting French President Nicolas
Sarkozy. On August 15, the Georgian government accepted the French-brokered 6-point cease-
fire that left Russian forces in control of South Ossetia, Abkhazia, and “security zones” in 47
undisputed Georgian territory. The six points include commitments not to use force, to halt
hostilities, to provide full access for humanitarian aid, to withdraw Georgian forces to the places
they were usually stationed prior to the conflict, to withdraw Russian forces to positions prior to
the outbreak of hostilities (although they are permitted to implement security measures in the
zone of the conflict until international monitors are in place), and to open international
discussions on ensuring security and stability in Abkhazia and South Ossetia.
Russia undertook a pullback of military forces on August 22. However, substantial forces
remained in areas around South Ossetia’s and Abkhazia’s borders with the rest of Georgia and
near the port of Poti, resulting in condemnation by the United States, NATO, and the EU that
Russia was violating the ceasefire accord. Further condemnation by the international community
occurred in the wake of President Medvedev’s August 26 decree officially recognizing the
45 See also CRS Report RL34618, Russia-Georgia Conflict in South Ossetia: Context and Implications for U.S.
Interests, by Jim Nichol.
46 ITAR-TASS, August 12, 2008. On September 11, Prime Minister Putin stated that Georgia’s aggression was answered
by “a well-deserved mighty punch” by Russia. ITAR-TASS, September 11, 2008.
47 See CRS Report RL34618, Russia-Georgia Conflict in South Ossetia: Context and Implications for U.S. Interests, by
Jim Nichol, August 29, 2008.
independence of South Ossetia and Abkhazia. Nicaragua is the only country that has followed suit
in extending diplomatic relations to Abkhazia and South Ossetia.
On September 8, 2008, visiting French President Nicolas Sarkozy and Russian President Dmitriy
Medvedev signed a follow-on ceasefire accord that fleshed out the provisions of the 6-point peace
plan. It stipulated that Russian forces would withdraw from Georgia’s port of Poti and adjacent
areas by September 15; that Russian forces would withdraw from areas adjacent to the borders of
Abkhazia and South Ossetia by October 11; that Georgian forces would return to their barracks
by October 1; that international observers already in place from the U.N. and Organization for
Security and Cooperation in Europe would remain; and that the number of international observers
would be increased by October 1, to include at least 200 observers from the European Union
(EU), and perhaps more later. The EU has called for Russia to permit these observers to patrol in
Abkhazia and South Ossetia. Russia’s position is that these observers cannot patrol in the regions
without the approval of the regions, and the regional leaders have refused to permit such patrols.
In a press conference after signing the accord, President Medvedev asserted that Russia’s
recognition was “irrevocable.” Although Sarkozy strongly implied that the international
conference would examine the legal status of Georgia’s breakaway Abkhazia and South Ossetia,
Medvedev pointed out that the regions had been recognized as independent by Russia on August 48
26, 2008, and stated that disputing this recognition was a “fantasy.” The Russian defense
minister called for retaining “around 3,800” Russian troops in Abkhazia and the same number in
South Ossetia. These numbers differ from troop ceilings permitted under the early 1990s ceasefire
agreements of up to 3,000 Russian “peacekeepers” in Abkhazia and about 1,000 in South Ossetia 49
(including Russian troops and those ostensibly from Russia’s North Ossetia region). Russian
military bases reportedly were being established in the regions, in violation of Russia’s 1999
commitment under the CFE Treaty to close its military bases in Georgia (Russia had announced
in mid-2007 that it was unilaterally suspending compliance with the Treaty).
The EU deployed over 200 monitors by October 1, and Russia announced on October 9 that its
troops had withdrawn from buffer zones. Georgia has maintained that Russian troops have not
pulled out of Akhalgori, a district that Russia asserts is within South Ossetia’s Soviet-era borders,
and the Kodori Gorge. New EU and OSCE monitors, as well as UNOMIG and OSCE observers
who previously patrolled in the regions, have been blocked from entering the regions. A
conference to discuss security, repatriation, and status issues was disrupted at its inaugural session
on October 15 when Russian, Abkhazian, and South Ossetian emissaries boycotted or walked out
of various meetings during the day. Sessions in November and December 2008 were more
successful in involving the emissaries in discussions, but no progress was reported on the main
issues. In December 2008, Russia objected in the OSCE to continuing a mandate for OSCE
observers in Georgia---including some observers authorized before the August 2008 conflict and
some who were added after the August 2008 conflict---and they began to be pulled out in early 50
48 Open Source Center. Central Eurasia: Daily Report(hereafter CEDR), September 28, 2008, Doc. No. CEP-950425;
49 Conor Humphries, “Russia Establishes Ties with Georgia Regions,” Agence France Presse, September 9, 2008;
“Russia to Base 7,600 Troops in Georgian Regions,” Deutsche Presse-Agentur, September 9, 2008.
50 Before the August 2008 conflict, there were 142 OSCE staff in Georgia, of whom 106 were national staff, 7
contracted international staff, and 29 seconded international staff. The OSCE reported “some 200” staff members in
December 2008. OSCE. Press Information: Head of Mission, February 1, 2008; Press release: OSCE Chairman
Regrets Disagreement on OSCE Future in Georgia, December 22, 2008.
South Caucasus states and breakaway regions have alleged the existence of various terrorist
groups that pursue mixes of political, ethnic, and religious goals, with such allegations having
increased greatly after September 11, 2001, and the intensification of international anti-terrorism
efforts. Armenia and Azerbaijan accuse each other of sponsoring terrorism. Georgian militias
reportedly were active in Georgia’s efforts in 2004 to regain control over South Ossetia. In
reaction, Russian defense and security officers allegedly assisted several hundred irregulars from
Abkhazia, Transnistria, and Russia to enter the region. Such irregulars and Abkhazian and South
Ossetian militias reportedly carried out widespread attacks against ethnic Georgians during and
after the August 2008 Russia-Georgia conflict. South Caucasus governments sometimes have
accused opposition political parties of terrorism and banned and jailed their followers. However,
some of the so-called terrorist violence has been hard to attribute to specific groups or agents that
aim to destabilize the governments. Other sources of violence, such as personal or clan
grievances, economic-based crime, or mob actions, are also prominent.
Islamic extremism has appeared a lesser threat in Azerbaijan than in the Central Asian states,
although some Azerbaijani authorities warn that the threat is growing as unemployed young
people are attracted to radical missionaries. The Azerbaijani government has moved against
myriad indigenous terrorist groups, including Jayshullah, the Jamaat al-Muwahidun, the al Qaeda
Caucasus international group, the Northern Mahdi Army, the Forest Brothers, the Islamic Party,
and others (see below). In mid-2006, Azerbaijani officials raised concerns that Islamic extremists
might target the country, after al Qaeda member Ayman al-Zawahiri stated that Azerbaijan and 51
other Muslim countries should be punished for “aligning themselves with the infidels.”
According to the State Department’s Country Reports on Terrorism, until Russia launched its
incursion into Chechnya in August-September 1999, Azerbaijan had served as a conduit for
international mujahidin, some of whom supported the separatist leadership in Chechnya. After
Russian security forces attacked Chechnya, however, Azerbaijan reinforced border controls to
discourage foreign mujahidin from operating within Azerbaijan. The State Department reports
that Azerbaijan stepped up such interdiction efforts after September 11, 2001, and “had some 52
success in suppressing these activities.”
Reportedly, more than 100 individuals have been convicted in Azerbaijan in recent years for
supporting Chechen separatism. Several members of Jayshullah (Warriors of Islam; members had
been trained in Chechnya and had set up a training camp in Azerbaijan) were arrested in 1999 and
thirteen were convicted in 2001 for planning or carrying out various terrorist acts. Other young
members of the group were let off. Azerbaijani authorities alleged that some Warriors of Islam
were Lezgin separatists.
In December 2003, Azerbaijan sentenced the leaders of Revival of Islamic Heritage, a Kuwaiti
humanitarian organization, on charges of recruiting Azerbaijanis and sending them to the Pankisi
Gorge for paramilitary training to fight in Chechnya against Russia. In February 2005, six
51 CEDR, June 30, 2006, Doc. No. CEP-950096.
52 U.S. Department of State. Country Reports on Terrorism 2006. Azerbaijan also had served as a conduit for some
terrorist financing, as evidenced by fund transfers to Azerbaijan by the bin Laden-associated organization Benevolence
International. Money Laundering Alert, March 2003. Azerbaijani media have reported that Turkey is concerned that the
Kurdistan Workers’ Party (PKK) receives some funds and arms via Azerbaijan. CEDR, June 30, 2006, Doc. No. CEP-
individuals who called themselves “Al Qaeda Kavkaz” received sentences of 3-14 years on
charges of planning terrorist attacks in Baku. The group was apprehended with arms and
propaganda materials and allegedly had attempted to recruit female suicide bombers. In 53
December, the government extradited two members of the Kongra-Gel/PKK to Turkey.
In April 2006, ten members of Jamaat al-Muwahidun were sentenced to prison on charges of
planning training to attack Western interests in Azerbaijan, and sixteen members of al Qaeda
Caucasus International—citizens of Azerbaijan, Russia, Turkey, and Yemen who had received
training in the Pankisi Gorge for fighting in Chechnya—were sentenced to prison on charges of 54
assassination, planned suicide bombings, and terrorism. Azerbaijan’s head of the State
Committee for Work with Religious Structures warned in mid-2006 that al Qaeda-linked Chechen
rebels continued activities in Azerbaijan, that an Iranian Shiite extremist group named “72
Martyrs” was operating in southern Azerbaijan, and that increasing numbers of other Islamic 55
extremists were entering the country to recruit members and set up cells. An imam belonging to
the Board of the Muslims of the Caucasus appeared to back some of these claims in early 2007 by
asserting that Wahhabism was growing in northern areas of Azerbaijan bordering Chechnya and
Russia’s Dagestan republic (region). The National Security Ministry, however, claimed that there 56
are no terrorist training camps in Azerbaijan.
Azerbaijani authorities reported the arrest in January 2007 of fifteen members of the so-called
Northern Mahdi Army who were convicted in December 2007 on charges of plotting a coup to
establish Shariah rule and of working with Iran’s Islamic Revolutionary Guards. Some of the
members of the group allegedly received terrorist training in Iran, and were tasked by Iran with
gathering information about the U.S. and Israel embassies, international firms, and Azerbaijan’s 57
pipelines to Turkey.
In November 2007, 18 alleged members of the Salafi Forest Brothers (a group led by Saudi
Arabian citizen Nail Abdul Kerim Al-Bedevi, aka Abu Jafar; he had fought in Chechnya and
elsewhere in the Caucasus) were arrested. Other Forest Brother members were arrested in
connection with the August 17, 2008, bombing of Baku’s Abu Bekr Mosque.
In Georgia, Zviadists (supporters of former President Zviad Gamsakhurdia) in 1998 launched an
assassination attempt against then-President Shevardnadze and an abortive military insurrection
aimed at his overthrow, but a government reconciliation campaign since contributed to
quiescence by this group. Georgian officials alleged that a supporter of ousted Ajarian leader
Aslan Abashidze was behind an abortive hand-grenade attack during the May 2005 visit of then-
President Bush to Tbilisi.
The State Department’s Patterns of Global Terrorism for 2002 stated that Georgia also contended
with “third-country terrorists with links to al Qaeda” who used Georgia as a conduit for financial
and logistic support for the mujahidin and Chechen fighters.” Georgia, however, appeared
53 U.S. State Department, Country Reports on Terrorism 2005, April 28, 2006, pp. 88-89.
54 CEDR, April 19, 2006, Doc. No. CEP-950146; April 24, 2006, Doc. No. CEP-25008; April 25, 2006, Doc. No. CEP-
950069; April 27, 2006, Doc. No. CEP-381001; Middle East Quarterly, Summer 2005.
55 CEDR, June 29, 2006, Doc. No. CEF-26001.
56 CEDR, February 18, 2007, Doc. No. CEP-950047; January 24, 2007, Doc. No. CEP-950178.
57 CEDR, December 17, 2007, Doc. No. CEP-950125.
unwilling and unable to prevent mujahidin activities until prodded and supported by the United
States and Russia after September 11, 2001.
U.S. concerns over the presence of international terrorists in Georgia’s Pankisi Gorge were
spurred when, reportedly during the September 11, 2001, attacks, a phone call was made from a
bin Laden operative in Afghanistan to Georgia announcing the success of the first phase of
attacks. President Bush in late February 2002 explained the U.S. decision to launch a military
training program in Georgia (see below) by emphasizing that there were some al Qaeda in the
Russian demands that Georgian forces combat international terrorists based in the Gorge led to
the launch of Georgian police and security operations in the Gorge in August 2002. Concerns
about the renewal of terrorist operations in the area in the springtime, however, led the Georgian
government in March 2003 to send in extra military and police forces to prevent Chechen rebels
from re-entering. In late 2004, Russia claimed that some terrorists remained in the gorge but still
refused to agree to renew the mandate of OSCE personnel who had been monitoring the
Georgian-Russian border area since early 2000. Although they had been effective in publicizing
border violations and were viewed by many commentators as discouraging border incursions,
Russia claimed that they had been ineffective. The OSCE subsequently launched a program to
help train some Georgian border guards.
According to Country Reports on Terrorism 2005, Georgian police discovered and removed
hidden weapon caches in the Pankisi Gorge during the year and otherwise better secured the area
against terrorist acts or transit. However, Georgia continued to be used to a limited degree as a
transit state for weapons and money, including because of corruption at border checkpoints,
according to the State Department. In November 2007, Col. Andrey Sergeyev, Chief of the
Border Directorate of the Federal Security Service for Chechnya, appeared to verify that the
Gorge was no longer a terrorist transit route, stating that “none of our militarized structures have
information indicating that bandit groups have crossed the state border recently in the segment of
the Border Directorate for the Chechen Republic, either from the Pankisi Gorge of Georgia or in 58
the opposite direction.” Just a few months later, however, the Russian Federal Security Service’s
First Deputy Director for the Border Guard Service, Lt. Gen. Anatoliy Zabrodin, stressed that
there were some Chechen terrorists remaining in the Pankisi Gorge that might cross the border
into Russia despite the construction of dozens of border guard posts and the training of rapid
reaction border forces. The Georgian Border Police responded that there were no terrorists in the
Gorge and retorted that “the Russian side has never raised the issue of the presence of rebels in
the Pankisi Gorge at the meetings held regularly between representatives of the border services of 59
Georgia and the Russian Federation.” Georgian media reported that some Islamic
fundamentalists remained in the Gorge, not terrorists, who were influential in local business.
Crime and corruption are serious threats to democratization and economic growth in all the states.
The increasing amount of foreign currency entering the states as the result of foreign oil and
natural gas investments, drug trafficking, and other means, the low pay of most government
58 CEDR, November 26, 2007, Doc. No. CEP-548002.
59 U.S. Department of State. Country Reports on Terrorism 2005, April 2006; ITAR-TASS, February 7, 2008; CEDR,
February 11, 2008, Doc. No. CEP-950123.
bureaucrats, and inadequate laws and norms, are conducive to the growth of corruption. Also, the
weakness of the rule of law permits the Soviet-era political patronage and spoils system to
continue. Saakashvili has pledged to combat corruption, firing many policemen and emphasizing
merit-based examinations for college entrance. According to the private organization
Transparency International (TI), Azerbaijan and Georgia in 2004 ranked among those with 60
“rampant corruption,” and Armenia barely escaped being placed among these countries. The
levels of corruption in the countries were viewed as decreasing somewhat since then. In the case
of Georgia, TI in 2008 ranked Georgia as less corrupt than Armenia, which in turn was ranked as
less corrupt than Azerbaijan. Georgia was praised for continuing to reduce corruption in 2008, but
TI warned that “grand corruption remains a persistent concern and ... the official anti-corruption
campaign is too heavily focused on prosecution as opposed to prevention, and ... is rather ad
hoc.” In the case of Azerbaijan, TI has continued to rank it among countries with “rampant 61
According to the State Department’s International Narcotics Control Strategy Report, none of the
South Caucasian states is a major drug producer, but Azerbaijan is a transit route for drugs from
Afghanistan that enter from Iran or Central Asia and are smuggled to markets in Russia, Turkey, 62
and Europe. Armenia’s borders with Azerbaijan and Turkey remain closed due to the NK
conflict, but when these borders open, drug transiting could increase significantly, the State
Department warns. Drug consumption is increasing in Azerbaijan. In 2006-2007, the United
States provided training and equipment to enhance Azerbaijan’s counter-narcotics capabilities 63
along its border with Iran and along Azerbaijan’s maritime border.
Georgia does not appear to be a route for large-scale drug smuggling, but could be vulnerable to
increased trafficking because of lack of control over parts of its territory and its borders, some of
which are under separatist control. Drugs from Asia that transit Georgia are smuggled out through
land routes and Black Sea ports in Ajaria. The Report suggests that such smuggling by trucks and
ferries may be increasing. Previously, Chechen and al Qaeda terrorists that were based in the
Pankisi Gorge area of northeast Georgia at least partly financed their activities by drug-
trafficking. Georgian counter-terrorism actions in the Gorge in recent years appear to have
eliminated this trafficking. Georgia’s border control forces are capable of controlling drug
60 Transparency International, Annual Report 2004, pp. 8-9.
61 TI, Corruption Perceptions Index 2008. See also The World Bank. Governance Matters 2008: Governance
Indicators for 1996–2007, country reports online at http://info.worldbank.org/governance/wgi/pdf_country.asp.
According to the World Bank, progress in combating corruption may have faced setbacks in Armenia and Azerbaijan in
62 The State Department. Bureau for International Narcotics and Law Enforcement Affairs. International Narcotics
Control Strategy Report, vol. 1, March 2008.
63 Iran and Azerbaijan are increasing border controls to combat rising drug smuggling along their borders. The police
chief of Iran’s Ardabil Province bordering Azerbaijan stated in January 2009 that one ton of drugs had been confiscated
at the border town of Bilehsaver, that $350,000 had been spent to build a border fence, and that a border police
battalion was being formed to guard this border. Open Source Center. January 11, 2009, Doc. No. IAP-950067. An
Azerbaijani newspaper in mid-2008 claimed that “one of the leading roles in [drug transit through Azerbaijan] is said to
be played by [treaty-protected] lorries of Iranian companies.... [These] lorries are checked only at the Astara checkpoint
[at the border with Ardabil].... We have to stress that many of these lorries head for Russia, Ukraine, and other CIS
countries.” The newspaper also asserted that “heroin processing labs operate in the Kurdamir District” and elsewhere in
Azerbaijan. CEDR, June 16, 2008, Doc. No. CEP-950057.
trafficking and appear motivated, according to the Report. They complain, however, that they
need more scanning equipment and canines trained in drug detection.
The South Caucasus states have only in recent years begun implementing effective export control 64
regimes to prevent the proliferation of weapons of mass destruction and associated technologies.
There are not as many nuclear fuel cycle-related facilities in the South Caucasus as elsewhere in
the former Soviet Union, but there are various nuclear research facilities and an operating nuclear
power reactor in Armenia. Virtually all of the facilities lacked adequate security systems such as
cameras and computerized accounting to safeguard medical and industrial nuclear materials and
wastes. Some radioactive materials that were inadequately documented during the Soviet era have
been discovered. Border and customs officials have halted some smuggling of WMD materials,
and are receiving increasing levels of U.S. and other international training and other assistance to 65
bolster their effectiveness (see also below, “U.S. Peace and Security Assistance”).
The South Caucasus states have worked to bolster their economic and defense capabilities by
seeking assistance from Western donors such as the United States, by seeking private investment,
by joining international organizations, and by cooperating with each other to limited degrees.
Georgia was the first state in the region to achieve World Trade Organization membership in June
2000, followed by Armenia in December 2002. Azerbaijan has encouraged foreign firms and
governments to become involved in energy development to ensure the widest possible
international interest in Azerbaijan’s independence and to attempt to influence attitudes toward
the NK conflict.
Georgia, as a major conduit for oil and gas pipelines,66 and because of its economic and
democratic reforms, has emerged as the key to regional stability and security, according to some 67
observers. By the same token, instability in Georgia could threaten the whole region by
providing greater opportunities for outside powers to meddle. Georgia has working relations with
the other two states of the region and with Turkey, and is a member with Azerbaijan in GUAM
64 NIS Nuclear Profiles Database. Center for Nonproliferation Studies, Monterey Institute of International Studies.
Armenia has the most developed export control system on paper. The State Department’s Country Reports on
Terrorism 2004 states that Armenian border guards in 2004 seized 42 grams of non-weapons-grade radioactive
material, demonstrating that “they are capable of detecting and interdicting nuclear material.”
65 NIS Trafficking Database. Center for Nonproliferation Studies, Monterey Institute of International Studies. Among
prominent smuggling attempts, Azerbaijani border troops halted a shipment of Russian missile parts bound for Iran in
March 1998 and about one kilogram of uranium 235 allegedly bound for Iran in April 2000. In early 2002, Russian and
Georgian media reported that two of eight Soviet-era small nuclear generators containing strontium-90 were missing in
Georgia. Georgian and Russian authorities on January 25, 2007, verified media reports that Georgian security in
cooperation with U.S. agencies in early 2006 had apprehended a Russian citizen who was attempting to smuggle a tiny
amount of highly-enriched uranium into Georgia. CEDR, April 27, 1998, Doc. No. FTS-558; February 4, 1999, Doc.
No. FTS-1112; May 3, 2000, Doc. No. CEP-9; January 24, 2002, Doc. No. CEP-55; January 25, 2007, Doc. No. CEP-
950026; January 25, Doc. No. CEP-950351.
66 The oil pipeline from Baku, Azerbaijan, through Tbilisi, Georgia, to Ceyhan, Turkey (the BTC pipeline) and an
associated South Caucasus Pipeline (SCP) for gas from Azerbaijan’s offshore Shah Deniz fields to Turkey’s gas
67 Robert Cutler, Newsbase FSU Oil and Gas Journal, June 6, 2000.
(see below). Georgia and Azerbaijan have common interests that have encouraged limited
cooperation. Both face separatism, perceive Russia as domineering, seek revenues from oil and 68
gas transport, and are pro-Western. Armenia seeks good relations with Georgia so that it may
retain transport links to Russia, including for energy supplies. During and after the August 2008
Russia-Georgia conflict, President Sargisyan carefully maneuvered to retain good relations with
both Russia and Georgia. Georgia must balance its relations with the other two regional states to 69
prevent one or the other from accusing it of favoritism regarding the NK conflict. Armenia has
increasing links (and proposals for links) with Iran. Trade ties with Iran already permit Armenia
to export electricity and import oil and gas from Iran and to receive products shipped via Iran.
Gas Prices. In early 2006, Russia charged all three states much more for gas. In May 2006,
Armenia agreed to relinquish various energy assets to Russian firms as partial payment for this
price increase. Some critics have alleged that Russia now has virtual control over Armenia’s 70
• In late 2006, Russia again requested price hikes for 2007. In the case of Georgia,
Russia’s state-controlled Gazprom gas firm announced in early November 2006
that it would cut off gas supplies to Georgia by the end of the year unless Georgia
agreed to a 100% price hike or sold its main gas pipeline to Gazprom. Spurred by
Russia’s economic sanctions and this announcement, Georgia negotiated an
agreement to receive some Azerbaijani gas via the new South Caucasus Pipeline
(SCP; see below) and another small existing pipeline. It also agreed to continue
to purchase some higher-priced gas from Gazprom. In the case of Azerbaijan,
Russia’s requests for higher prices and reductions in the amounts of gas and
electricity supplies led President Aliyev to announce that as of 2007, the country
would no longer purchase Russian gas (however, agreement was reached to
provide Russian electricity, but at a higher price).
• During the winter of 2007-2008, Gazprom demanded even higher prices, and
Georgia was forced to continue to purchase some gas from Gazprom to meet its
• During the winter of 2008-2009, Gazprom has continued to supply some gas to
Georgia despite the extremely poor relations between Russia and Georgia in the
wake of the August 2008 conflict. Russia has an incentive to work out a
continued supply arrangement with Georgia because some of the Russian gas
transits Georgia to Armenia.
The activities of Russia’s state-controlled United Energy Systems (UES) in Armenia and Georgia
also have raised concerns among some observers. UES in mid-2005 gained management control
or ownership over virtually all of Armenia’s electric power system, including the Metsumor
68 Another issue of contention, border delimitation, reportedly moved closer toward resolution in 2005. CEDR, May 9,
2005, Doc. No. CEP-39.
69 CEDR, February 2, 2005, Doc. No. CEP-347.
70 Despite earlier denials, Armenian officials announced in late October 2006 that Gazprom would assume effective
management control of an Iranian-Armenian gas pipeline under construction. According to analyst Vladimir Socor, this
acquisition may have provided Gazprom with another source of inexpensive foreign gas so that it could boost sales of
its own gas to Europe. Also, this acquisition may have signaled Russia’s intent to block use of Armenia as a pipeline
route independent of Russian control. Eurasian Daily Monitor, November 3, 2006. See also RFE/RL, Armenia Report,
October 31, 2006.
nuclear power plant. In Georgia, UES in late 2003 bought controlling interests in the Tbilisi
electrical grid and several hydro- and thermal power generation facilities.
All three states have been faced with constructing military forces to address regional conflicts and
low-intensity threats. Poverty and the need for know-how and equipment have forced them to
seek outside assistance. Armenia has proceeded the farthest. It suppressed most paramilitary th
forces potentially dangerous to civil order in the early 1990s. The Yerevan-based Soviet 7 Army,
disbanded in 1992, provided a ready-made model for Armenia’s armed forces. Russia provides
officer training and military equipment, including regional air defenses, under the CIS Collective
Security Treaty (CST) and bilateral accords. Azerbaijan’s rejection of many ties with the Russian
military stymied its early military development. Azerbaijan’s and Georgia’s reliance until the
mid-1990s on paramilitary forces to combat regional separatism contributed to wide civil disorder
in both states.
All three of the South Caucasus states have joined NATO’s Partnership for Peace (PFP) to
facilitate the modernization of their armed forces and to increase ties with Europe. PFP status
seeks to assure the South Caucasus states that they are not in a “power vacuum” or completely
vulnerable to neighboring powers. Georgia has looked to links with PFP as the road to eventual
NATO membership that will provide security guarantees against possible Russian revanchism. In
2004-2005, all three states agreed with NATO to participate in Individual Partnership Action
Plans (IPAPs) for military and civil-military reforms.
The June 2004 NATO summit pledged enhanced attention to the South Caucasian and Central
Asian PFP members. A Special Representative of the NATO General Secretary was appointed to
encourage democratic civil-military relations, transparency in defense planning and budgeting,
and enhanced force inter-operability with NATO. While including the South Caucasus states in
NATO activities, NATO endeavored to reassure Russia—by including it as a member of PFP and
by establishing a NATO-Russia Council—that it was not excluding Russia from a regional role as
long as Moscow supported regional stability, democratization, and the creation of free markets.
Georgia. On September 21, 2006, NATO approved Georgia’s application for “Intensified
Dialogue” with the alliance, ostensibly because of Georgia’s military reform progress, although
NATO also emphasized that much more reform work needed to be done before Georgia might be
considered for NATO membership. Although the United States urged that Georgia be considered
for a Membership Action Plan (MAP; preparatory to membership), NATO’s Riga Summit in
November 2006 reaffirmed support for an intensified dialogue to assist Georgia in implementing 71
reforms. The NATO Freedom Consolidation Act of 2007 (P.L. 110-17), signed into law in April
2007, urged NATO to extend a MAP for Georgia and designated Georgia as eligible to receive
security assistance under the program established by the NATO Participation Act of 1994 (P.L.
71 NATO. North Atlantic Council. Riga Summit Declaration, November 29, 2006. President Bush stated that the United
States supported Georgia’s NATO membership. Remarks By President Bush In Riga, Latvia, PR Newswire, November
28, 2006. Sen. Richard Lugar urged soon granting Georgia a MAP and suggested that NATO’s energy security would
be facilitated by eventually offering NATO membership to Azerbaijan and Kazakhstan. Senator Lugar Delivers
Remarks at the Riga Summit, Latvia, Congressional Quarterly Transcripts, November 27, 2006.
At a meeting with NATO Secretary General Jaap de Hoop Scheffer on February 14, 2008, the
head of Georgia’s mission to NATO transmitted a note from President Saakashvili formally
requesting the alliance to invite Georgia to participate in a Membership Action Plan (MAP). On
February 14, 2008, the Senate approved S.Res. 439 (sponsored by Senator Lugar), which urged
NATO to award a MAP to Georgia and Ukraine as soon as possible. A NATO MAP for Georgia
was a matter of contention at the April 2008 NATO Summit. Although Georgia was not offered a
MAP, the Alliance pledged that Georgia would eventually become a member of NATO. After the
Russia-Georgia conflict, a NATO-Georgia Commission was set up to further systematize NATO
reform guidance. At the December 2008 NATO foreign ministerial meeting, the United States
reportedly agreed with a British proposal to not push for a MAP for Georgia, and instead to
formulate Annual Action Programs for Ukraine and Georgia to assist them in the “significant
work left to do” in meeting the requirements for NATO membership. The United States took the
position that the two countries might work toward Alliance membership without formally 72
undertaking MAPs but still carrying out the requirements of MAPs.
Azerbaijan. Illustrating support for PFP, Azerbaijani troops served as NATO peacekeepers in
Kosovo as part of the Turkish battalion in the German sector, and Georgian troops served as part
of the Turkish battalion in the U.S. sector.
Armenia. Armenia announced in July 2000 that it aimed to increase activities with PFP. Its
Foreign Ministry argued that Armenia was falling behind Azerbaijan and Georgia in such
activities and wished to ensure its security by developing the widest possible international ties,
especially with the world’s “most influential” security body. The Foreign Ministry explained that
Armenia had been reluctant to increase ties with NATO because of possible Russian reactions but
that Russia itself had developed such ties. To support NATO, Armenia began to send
peacekeepers to Kosovo in 2003 as part of the Greek battalion. Armenia’s officials also stressed
that participation in PFP kept the country abreast of PFP training and aid provided to 73
Azerbaijan. Armenia decided in December 2005 to further advance its relationship with NATO
by adopting an Individual Partnership Action Plan, but then-President Kocharyan stated that
Armenia was not seeking NATO membership.
At an April 2003 summit, Armenia joined Russia, Belarus, Kazakhstan, Kyrgyzstan and
Tajikistan in creating the CST Organization (CSTO), which set up a secretariat for operational 74
military planning and budget coordination. The main stated objectives of CSTO are to combat
terrorism and drug trafficking, particularly in Central Asia, with an initial focus on establishing
the rapid deployment force in Kant, Kyrgyzstan. Many observers view the creation of the CSTO
as a mainly Russian initiative to increase security influence over member-states to counter U.S.
72 According to Secretary Rice, how Ukraine and Georgia attain NATO membership, and “what mechanisms are used –
we believe that the NATO-Georgia Commission and the NATO-Ukraine Commission can be the bodies with which we
intensify our dialogue and our activities with Georgia and NATO. And therefore, there does not need at this point in
time to be any discussion of MAP. And so this is the nature of this. It really is just a question of how we would execute
the Bucharest decision. It is not a change in policy.” U.S. Department of State. Remarks on the NATO Foreign
Ministers Meeting, November 26, 2008.
73 CEDR, July 26, 2000, Doc. No. CEP-63; January 18, 2003, Doc. No. CEP-166; February 12, 2003, Doc. No. CEP-
174; February 16, 2003, Doc. No. CEP-66; May 19, 2003, Doc. No. CEP-213.
74 CEDR, April 29, 2003, Doc. No. CEP-96; April 29, 2003, Doc. No. CEP-132.
and other outside influence.75 By establishing a joint military leadership, the CSTO is supposed to
be able to quickly decide on sending troops to troublespots. Its possible usefulness appeared
sorely tested by the “tulip revolution” in Kyrgyzstan in March 2005. Although Russian Gen.
Nikolay Bordyuzha, the secretary general of CSTO, urged intervention, Kyrgyzstan’s then-
President Askar Akayev reportedly vetoed his offers. While the CSTO appears focused on Central
Asian security, Azerbaijan and Georgia have raised concerns about the CSTO’s possible role in
the South Caucasus. In March 2007, Bordyuzha highlighted the benefits that Armenia receives
from membership, including being able to purchase Russian weaponry at a discount and to send
its troops to Russian military schools. He also mentioned its efforts to publicize common foreign
policies, among them CSTO support for restrictions on electoral observers from the OSCE and 76
opposition to the discussion of “frozen conflicts” in the United Nations.
At the November 1999 OSCE Summit and other forums, former President Kocharyan, former
Turkish President Suleyman Demirel, and former presidents Shevardnadze and Aliyev called for
the creation of a South Caucasus security system that would provide regional states and external
powers with shared stakes in regional stability. Kocharyan explained that his “Round Table on
Stability” proposal was prompted by the withdrawal of Azerbaijan and Georgia from the CIS
Collective Security Pact. He called for the creation of a sub-CIS system whereby the three
regional states, buttressed by their neighbors, and aided by the EU and the United States, would
guarantee regional stability. Iran endorsed the creation of such a pact, though calling for it to 77
initially exclude external powers.
Seeking to play a leading role in forming such a pact, Putin convened side meetings with the
leaders of the three Caucasus states during CIS summits in 2000 (meetings of lower-level
officials of the four states had begun in 1997), but the region’s leaders appeared to disagree with
Putin that Russia and other “Caucasus countries must alone shape the region’s fate,” excluding
outside interests. The last meeting of the so-called “Caucasus Four” took place in Moscow in
September 2003 among the region’s legislative speakers. A meeting planned for early 2004 in
Tbilisi was apparently sidelined by Georgia’s “rose revolution.” Although Russia and Armenia
called for the resumption of “Caucasus Four” meetings, the Saakashvili government balked at 78
participating in the Russia-led grouping, rendering it moribund.
75 Ibragim Alibekov and Sergei Blagov, Eurasia Insight, April 29, 2003.
76 ITAR-TASS, March 15, 2007; CEDR, March 16, 2007, Doc. No. CEP-950249. According to Armenian Foreign
Minister Oskanyan, Article 4 of the CST (“in case an act of aggression is committed against any of the member-states,
all other member-states will render it necessary assistance, including military, as well as provide support with the
means at their disposal through an exercise of the right to collective defense”) pertains to aggression from outside the
CIS, so does not pertain to the Armenia-Azerbaijan conflict (since Azerbaijan is a member of the CIS). Interview,
October 26, 2006.
77 Gerald Libaridian, reported in RFE/RL Caucasus Report, June 15, 2000; Wayne Murray, reported in Caucasus
Reporting Service, no. 38, June 30, 2000.
78 Nezavisimaya gazeta, May 17, 2000, p. 1; Caucasus Stability Pact - Iran Counters Russian Expansion, May 25,
2000; CEDR, September 30, 2003, Doc. No. CEP-386. A planned “Caucasus Four” meeting of legislative speakers
planned for November 2006 on the sidelines of a CIS speakers summit in St. Petersburg apparently was not held. At the
CIS speakers’ meeting, Russian Duma Speaker Boris Gryzlov reportedly refused to meet with Georgian Speaker Nino
Burjanadze. CEDR, November 16, 2006, Doc. No. CEP-950221.
Soon after the breakout of conflict between Russia and Georgia in August 2008, Turkish Prime
Minister Recep Tayyip Erdogan proposed creating a “Caucasus Stability and Cooperation
Platform” or forum to pursue regional peace, security, and economic development. He proposed
that members include the three South Caucasian states, Turkey, and Russia (but not the United
States or others), and compared the initiative to the EU’s 1999 Balkan Stability Pact. Erdogan
traveled to Azerbaijan later in August 2008, where President Aliyev endorsed the proposal, and
Turkish Foreign Minister Ali Babajan visited Moscow in September 2008, where Russian Foreign
Minister Lavrov endorsed the proposal. Armenia also welcomed the proposed regional talks, and
Turkish President Abdullah Gul discussed it with President Sarkisyan when he visited Yerevan in
September 2008. Critics of the proposal argued that, unlike the Balkan states in 1999, which were
united in their aspirations for integration with Europe, “the five proposed members of the
Caucasus Stability and Cooperation Pact have no shared objective or vision that would serve as 79
an incentive for setting aside their differences.” Instead, Azerbaijan and Armenia are in conflict
over NK, Turkey and Armenia have strained ties, and Russia and Georgia have severed relations.
Also, these critics argued, all countries bordering the Black and Caspian Seas should be
considered regional neighbors and should be included.
In another area of regional cooperation, the GUAM states (formed from the initials of the 80
member-states: Georgia, Ukraine, Azerbaijan and Moldova) share common interests in resisting
Russian domination and in securing energy transport and supply that is outside Russian control.
Formed in 1997, Azerbaijan, Georgia, and Ukraine in early 1999 held joint military exercises
aimed at protecting the Georgian oil pipeline. Russia has opposed GUAM as usurping CIS
functions, but also called for GUAM to admit Moscow as a member. In 2000, the members 81
agreed to convene regular summits and ministerial-level conclaves. At the July 2002 meeting in
Yalta, GUAM countries signed an “Agreement on Cooperation in the Battle against Terrorism,
Organized Crime and Other Dangerous Types of Crime.” At a Georgia-Ukraine presidential
summit in May 2003, the two leaders called for naming military coordinators to work out security
cooperation within GUAM, with Georgian officials arguing that such cooperation could help 82
prepare the members for NATO membership.
The “rose revolution” in Georgia in late 2003, the “orange revolution” in Ukraine in late 2004,
and political reforms in Moldova gave GUAM a democratic orientation. At a meeting in April
2005, the members and invited guests (including Lithuania and Romania) proclaimed the goal of
consolidating democracy in the Black Sea region and beyond, called for ending regional “frozen
conflicts,” and discussed energy transport cooperation. Ukrainian President Viktor Yushchenko
suggested that GUAM focus on integration with NATO and the EU. All these subjects had
concerns about Russian behavior at their core. The first GUAM-sponsored Virtual Center for
Fighting Against Terrorism, Organized Crime, Drug Trafficking and Other Dangerous Crimes
79 “Lousy Timing Could Overshadow Turkey’s Logical Caucasus Solution,” Radio Free Europe, September 12, 2008.
80 The group admitted Uzbekistan as a member in April 1999, but Uzbekistan stopped participating in most activities in
2002 and formally withdrew in May 2005. In a letter announcing the withdrawal, Karimov reportedly stated that
Uzbekistan disliked “the organization’s emphasis on the resolution of frozen conflicts, the formation of joint armed
blocs, and the review of existing security systems,” outside its geographical area of interests. CEDR, May 9, 2005, Doc.
81 CEDR, March 17, 2000, June 19, 2000, and September 9, 2000.
82 CEDR, May 7, 2003, Doc. No. CEP-224.
opened in Azerbaijan in July 2005 and the second in Kyiv, Ukraine, in May 2006. These centers
in member-states are supposed to exchange data, but reportedly such cooperation still was below
par in early 2007.
In May 2006, the heads of state of the GUAM countries signed a charter renaming the
organization “GUAM: The Organization for Democracy and Economic Development” and
proclaiming the of goal of economic and security integration with the West. Combating crime,
terrorism, and separatism were highlighted. In June 2006, the Ukrainian defense minister
proposed that GUAM form a peacekeeping force, including to possibly substitute for Russian
peacekeepers in the “frozen conflict” regions. In September 2006, the GUAM delegations to the
U.N. General Assembly succeeded in getting their proposal for a discussion of “protracted
conflicts” in the GUAM states placed on the agenda. In October 2006, GUAM foreign ministers
issued a statement calling on Russia to refrain from “unilateral actions” against Georgia and
supporting Georgia’s call for Russian-Georgian talks on introducing international forces in the
separatist areas. In December 2006, Colonel-General Sergiy Kirichenko, chief of the General
Staff of Ukraine’s armed forces, reportedly announced plans to form a GUAM peacekeeping 83
force to serve in U.N. peacekeeping operations.
GUAM has received significant encouragement from the United States, including a 84
Congressional authorization for funding (The Security Assistance Act of 2000; P.L. 106-280),
that some observers have viewed as sustaining the group. In December 2002, then-Assistant
Secretary Jones and the GUAM ambassadors adopted a framework program of projects to
facilitate regional trade and transport, the improvement of border and customs services, and the 85
fight against terrorism, organized crime and drug-trafficking. Under the accord, the United
States funded pilot programs of customs and border training and GUAM law enforcement offices,
with rotating meetings in each of the GUAM capitals of expert level working groups. The United
States voted for putting the discussion of “protracted conflicts” in GUAM member-states on the
agenda of the 2006-2007 session of the U.N. General Assembly. The U.S. representative argued
that discussion would not “gravely” harm ongoing peace talks, but Russia and Armenia warned of 86
possible negative effects. The budget requests for FY2005 and FY2006 called for FREEDOM
Support Act (FSA) funds to be used to bolster Moldova’s and Ukraine’s participation in GUAM,
and the budget request for FY2007 called for some portion of $29.4 million for FSA regional
programs to be used to fund GUAM activities. GUAM was not mentioned in the FY2008 budget
request. In the FY2009 budget request, the Administration called for aid to GUAM to help them
set up a coordination mechanism for law enforcement officials to combat trans-border criminal
83 CEDR, April 22, 2005, Doc. No. CEP-238; April 25, 2005, Doc. No. EUP-87; April 25, 2005, Doc. No. CEP-102;
May 25, 2006, Doc. No. CEP-4002; October 16, 2006, Doc. No. CEP-950116; October 17, 2006, Doc. No. CEP-
950149; December 13, 2006, Doc. No. CEP-358001; March 2, 2007, Doc. No. CEP-950315. According to Georgian
analysts Pikria Asanishvili and Avtandil Tukvadze, GUAM will not meet its full potential until Armenia is admitted—
making GUAM a true regional organization—and the people of the South Caucasus realize that regional integration
will benefit them. Central Asia and the Caucasus, no. 3, June 30, 2005.
84 P.L. 106-280 authorized assistance to GUAM and Armenia for International Military Education and Training
(IMET), Foreign Military Financing (FMF), nonproliferation and export control, and antiterrorism assistance for
FY2001-FY2002. Section 907 provisions blocking FMF and IMET aid to Azerbaijan remained in place until FY2002.
85 U.S. Department of State. Office of the Spokesman. Joint Statement of the United States, Azerbaijan, Georgia,
Moldova, Ukraine, and Uzbekistan, December 23, 2002.
86 CEDR, September 14, 2006, Doc. No. CEP-950244. U.N. General Assembly. Sixty-First Session. General
Committee. Summary Record of the 1st Meeting on 12 September 2006, A/BUR/61/SR.1, October 13, 2006; U.N. nd
General Assembly. Sixty-First Session. 2 Plenary Meeting, A/61/PV.2, September 13, 2006.
activities. Funding of $123,000 was requested for the Eurasian regional account for combating
trans-national crime, some of which would be used for the GUAM program.
At the July 2007 Summit of the Heads of State of GUAM, held in Baku, Azerbaijan, the
presidents (Moldova’s president did not attend) agreed to form a permanent secretariat and eight
committees handling economic, trade, security and cultural issues.
At the July 2008 Summit of the Heads of State of GUAM, held in Batumi, Georgia, energy
security was a primary topic. Guests included the Presidents of Poland and Lithuania and
emissaries from the United States, the EU, and other countries. The presidents of the member-
states (Moldava’s president did not attend, but the interior minister and deputy foreign minister
attended) called for the further development of east-west rail and other transport links and
endorsed the delivery of oil from Baku to Poti, and across the Black Sea to Kerch, Ukraine, and
thence to the Odessa-Brody-Plotsk-Gdansk pipeline. They also proclaimed adherence to the
territorial integrity of the member-states and the peaceful resolution of the “frozen conflicts.”
Moldova’s emissaries continued to oppose proposals to create a GUAM peacekeeping force and 87
urged that the organization focus on economic cooperation.
Issues of regional security and the balance of regional power, as well as of economic advantage,
have increasingly come to be wrapped up with the issue of pipeline politics. The discovery of
major new oil and gas resources in the Caspian Sea in recent years has contributed to the strategic
significance of the South Caucasus region as an energy producer and transport corridor. The U.S.
Energy Department reports 7-13 billion barrels of proven oil reserves and 30 trillion cubic feet of 88
proven natural gas reserves in Azerbaijan. Russia and Kazakhstan have reported finding energy
reserves in the Caspian Sea rivaling those of Azerbaijan. Azerbaijan faced many obstacles to fully
exploit and market its energy resources, including project financing, political instability, ethnic
and regional conflict, and pipeline security.
U.S. companies were shareholders in about one-half of about twenty international production-
sharing consortiums formed in the 1990s to carry out oil and gas exploration, appraisal,
development, and production. Many of these consortiums were dissolved after the firms did not
find commercially significant resources. The first was the Azerbaijan International Oil
Corporation (AIOC), formed to exploit the Azeri-Chirag-deepwater Gunashli (ACG) oil and gas
fields. In 1995, Heydar Aliyev and the AIOC decided to transport “early oil” (the first and lower
volume of oil from AIOC fields, along with other Azerbaijani oil) through two Soviet-era
pipelines in Georgia and Russia to ports on Russia’s Black Sea coast. The capacity of each of
these pipelines is around 100,000-115,000 barrels per day (bpd).
A “main oil” pipeline—with a capacity of one million bpd—began delivering oil from Baku
through Georgia to Turkey’s Mediterranean port near Ceyhan in June 2006. The Clinton
Administration launched a major campaign in late 1997 stressing the strategic importance and
suitability of this route as part of a “Eurasian Transport Corridor,” including possible trans-
87 Ministry of Foreign Affairs of Georgia. Official Documents of the GUAM Batumi Summit, at
88 U.S. Department of Energy. Energy Information Administration. Country Analysis Report: Azerbaijan, December
Caspian links to Central Asia. Volatile oil prices and questions about the amount of oil in the
Caspian region raised concerns among oil firms about financial risks of the route.
Political endorsement of the Baku-Tbilisi-Ceyhan (BTC) route was provided by a 1998 meeting
of the presidents of Turkey, Georgia, Azerbaijan, Kazakhstan, and Uzbekistan, and then-U.S.
Energy Secretary Bill Richardson, where they pledged to cooperate to ensure the commercial
viability of the route. An even more important “Istanbul Protocol” on construction of the BTC oil
pipeline was signed in November 1999 by Azerbaijan, Georgia, Turkey, and Kazakhstan (with
then-President Clinton in attendance). It is reported that the pipeline cost $4 billion to build.
Kazakhstan has agreed to barge some oil across the Caspian Sea for transport through the
pipeline, helping to address under-utilization of the pipeline until oil production increases in
Azerbaijan. A gas pipeline to Erzurum, Turkey was built parallel to the oil pipeline (the South
Caucasus Pipeline or SCP), and was inaugurated in March 2007. The SCP section in Azerbaijan
and Georgia, completed earlier, was pressed into service in the winter of 2006-2007 to deliver
some gas from Azerbaijan’s offshore Shah Deniz gas fields to Azerbaijani and Georgian
customers (another small pipeline also delivered Azerbaijani gas to Georgia). Azerbaijan had
balked at paying substantially increased prices for Russian gas, and Georgia had reduced its own
purchases of Russian gas after the price increase.
Some analysts argue that the opening of the BTC pipeline and associated SCP, along with the re-
opening of the region’s roads, railways, and other transport, may well transform the economies of
the region by bringing substantial energy transit fees, energy revenues, and trade. Others are less
optimistic, warning that the states still maintain several transport blockades and barriers. Many in
Armenia are concerned that Azerbaijan is channeling substantial revenues from oil and gas
exports into a military buildup aimed against NK. However, former Foreign Minister Oskanyan
and others have suggested that the completion of the pipelines could make Azerbaijan reticent to 89
launch a conflict that could result in the destruction of the pipelines.
In congressional testimony in March 2008, Gen. Brantz Craddock, the Commander of the U.S.
European Command, stated that “the Caucasus’ geostrategic location makes the region an
important area for the United States and its Allies. Caucasus nations actively support Iraqi
Freedom and ISAF. They provide alternative hydrocarbon sources from the Caspian Sea and
alternative routes of access to Central Asian hydrocarbon reserves. It is an important region for
European energy diversification.” He stressed that to counteract the harm to regional stability
posed by corruption, ethnic conflicts, and Russian meddling, “the Caucasus require sustained and 90
coordinated interagency efforts.” Former Assistant Secretary of State Elizabeth Jones stated in
2003 that, thanks to U.S. security assistance, “as each day passes, the countries of Central Asia
89 Edmund Herzig, The New Caucasus. London, Royal Institute of International Affairs, 1999, p. 93; Amy Myers Jaffe
and Robert Manning, Survival, Winter 1998-1999, p. 115; CEDR, January 14, 2004, Doc. No. CEP-153.
90 U.S. Senate. Committee on Armed Services. Statement of General Bantz J. Craddock, March 13, 2008. In
congressional testimony in March 2005, Gen. James Jones, then the head of USEUCOM, stated that “the Caucasus is
increasingly important to our interests. Its air corridor has become a crucial lifeline between coalition forces in
Afghanistan and our bases in Europe. Caspian oil, carried through the Caucasus, may constitute as much as 25 percent
of the world’s growth in oil production over the next five years ... This region is a geographical pivot point in the
spread of democracy and free market economies to the states of Central and Southwest Asia.” U.S. Congress. Senate.
Committee on Armed Services. Testimony by Gen. James Jones, March 1, 2005.
and the Caucasus are becoming better equipped, better trained and better coordinated with one
another to deal with transnational threats.” She also stated that such U.S. security assistance was 91
“integrated” with programs to enhance human rights and political and economic reforms.
Conflict resolution is part of U.S. policy to enhance stability in the region. Among the first
foreign policy acts of the George W. Bush Administration was the hosting of peace talks in Key
West, Florida between Armenia and Azerbaijan. Then-President Bush reportedly pledged to
former President Shevardnadze in March 2003 that after the U.S.-led coalition had eliminated
WMD in Iraq, the United States would enhance its diplomatic efforts to end separatist conflicts in
Georgia. President Bush re-emphasized this support during his May 2005 visit to Georgia. In
yearly appropriations for foreign operations, Congress has called on the Administration to pursue
conflict mitigation in the region.
In some respects, U.S. policy has tended to view the South Caucasian countries (and those of
Central Asia) as part of the Caspian Sea-Black Sea region, to include the Black Sea littoral states
in the west and Afghanistan in the east. This view is partly the result of the air transit of U.S. and
NATO forces and supplies based in Europe across these countries to the Afghan military theater.
Also, U.S. policy has tended to focus on westward oil and gas transit routes from Caspian
regional states. On the other hand, the U.S. State Department in 2005 implemented a persistent
congressional call to re-assign responsibility for the Central Asian states to the Bureau for South
Asian Affairs, leaving responsibility for the South Caucasus to the Bureau for European and 92
Eurasian Affairs. U.S. military operational planning also separated these regions. In 1999, the
Central Asian states were reassigned to USCENTCOM’s area of responsibility, covering Horn of
Africa countries and many Middle Eastern and South Asian states, leaving the South Caucasus
states (and the Caspian Sea) in USEUCOM’s area of responsibility, covering Europe.
As reflected in the Congressional Budget Justification for Foreign Operations (for FY2007,
FY2008, and FY2009):
• U.S. national interests in Armenia have included cooperation in the war on
terrorism and combating arms and other illicit trafficking. A durable and peaceful
resolution of the Armenia-Azerbaijan conflict acceptable to both parties is key to
U.S. interests that include stability in the South Caucasus, regional economic
cooperation that ends Armenia’s isolation, and improved Armenian-Turkish
relations. Armenia’s shift away from a war footing would also further U.S.
interests in Armenia’s economic development and improved standards of living.
• U.S. national interests in Azerbaijan have included cooperation in the war on
terrorism, the advancement of U.S. energy security, and progress in democratic
and economic reforms, which enhance internal stability. Such stability will
reduce tendencies for Azerbaijani conflict with Iran and Armenia. Azerbaijan’s
creation of a transparent and corruption-free market economy is deemed essential
to its role as a vital link in the trans-Caspian energy corridor, and it has the
“potential to play a significant role in the diversification of American and global
energy supplies.” Azerbaijan’s conflict with Armenia over Azerbaijan’s Nagorno
91 Elizabeth Jones, Speech at the University of Montana, April 10, 2003.
92 Jaroslaw Skonieczka, A Black Sea strategy, according to some observers, would “de-link” the South Caucasus
countries from the Central Asian states, so that the former might be more clearly viewed as European countries and
included in European institutions. The Black Sea Region, NATO International Staff, 2004.
Karabakh area, and its tensions with Iran upset stability in the critical South
• “Georgia plays a key role in furthering U.S. interests” and has been a “premier
partner” in the global war on terrorism by providing troops for coalition
operations in Iraq and other support. Since its late 2003 “revolution of roses,”
Georgia has been a model of free market democratic reform and a close partner
in supporting U.S. democratization goals in the Soviet successor states and
beyond. Georgia is becoming “a key conduit through which Caspian Basin
energy resources will flow to the West, facilitating diversification of energy
sources for the United States and Europe.”
In the wake of September 11, 2001, U.S. policy priorities shifted toward global anti-terrorist
efforts. In the South Caucasus, the United States obtained quick pledges from the three states to
support U.S. and coalition efforts in Afghanistan, including overflight rights and Azerbaijan’s and
Georgia’s offers of airbase and other support. The State Department’s Country Reports on Global
Terrorism has highlighted U.S. support for Azerbaijan’s and Georgia’s efforts to halt the use of
their territories as conduits by international mujahidin and Chechen guerrillas for financial and
logistic support for Chechen and other Caucasian terrorists.
Then-President Shevardnadze immediately condemned the “scum” who attacked the United
States on September 11, 2001, and one week later offered Georgian “airspace and territory” for
use by U.S. troops. During his U.S. visit with President Bush in October 2001, he reiterated
Georgia’s “full cooperation and solidarity” with the U.S. and coalition actions in Afghanistan, and
the full use of Georgia’s airspace and airbases. He also reportedly asked for U.S. training 93
assistance for Georgia’s security forces to help them reassert control in the Pankisi Gorge. On
February 11, 2002, the U.S. Embassy in Georgia declared that the United States was ready to help
Georgia combat several dozen al Qaeda and other terrorists who had fled to the Caucasus from
Afghanistan. Some had relocated to Georgia’s Pankisi Gorge area bordering Chechnya, where
they maintained links with Chechen terrorists. On February 27, 2002, then-President Bush
announced that the United States would provide equipment and training to help Georgia rout al
Qaeda influences. The next day, the U.S. Defense Department announced plans for a “Georgia
Train and Equip Program” (GTEP), as part of the global war on terrorism (see also below “U.S.
Peace and Security Assistance”).
Russia initially reacted critically to the U.S. announcement of the GTEP, but then-President
Vladimir Putin on March 1, 2002, stated that he had received assurances from then-President
Shevardnadze that the United States was not seeking permanent bases. He stressed that “we
support this fight [in the Pankisi Gorge] no matter who takes part in it,” although he called for
Russia’s participation. Then-National Security Advisor Condoleezza Rice on May 11, 2002,
stated that Russia was a “stalwart asset and friend” in viewing the GTEP as “helpful to Russian
93 According to Patterns of Global Terrorism 2002, p. 29, the United States strongly urged Georgia to “regain control
of the Pankisi Gorge,” where terrorists with links to al Qaeda threatened the security of both Georgia and Russia.
Georgia contributed about 50 troops for peacekeeping in Afghanistan during Afghan elections in
late 2004-early 2005. In early 2007, President Saakashvili announced that Georgia intended to
eventually send 200-400 troops to support NATO in Afghanistan. Reportedly, before the August
2008 Russia-Georgia conflict, the United States had urged Georgia not to end its military support
for coalition actions in Iraq upon sending its troops to Afghanistan.
The day after the terrorist attacks on the United States, Azerbaijan’s then-President Heydar Aliyev
averred that Azerbaijan was a “strategic partner” of the United States and would join the United
States in operations against terrorism. Azerbaijan granted blanket overflight rights and
intelligence support and offered the use of its bases. After the commencement of air operations in
Afghanistan on October 6, 2001, Heydar Aliyev endorsed coalition actions in a phone
conversation with then-Secretary Powell on October 9 and with President Bush on October 30,
2001. NK Armenians and U.S. diplomats have censured statements by Azerbaijani officials
calling for international “counter-terrorism” actions against NK. Azerbaijan in November 2002
deployed 30 troops to assist the U.S.-led coalition in Afghanistan.
Immediately after September 11, 2001, Armenia’s President Kocharyan offered condolences and
Armenia’s Department for Emergencies proffered rescue aid. On September 19, Armenian
Defense Minister Serzh Sarkisyan stated that Armenia would contribute to U.S.-led counter-
terrorism efforts, and Kocharyan the next day offered Armenia’s support for international counter-
terrorism efforts during a meeting with the U.S. Ambassador to Armenia. On September 27, the
presidential press service reported that this support included military overflight rights, and other
reports mentioned intelligence sharing. While supporting diplomatic efforts to convince the
Taliban to extradite those responsible for the September 11, 2001, attacks, after the start of
coalition actions in Afghanistan on October 6, Armenia expressed support for the “consistent and
decisive” military actions to safeguard the “global community” from international terrorism.
Armenia explained that this support was consistent with its foreign policy of complementarity,
which calls for good relations with both Russia, the United States, and Middle Eastern countries
such as Iran in order to buttress the country’s independence, gain support for NK Armenians, and 94
protect the interests of Armenians living in the Middle East and elsewhere.
In the U.S. Congress, the events of September 11, 2001, altered attitudes toward Sec.907, causing
the Members to permit the lifting of aid sanctions on Azerbaijan to facilitate regional cooperation
on anti-terrorism, conflict resolution, and energy development. Permanent Presidential waiver
authority was added to the Senate version of Foreign Operations Appropriations for FY2002
(H.R. 2506) and retained by the conference managers. The President may use the waiver
authority if he certifies to the Appropriations Committees that it supports U.S. counter-terrorism
efforts, supports the operational readiness of the armed forces, is important for Azerbaijan’s
border security, and will not harm peace talks between Armenia and Azerbaijan or be used for
offensive purposes against Armenia. The waiver may be renewed annually on or after December
94 Armenian Agency Praises Foreign Policy, BBC Worldwide Monitoring, September 24, 2001.
31, 2002, and sixty days after the exercise of the waiver authority, the President must send a
report to Congress specifying the nature of aid to be provided to Azerbaijan, the status of the
military balance between Armenia and Azerbaijan and the effects of U.S. aid on that balance, and
the status of peace talks between Armenia and Azerbaijan and the effects of U.S. aid on those
Days after being signed into law (P.L. 107-115), then-President Bush on January 25, 2002,
exercised the waiver. The most recent waiver was exercised in March 2008. The Bush
Administration maintained that the waiver was necessary to support U.S. counter-terrorism and
the operational readiness of U.S. Forces and coalition partners. It also stressed that the waiver
permitted U.S. border security aid for Azerbaijan and did not hamper efforts to settle the NK
Azerbaijan and Georgia are among the countries that openly pledged to support the U.S.-led
Operation Iraqi Freedom. Both offered to make their airfields available and to assist the United
States in re-building Iraq. Azerbaijan’s foreign minister on March 14, 2003, indicated
Azerbaijan’s preference for a peaceful solution, but stated that Azerbaijan would support U.S.
action in Iraq. Azerbaijan has raised concerns about the welfare of some 300-900,000 Turkic
speakers in Iraq. In August 2003, both Azerbaijan (150 troops) and Georgia (69 troops)
dispatched forces to Iraq. U.S. officials reportedly asked Azerbaijan and Georgia in April 2004 to
bolster their troop contributions in the face of Spain’s troop pullout.
Georgia boosted its deployment to 850 troops in 2005, at that time matching the contributions by 95
Australia and Ukraine. Azerbaijan’s troops helped U.S. Marines guard the Haditha dam.
Georgia’s troops guarded military and other facilities, helped patrol around the town of Ba’qubah,
and also helped protect U.N. and coalition offices in Baghdad’s “Green zone.” In March 2007,
President Saakashvili announced that Georgia intended to boost its troop deployment from 850 to
up to 2,000, which made Georgia the second-largest non-U.S. contributor (after the United
Kingdom). The bulk of the 2,000 troops pulled out in August 2008 at Georgia’s request in
connection with the Russia-Georgia conflict, and the rest pulled out by the end of November
Armenia initially did not support military intervention in Iraq, citing its concerns about the safety
of 15,000 ethnic Armenians residing in Iraq and 200,000 in the Middle East, concerns about
Turkish expansionism into Kurdish areas of Iraq, and affinities with the views of France,
Germany, and Russia. However, in September 2004, the presidents of Poland and Armenia agreed
that Armenian troops could serve with the Polish contingent in Iraq to carry out humanitarian
work. The Armenian legislature approved the planned deployment, and 46 personnel left for Iraq
in January 2005. Armenia’s troops pulled out of Iraq in late 2008.
Azerbaijan and Georgia reportedly suffered some economic losses associated with the active
phase of the Iraq conflict. BTC pipeline construction was reportedly temporarily delayed because
95 The U.S. and Azerbaijani troops allegedly do not fraternize, ostensibly because of “language and culture” barriers.
Tony Perry, CENTCOM NEWS, June 21, 2005; CEDR, May 20, 2005, Doc. No. CEP-27036; May 23, 2005, Doc. No.
CEP-20005. One of the Azerbaijani officers has alleged mistreatment by Azerbaijani commanders. CEDR, March 28,
2007, Doc. No. CEP-950314.
of material delivery problems, and Azerbaijan reported that its support for the United States led 96
several Islamic banks and investors to curtail operations or negotiations. Some Azerbaijanis
objected to support for coalition actions in an Islamic country.
In the wake of the Russia-Georgia conflict, Vice President Cheney visited Georgia and Azerbaijan
in early September 2008. In Georgia, he stated that “[President Mikheil Saakashvili] and his
democratically elected government can count on the continued support and assistance of the
United States.” He pledged U.S. aid to help Georgians “to overcome an invasion of your
sovereign territory, and an illegitimate, unilateral attempt to change your country’s borders by
force.... We will help [you] to heal this nation’s wounds, to rebuild this economy, and to ensure 97
Georgia’s democracy, independence, and further integration with the West.”
In Azerbaijan, he stated that “the United States has deep and abiding interests in [Azerbaijan’s]
well being and security.” He averred that the United States is “committed to achieving a
negotiated solution to the NK conflict, a solution that starts with the principle of territorial
integrity, and takes into account other international principles. Achieving a solution is more
important now than ever before; that outcome will enhance peace and stability in the region, and
Azerbaijan’s security, as well.” He praised Azerbaijan’s cooperation with Western countries in the
energy sphere and thanked Azerbaijan for its contribution to the global war against terrorism. He
also voiced U.S. support for “the people of Azerbaijan in their efforts, often in the face of great
challenges, to strengthen democracy, the rule of law, and respect for human rights, and to build a 98
prosperous, modern, independent country.”
On January 9, 2009, Secretary of State Rice and visiting Georgian Foreign Minister Grigol
Vashadze signed a U.S.-Georgia Charter on Strategic Partnership. Similar to the U.S.-Ukraine
Charter signed in December 2008 and the U.S.-Baltic Charter signed in 1998 with Estonia,
Latvia, and Lithuania, the accord states that the countries plan to “strengthen our relationship
across the economic, energy, diplomatic, scientific, cultural and security fields.”
• In the security realm, the Charter affirms that “a strong, independent, sovereign
and democratic Georgia, capable of responsible self-defense, contributes to the
security and prosperity not only of all Georgians, but of a Europe whole, free and
at peace.” The two sides “declare that their shared goal is the full integration of
Georgia into European and transatlantic political, economic, security, and defense
institutions,” and that “the United States and Georgia intend to expand the scope
of their ongoing defense and security cooperation programs to defeat [threats to
global peace and stability] and to promote peace and stability.” Such cooperation
will “increase Georgian capabilities and ... strengthen Georgia’s candidacy for
96 CEDR, March 25, 2003, Doc. No. CEP-226.
97 The White House. Office of the Vice President. Remarks by Vice President Cheney and President Saakashvili of
Georgia After Meeting, September 4, 2008.
98 The White House. Office of the Vice President. Remarks by Vice President Cheney and President Aliyev of the
Republic of Azerbaijan After Meeting, September 3, 2008.
NATO membership.” The accord highlights ties through the NATO-Georgia
• In the economic realm, the two countries “intend to pursue an Enhanced Bilateral
Investment Treaty, to expand Georgian access to the General System of
Preferences, and to explore the possibility of a Free-Trade Agreement.” Energy
security goals include “increasing Georgia’s energy production, enhanc[ing]
energy efficiency, and increas[ing] the physical security of energy transit through
Georgia to European markets. We intend to ... develop a new Southern Corridor
to help Georgia and the rest of Europe diversify their supplies of natural gas by
securing imports from Azerbaijan and Central Asia.”
• In the realm of democratization, the two countries “pledge cooperation to bolster
independent media, freedom of expression, and access to objective news and
information,” and to further strengthen the rule of law. The United States pledged 99
to train judges, prosecutors, defense lawyers, and police officers.
• Before the signing, Vashadze hailed the accord as a “stepping stone which will
bring Georgia to Euro-Atlantic structures, to membership within NATO, and to 100
[the] family of Western and civilized nations.” Deputy Assistant Secretary
Bryza stressed that the charter does not provide security guarantees to Georgia.
He also stated that U.S.-Georgian defense cooperation programs were still being 101
developed. Vashadze later claimed that the U.S. support in the Charter for
Georgia’s territorial integrity would help convince Russia eventually to rescind 102
its recognition of the independence of Abkhazia and South Ossetia. According
to some observers, the Charter aimed to reaffirm the United States’ high strategic
interest in Georgia’s fate, after it had appeared that the United States (and the
West) in recent months had acquiesced to increased Russian dominance in the 103
The United States has provided some security assistance to the region and bolstered such aid after
September 11, 2001. Cumulative budgeted funding for FY1992-FY2007 for peace and security
programs (including law enforcement) was $170.1 million for Armenia, $187.8 million for
Azerbaijan, and $542.3 million for Georgia (see Table 1 and Table 2). The total funding of $900
million for this region amounted to 20.5% of cumulative budgeted funding for all regional
programs and about 7-8% of the security assistance provided to all twelve Soviet successor states.
If such aid had been distributed equally to all twelve countries, the South Caucasus would have
received 25%. The relative dearth of such aid distributed to the South Caucasus mainly reflects
the historical U.S. emphasis on Global Threat Reduction in Russia, Ukraine, and Kazakhstan and
an emphasis on humanitarian, democratic, and economic assistance to the South Caucasus states.
99 U.S. Department of State. U.S.-Georgia Charter on Strategic Partnership, January 9, 2009.
100 U.S. Department of State. Signing Ceremony for the United States and Georgia Charter on Strategic Partnership:
Secretary Condoleezza Rice Remarks With Georgian Foreign Affairs Minister Grigol Vashadze in the Treaty Room,
January 9, 2009.
101 CEDR, January 7, 2009, Doc. No. CEP-950092.
102 CEDR, January 12, 2009, Doc. No. CEP-950240; Doc. No. CEP-21003.
103 David J. Smith, “US-Georgia Charter is Historic,” Potomac Institute for Policy Studies, January 12, 2009.
Also, until waived, Sec. 907 had prohibited much U.S. security aid to Azerbaijan, and by U.S.
policy, similar aid had not been provided to Azerbaijan’s fellow combatant Armenia. The waiver
permitted an increase in U.S. Peace and Security aid to Armenia from a budgeted $5.96 million in
FY2001 to an estimated $11.53 million in FY2002, and to Azerbaijan from $3.23 million to
$11.33 million. A U.S.-financed center for de-mining opened in Armenia in March 2002.
Similarly, the State Department announced in July 2002 that 25 U.S. Special Operations troops
were assisting U.S. nongovernmental organizations in training troops in Azerbaijan in de-mining.
In April 2002, President Bush issued Presidential Determination 2002-15, making Armenia,
Azerbaijan, and Tajikistan eligible to receive U.S. arms exports and services in order to
“strengthen the security of the United States.”
A U.S.-Azerbaijan Security Dialogue working group has met since 1996 to discuss mutual
security concerns. According to Deputy Foreign Minister Araz Azimov, a March 2006 meeting
discussed anti-terrorism, non-proliferation, and energy security cooperation, Azerbaijan’s
relations with NATO and the OSCE, the settlement of the NK conflict, and the military situation
in the Caspian region. In February 2007, Assistant Secretary of Defense Peter Rodman visited
Azerbaijan and met with Aliyev and other top officials. Reportedly, discussions were held on
energy security, cooperation with NATO, and anti-terrorism assistance, among other issues, and
were termed part of an “expanded dialogue” in the wake of President Aliyev’s April 2006 U.S.
visit. Marking a U.S. emphasis on encouraging the diversity of energy supplies in Europe,
Secretary of State Rice and Foreign Minister Elmar Mamedyarov signed a memorandum of
understanding in March 2007 on convening annual meetings to discuss energy security. Proposed
talks would include the facilitation of trans-Caspian energy transport, the construction of 104
pipelines to European markets, and aid in securing Azerbaijan’s oil and gas transport networks.
In July 2007, the U.S.-Azerbaijan Security Dialogue working group met and discussed “security
cooperation, energy cooperation, and promoting democracy through political and economic
reform,” with emphasis on “counterterrorism cooperation, maritime and border security
programs, nonproliferation concerns, missile defense, critical energy infrastructure protection,
Azerbaijan’s relations with NATO and related security sector reforms, and Azerbaijan’s current 105
chairmanship of ... GUAM.” In October 2008, Deputy Secretary of State John Negroponte
visited Azerbaijan to discuss security issues.
Table 1. Armenia, Azerbaijan, and Georgia: Basic Facts
South Caucasian State Armenia Azerbaijan Georgia Total
Territory (square miles) 11,620 33,774 26,872 72,266
Population (mid-2008 est.; millions) 2.97 8.2 4.6 15.77
Gross Domestic Product (billion dollars, 2007 est., 17.2 64.7 20.6 102.5
purchasing power parity)
GDP per capita (dollars) 5,800 8,000 4,400 6,066
Proven Oil Reserves (billions of barrels) 0 7 to 13 0.3 7.3 to 13.3
104 CEDR, April 2, 2006, Doc. No. CEP-950041; April 4, 2007, Doc. No. CEP-950285; February 12, 2007, Doc. No.
CEP-950333; February 13, 2007, Doc. No. CEP-950116; U.S. Department of State. U.S.-Azerbaijan Memorandum of
Understanding on Energy Security Cooperation in the Caspian Region, March 22, 2007.
105 U.S. Department of State. Office of the Spokesman. Joint Statement Between the Government of the United States
and the Government of the Republic of Azerbaijan for the 10th Annual Bilateral Security Dialogue, July 9, 2007.
South Caucasian State Armenia Azerbaijan Georgia Total
Proven Natural Gas Reserves (trillion cubic feet) 0 30 0.3 30.3
Size of Security Forces (Military and Police/Border Troops) 46,828 81,740 34,428 54,332
Cumulative U.S. Aid Budgeted, FY1992-FY2007 a1,746.08 753.26 1,898.64 4,397.98
(millions of $)
—Peace and Security Assistance a170.1 187.83 542.27 900.2
(millions of $)
FY2008 Estimate Budgeted Aid (millions of $)b 64.4 28.4 66.4 159.2
—Peace and Security Assistance 8.7 7.1 21.7 37.5
(millions of $)
FY2009 Requested Aid (millions of $)b 29.9 26.9 69.2 126.0
Sources: Central Intelligence Agency. The World Factbook; Department of Energy. U.S. Energy Information
Administration. Caspian Sea Region and Country Analysis Briefs; International Institute of Strategic Studies, The
Military Balance, February 2008; Department of State. Office of the Coordinator of U.S. Assistance to Europe and
Eurasia, data as of January 2009; The Secretary of State. Congressional Budget Justification for Foreign Operations,
a. FREEDOM Support Act and Agency budgets.
b. FREEDOM Support Act and other Function 150 funds (does not include Defense or Energy Department
funding or food aid, but does include Peace Corps funding).
Table 2. Security Funds Budgeted for Armenia, Azerbaijan,
and Georgia, FY1992-FY2007
(millions of $)
Approp Program Armenia Azerbaijan Georgia Total
DOD/DOS/DOE/HHS Global Threat Reduction 10.84 70.41 139.22 220.47
DOD Warsaw Initiative 2.51 3.09 4.51 10.11
(Partnership for Peace)
DOD Counternarcotics 0 3.07 0 3.07
DOE Material Protection, Controls & 5.8 11.6 18.9 36.3
DOE Non-Proliferation and International Sec. 0.65 0.07 3.16 3.88
DOE/DOS/NRC Nuclear Reactor Safety 61.22 0 3.54 64.76
DOS/DHS/CUS/DOJ Law Enforcement Assistance 18.26 12.03 41.54 71.83
DOS/DHS/CUST Export Control & Border Security 10.6 20.72 148.41 179.73
DOS/HHS/EPA/USDA Non-Proliferation of WMD Expertise & 6.55 0.01 10.41 16.97
DOS Foreign Military Financing 27.26 27.26 104.87 159.39
DOS International Military Exchanges and 4.16 4.95 9.61 18.72
DOS Peacekeeping Operations 0 5.0 15.54 20.54
DOS Anti-Terrorism Assistance (ATA) 3.68 4.67 12.28 20.63
Approp Program Armenia Azerbaijan Georgia Total
DOS/NIH/NSF Civilian R&D Foundation (CRDF) 11.8 4.7 10.28 26.78
DOS/DOD Humanitarian Demining 4.45 19.36 11.97 35.78
DOS/USAID Conflict Mitigation & Reconciliation 0.5 0.49 2.62 3.61
DOS Russian Military Relocation 0 0 5.0 5.0
DOS Small Arms & Light Weapons 0 0.4 0.41 0.81
DOS OSCE 1.82 0 0 1.82
TOTAL 170.1 187.83 542.27 900.2
Source: State Department. Office of the Coordinator of U.S. Assistance to Europe and Eurasia. FY2005 data are
included through mid-2005.
Georgia became eligible for security-related International Military Education and Training
(IMET) and Foreign Military Financing (FMF) programs in FY1997. In 1999, the United States
provided grant aid of ten UH-1H unarmed combat helicopters, six of which were operational,
while the others were for spare parts. In FY1999, USEUCOM launched a U.S.-Georgian
Peacetime Military Engagement Program after the South Caucasus states were included in
USEUCOM’s area of responsibility.
The Georgia Train and Equip Program (GTEP) grew out of a request made by former Georgian
President Eduard Shevardnadze during his U.S. meeting with then-President Bush in October
2001 for help to resist Russia’s request that it be allowed to pursue or attack Chechen rebels in
Georgia, to combat terrorists who were hiding in Georgia’s Pankisi Gorge area, and otherwise to
keep terrorists from entering Georgia. Some of these terrorists allegedly had fled U.S.-led
coalition operations in Afghanistan, so the U.S. Administration initially linked GTEP to OEF.
Other reported U.S. aims included enhancing military reform by helping Georgia set up a
National Command Center and bolstering Georgia’s ability to guard its energy pipelines and 106
ensure internal stability.
The $64 million Georgia Train and Equip Program (GTEP) began in April-May 2002.107
USEUCOM coordinated training in light infantry airmobile, mechanized, and mountain tactics,
and medical and logistical methods by personnel from U.S. Special Operations Command Europe
and from U.S. Marine Forces Europe, which took over training in late 2002. Four battalions of
over 2,000 troops, a 270-member mechanized armor company, about 200 military, security, and
border officers, and a small number of Interior (police) Ministry troops and border guards were
trained. Equipment provided included small arms, communications and medical gear, uniforms,
and construction materials for base refurbishment. The program formally ended in April 2004.
U.S. officials deemed GTEP a model for programs planned for other countries and praised its
106 Department of Defense. Press Release: Georgia “Train and Equip” Program Begins, April 29, 2002. See also
Department of State. Embassy of the United States in Georgia. Press Briefing on the Georgia Train and Equip Program
at the Georgian Ministry of Defense, May 7, 2002. Besides GTEP and its follow-on program (see below), the United
States supports multilateral security efforts that aid Georgia, such as GUAM (named for its members, Georgia,
Ukraine, Azerbaijan, and Moldova) and NATO’s Partnership for Peace.
107 GTEP was funded from a variety of sources, including Foreign Military Financing, International Military Education
and Training, Peacekeeping Operations, border security and other foreign operations appropriations for FY2002
through FY2004; FMF in the 2002 Supplemental Appropriations Act (P.L. 107-38); and Defense Department
contribution to Georgia’s deployment of a 550-member infantry battalion to Iraq in March 2005,
which boosted the number of its troops there from about 300 to about 850. Other GTEP-trained 108
troops have been deployed to Afghanistan and Kosovo.
In 2004, USEUCOM developed a follow-on program to GTEP termed the Georgian Sustainment
and Stability Operations Program (SSOP), for reasons that included helping Georgia sustain 109
increased troop deployments to Iraq. Funded at $60 million, the 16-month program began in 110
January 2005 to bolster military reforms and to train four battalions of 2,000 troops. The
majority of training took place near Tbilisi at the Krtsanisi Training Area, where $6.5 million of
SSOP funds were used to build barracks, classrooms, a dining hall, and other infrastructure. By stndrd
the end of March 2006, the 21, 22, and 23 battalions had finished seventeen weeks of training
and had been rotated to Iraq. Other training and equipping involved the reconnaissance, engineer, stst
and signal companies of the 1 Brigade; the military staffs and the logistics battalions of the 1 nd
and 2 Brigades; the general staff command and control elements, and the Operational 111
In July 2006, following President Saakashvili’s U.S. visit, the Administration announced that the
SSOP would be extended another year and allocated $30 million for the program.
The 2006 National Security Concept of Georgia stated that the country’s defense capabilities
“have significantly increased as a result of [U.S.] assistance programs” and that troops trained
under GTEP and SSOP “constitute the core of the Georgian Army.” GTEP and SSOP provided
training to a major portion of Georgia’s armed forces. Some observers claimed that the successes 112
of the programs included the encouragement of democratic values in the armed forces.
Georgian and international media provided some information on possible problems associated
with GTEP and SSOP. Russia’s relations with the United States appeared strained at times by
concerns by some Russian officials about U.S. military training in what they considered a
108 The 113th Shavnabada battalion (550 troops) was deployed to supplement a 300-member group which had been
deployed in November 2004. On the end of GTEP, see Embassy of the United States in Georgia. Embassy News: GTEP
Program Graduates Last Group of Georgian Soldiers, April 24, 2004. See also U.S. Embassy in Georgia. U.S.
Ambassador Thanks Marines, GTEP Cadre, April 21, 2004. Hamlin Tallent, the Director of EUCOM’s European Plans
and Operations Center, praised training that supported Georgia’s troop deployment to Iraq. See House International
Relations Committee. Subcommittee on International Terrorism and Nonproliferation. Written Statement, March 10,
109 Deputy Assistant Defense Secretary James MacDougall, quoted by The Jewish Institute for National Security
Affairs, JINSA Online, January 12, 2005, http://www.jinsa.org. According to some reports, Defense Secretary Donald
Rumsfeld had pledged added military assistance to Georgia—in return for an increased deployment—at an October
2004 meeting in Bahrain with coalition defense ministers. ITAR-TASS, October 11, 2004.
110 According to testimony by Rear Admiral Hamlin Tallent, funding for SSOP is provided for FY2005-FY2006 under
U.S. Code Title 10 (covering armed forces, $27.1million), U.S. Code Title 22 (covering foreign affairs, $17.33
million), and other authorities and sources (including Excess Defense Articles and donor nation aid, $16.5million).
Written Statement, March 10, 2005.
111 Gen. James Jones, then-Commander of USEUCOM and the Supreme Allied Commander, Europe, testified in early
2006 that the United States at that time had trained over 1,000 Georgian troops who had been deployed on rotation to
Iraq. U.S. Senate. Committee on Armed Services, March 7, 2006.
112 According to Charles Western, Commander of Task Force GTEP, during Georgia’s late 2003 “rose revolution,” “the
GTEP battalions told us that they did not want to use their troops against their own people,” and this “may have had an
influence on the Defense Minister’s decision not to use force.” Leatherneck, February 2004, pp. 26-28. For an
argument that GTEP enhanced regional stability, see Peter Forster, The Paradox of Policy: American Interests in the
Post-9/11 Caucasus, National Defense Academy and Bureau for Security Policy, Vienna, February 2004.
traditional sphere of Russian influence. Then-President Putin, however, acknowledged the useful
role played by U.S.-trained Georgian troops in counter-terrorism efforts in the Pankisi Gorge.
Sensitive to Russian concerns, U.S. and Georgian officials gave assurances to Russia in 2002 that
U.S. military trainers would not enter the Pankisi Gorge to assist GTEP-trained and other
Georgian troops to eliminate alleged terrorists based there. In contrast to Putin’s earlier stance,
Russia formally protested to the United States in mid-2004 about the alleged involvement of 113
some U.S.-trained troops in Georgia’s actions in its breakaway South Ossetia region.
Some problems were reported in finalizing applicants for the first phase of SSOP training in early
delay in beginning the program. One Georgian report alleged that there was a lack of discipline 115
in some U.S.-trained units. According to another Georgian report, SSOP training and associated 116
construction of facilities at the Krtsanisi Training Center did not meet expectations. Some
Georgian legislators and others alleged that many troops trained under GTEP did not re-enlist
when their service contracts ended in 2005, resulting in a loss of expertise among active duty
personnel. They also questioned whether some military officials were resisting SSOP and other 117
U.S. and NATO-backed military reforms. Some Georgian observers cautioned that Georgia’s
relatively large-scale involvement in SSOP and deployments to Iraq diverted Georgia from other
vital national security concerns, but most Georgian officials viewed these efforts as boosting the 118
professionalism of the armed forces and moving Georgia toward NATO membership.
USEUCOM initiatives in the region have included the Sustainment and Stability Operations
Program (SSOP) in Georgia, the South Caucasus Clearinghouse, and the Caspian Regional
Maritime Security Cooperation program. The 16-month SSOP was launched in early 2005 as a 119
follow-on to the Georgia Train and Equip Program (GTEP). SSOP was funded at $60.5 million
in FY2005. SSOP provided training for four battalions (2,000 troops), in part to support U.S.-led
coalition operations. In July 2006, the United States announced that the SSOP would be extended 120
another year and funded at $30 million. Prior to the August 2008 Russia-Georgia conflict, the th
U.S. was providing initial military training to Georgia’s 4 Brigade for its eventual deployment to
Iraq in Winter 2008. The Defense Department planned to budget approximately $35 million for 121
113 New York Times, March 2, 2002, p. 9; Jim Heintz, Associated Press, June 11, 2004.
114 U.S. European Command. SSOP Signing Ceremony and Press Briefing Transcript, March 29, 2005; CEDR,
February 2, 2005, Doc. No. CEP-249.
115 CEDR, May 17, 2005, Doc. No. CEP-20001.
116 Koba Liklikadze, as reported in Foreign Broadcast Information Service (CEDR). Central Eurasia: Daily Report,
January 18, 2006, Doc. No. CEP-20003.
117 CEDR, October 27, 2005, Doc. No. CEP-27165; January 3, 2007, Doc. No. CEP-21002.
118 CEDR, November 15, 2004, Doc. No. CEP-59.
119 U.S. officials explained that the $64 million GTEP carried out in 2002-2004 would help Georgian military, security,
and border forces to combat Chechen, Arab, Afghani, Al Qaeda, and other terrorists who allegedly had infiltrated
Georgia. Some of these terrorists allegedly had fled U.S.-led coalition operations in Afghanistan, so the GTEP was
initially linked to OEF. Other reported U.S. aims include bolstering Georgia’s ability to guard its energy pipelines and
ensuring internal stability. The program formally ended in April 2004.
120 “U.S. Allocates $30 mln for SSOP Army Training Program,” Civil Georgia, July 17, 2006.
121 Senate Armed Services Committee. Hearing on the Georgia-Russia Crisis: Implications and U.S. Response.
Testimony of Eric S. Edelman, Under Secretary of Defense for Policy, September 9, 2008.
The Clearinghouse aims to facilitate cooperation by sharing data on security assistance among
both donor and recipient countries. Gen. Bantz John Craddock, then-Commander of USEUCOM,
testified in March 2008 that the Caspian Regional Maritime Security Cooperation program aims
to “coordinate and complement U.S. government security cooperation activities in Azerbaijan and
Kazakhstan. U.S. Naval Forces Europe continues to promote Maritime Safety and Security and
Maritime Domain Awareness in the Caspian Sea through routine engagement with Azerbaijan.
These efforts are targeted to create an organic ability within Azerbaijan to ‘observe, evaluate, and 122
respond’ to events in their maritime domain.” (This program appears to combine elements of 123
the former Caspian Guard and Hydrocarbons programs.)
In November 2004, Gen. Charles Wald, then-deputy head of USEUCOM, suggested that the
Administration was exploring the establishment of “cooperative security locations” (CSLs)—sites
without a full-time U.S. military presence that would be used for refueling and short-duration 124
deployments—in Azerbaijan or Georgia.
The United States has gained greater support in the region for combating the proliferation of
weapons of mass destruction (WMD) by emphasizing how this goal enhances the security
interests of the states. The United States has been the largest aid donor for such efforts. The
Departments of Defense (DOD), Energy (DOE), and State (DOS) have been the main agencies
providing training and equipment to help prevent nuclear smuggling and other proliferation 125
threats in the South Caucasus states. DOS funds the Export Control and Related Border
Security Program (EXBS), which improves export control capabilities in the Soviet successor
states to prevent proliferation of WMD and related components. The Commerce Department,
DOE, Customs and Border Protection Service, and Coast Guard help implement EXBS. DOE’s
Second Line of Defense Program places radiation detection systems at ports of entry. DOD’s
Proliferation Prevention Program (PPP; launched in FY2003) was designed to upgrade the
abilities of non-Russian Soviet successor states to deter and interdict smuggling of WMD and
related materials. PPP coordinates with these and other DOD programs, including the
International Counter-proliferation Program (ICP; launched in FY1997) that conducts activities 126
with the FBI and the Customs and Border Protection Service.
An ICP was launched in Armenia in FY1999, which included WMD detection and interdiction
training. Also in FY1999, DOS provided $1.9 million for Armenia and Azerbaijan to expand the
122 U.S. Senate. Committee on Armed Services. Statement of General Bantz J. Craddock, March 13, 2008.
123 Gen. James Jones testified that the Caspian Guard program, launched in 2003, aimed to enhance and coordinate
security assistance provided by U.S. agencies to establish an “integrated airspace, maritime and border control regime”
for the littoral states of Azerbaijan and Kazakhstan. The Hydrocarbons initiative aimed to provide maritime security
and crisis response and consequence management assistance to help the regional states protect their pipelines and other
energy transport to the West. U.S. Senate. Committee on Armed Services. Testimony by Gen. James Jones, March 1,
124 Vince Crawley, Army Times, November 22, 2004.
125 Government Accountability Office. Nuclear Non-proliferation: U.S. Efforts to Help Other Countries Combat
Nuclear Smuggling Need Strengthened Coordination and Planning, May 16, 2002; Combating Nuclear Smuggling:
Corruption, Maintenance, and Coordination Problems Challenge U.S. Efforts to Provide Radiation Detection
Equipment to Other Countries, March 14, 2006.
126 Department of Defense. Comprehensive Threat Reduction Annual Report to Congress, 2004, 2005, 2006, 2007,
Tracker Automated Licensing System to help them track exports of proliferation concern. EXBS
aid helped Armenia establish an interagency export-control coordinating commission and has
provided training and equipment. Through FY2005, DOE and other agencies have provided more 127
than $55 million to enhance the safety and security of Armenia’s Metzamor nuclear reactor.
Beginning in FY1999, an ICP in Azerbaijan has provided training courses on crime scene
investigation, criminal investigation, radiation detection and response, and other courses relevant 128
to WMD counter-proliferation. In January 2004, the United States and Azerbaijan signed an
agreement implementing a five-year PPP in Azerbaijan to enhance the country’s ability to detect
and interdict WMD on vessels transiting the Caspian Sea. The $68 million was used to provide
and improve maritime radar surveillance equipment and procedures, repair and upgrade boats,
provide WMD detection and other equipment for boarding crews, and construct or upgrade
command and control, maintenance, and logistics facilities to expand the patrol areas of the
Border Service-Coast Guard. In November 2006, DOD completed construction of a boat basin for
the Border Service-Coast Guard to extend their range of patrols. A follow-on FY2009-FY2013
PPP is projected to cost $33 million. This project aims to “develop a comprehensive capability for
WMD surveillance and interdiction on Azerbaijan’s Caspian Sea border.” Plans include the
installation of an upgraded maritime surveillance radar on Chilov Island for use by the Navy and
the State Border Service-Coast Guard, ongoing repairs and upgrades for some naval vessels, the
transfer of WMD detection equipment, and training on boarding for State Border Service-Coast
The United States and Georgia signed a CTR umbrella agreement in 1997 (and extended in 2002)
for proliferation prevention and the promotion of defense and military contacts to encourage
demilitarization, defense reform, proliferation prevention, and regional stability and cooperation.
In 1998, the two sides signed an export control systems implementing agreement (extended in
2002). At Georgia’s behest, the United States used emergency CTR funds to remove 8.8 lbs. of
highly enriched uranium and 1.8 lbs of spent fuel from an Institute of Physics research reactor
near Tbilisi in April 1998. The United States had earlier provided security assistance to safeguard 129
the material prior to removal, after two criminal attacks on the reactor facility. In 1998-1999,
DOD provided two CTR-funded patrol boats to enhance export controls. Some CTR funding
reportedly was used to support the SSOP. CTR funding was used to remove and destroy dual-use
equipment at the Soviet-built Biokombinat animal vaccine production plant near Tbilisi, Georgia.
The plant’s conversion into a feed mill was completed in mid-2007. The United States provided
$185.5 million in cumulative DOD, DOS, and DOE aid over the period FY1992-FY2007 (if
EXBS aid is included, the total would be $334 million) to help Georgia prevent the proliferation 130
of WMD (see Table 2).
127 In May 2002, the United States imposed sanctions on the Armenian firm Lysine Open Joint Stock Co. and its former
owner, Armen Sarkisyan, for transferring WMD technology to Iran, specifically, transfer of biochemical equipment.
Federal Register, May 16, 2002, pp. 32983-32984; RFE/RL Newsline, May 17, 2002.
128 Defense Threat Reduction Agency. International Counter-Proliferation Program Conducts Field Exercise in
Azerbaijan, June 8, 2006.
129 NIS Nuclear Profiles Database. Center for Nonproliferation Studies, Monterey Institute of International Studies.
130 The United States in early 2003 raised concerns that unemployed Georgian technicians were servicing military
aircraft or assisting in nuclear programs in Iran. Then-President Shevardnadze verified that Georgian citizens had
illicitly aided Iran. CEDR, January 12, 2003, Doc. No. CEP-23; January 13, 2003, Doc. No. 167; January 15, 2003,
Doc. No. 282; Agence France-Presse, January 14, 2003.
There is rising U.S. concern that drugs transiting the South Caucasus may eventually reach the
United States in major quantities, since Latin American and other international organized groups
have become involved in the wider regional drug trade. Despite efforts to eliminate them, terrorist
groups still in the region may be using drug trafficking to help finance their operations, so 131
counter-drug activities may support counter-terrorism. U.S. policy also recognizes the problems
of rising crime, corruption, and instability posed by illegal narcotics production, use, and
trafficking in the region. These problems are increasingly emphasized by regional governments
that urge the United States to take the lead in combating rising drug trafficking from Afghanistan.
Dissatisfaction with U.S. actions in this area eventually could harm U.S. relations with the
governments. Since 2006-2007, according to the State Department, drug trafficking through
Azerbaijan has increased, leading to a “few violent confrontations and increased causalities 132
amongst security personnel and drug traffickers,” as has domestic drug use.
Among U.S. efforts, the FBI, Department of Justice, U.S. Customs Service, the Drug
Enforcement Administration, and the State Department’s Bureau of International Narcotics and
Law Enforcement Affairs have provided training in counter-narcotics to police, customs, and
border control personnel in the region. The waiver of Sec.907 of the Freedom Support Act has
permitted U.S. government-to-government aid for counter-narcotics programs in Azerbaijan since
2002. Significant U.S. assistance to Azerbaijan was reported for FY2006, including the provision
of trucks for Customs Contraband Teams, an assessment of security along the Iranian border for
the Border Guards, the contribution of fencing and construction materials to rebuild watchtowers
along the Iranian border, a USEUCOM assessment of the capabilities of the Border Guard’s Air
Wing, and the equipping of a maritime base near Astara. A U.S.-supplied short-range radar near
Astara was upgraded to monitor and patrol the southern Caspian Sea and maritime boundaries. In
2007, Four patrol and fast response boats were delivered to the base, and Customs personnel were
given added training and search equipment. Plans for FY2009-FY2013 include further upgrading 133
the radar and repairing boats (see also above, WMD).
U.S. firms are the largest cumulative investors in Azerbaijan, investing nearly $6 billion through 134
2007, or about one-third of all foreign investment. The U.S. Commerce Department warned in
2008 that corruption impedes the ability of many companies to do business and even has driven
some major Western firms to leave Azerbaijan. Businesses indicate that some customs and tax
personnel and contract dispute arbitrators may be corrupt. Particularly in the non-energy sector,
“government bureaucracy, weak legal institutions and predatory behavior by politically connected
monopoly interests have severely hindered [foreign direct] investment.” In an effort to improve
the investment climate, Azerbaijan’s Tax Ministry set up an expedited business registration 135
process. However, registration as a legal entity still is required at the Justice Ministry, which
131 U.S. Senate. Judiciary Committee. Narco-Terrorism. Testimony of Raphael Perl, May 20, 2003.
132 International Narcotics Control Strategy Report, March 2008.
133 International Narcotics Control Strategy Report, March 2008.
134 U.S. Department of Commerce. Bureau of Economic Analysis. U.S. Direct Investment Abroad: Azerbaijan, data
tables at http://www.bea.gov/international.
135 In late 2008, the opposition newspaper Musavat reported that businessmen were complaining that tax collectors
were assessing illicit “surcharges,” allegedly on orders from above to find extra revenues to erase a growing budget
“operates in a non-transparent and arbitrary manner.... Some investors have alleged that they have
received demands for bribes when attempting to register their enterprises.” In the case of business
disputes, “effective means of protecting and enforcing property and contractual rights are by no
means assured.... The Economic Court, which has jurisdiction over commercial disputes, is weak, 136
widely regarded as corruptible, and its decisions are often inconsistent.”
Foreign direct investment in Georgia has increased since its “rose revolution,” mainly involving
investment by BP in oil and gas pipeline infrastructure. Many medium and small investors 137
allegedly remain wary. The U.S. Embassy in Georgia reports conditions similar to those in
Azerbaijan, warning that many U.S. and foreign firms have suffered from official corruption. The
embassy also warns that there are a few criminalized sectors of the economy, such as gasoline and
cigarette distribution, that foreign investors should avoid. U.S. foreign direct investment (FDI) in 138
Georgia was about $124 million in 2007, about 7% of total FDI of $1.7 billion in 2007.
U.S. government facilities worldwide were on a heightened state of alert after September 11,
U.S. embassies in the region issued Warden’s Messages warning that U.S. citizens and interests
worldwide were at risk of terrorist attacks. There were some anti-U.S. demonstrations in early
2003 in the region related to the Iraq conflict, but the State Department reported no significant
violence against U.S. interests.
In Georgia, the State Department has advised U.S citizens to avoid travel to Abkhazia and South
Ossetia because of increased gunfire and crime and the extremely limited U.S. diplomatic access
to these breakaway regions. Travel also is ill-advised to the Pankisi Gorge and to other border
areas near Russia’s Chechnya and Dagestan regions. The State Department also has warned
Americans that areas of relative lawlessness include upper Svanetia, Samtskhe-Javakheti, areas of
the Samegrelo Region, and areas near Abkhazia’s and South Ossetia’s borders with the rest of 139
Despite Georgia’s efforts to combat corruption and increase the caliber of law enforcement
personnel, crime continues to be a “very serious problem” in Tbilisi. The U.S. Embassy in Tbilisi
warns that high rates of poverty have contributed to an increase in crimes against Americans and
other foreigners who are viewed as wealthy. and are therefore targeted for economic- and
property-based crimes. Most of the crimes against Americans involve residential break-ins, car-
jackings, car theft, petty theft, and armed robbery. However, the rate of violent crime against
foreigners also is increasing. The State Department warns that the level of crime in Tbilisi is 140
higher than in many European and U.S. cities. During then-President Bush’s visit to Georgia on
May 10, 2005, a hand grenade was thrown toward a podium containing Presidents Bush and
deficit. CEDR, December 3, 2008, Doc. No. CEP-950274.
136 U.S. Department of Commerce. International Trade Administration. U.S. Commercial Service. Azerbaijan:
Investment Climate Statement 2008.
137 U.S. Department of Commerce. Bureau of Economic Analysis. U.S. Direct Investment Abroad: Georgia, data tables
138 U.S. Department of State. Consular Information Sheet, Georgia, September 18, 2008.
139 U.S. Department of State. Bureau of Consular Affairs. Georgia: Travel Warning, December 12, 2008.
140 U.S. Department of State. Consular Information Sheet, Georgia, September 18, 2008.
Saakashvili. It failed to explode. In late July, a suspect possibly linked to former Ajarian politician
Aslan Abashidze was taken into custody.
A more secure U.S. Embassy building opened in Tbilisi in December 2005. During the August
2008 Russia-Georgia conflict, U.S. Embassy dependents and Peace Corps volunteers were
evacuated to Armenia. The U.S. Embassy also restricted travel outside of Tbilisi by staff and
Several U.S. investors in Armenia have reported being victims of financial scams and of being
involved in disputes over property ownership. The State Department reports that these latter
investors “have had to seek legal recourse through a long, and in the majority of cases,
unsuccessful court proceeding.” The State Department has assessed crime against foreigners as
relatively rare in Armenia, mainly involving break-ins and theft. There are some instances of
violent assaults and robberies, but the general level of violent crime is less in Yerevan than in
most U.S. cities. There is “a considerably large organized crime network” in Armenia, but
organized crime violence usually is not aimed against foreigners. U.S. citizens are unlikely to be
the targets of political violence, according to the State and Commerce Departments. There have
been instances where young men with dual citizenship have been conscripted into the armed
forces upon visiting Armenia. The U.S. Embassy has designated a section of highway near NK as
off limits to U.S. government travelers because of the danger of ceasefire violations. A more 141
secure U.S. Embassy building opened in Yerevan in May 2005.
In Azerbaijan, the State Department reports that “there have been no acts of political violence
against U.S. businesses or assets, nor against any foreign-owned entity. The risk of political 142
violence affecting foreign investors remains minimal.” However, Azerbaijani authorities have
reported an increase in Islamic extremism and terrorist plots against Western interests in the
country. Members of the indigenous terrorist group Jayshullah were convicted in 2001 for
planning an attack against the US Embassy and other terrorism. In July 2005, the Azerbaijani
government arrested a group on charges of planning terrorist training to attack the U.S., Israeli, 143
and Russian embassies. In late October 2007, the Azerbaijani National Security Ministry
warned the U.S. Embassy and other Western interests that a terrorist group was planning attacks,
and the embassy limited its operations for two days while the Ministry continued to investigate 144
and make arrests.
U.S. citizens traveling to Azerbaijan are advised that the occupied areas around NK are dangerous
because of ceasefire violations and the presence of minefields and that travel into NK is not
possible from Azerbaijan. U.S. travelers were warned in July 2006 to be on guard against violent
acts and possible terrorist attacks against Americans in the face of Israeli military actions in
Lebanon. The Warden’s Report for January 2007 warned U.S. citizens that petty crime such as
pick-pocketing and taxi shakedowns (charging onerous fares) remained prevalent and that police
harassment occurred throughout the country. The State Department warned in mid-2008 that the
141 U.S. Department of State. Armenia: 2008 Crime and Safety Report, September 15, 2008; Consular Information
Sheet, Armenia, January 9, 2009.
142 U.S. Department of Commerce. International Trade Administration. U.S. Commercial Service. Azerbaijan:
Investment Climate Statement 2008.
143 CEDR, April 24, 2006, Doc. No. CEP-25008.
144 U.S. Embassy in Baku. Warden’s Messages, October 29 and 30, 2007; “Azerbaijani Security Forces Announce
Arrest Of Key Figure In Alleged Terror Plot,” Associated Press, November 10, 2007.
trend was away from petty crime and toward violent attacks against foreigners, several of which
have resulted in injuries. It also warned Americans of Armenian ancestry traveling to Azerbaijan 145
that the Azerbaijani government has “claimed that it is unable to guarantee their safety.”
While a consensus appears to exist among most U.S. policymakers on the desirability of fostering
democratization, the creation of free markets, trade and investment, integration with the West, and
responsible security policies in the South Caucasus states, others urge different emphases or
levels of U.S. involvement. Some consider the United States as being the “indispensable power,”
leading the way in fostering peace, stability, security, and development in the region.
Critics assert that the United States has historically had few interests in this region, and argue that 146
developments there are largely marginal to U.S. interests. In any event, they argue, EU
expansion is bringing the South Caucasus into closer proximity to Europe, making the region a
higher priority interest of Europe than of the United States. They advocate limited U.S.
involvement to ensure general U.S. goals of ameliorating strife and instability, fostering
democratization and regional cooperation, and improving human rights and the quality of life.
One view holds that greater U.S. assistance for the region to bring stability could have a positive
effect on North Caucasian areas of Russia and on Turkey, as well as on European security. They
urge greater U.S. aid and conflict resolution efforts to contain warfare, crime, smuggling,
terrorism, and Islamic extremism and bolster independence of the states. More U.S. ties with the
region might serve to “contain” or modify Iranian influences. Some also argue that improved U.S.
ties with Azerbaijan would benefit U.S. relations with other Islamic countries, particularly Turkey
and the Central Asian states. Many add that U.S. encouragement of Caspian region oil and natural
gas development and pipelines to the West that do not traverse Russia or Iran would expand
world supplies, making the West somewhat less vulnerable to supply cutoffs in the Middle East or
Russia. The Administration also has pursued close ties with Armenia and Georgia because of their
professions of democratic principles, concerns by Armenian-Americans and others over
Armenia’s fate, and appreciation among U.S. policymakers for Georgia’s pro-Western policies.
They also point to the prompt cooperation offered to the United States by Armenia, Azerbaijan,
and Georgia in the aftermath of September 11, 2001, and their military support for U.S. post-
Saddam peacekeeping in Iraq.
Other observers doubt that there is a strategic “power vacuum” in the region that the United
States must fill. U.S. aid for humanitarian and counter-proliferation purposes should continue,
according to this view, but other aid should be curtailed, particularly since these states continue to
fall short of U.S. goals for democratization, human rights, and peace settlements. Great caution is
in order in adopting policies and actions that will heavily involve the United States in a region
145 U.S. Department of State. Consular Information Sheet, Azerbaijan, June 19, 2008.
146 Joe Barnes, U.S. National Interests, in Energy in the Caspian Region, ed. by Yelena Kalyuzhnova, Amy Jaffe, Dov
Lynch, and Robin Sickles, New York: Palgrave, 2002, pp. 212-233.
beset by ethnic and civil conflicts.147 Some observers question whether U.S. interests are
threatened by alleged al Qaeda or other international terrorists in the region. They also question
whether the United States should play the lead role in advocating diverse routes for the export of
oil and gas from the Caspian region. Many in Congress and elsewhere object to any substantial
U.S. assistance to Azerbaijan until the country moves toward peace with Armenia and NK.
The United States has advocated that neighboring states respect the sovereignty, independence,
and territorial integrity of the South Caucasian states, and resolve border and other disputes
peacefully. The U.S. policy of engagement with both Russia and the South Caucasus states has
suffered substantially in the wake of Russia’s August 2008 invasion of Georgia. Some observers
who view Russia as taking disproportionate actions in Georgia urge stronger Western sanctions
against Russia, while the EU and former Bush Administration policymakers have appeared to
stress continued cooperation with Russia on arms control, non-proliferation, anti-terrorism, and
other important shared security interests. At the same time, these policymakers have demanded
that Russia reverse its recognition of the independence of Abkhazia and South Ossetia and its
basing of troops in these regions. Some observers advocate a major role for Turkey to counter 148
undue influence by Iran, including by calling for closer EU-Turkish cooperation.
The National Security Strategy of the U.S.A. maintains that U.S. energy security and the global
economy can be strengthened by expanding the sources and types of global energy supplied, 149
including from the Caspian region. Caspian regional oil exports from Azerbaijan, Kazakhstan,
and Turkmenistan Russia might have constituted about 1% of world oil exports and gas exports 150
might have constituted about 2% in 2004, according to the U.S. Energy Department. Oil and
gas exports are projected to increase in coming years, making these countries of incremental
significance as world suppliers, according to this view. The May and November 2002 U.S.-Russia
summit statements on energy cooperation appeared to mark a U.S. policy of cooperation with
Russia in the development of Caspian oil resources. However, the United States backed the
construction of the BTC oil pipeline and the SCP for gas in part as hedges against a possibly
147 Zbigniew Brzezinski warned that the South Caucasus and Central Asian regions were the “Eurasian Balkans.” See
The Grand Chessboard. New York, Basic Books, 1997. Similarly, a group of analysts in 2000 assessed the South
Caucasus as potentially more dangerous than the Balkans as a “theater of conflict, human suffering, and escalating
geopolitical instability in the wider European area.” A Stability Pact for the Caucasus, Brussels, Belgium, Centre for
European Policy Studies, January 2000.
148 Stephen Blank, Problems of Post-Communism, January-February 2003, pp. 8-21; Olga Oliker and Tanya Charlick-
Paley, Assessing Russia’s Decline, Santa Monica, CA: RAND, 2002, p. 120. Analyst Martha Olcott has argued that the
United States should recognize that Russia has important economic and security interests in the Caspian region, and
place greater stress on cooperating with Russia on regional energy projects, particularly since we also want access to
Russian energy. Testimony. Senate Foreign Relations Committee. Subcommittee on International Economic Policy,
April 8, 2003.
149 The White House. National Security Strategy of the United States of America, April 29, 2003. Analyst Zeyno Baran
states that most speeches delivered by U.S. Caspian energy envoys included the U.S. policy principles of strengthening
the independence of Caspian states, bolstering regional cooperation, enhancing global energy supply diversification,
and increasing investment opportunities for U.S. firms. Washington Quarterly, Winter 2002, p. 222.
150 Percentages derived from data on production, consumption, and exports by the Energy Department, Energy
Information Administration, http://www.eia.doe.gov/.
uncooperative Russia. The Administration and others also argued that the economic benefits
gained by the region by developing its energy resources would be accompanied by contractual
and other rule of law developments, which could foster regional stability and conflict 151
The Administration’s May 2001 National Energy Policy report recommended that the President
direct U.S. agencies to support building the BTC oil pipeline, expedite use of the pipeline by oil
companies operating in Kazakhstan, support constructing a gas pipeline from Azerbaijan to
Turkey, and otherwise encourage the Caspian regional states to provide a stable and inviting
business climate for energy and infrastructure development. The September 11, 2001, attacks
appeared to intensify the Administration’s commitment to develop Caspian energy, the BTC
pipeline, and the SCP as part of a strategy of reducing the vulnerability of the United States to
possible energy supply disruptions by increasing and diversifying world energy supplies. Russia’s
January 2006 and January 2009 cutoff of gas exports through the pipeline transiting Ukraine has
heightened U.S. support for Europe to develop sources of supply that at least substantially
supplement those transiting Russia.
Critics of Administration policy raise concerns about regional stability, ownership of Caspian Sea 152
fields, and the size of regional reserves. They question whether the oil and other natural
resources in these new states are vital to U.S. security. Some observers also reject the argument
that energy and pipeline development may boost economic development—rather than merely the
wealth of regional elites—and thereby foster the settlement of ethnic and civil conflicts in the
region. Instead, they urge greater attention to conflict resolution and broader-based economic and 153
democratic reforms that would better serve the people of the region.
Observers who urge greater emphasis on U.S. security assistance to the South Caucasus states
argue that such aid serves crucial U.S. interests. Without greater assistance, these states may not
consolidate their independence. The states remain vulnerable to international terrorist groups and 154
to coercion from neighboring countries. These observers emphasize that U.S. customs and
border training and equipment and other nonproliferation aid prevent WMD technologies,
materials, and personnel from falling prey to terrorist states or groups and from being smuggled
through the region. They also argue that the states may not be able to adequately safeguard their
energy pipelines from terrorists or criminals.
151 Thomas Waelde, Sergey Vinogradov, and Armando Zamora, Caucasian Regional Studies, http://poli.vub.ac.be/
152 Eric Rasizade, Comparative Studies of South Asia, nos. 1-2, 2002; Anush Begoyan, Iran and the Caucasus, vol. 8
issue 1, 2004, pp. 141-155. At least until the run-up in crude oil prices, critics of Administration policy also questioned
the economic viability of Ceyhan and trans-Caspian pipeline routes compared to routes through Russia or Iran.
153 Jaffe and Manning, pp. 113, 118; Michael Evans, Strategic Review, Spring 1999, pp. 4-10; Peter Rutland, Russia
and Eurasian Review, May 13, 2003. Analyst Edward Chow has argued that “by focusing too much on energy
relationships ... we give the impression that we care less about improvement in fundamental conditions like the rule of
law, transparency, and more political openness .... Russia, Central Asia, and the Caucasus are important to U.S. foreign
policy interests whether these countries have oil or not.” Testimony. Senate Foreign Relations Committee.
Subcommittee on International Economic Policy, April 30, 2003.
154 Prior to the August 2008 Russia-Georgia conflict, Oliker and Charlick-Paley suggested that the United States should
increase its cooperation with Russia in South Caucasian affairs to reduce the likelihood of a clash between Georgian
and Russian troops in Georgia that might necessitate a U.S. military intervention. (pp. 107-120).
They urge greater U.S. military-to-military assistance, including for military institution-building,
basic soldier life support, and military education and training programs that bolster human rights.
Such aid, in this view, will foster the creation of a professional, Western-style military that is
better able to resist external security threats, and will foster democratic civil-military relations
that reduces the chance of military coups. Greater U.S. support for PFP training—involving
cooperation among regional militaries—could spur these states to work together. These observers
also argue that as Iran increases its military capabilities, including missiles and possibly nuclear
weapons, the South Caucasus states may necessarily seek closer countervailing ties with the
United States. Alternatively, the region might feel pressured to seek greater accommodation with
Iran, including by distancing itself from the United States. Georgia’s integration into Western
institutions, including NATO, bolsters security in the Black Sea-Caspian Sea regions.
Critics question whether the region is a vital U.S. interest necessitating enhanced U.S. security
commitments and aid. They warn that the stepped-up U.S. security training and arms transfers has
added to arms races in the region and tensions with other outside powers. They argue that the
United States should primarily seek to encourage conflict resolution and regional cooperation in
demilitarization. They oppose providing formal security guarantees or establishing military bases
in the region, and endorse making it plain that any U.S. security assistance provided implies no 155
In the wake of the August 2008 Russia-Georgia conflict, these contrasting arguments were at the
forefront of debate over future U.S. military-to-military assistance to Georgia. Advocates of
boosted U.S. security assistance to Georgia argued that the U.S. military training provided to
Georgian troops was designed for counter-terrorism, including to support coalition actions in Iraq,
rather than for conventional military operations. They suggested that more robust U.S. security
assistance --- along with assistance that would have been in the works if NATO had offered a
MAP to Georgia in April 2008 --- might have deterred Russia from its disproportionate military
actions in Georgia. Some critics of this view asserted that U.S. and NATO assistance to Georgia’s
military emboldened the country’s leadership to launch an action in South Ossetia, whether or not
the action was provoked by Russia. They also pointed to Russian President Medvedev’s
opposition to a NATO MAP for Georgia as destabilizing and a threat to Russia, and his assertion
that he would have ordered Russian troops to invade Georgia even if Georgia had been granted a
MAP. The U.S.-Georgia Charter on Strategic Partnership, signed in January 2009, appears to
support the former viewpoint by stating that “our two countries share a vital interest in a strong,
independent, sovereign, unified, and democratic Georgia.... We plan to undertake a program of
enhanced security cooperation intended to increase Georgian capabilities and to strengthen
Georgia’s candidacy for NATO membership.... The United States and Georgia intend to expand
the scope of their ongoing defense and security cooperation programs to defeat [threats to global
peace and stability] and to promote peace and stability. A defense and security cooperation
partnership between the United States and Georgia is of benefit to both nations and the region....
the United States supports the efforts of Georgia to provide for its legitimate security and defense 156
155 These views were more prevalent prior to September 11, 2001. John Kreul argued against a U.S. “strategy that
entails deeper defense relationships and hints of security guarantees” to Caspian regional states. National Security
Watch, Association of the U.S. Army, Institute of Land Warfare, June 15, 2000. On the unintended consequences of
U.S. security assistance, see Jamestown Foundation, Russia and Eurasia Review, May 13, 2003.
156 U.S. Department of State. United States-Georgia Charter on Strategic Partnership, January 9, 2009.
Some observers argue that the major security problems faced by the South Caucasus states are
largely the result of inadequate or fragile democratization. The illegitimacy of the governments in
the eyes of significant numbers of citizens endangers civil and ethnic peace and sustainable
development and invites foreign meddling, in this view. Some observers recommend greater U.S.
and Western attention to bolstering social programs so that public demands that are unleashed by 157
liberalization do not destabilize fragile democratic institutions. After the “rose revolution” in
Georgia and a relatively free and fair presidential election in early 2004, political instability
increased in 2007, resulting in President Saakashvili’s resignation in order to hold a snap
presidential election (which he won). His stated intention in holding the snap election was to
restore stability by pledging a more open and responsive political system that will better address
quality of life concerns.
The United States has provided most assistance for democratization to Armenia, and somewhat
less for Georgia. U.S. aid for democratization in Azerbaijan was explicitly permitted by Congress
in FY1998 and thereafter. The 2003 Armenian presidential and legislative elections did not mark
substantive further democratization, according to some observers. More positively, Armenia’s
May 2007 legislative elections “demonstrated improvement and were conducted largely in
accordance with ... international standards for democratic elections,” according to the conclusions
made by observers from the OSCE, COE, and the EU. However, these observers still raised some
concerns over pro-government party domination of electoral commissions, the low number of 158
candidates in constituency races, and inaccurate campaign finance disclosures. Election
observers from the OSCE, COE, and the EU stated that Armenia’s February 2008 presidential
election “mostly met OSCE commitments ... in the pre-election period and during voting hours,”
but that “serious challenges to some commitments did emerge, especially after election day. This
displayed an insufficient regard for standards essential to democratic elections and devalued the
overall election process. In particular, the vote count demonstrated deficiencies of accountability 159
In the case of Azerbaijan, irregularities during the 1998 presidential election, municipal elections
in 1999, the 2000 legislative race, and the 2003 presidential contest were viewed as evidence of
halting pluralism by many observers. Although OSCE monitors reported large-scale irregularities
during the 2005 legislative election, particularly in vote-counting, the U.S. Administration viewed 160
the race as indicating the Azerbaijani government’s commitment to democratization. Election
observers from the OSCE, COE, and the EU stated that Azerbaijan’s October 2008 presidential
157 S. Neil McFarlane, Government and Opposition, no. 3, 1997, pp. 399-420; S. Neil McFarlane, Western Engagement
in the Caucasus and Central Asia, London, Royal Institute of International Affairs, 1999, pp. 48, 60.
158 OSCE. ODIHR. Parliamentary Elections, Republic of Armenia, 12 May 2007: Statement of Preliminary Findings
and Conclusions, May 13, 2007; Post-Election Interim Report, No. 1, May 22, 2007. PACE. Ad Hoc Committee of the
Bureau of the Assembly. Report: Observation of the Parliamentary Elections in Armenia, Doc. 11312, June 20, 2007.
According to this report, “the shortcomings and irregularities, some of which were serious, observed during the crucial
vote count and tabulation processes stain the positive preliminary assessment.... [T]hey could undermine the
transparency and public confidence in the conduct and results of these elections. In addition, they raise questions with
regard to the robustness of the electoral process....” See also CRS Report RS22675, Armenia’s Legislative Election:
Outcome and Implications for U.S. Interests, by Jim Nichol.
159 OSCE. International Election Observation Mission. Presidential Election, Republic of Armenia, 19 February 2008:
Final Report of the OSCE/ODIHR Election Observation Mission, May 30, 2008.
160 U.S. Department of State. Press Statement: Azerbaijan Parliamentary Elections, November 7, 2005.
election “marked considerable progress toward meeting OSCE and Council of Europe
commitments and other international standards but did not meet all ... the principles of a
meaningful and pluralistic democratic election.” The observers commended a peaceful voting
process that was “well organized and efficient,” but were critical of a “lack of robust competition 161
and of vibrant political discourse facilitated by media.”
Critics of U.S. democratization aid have suggested that the Administration’s stress on gradual and
peaceful political change in the South Caucasus connotes U.S. support for the stability of current
leadership. They contend that U.S. support may unwittingly assist the regimes to stay in power,
make peaceful political succession more problematic, and encourage the countervailing rise of
extremist parties and groups as alternative channels of dissent. They urge greater adherence to the
policy that “aid follows reform,” so that U.S. assistance is reduced to regimes that fail to 162
democratize and continue to violate human rights.
161 EU. Statement of the Presidency of the EU on the Presidential Election in Azerbaijan, October 17, 2008; CEDR,
October 22, 2008, Doc. No. CEP-950288. See also CRS Report RS22977, Azerbaijan’s October 2008 Presidential
Election: Outcome and Implications, by Jim Nichol.
162 Deputy Assistant Secretary of State Bryza stated in June 2006 that “just because Azerbaijan hasn’t gone as far as we
would like on democracy doesn’t mean we’re going to ignore our energy interests or our military interests. That’s not
to say that our energy interests or our military interests or our counter-terrorism interests are driving us to ignore
democracy....we have to pursue a balance.” “Caucasus: U.S. Says Aliyev, Kocharyan Must Show ‘Political Will,’”
RFE/RL, June 23, 2006.
According to many observers, Russia—the former colonial power— is the most serious potential
threat to the security and independence of the South Caucasian states. Russia has appeared to
place a greater strategic importance on maintaining influence in the South Caucasus region than
in much of Central Asia (except Kazakhstan). Its early determination to remain closely involved
in the region included its pressure on Azerbaijan and Georgia in 1993 to get them to join the CIS
and sign the Collective Security Treaty, and on Georgia to acquiesce to Russian military bases on 163
The elevation of Vladimir Putin to Russia’s presidency marked a more coordinated and activist
Russian stance toward the region. Then-Acting President Putin approved a “national security
concept” in January 2000 that termed foreign efforts to “weaken” Russia’s “position” in the South
Caucasus, or to thwart “integrative processes” in the CIS, as security threats. It also calls for
protecting Russia’s economic interests in routes for energy flows from the Caspian and elsewhere.
A new military doctrine approved by Putin also stressed these threats, including warnings that
NATO might intervene in conflicts in the CIS, such as the NK or Abkhaz conflicts, as it did in the 164
Kosovo region of Yugoslavia. Russia’s 1999-2005 Chechnya campaign, in this view,
demonstrated Putin’s determination to grasp for regional influence over the South Caucasus.
Other observers argue that such Russian intentions, however, may in fact be unattainable because 165
of Russia’s strategic weakness.
Putin launched new regional initiatives, including an agreement in July 2000 to hold regular
biannual “Caucasus Four” summits focusing on deepening Russia’s influence through dispute
mediation and security cooperation (only a few ever were held). Another agreement in September
Corridor (NSTC). According to Russian media, major reasons for pursuing a Russian-oriented
NSTC included counteracting the regional development of routes bypassing Russia, such as the
BTC oil pipeline and SCP, and the Russian strategic concept’s call for protecting Russia’s 167
interests in the Caspian region. In May 2002, an inter-ministerial agreement was signed
between Russia, Iran, and India inaugurating the NSTC with termini at Bombay and St.
Petersburg. Shipments along the route began in July 2004, and at a meeting in late 2004,
163 The Russian military reportedly provided assistance for overthrowing the Azerbaijani government, opening up
Heydar Aliyev’s return to power, after which Azerbaijan joined the CIS. Similarly, the Russian military assisted then-
President Shevardnadze in defeating insurgency, after which Georgia joined the CIS.
164 In contrast, a 1997 draft of the national security concept emphasized the importance of a democratizing CIS, rather
than a militarized CIS protecting against outside threats. Herzig, p. 49. See also Stephen Blank, Threats to Russian
Security, U.S. Army War College, July 2000, pp. 18-19.
165 The Economist, August 19, 2000; Stephen Blank, U.S. Military Engagement with Transcaucasia and Central Asia,
U.S. Army War College, June 2000, pp. 22-35.
166 Russian and Iranian transport ministers discussed setting up such a transport corridor at a meeting in September
1999. India was interested in sending an experimental cargo shipment to Scandinavia along this corridor. Interfax,
September 14, 1999.
167 CEDR, January 15, 2000, Doc. No. CEP-162; April 26, 2000, Doc. No. CEP-15; September 15, 2000, Doc. No.
CEP-193; November 10, 2000, Doc. No. CEP-58; April 2, 2002, Doc. No. CEP-201; May 23, 2002, Doc. No. CEP-
150; August 5, 2002, Doc. No. CEP-309; May 5, 2003, Doc. No. CEP-204.
representatives from Russia, Kazakhstan, India, Iran, Azerbaijan and Oman discussed measures to
expedite shipping. The opening of the BTC pipeline and the SCP, however, have been a blow to
Russia’s rationales for the NSTC.
Armenia has been concerned about proposals to build regional railroads that would bypass the
country, which it argues will further isolate it from transport routes. Accords were signed in 2004-
2005 between the state-controlled Russian Railways Company and Azerbaijani and Iranian
railway officials to form a consortium to build a 250-mile railway from Azerbaijan’s town of
Astara to Iran’s towns of Resht and Kazvin. This proposed railway, if built, would link with
others to the north and south, permitting land-based transport of cargo from Europe to the Persian
Gulf, and would supplement existing transport by ferry from Russian and Iranian Caspian Sea 168
ports. Armenia has urged Russia to refurbish a railway through Abkhazia (and has hoped that 169
Georgia would permit transport via this railway). The presidents of Turkey, Azerbaijan, and
Georgia signed a declaration of intent in May 2005 to build a railway linking Kars in Turkey to
Baku in Azerbaijan. Financing of the railway was agreed upon by the parties in January 2007 and
construction began in late 2007. Armenia has objected that this project bypasses Armenia (an 170
existing but unused railway links Armenia to Kars).
Successive U.S. Administrations hoped that Russia would progress in democratization and could
play a stabilizing role in the South Caucasus, but these hopes largely lapsed in recent years as
Russia became more authoritarian. Congressional concerns over Russia’s motives in the Eurasian
states have been reflected in provisions in every Foreign Operations Appropriations Act since
FY1994 prohibiting aid to any Eurasian state that violates the territorial integrity or national
sovereignty of another (a presidential waiver is included; the waiver has been used to provide aid
Russia has appeared to place the greatest strategic importance on exercising influence in the
military-strategic sphere, less on influence in the economic sphere, and a minimum on influence
in the domestic political sphere, except for obtaining assurances on the treatment of ethnic
Russians. Russia has tried to stop terrorism, ethnic “undesirables,” drugs, weapons, and other
contraband from entering its borders, and to contain or manipulate separatist ideologies in the
North and South Caucasus. Russia has averred that these concerns have caused it to maintain
military bases in Armenia and Georgia and a relatively large Caspian Flotilla. The states variously
have responded to Putin’s policies. Armenia has been interested in close security ties with
Russia—given that it is almost surrounded by Islamic states that support Azerbaijan’s sovereignty
over NK—and it views Russia as a traditional protector against the Turks. Azerbaijan has been
concerned about Russia’s ties with Armenia. Georgia long pressed for the closure of all Russian
military bases in the country and the removal of Russian “peacekeepers” (or their inclusion in a
larger international force) in Abkhazia and South Ossetia, but failed in August 2008 to advance
168 CEDR, May 20, 2004, Doc. No. CEP-302; February 10, 2005, Doc. No. CEP-109; ITAR-TASS, May 3, 2005; May
5, 2005; President of OAO RZHD Vladimir Yakunin visited the Islamic Republic of Iran, International Congress of
Industrialists and Entrepreneurs News, November 6, 2006.
169 CEDR, February 17, 2005, Doc. No. 189; February 21, 2005, Doc. No. CEP-27.
170 In the 109th Congress, H.R. 3361, introduced on July 20, 2005, and S. 2461, introduced on March 28, 2006,
prohibited U.S. assistance to build any rail connections or railway-related connections that traverse or connect Baku,
Azerbaijan; Tbilisi, Georgia; and Kars, Turkey, and that specifically exclude cities in Armenia. S. 3938, the Export-
Import Bank Re-authorization Act of 2006—prohibiting Eximbank credits or guarantees for the railway—was signed
into law on December 20, 2006 (P.L. 109-438).
Several developments since Georgia’s late 2003 “rose revolution” appeared to mark Russia’s
declining influence in the South Caucasus. These included NATO’s increased ties with all the
states of the region, the completion of the BTC oil pipeline and the SCP for gas, Russia’s
agreement to close its remaining military bases in Georgia, and decisions by Azerbaijan and
Georgia to end or reduce their Russian gas imports. These developments appeared to be
strengthening the region’s pro-Western and pro-U.S. orientation. Russia’s invasion of Georgia in
August 2008, its recognition of the independence of Abkhazia and South Ossetia, and its
establishment of military bases in these regions mark a substantial reassertion of Russian
influence in the South Caucasus, according to some observers.
Russia’s armed presence in Armenia and Georgia—including military base personnel,
“peacekeepers,” and border troops—was significant during most of the 1990s, but temporarily
declined in recent years in Georgia. The first step by Russia in maintaining a military presence in
the region was the signing of the CIS Collective Security Treaty by Armenia, Russia, and others
in 1992, which calls for mutual defense consultations. Russia prevailed on Georgia and
Azerbaijan to join the CIS and also sign the treaty, but they withdrew from the treaty in early
1999. Russia secured permission for two military bases in Armenia and four in Georgia, and
Russian forces help guard the Armenian-Turkish border. In 1993, Azerbaijan was the first
Eurasian state to pressure Russia to withdraw its troops, except at the Gabala radar site in
northern Azerbaijan. (Giving up on closing the site, in January 2002 Azerbaijan signed a 10-year
lease with Russia to permit up to 1,500 personnel to man the radar.) In 1999, Georgia assumed
full control over guarding its land and sea borders, except for some liaison officers.
At the November 1999 OSCE Summit, the South Caucasus states joined 27 others in agreeing to
adapt the Conventional Armed Forces in Europe (CFE) Treaty. The Treaty adaptation process
gave Georgia a forum to push for a reduced Russian military presence in Georgia, and when fully
implemented also will provide for a reduced Russian military presence in the North Caucasus. To
comply with new weapons limits under the Treaty, Russia agreed to reduce weaponry at its bases
in Georgia, to close its bases at Gudauta and Vaziani by July 2001, and to complete negotiations
during 2000 on the status of the other two bases at Batumi and Akhalkalaki. The Treaty remained
unratified by NATO signatories until Russia satisfied these and other conditions. Russia moved
some weaponry from the bases in Georgia to bases in Armenia, raising objections from
Azerbaijan. On July 1, 2001, Georgia reported that the Vaziani base and airfield had been turned
over by Russia to Georgia. The Russian government reported in June 2002 that it had closed its
Gudauta base, but announced that 320 troops would remain to guard facilities and support
“peacekeepers” who would relax at the base. At its December 2002 ministerial meeting, the
OSCE hailed the Gudauta closure—over Georgia’s objections that the base was not under its
control—and appeared unwilling to press Russia on terminating the other bases. At the meeting,
the United States voiced “hope” that Russia would make progress in meeting its CFE
commitments. A more determined stance was taken by the OSCE in subsequent fora. Russia
asserted that it needed $300 million to $1 billion and three to ten years to close the other two
bases. Russian Defense Minister Sergey Ivanov stated in June 2005 that about 2,500 Russian
troops were at the bases.
Putting pressure on Russia to abide by its commitments, the Georgian legislature in March 2005
passed a resolution calling for Russia to come to an agreement by mid-May on closing the bases
by January 2006 or face various restrictions on base operations. This pressure, and perhaps a May
May 30, 2005, setting 2008 as the deadline for closing the bases. Paving the way for this
agreement, President Putin on May 23, 2005, stated that Georgia had the sovereign right to
request the base closures and that his military General Staff had assured him that the Cold War-
era bases were not of strategic importance to Russia. On June 27, 2007, Russia formally handed
over the Akhalkalaki base to Georgia’s control. On November 21, 2007, the Russian Foreign
Ministry proclaimed that the Batumi base had been closed and that Russia had “fully”
accomplished its obligations to Georgia on the withdrawal of military facilities. Georgia
continued to protest that the Gudauta base retained some Russian forces and equipment and had
not been handed over to Georgia’s control. It also continued to call for either the removal of
Russian “peacekeepers” from Abkhazia and South Ossetia or their incorporation into a larger
international peacekeeping force.
Russia’s military force withdrawals from Georgia temporarily made its presence in Armenia more
significant in terms of regional influence. Armenia has argued that the Russian bases provide for
regional stability by protecting it from attack. The total number of Russian troops in Armenia has
been estimated at about 3,500. Russia has supplied many weapons to Armenia—including S-300
missiles, Mig-29 fighters, and some of the equipment relocated from Georgia as part of the base-
closure process—which Azerbaijan views as destabilizing. In addition to this military influence in
the region, Russia has about 90,000 troops in the North Caucasus area that it can use to intimidate
the region. Other Russian forces along the region’s borders include the Black Sea Fleet and the
Caspian Flotilla. The latter has been expanded in recent years while the former faced dwindling
funding until 2003. Armenia is the base for a regional air defense system. Russian military forces
from the North Caucasus and the Black Sea Fleet invaded Georgia in August 2008. After the
conflict, Russia substantially enlarged its military presence in the South Caucasus with its
establishment of military bases in Abkhazia and South Ossetia, each containing about 3,500
Until late 2006, it appeared that Russia was trying to develop closer security ties with Azerbaijan
to counter U.S. influence. Russia was concerned about possible U.S. plans to seek a greater
security presence and feared that U.S. assistance would permit Azerbaijan to bolster its Caspian
Sea navy, challenging Russian naval predominance. In February 2003, a framework agreement on
Azerbaijan-Russia military cooperation accord was signed, opening the possibility of Russian
military training and arms sales to Azerbaijani forces. However, such cooperation has appeared
minor, perhaps because Azerbaijan’s aim in signing the agreement was to persuade the United
States to offer more security assistance. Among other Russia-Azerbaijan security cooperation, in
May 2005, the Interior (police) Ministers of the two countries signed an accord to cooperate on
anti-terrorism and announced that cooperation in 2004 had resulted in the extradition of dozens of 171
suspected criminals by both sides. In March 2006, visiting then-President Putin called for
enhanced bilateral economic and security cooperation, but Aliyev reportedly would not agree to
support the creation of a Russia-led Caspian Sea naval security alliance or commit to greater
Azerbaijani use of Russian oil export pipelines. After late 2006, Azerbaijani-Russian relations
appeared to worsen over demands by Russia’s Gazprom for substantial gas price hikes, which led
Azerbaijan to cease importing from Gazprom.
After September 11, 2001, Russia stepped up its claims that Georgia’s Pankisi Gorge harbored
Chechen terrorists with links to bin Laden, who used the Gorge as a staging ground for attacks
171 Igor Torbakov, Eurasia Insight, April 9, 2003; CEDR, April 15, 2005, Doc. No. CEP-78; April 25, 2005, Doc. No.
CEP-122; May 20, 2005, Doc. No. CEP-39062.
into Chechnya. Some Russian officials in 2002 initially condemned U.S. plans to provide military
training and equipment to Georgia to help it deal with terrorism in the Gorge and elsewhere The
United States in turn expressed “unequivocal opposition” to some Russian assertions of a right to
military intervention within Georgia to combat terrorism. Georgia launched a policing effort in
the Gorge and agreed with Russia to some coordinated border patrols in late 2002 that somewhat
reduced tensions over this issue. In February 2004, Saakashvili reportedly pledged during a
Moscow visit to combat “Wahabbis” (referring to Islamic extremists) in Georgia, including
Chechen terrorists hiding in the Pankisi Gorge and international terrorists that Russia alleged had
transited Georgia to fight in Chechnya.
In recent years, Russian energy firms have played more prominent roles in the Caspian Sea
region. With Russia’s military influence in the region perhaps declining with the closure of its
military bases in Georgia, Russia may place even greater emphasis on retaining or expanding 172
influence over energy development and transport. As part of such efforts, Russia’s
policymakers during much of the 1990s insisted that the legal status of the Caspian Sea be
determined before resources could be exploited. Russia changed its stance by agreeing on seabed
delineation with Kazakhstan (1998 and 2002) and Azerbaijan (2002), prompting objections from
Iran and Turkmenistan. Before September 11, 2001, Putin criticized Western private investment in
energy development in the Caspian region, and appointed a special energy emissary to lobby the
region to encourage energy ties with Russia. After September 11, 2001, however, he appeared to
ease his criticism of a growing U.S. presence. At the May 2002 U.S.-Russia summit, the two
presidents issued a joint statement endorsing multiple pipeline routes, implying Russia’s non-
opposition to plans to build the BTC oil pipeline and an associated gas pipeline. In March 2004,
however, a Russian official stated that Putin wanted to ensure that the greatest volume of Caspian
energy continued to flow through Russian pipelines. A U.S.-Russia Strategic Framework
Declaration, issued in April 2008, reaffirmed the goal of enhancing the “diversity of energy 173
supplies through economically viable routes and means of transport.” In the South Caucasus
region, Russian energy firms have moved aggressively to purchase or otherwise gain influence
over energy development and distribution. In Armenia, Russia reportedly lobbied to limit the
capacity of the Iran-Armenia gas pipeline (the first phase of which opened in March 2007) and a 174
consortium controlled by Gazprom succeeded in becoming the operator.
As a percentage of the population, there are fewer ethnic Russians in the South Caucasus states
than in most other Eurasian states. According to the CIA World Factbook, ethnic Russians
constituted less than 4% of the region’s population in 2005. Russia has voiced concerns about the
safety of ethnic Russians in Azerbaijan and Georgia. A related Russian interest has involved
former Soviet citizens who want to claim Russian citizenship or protection. In June 2002, a new
Russian citizenship law permitted granting citizenship and passports to most Abkhazians and
South Ossetians (they are already able to enter Russia without visas, while Georgians are not),
heightening Georgian fears that Russia has de facto annexed the regions. Many observers argue
172 Jeronim Perovic, Demokratizatsiya, Winter 2005, pp. 61-85.
173 The White House. Office of the Press Secretary. US-Russia Strategic Framework Declaration, April 6, 2008.
174 “Armenia/Iran: Pipeline Admits in Rival Gas Supplier,” Oxford Analytica, March 19, 2007.
that the issue of protecting the human rights of ethnic Russians and pro-Russian groups is a
stalking horse for Russia’s military-strategic and economic interests. Pro-Russian fellow-travelers
and agents in place are used to boost Russian influence and to oppose U.S. interests.
The Bush Administration has generally viewed Turkey as able to foster pro-Western policies and
discourage Iranian interference in the South Caucasus states. According to these policymakers
and others, Turkey can play an important role in the region, and provide a model of a non-
authoritarian, non-theocratic Islamic state. Critics of an over-reliance on Turkey’s role in the
region point to the Turkish tilt toward Azerbaijan in the NK conflict and Turkey’s less than full
support for U.S.-led coalition actions in Iraq in March-April 2003 in cautioning that the United
States and NATO might be drawn by their ties with Turkey into policy imbroglios.
Some in Turkey have envisaged Azerbaijan and Central Asia as part of a pan-Turanic (Turkic
peoples) bloc. Turkey seeks good relations with Azerbaijan and Georgia and some contacts with
Armenia, while trying to limit Russian and Iranian influence. While Turkey has gained some
influence in the region, it has been constrained by its own economic problems, poor relations with
Armenia, and countervailing Russian influence. Armenia is a member of the Black Sea Economic
Cooperation zone, initiated by Turkey, and the two states have established consular relations.
Roadblocks to better Armenian-Turkish relations include Turkey’s rejection of Armenians’ claims
that Turkey perpetuated a genocide against them in 1915 and its support for Azerbaijan in the NK
conflict. Turkish officials stated in 1995 that “Armenia must withdraw from occupied Azerbaijani
lands” before Turkey would consider establishing full diplomatic relations. Turkey’s increased
influence in Azerbaijan has included Azerbaijan’s adoption of a Latin alphabet and the
construction of the BTC oil and associated gas pipelines. Georgia has an ongoing interest in ties
with the approximately one million Georgians residing in Turkey and the approximately 50,000
residing in Iran, and has signed friendship treaties with both states. Turkey and Russia are
Georgia’s primary trade partners. Russia has been able to establish military bases in Armenia and
Georgia to buoy up its regional influence. Turkey views the Russian bases in Armenia and
Georgia as security threats, and Turkey and the United States succeeded within the CFE Treaty
adaptation process in obtaining Russian pledges to close down two bases in Georgia and to
discuss the status of the remaining two bases. Turkey reportedly has some military aircraft
landing and servicing privileges at Georgia’s Marneuli airbase.
Many in Iran initially viewed the breakup of the Soviet Union as creating a “new Middle East”
centered on Iran, and including Afghanistan, Armenia, Azerbaijan, the Central Asian states,
Pakistan, and Turkey, but poor relations with Afghanistan’s Taliban group and others caused this
idea to fade. Iran’s interests in the South Caucasus have appeared moderate and not focused on
dominating the region through subversion. Azerbaijani officials at times have alleged that
elements in Iran have fostered Islamic fundamentalism or sponsored terrorism, and Georgian
officials have reported Islamic missionary activities in areas of Georgia with Islamic populations,
including Kvemo Kartli (in which about one-half of the population is ethnic Azerbaijani) and
Kakheti (in which about one-tenth of the population is ethnic Azerbaijani or Kist).
Iran’s interests in the South Caucasus include building economic ties and discouraging Western
powers such as Turkey and the United States from gaining influence and from working to end
regional instability that might threaten its own territorial integrity. Iran and Russia cooperated
during most of the 1990s in trying to block Western energy development in the Caspian by
demanding that the legal status of resources first be determined. Russia has broken with Iran on
this stance by signing bilateral and trilateral border agreements with Azerbaijan and Kazakhstan.
In the wake of growing international criticism of its nuclear programs in recent years, Iran has
intensified its attempts to involve itself in South Caucasus economic and security issues, to
dissuade the states from bolstering security ties with the United States, including by signing
agreements to host U.S. military assets, which Iran fears the United States would use to attack it.
High-level Iranians have visited each regional state, have hosted high-level return visits, and have
met with regional leaders in international forums to make their case.
A major proportion of the world’s Azerbaijanis (estimates range from 6-12 million), and about
constituting almost one-third of its population. Iran has limited trans-Azerbaijani contacts to
discourage the spread of ethnic consciousness among its “Southern Azerbaijanis,” and has heavily
criticized politicians in Azerbaijan who advocate separatism in Iran. The example of the assertion
of Kurdish ethnic rights in post-Saddam Iraq in 2003 has galvanized some Azerbaijanis who
propagandize for greater rights for “Southern Azerbaijanis.” Alternatively, Azerbaijani elites fear
Iranian-supported Islamic fundamentalism and question the degree of Iran’s support for an 175
Iran has growing trade ties with Armenia and Georgia, but its trade with Azerbaijan has declined.
Iran has argued for some time that Azerbaijan would most benefit financially by cooperating in
building energy pipelines to Iran. Islamic Shiite fundamentalists in Iran have urged Iran’s
government to forego its official policy of neutrality in the NK conflict and embrace solidarity 176
with Shiites in Azerbaijan.
A major thaw in Azerbaijani-Iranian relations took place in 2004-2005 with an exchange of visits
by the heads of government. Iran’s then-President Mohammad Khatami visited Azerbaijan in
August 2004, during which the two presidents agreed to open an Azerbaijani consulate in Tabriz.
In January 2005, Ilkham Aliyev visited Iran. However, on major issues such as border delineation
in the Caspian Sea and Iran’s objections to Azerbaijani security ties with the United States, the
two sides did not come to agreement. In March 2005, Iranian Air began weekly flights from
Tabriz to Baku. Some observers suggested that Iran’s increased acrimony with the United States
may have been a spur to its improved relations with Azerbaijan, in order either to encourage 177
Azerbaijan to be a mediator or to urge it not to permit U.S. basing. Since 2006, many in
Azerbaijan increasingly have been concerned about Iran’s arrests of ethnic Azerbaijani civil rights 178
advocates and alleged separatists, including Abbas Lisani. Azerbaijani-Iranian relations were
175 Cameron Brown, The Middle East Journal, Autumn 2004, pp. 576-597; Brenda Shaffer, Borders and Brethren: Iran
and the Challenge of Azerbaijani Identity, Cambridge, Mass., MIT Press, 2002.
176 Analyst Brenda Shaffer argues that Iran tacitly supports the continuation of the NK conflict by assisting Armenia,
since the conflict constrains Azerbaijan’s ability to foster ethnic nationalism among Azerbaijanis in Iran and makes
war-torn and poverty-stricken Azerbaijan appear less inviting as a homeland. Borders and Brethren, pp. 136-140.
177 BBC Monitoring International Reports, New Iranian Leader Might Improve Ties with Azerbaijan, June 29, 2005.
178 CEDR, January 8, 2008, Doc. No. CEP-950009; August 15, 2007, Doc. No. CEP-950239; January 31, 2007, Doc.
No. CEP-950234; November 1, 2006, Doc. No. CEP-950311; August 11, 2006, Doc. No. CEP-950113. Amnesty
International terms Lisani a “prisoner of conscience.” Iran: Further Information on Incommunicado Detention/Fear of
Torture/Medical Concern, Abbas Lisani, September 19, 2006; and Iran: Further information on Incommunicado
Detention/Fear of Torture/Medical Concern, Prisoner of Conscience. New Concern: Fear of Flogging, January 19,
roiled at the end of 2007 by the conviction in Azerbaijan of fifteen individuals on charges of
collaborating with the Islamic Revolution Guards Corps to plan a coup and carry out terror
operations. After the Azerbaijani National Security Ministry released details of the case, the
Iranian Foreign Ministry denied any Iranian involvement and termed the case a scheme by Israel 179
and the United States to harm Azerbaijani-Iranian relations.
U.S. policy aims at containing Iran’s threats to U.S. interests in the region (See CRS Report
RL32048, Iran: U.S. Concerns and Policy Responses, by Kenneth Katzman). Some critics argue
that if the South Caucasus states are discouraged from dealing with Iran, particularly in building
pipelines through Iran, they would face greater pressure to accommodate Russian interests.
Among non-bordering states, the United States and European states are the most influential in the
South Caucasus in terms of aid, trade, exchanges, and other ties. U.S. and European goals in the
region are broadly compatible, involving integrating it into the West and preventing an anti-
Western orientation, opening it to trade and transport, obtaining energy resources, and helping it
become peaceful, stable, and democratic. Major programs have been pursued by the European
Union, NATO’s Partnership for Peace, OSCE, European Bank for Reconstruction and 180
Development, and European-based non-governmental organizations.
U.S. and EU policies toward the region have sometimes differed, primarily on the greater
willingness of the EU to cooperate with Russia and Iran in regional projects. U.S. and European
energy firms also have vied to develop resources. In 2004, EU foreign ministers invited the South
Caucasus states to participate in a “Wider Europe” program of enhanced aid, trade, and political
The South Caucasus region has developed some economic and political ties with other Black Sea
and Caspian Sea littoral states, besides those discussed above, particularly with Ukraine,
Romania, Kazakhstan, and Turkmenistan. Various Central Asian states have common interests
with Azerbaijan, including some linguistic and religious ties and concerns about some common
bordering powers (Iran and Russia). Both the South Caucasus and Central Asia face terrorist
threats and drug trafficking from Afghanistan. Energy producers Kazakhstan, Turkmenistan, and
Uzbekistan have considered trans-Caspian transport as a means to get their oil and gas to Western
markets. As Central Asia’s trade and transport links to the South Caucasus become more
significant, it will become more dependent on stability in the region.
179 CEDR, December 14, 2007, Doc. No. CEP-950356; December 16, 2007, Doc. No. CEP-950073; December 17,
2007, Doc. No. CEP-950308.
180 Herzig, pp. 114-117.
Figure A-1. Armenia, Azerbaijan, and Georgia
Source: Map Resources. Adapted by CRS. (06/02 M. Chin)
Specialist in Russian and Eurasian Affairs