security and development in the caucasus

This article was downloaded by: [Simon Fraser University]On: 17 November 2014, At: 12:48Publisher: RoutledgeInforma Ltd Registered in England and Wales Registered Number: 1072954 Registeredoffice: Mortimer House, 37-41 Mortimer Street, London W1T 3JH, UK

Conflict, Security & DevelopmentPublication details, including instructions for authors andsubscription information:http://www.tandfonline.com/loi/ccsd20

Security and development in theCaucasusS. Neil MacFarlanePublished online: 22 Oct 2010.

To cite this article: S. Neil MacFarlane (2004) Security and development in the Caucasus, Conflict,Security & Development, 4:2, 133-148, DOI: 10.1080/1467880042000259077

To link to this article: http://dx.doi.org/10.1080/1467880042000259077

PLEASE SCROLL DOWN FOR ARTICLE

Taylor & Francis makes every effort to ensure the accuracy of all the information (the“Content”) contained in the publications on our platform. However, Taylor & Francis,our agents, and our licensors make no representations or warranties whatsoever as tothe accuracy, completeness, or suitability for any purpose of the Content. Any opinionsand views expressed in this publication are the opinions and views of the authors,and are not the views of or endorsed by Taylor & Francis. The accuracy of the Contentshould not be relied upon and should be independently verified with primary sourcesof information. Taylor and Francis shall not be liable for any losses, actions, claims,proceedings, demands, costs, expenses, damages, and other liabilities whatsoever orhowsoever caused arising directly or indirectly in connection with, in relation to or arisingout of the use of the Content.

This article may be used for research, teaching, and private study purposes. Anysubstantial or systematic reproduction, redistribution, reselling, loan, sub-licensing,systematic supply, or distribution in any form to anyone is expressly forbidden. Terms &Conditions of access and use can be found at http://www.tandfonline.com/page/terms-and-conditions

http://www.tandfonline.com/loi/ccsd20

http://www.tandfonline.com/action/showCitFormats?doi=10.1080/1467880042000259077

http://dx.doi.org/10.1080/1467880042000259077

http://www.tandfonline.com/page/terms-and-conditions

http://www.tandfonline.com/page/terms-and-conditions

Conflict, Security & Development 4:2 August 2004

Analysis

Security and development inthe CaucasusS. Neil MacFarlane

This article discusses the linkage between sition. However, the collapse of command

security and development in the Caucasus. economies and the failure of governance

In particular, it examines the degree to have a stronger causal role in explaining the

economic collapse and the halting quality ofwhich developmental dysfunction has been

a significant cause of conflict, the extent to economic recovery. Turning to the role of

which conflict has distorted the region’s development assistance in conflict resol-

ution, aid agencies and donors have beeneconomic transition, and the role of devel-

reluctant to use development assistance asopment assistance in fostering conflict resol-

an instrument of conflict resolution. How-ution. The article argues that the region’s

conflicts have had locally significant econ- ever, there has been some success in using

micro-level assistance to foster reconciliationomic consequences and that they make it

difficult for the region’s states to cushion the between communities.

effects of post-communist economic tran-

IntroductionThe Caucasus has experienced widespread economic decay and social and political

conflict since the collapse of the USSR in 1991. This raises several questions.

• To what extent are the region’s conflicts a result of developmental dysfunction?

• What is the impact of conflict on the region’s development?

• To what extent have developmental difficulties fuelled conflict in the region?

Neil MacFarlane is Lester B. Pearson Professor of International Relations at the University of Oxford, Professorial Fellow

at St Anne’s College, and former director of Oxford’s Centre for International Studies. He is also an associate of the

Geneva Centre for Security Policy, where he manages the course on new issues in international security.

ISSN 1467-8802 print/ISSN 1478-1174 online/04/020133-16 © 2004 International Policy InstituteDOI: 10.1080/1467880042000259068

Dow

nloa

ded

by [

Sim

on F

rase

r U

nive

rsity

] at

12:

48 1

7 N

ovem

ber

2014

134 S. Neil MacFarlane

• How have the developmental activities of international donors and agencies affected

regional processes of conflict?

In this article, I attempt to answer these questions by examining the regional contexts

of conflict and development, the extent to which developmental inequities fuel or sustain

conflict, the developmental consequences of conflict, and the implications of inter-

national engagement in reconstruction for regional conflict and conflict resolution.

DefinitionsA number of clarifications are necessary prior to beginning the analysis. One concerns

the geographical area we are discussing. Specifically, do we include Chechnya, In-

gushetia, North Ossetia, and Daghestan, all of which are jurisdictions in the Russian

Federation, or do we limit the analysis to the southern Caucasian republics (Armenia,

Azerbaijan, and Georgia)?

This article focuses on the three independent republics rather than taking the region

more broadly for two reasons. First, our terms of reference indicate interest in the

linkages between security and development in the ‘post-conflict phase’ (the war to peace

transition). Chechnya is not in the ‘post-conflict phase’, despite the efforts of the Russian

government to make us believe that it is. Second, in the notes of guidance for the project

there is a clear interest in the nature of international engagement and its impact on

linkages between security and development. International engagement in the northern

Caucasus has been quite small in comparison to that in the south, in part because of the

security situation, and in part because of the sensitivities of both the Russian govern-

ment and of international actors. For the former, substantial international engagement

would complicate the waging of a rather nasty war by enhancing transparency. For the

latter, development assistance might be seen as an endorsement of the Russian govern-

ment’s policy in the troubled republic. This in turn would carry potentially substantial

domestic political costs, given widespread concern over Russian violation of human

rights.1 What international engagement there has been in the northern Caucasus is

largely humanitarian rather than developmental, and so falls outside the terms of

reference.

What do we mean by security? The definition of security is contested with regard to

content, scope and referents (i.e. states, peoples, human beings). For the sake of

simplicity, however, I take security to mean (in an absolute sense) freedom from the

Dow

nloa

ded

by [

Sim

on F

rase

r U

nive

rsity

] at

12:

48 1

7 N

ovem

ber

2014

Security and development in the Caucasus 135

threat of armed violence. At the micro-level, this may mean individual and group

freedom from political, ethnic and criminal violence. At the macro-level, it may mean

freedom from armed threats to the survival of the state.

By development, I mean the enhancement of the welfare of individuals, communities

and states, measured in terms of aggregates such as production, investment, employment

and standard of living, but also, and drawing from the human development literature,

individuals’, groups’ and societies’ quality of life and the opportunities available to

them.2

With these rather crude definitions in mind, one can easily deduce linkages between

security and development. Denial of opportunity and persistently poor quality of life

may conduce to micro and macro insecurity (the so-called ‘root causes of conflict’).3

Addressing these developmental challenges may remove the sources of insecurity and, as

such, be perceived as a central part of the conflict prevention agenda.4

However, the existence and persistence of physical insecurity complicates the develop-

mental agenda. People who feel insecure are less likely to invest personal resources in

development. It is difficult to attract significant external resources (ODA, multilateral

loans and private investment) in conditions of sustained political and social instability.

Governments faced with security challenges may find it difficult to commit limited

public resources to development activities.

Turning to the roles of external assistance providers, it follows from the above that

targeted security assistance, by enhancing people’s confidence and trust, may help in

laying the basis for development.5 Assistance in security sector reform is an obvious

example.

Likewise, sensitive and effective developmental assistance may enhance security by

reducing people’s incentives to exit law and politics and turn to violence. More strongly,

and particularly at the micro level, assistance may be designed to bridge divides within

society and—through positive or negative conditionality—to encourage conflict resol-

ution and inter-group reconciliation, a point I shall return to later.

The ContextThe consideration of the development-security nexus is generally linked to the period of

post-conflict transition. The southern Caucasus provides a telling example of the often

misleading quality of this phrase. There is no open violent conflict. There is also

Dow

nloa

ded

by [

Sim

on F

rase

r U

nive

rsity

] at

12:

48 1

7 N

ovem

ber

2014


no war-to-peace transition. The region is one of (the equally misleadingly called) ‘frozen

conflicts’.

The conflicts

There have been three significant civil conflicts in the southern Caucasus since indepen-

dence in 1991.6 Two occurred in Georgia, one in Azerbaijan. The first of the conflicts

in Georgia was that in Southern Ossetia (formerly an autonomous region of Soviet

Georgia) in 1990–92. Why it happened is a long story, but suffice it to note that the

approach of Georgian independence unsettled minority elites in the region, not least

because the dominant political forces in Georgia in the lead-up to independence

questioned the rights of some minorities not only to enjoy constitutionally protected

autonomy, but, for that matter, to be in Georgia. The Osset leadership of the day sought

to tighten the region’s ties with the Russian Federation and their kin in North Ossetia.

This led the Georgian parliament to annul the region’s autonomous status and away they

went.

The conflict lasted two years. It resulted in the displacement of some 25,000 ethnic

Georgians from South Ossetia and somewhere between forty and sixty thousand Ossets,

either from other parts of Georgia into South Ossetia and the Russian Federation or

from South Ossetia to the Russian Federation.7 A ceasefire was achieved in June 1992

with mediation by then-Russian President Boris Yel’tsin. A mixed (Russian-Georgian-

Osset) peacekeeping force was deployed; there has been no significant renewal of

violence. The Russian Federation and the Organisation for Security and Cooperation in

Europe (OSCE) have been engaged for eleven years in an effort to produce a peaceful

settlement. There is no obvious sign of progress at the political level, although a

considerable amount has been achieved in reconciling local communities. Development

assistance has played an important role in the latter (see below).

Attention then turned to Abkhazia, after an interlude of civil war amongst the

Georgians that ultimately removed their democratically elected President and replaced

him with Eduard Shevardnadze. The defeated party regrouped in Mingrelia (western

Georgia) and mounted a guerrilla campaign, using sanctuaries in the Autonomous

Republic of Abkhazia. The Georgians pursued and then decided to take advantage of

their presence in Abkhazia to unseat the independently minded regional government.

They succeeded, but the government escaped and re-established itself in northern

Abkhazia, whence it mounted a counteroffensive with Russian assistance. A year later,

Dow

nloa

ded

by [

Sim

on F

rase

r U

nive

rsity

] at

12:

48 1

7 N

ovem

ber

2014


Georgian forces and the Georgian population were expelled from Abkhazia, producing

somewhere between 200,000 and 300,000 refugees. Russian mediation (and Russia’s

provision of a peacekeeping force) again produced a cessation of hostilities. The UN also

deployed an observer force in September 1993, which remains in place today. Ten years

of negotiations ensued. There is no obvious sign of progress towards a durable

resolution of the conflict. There have been repeated instances of renewed violence that

blends criminality with partisan activity directed at Abkhaz officials and Russian

peacekeepers. Abkhaz authorities have responded with harassment of the returning

civilian population, which, at its most extreme, has involved the re-expulsion of

Georgian spontaneous returnees from the Gali District of southern Abkhazia. The area

is also dangerous ground for UN personnel, with repeated kidnappings as well as the

targeting of UN helicopters.

The third major conflict in the region is that in Azerbaijan over the Nagorno

Karabakh region. The conflict began in February 1988, when the government of the

region petitioned the Supreme Soviet of the USSR for the transfer of jurisdiction to

Armenia. The petition triggered mass demonstrations of support in Yerevan. The cause

of Karabakh became the focal point for the consolidation of a mass democratic

opposition to communist rule in Armenia. Late in the same month, reports of the

murder of Azeris in Karabakh, and the mass outflow of Azeris from that region,

produced anti-Armenian rioting in Sumgait, an industrial city close to Baku. Nagorno

Karabakh itself rapidly descended into violence between Azeri and Armenian militias. A

spontaneous exchange of some 600,000 people followed between Armenia and Azerbai-

jan as minorities fled to their kin state.8

The war continued rather fitfully until early 1992, when Armenian forces took Shusha

(Shushi) and then broke through the district of Lachin to the border of Armenia. Over

the next two years, Armenian forces cleared six Azerbaijani districts contiguous to

Nagorno Karabakh of their 500–600,000 Azeri residents. With the military situation

stabilised, Russian mediation produced a cease-fire in 1994. Again, ten years later—and

despite a seemingly endless but occasionally creative OSCE-led mediation process – there

is no evidence of real movement towards a resolution of the conflict. The key points of

contention are the nature (horizontal or vertical) of relations between Karabakh and

Baku, the issue of return of Azeris to not only the districts surrounding Karabakh but

to Karabakh itself, and provision for the security of Nagorno Karabakh’s land bridge to

Armenia. Perhaps reflecting a sense that time is on their side, there are growing numbers

Dow

nloa

ded

by [

Sim

on F

rase

r U

nive

rsity

] at

12:

48 1

7 N

ovem

ber

2014


of statements from Azerbaijani officials and politicians expressing a willingness to resolve

the matter by force should negotiations continue to produce no result.

Before going on to the development context, it is worth noting that the failure to

resolve the three conflicts has stimulated the growth of comparatively strong criminal

interests in and around secessionist areas. Both the Abkhaz and Osset de facto

authorities fund themselves largely through revenues from smuggling of alcohol, drugs,

and produce to Russia. There is a significant flow of smuggled petroleum in the other

direction, from Russia to Georgia via South Ossetia. These activities occur across

boundaries that, for obvious reasons, are not controlled by Georgian customs and excise.

Conflict resolution would threaten these flows of revenue to those running the two

breakaway regions. In other words, they have a reasonably strong economic incentive

not to settle the conflicts. The same is true to a lesser extent of the conflict in Nagorno

Karabakh, where both Azeri and Armenian businessmen have profited from the

smuggling of petroleum from Azerbaijan to Armenia and Nagorno Karabakh.

In short, there is a significant political economy of conflict in the region. The

implications for security are reasonably clear; to the extent that elites prosper from the

status quo of frozen conflict, they are likely to resist (or to be unenthusiastic about)

conflict resolution and political normalisation. More generally, the political economy of

conflict is one major source of the high levels of criminality in the region. The insecurity

associated with criminality has knock-on effects in depressing development.

The development context

Turning to the developmental context, the economies of the three countries all shrunk

by between a third and two thirds between 1990 and 1994 (see Table 1). All three

returned to growth in 1995–96, but all of them were affected by the knock-on effects of

Russia’s rouble crisis in 1997–98. Since then, growth has been reasonably positive in

Table 1. GDP change in the southern Caucasus (%)

1998199619941992 20022000

Armenia � 52.6 5.4 12.95.8 7.3 6� 22.6 � 19.7 1.3 10Azerbaijan 11.1 10.6� 44.8 � 11.4Georgia 10.5 2.9 1.9 5.4

Source: IMF, World Economic Outlook (Washington, DC: IMF, December 1998 and April2003), p. 181.

Dow

nloa

ded

by [

Sim

on F

rase

r U

nive

rsity

] at

12:

48 1

7 N

ovem

ber

2014


percentage terms, but from a low base, and with Georgia lagging behind its two

neighbours. In Armenia and Georgia there is little evidence of recovery in manufactur-

ing. In both cases the economic structure has shifted quite dramatically away from

industry and towards services (see Table 2). The situation in Azerbaijan is somewhat

different, given the role of the energy sector as a magnet for investment, a source of

public revenue and a limited source of employment.

In all three cases, growth has been geographically and sectorally concentrated, with

little impact on the population as a whole. It has also produced a real widening of

income differentials between that minority benefiting (often illegally) from economic

transition and those left outside.

The combination of International Financial Institution (IFI) pressure to narrow the

gap between public sector revenue and expenditure and the inefficiency of state revenue

collection has produced a substantial contraction in public services. Consequently, in

human development terms, growth has produced little improvement in the quality of life

or in the availability of opportunity for the great majority of the region’s population (see

Table 3). This situation, in turn, has stimulated massive emigration of much of the most

economically promising pool of the population, and a growing dependence on remit-

tance flows as a replacement for the public sector safety net.

Concerning the development situation in areas outside government control, in

Abkhazia depopulation has had a devastating impact on the economy. Matters have been

made worse by the rupture of economic relations (at least non-criminal ones) between

the region and the rest of Georgia, by the partial disruption of economic ties with Russia

(largely involving trade in citrus, walnuts and tea)9, and by the persistence of low-level

Table 2. Structural change in economies of the southern Caucasus (%GDP)*

Agriculture Industry Services2002199220021992 1992 2002

2631 41303339Armenia3529 15 40Azerbaijan 50† 315723 20 38Georgia 23 39

Source: World Bank, ‘Country at a Glance Tables’. Posted at: http://www.worldbank.org/data/countrydata/countrydata.html visited 12 February 2003.Notes: *Figures may not add to 100% because of rounding.†If one disaggregates ‘industry’ and focuses on manufacturing, one sees a decline from23 to 6% over the same period.

Dow

nloa

ded

by [

Sim

on F

rase

r U

nive

rsity

] at

12:

48 1

7 N

ovem

ber

2014


Table 3. Human development indices (value and ranking) for thesouthern Caucasus

19971995 2001

0.728 (87)Armenia 0.729 (100)0.674 (99)Azerbaijan 0.623 (110) 0.695 (103) 0.744 (89)Georgia 0.729 (85)0.633 (108) 0.746 (88)

Source: UNDP, Human Development Report 1998: Consumption forHuman Development (New York: UNDP, 1998), p. 20; UNDP, HumanDevelopment Report 1999: Globalization with a Human Face (NewYork: UNDP, 1999), pp. 135–136; UNDP, Human Development Report2003: Millenium Development Goals—A Compact among Nations to EndHuman Poverty (New York: UNDP, 2003), pp. 238–239.

violence in the Gali District. South Ossetia was poorer to begin with, and it has suffered

similarly from market disruption and criminality. In both instances, the most prosper-

ous sectors are those involved in, shall we say, unofficial trade (citrus and walnuts in

Abkhazia, and alcohol, petroleum and tobacco in South Ossetia).

The case of Nagorno Karabakh is somewhat different, as it has benefited substantially

from Armenian diaspora assistance, and to some extent, help from the Armenian state.

However, here too depopulation has had a significant impact on development potential.

In the Azerbaijani districts outside Nagorno Karabakh but occupied by Armenia, there

is no economy. In all three cases, their de facto status significantly constrains their

potential for attracting domestic and foreign private investment. It has also resulted in

a less than equitable share of multilateral and bilateral ODA, reflecting a structural bias

against non-state actors involved in civil conflict.

The developmental consequences of conflict

Discussion of the reasons for the poor development performance of insurgent territories

leads to the broader question of the impact of conflict on development in the region as

a whole. To what extent can the development performance of the three states be

explained in terms of the persistence of conflict within them? Certainly, the developmen-

tal impact of the conflicts has been significant for all three countries. Beyond the effects

in the conflict zones just discussed, the wars (and the subsequent failure to conclude

durable peace) had dramatically negative effects on the capacity of all three states to

cushion the effects of transition between 1990 and 1994. In part because of civil conflict,

Dow

nloa

ded

by [

Sim

on F

rase

r U

nive

rsity

] at

12:

48 1

7 N

ovem

ber

2014


both Georgia and Azerbaijan came close to collapse in 1992–93. The two states’ (and also

Armenia’s) high levels of defence expenditure during the period drew substantial

resources away from pensions, public health and other aspects of state activity,

aggravating the social impact of economic collapse. Civil conflict closed major in-

frastructural links from Georgia and Armenia to markets in Russia, exacerbating

disruption associated with the evaporation of the integrated Soviet command economy.

The Azerbaijani (and, from 1993, Turkish) embargo on trade with Armenia seriously

complicated that country’s energy supply, and made it rely on rather tenuous transport

routes through Georgia and Iran for both trade and humanitarian assistance.

All of this said, it is improbable that the region’s depressing developmental record can

be attributed primarily to the security situation. In a general sense, there are numerous

examples of states (e.g. Sri Lanka and the Philippines) that have managed to deliver

respectable developmental results despite the persistence of conflict within their borders.

It is also pertinent to note that the conflicts were, on the whole limited to rather small

portions of Azerbaijan and Georgia. The physical damage wrought by military action was

contained in those regions. The great majority of the territories of the two states have

not been directly affected by conflict, and development there is not depressed by the

imminent threat of violence.

Macroeconomic trends for the region, such as they are, are not that far out of line

with post-Soviet states in similar situations, but which have not experienced significant

conflict (e.g. Kyrgyzstan in comparison to Georgia). This suggests that, conflict or not,

security or not, the problem of post-Soviet transition itself has substantial causal

significance in accounting for poor economic performance. Moreover, it bears mention

that, at the moment of independence, the governments of all three states had no

experience of independent decision-making or market-based economic management. In

two of three cases (Azerbaijan and Georgia), the first elected post-Soviet governments

were particularly inept at dealing with political and economic transition. In short, it

would probably be a mistake to overemphasise the developmental impact of the conflicts

themselves.

Beyond this are the broader issues of governance and the rule of law. The loss of

control in Azerbaijan and Georgia soon after independence permitted the massive

looting of the country’s physical capital. With some honourable exceptions, the incom-

petence of political elites in the region has been matched by their venality.10 The

acquisitiveness of politicians and bureaucrats and their lack of respect for law constitute

Dow

nloa

ded

by [

Sim

on F

rase

r U

nive

rsity

] at

12:

48 1

7 N

ovem

ber

2014


a very high barrier for both the domestic and foreign investment that might spur

regional development. In Azerbaijan, the rewards from energy extraction and export are

sufficiently high for this barrier to be overcome. In the other two cases, however, such

incentives are not present.

Development inequity as a cause of conflict

It is worth tackling the issue of root causes directly, before discussing a number of the

more specific issues guiding our analysis. To what extent are developmental inequities

or frustrations in some sense the cause of the region’s travails? This answer varies by

case. In that of Nagorno Karabakh, there is some evidence that unequal opportunity

played a part in generating the grievances that initiated the conflict. In the first place,

it is reasonably well documented that the Soviet government of Azerbaijan underin-

vested in infrastructure in the Karabakh region. This resulted in levels of development

lower than the republican average, as well as in significant out-migration of Armenians,

both to Azerbaijan’s major urban centres and to Armenia itself. Mikhail Gorbachev also

bears a share of the blame. His anti-alcohol campaign resulted in the destruction of

many of Azerbaijan’s vineyards, which were concentrated in Nagorno-Karabakh. The

resulting unemployment and loss of livelihood expanded the popular constituency for

secession.

Abkhazia, in contrast, was an extremely prosperous region, with a diversified economy

based on semi-tropical agriculture (citrus and tea) and tourism and that prosperity

included the Abkhaz minority that controlled the region’s government. There was no

obvious developmental dimension to the conflict. Similar conclusions are suggested by

the dynamic of conflict in South Ossetia. Although poorer than Abkhazia, there was no

obvious discrimination against the region in terms of investment in physical capital.

Those advocating secession did not justify their actions in terms of economic discrimi-

nation. In all three instances, the principal cause of conflict appears to have been the

effort of minority political elites to maintain their positions in a moment of considerable

uncertainty, and the failure of majority elites effectively to reassure their minority

counterparts, superimposed on a long history of ethnically based distrust and an

uncertain economic future for all. Developmental issues seem relatively insignificant in

comparison.

Dow

nloa

ded

by [

Sim

on F

rase

r U

nive

rsity

] at

12:

48 1

7 N

ovem

ber

2014


Regional dynamicsThe southern Caucasus is surrounded by three regional powers (Russia, Iran and

Turkey), all of whom have security interests in this region and are, consequently,

sensitive to relative gains by the others. Russia in particular has followed a strategy

of denial—seeking to inhibit the development of political and economic ties between

the region’s states and the West, Russia’s pipeline policy being is an obvious case in

point. It is widely believed that for much of the Yel’tsin period, Russian policy-makers

took the view that the persistence of conflict gave Russia leverage over the region’s affairs

and its governments.11 To the extent that Russian assistance has been instrumental both

in initiating and in sustaining conflict, Russia’s policies have been a significant compli-

cating factor in the region’s development. However, under President Putin, Russia seems

to have developed a growing interest in regional stabilisation, with a developmental

twist. For example, Russia’s interest in reopening the railway through Abkhazia and

Mingrelia to Armenia (for both economic and security reasons) has stimulated a

strengthening of Russia’s mediating role in the Abkhaz conflict.12 In general, over the

past decade, fear of Russian intentions has stimulated both Georgia and Azerbaijan to

develop security ties to Turkey and to the West (through, for example, NATO’s

Partnership for Peace).

One specific dimension of Russia’s role in the region requires particular emphasis. The

war in Chechnya—although not a focus of this paper for the reasons laid out

above—has had a substantial effect on Russia’s policy towards Georgia in particular.

Russia’s attack on Chechnya in 1999 produced a small exodus of refugees into Georgia’s

Pankisi region. They were accompanied by several hundred fighters who used the area

as a platform to mount attacks into Chechnya. Russia responded with demands on the

Georgian government either to suppress this problem or to permit Russian military

action on Georgian territory.13 When Georgia resisted, the Russians adopted a visa

regime directed at Georgian migrants. The potential for this regulatory change to

interrupt remittance flows had potentially serious implications for the Georgian econ-

omy and for the welfare of the large numbers of Georgians dependent on this flow. The

presence of Chechen fighters also had the potential to exacerbate other conflicts in

Georgia, as in 2002 when a number of Chechen fighters were transported by the

Georgian authorities to attack targets in Abkhazia. At the time of writing, the Georgian

government appears to have re-established a degree of control over Pankisi, with

Dow

nloa

ded

by [

Sim

on F

rase

r U

nive

rsity

] at

12:

48 1

7 N

ovem

ber

2014


significant US military assistance. This may result in a reduction in the significance of

this irritant in Georgian-Russian relations. None the less, the sequence points to the

substantial capacity of Russia to interfere with Georgia’s economy in pursuit of political

objectives and their willingness to do so.

Turkey’s support of Azerbaijan, meanwhile, has had strong developmental effects on

Armenia. As already noted, Turkey’s blockade of Armenia had a catastrophic effect on

output and trade. Turkey’s position on the war, and the generally poor quality of

relations between the two states has fostered the development of a close security policy

relationship between Armenia and Russia. Iran shares Russia’s discomfort with the

prospect of expanding Turkish and American influence in the southern Caucasus.

The Iranian authorities are also sensitive to the implications of the emergence of an

independent Azeri state on majority-minority relations in Iran, since more Azeris live

there than in Azerbaijan itself. Iran’s support for Armenia and its trade with Karabakh

itself, finally, have probably impeded a settlement of the Karabakh conflict.

Development and conflict resolutionThe last issue to be addressed is how international donors and implementing agencies

have attempted to use reconstruction and development assistance and related condition-

alities to promote conflict resolution, and what the effect of these efforts has been. It is

noteworthy that the donors and international agencies have for the most part avoided

conflict conditionality in their dealings with the southern Caucasian states. This

presumably reflects a judgement that these governments are not in a position to deliver

on conflict resolution whether or not conditionalities are applied.

Turning to positive incentives, there is not much to say. The governments of

Azerbaijan and Georgia have been reluctant to accept development assistance in

insurgent areas, since they fear that this may legitimise the non-state de facto authorities

in these areas while reducing pressure for a settlement restoring territorial integrity.

International agencies in turn have been loath to proceed in the face of this reluctance.

That in turn fosters a sense in insurgent zones that international actors are partial and

this complicates the mediation of peace.

There have been occasional efforts to untie this knot. In South Ossetia, both the

United Nations Development Programme (UNDP) and the European Union (EU) have

mounted reconstruction programmes of limited scale with the specific intention not

Dow

nloa

ded

by [

Sim

on F

rase

r U

nive

rsity

] at

12:

48 1

7 N

ovem

ber

2014


only of development but also of reconciliation at the community level. Small-scale

assistance has been made conditional upon agreement between local Georgian and Osset

communities on specific projects. Where such agreement was not forthcoming, UNDP

project assistance was denied. This micro-level effort to generate peace through develop-

ment was largely successful in regenerating economic linkages between the communities,

and in improving the quality of life.14 However, there is no evidence that it has trickled

upwards to generate momentum towards a political settlement. Indeed, there are those

who would argue that the small improvement in living conditions has reduced any

socio-economic urgency to the peace process.

Success in South Ossetia brought similar efforts in Abkhazia. In 1997-98, when the

UN-based Geneva process was reinvigorated, three working groups were formed on

political-security issues, return of the displaced, and development. It was hoped that

progress in the developmental dimension would stimulate movement in the political

process. A fair amount of reconstruction assistance was offered by donors, and UNDP

attempted a needs assessment in Abkhazia itself. Ultimately, the effort foundered,

because there was no agreement on the terms of reference for reconstruction. Essentially,

Georgia saw reconstruction as a means of tying Abkhazia back into Georgia, while the

Abkhaz viewed it as a way to lay the basis for an independent national economy.

Reconstruction in any case would have been problematic in southern Abkhazia, given

the activities of armed groups in the region and the threat they pose to peacekeepers,

civilian assistance personnel, and the beneficiary population.

Meanwhile, in Nagorno Karabakh, the government of Azerbaijan has systematically

opposed any significant engagement by donors and international agencies in reconstruc-

tion in Nagorno Karabakh or in other areas occupied by the Armenians. This is not to

say that reconstruction has not occurred. It has, but it is Armenian-funded and is

intended to render Nagorno Karabakh’s secession from Azerbaijan irreversible.

The principal reconstruction activity within government-controlled areas of Azerbai-

jan has focused on resettlement of the displaced through the Azerbaijan Reconstruction

and Rehabilitation Agency (ARRA). However, at the insistence of the government, this

activity has been limited largely to so-called liberated territories (those small areas taken

back from the Armenians towards the end of the war, notably in Fizuli District, Agdam,

and Terter). There are upwards of 600,000 persons displaced in Azerbaijan because of

the conflict. More than 570,000 continue to live in ‘precarious conditions’.15 ARRA

programmes were intended to benefit 36,000 people. Although the agency’s activities,

Dow

nloa

ded

by [

Sim

on F

rase

r U

nive

rsity

] at

12:

48 1

7 N

ovem

ber

2014


funded in considerable measure by the World Bank, the EU, and other international

agencies, have made a real difference in particular areas (e.g. Horadiz in Fizuli District),

they were not big enough to make a dent in the displacement problem as a whole. More

recently, the government of Azerbaijan has committed some oil revenue to improvement

of internally displaced peoples (IDP) conditions through resettlement.16

The authorities have blocked larger resettlement activities, largely because they fear

that once resettled, the displaced will not wish to return, and Azerbaijan would thereby

lose the leverage with the international community that it gains from the existence of

large groups of displaced persons living in miserable conditions. Regarding the recon-

struction and resettlement that has occurred, one could question the wisdom, if not the

ethics, of locating resettlement programmes in proximity to the line of military conflict

when the conflict itself has not been resolved. Finally, all of these programmes lack any

conflict resolution dimension. They deal with the results of conflict. They do not

constitute an effort to use aid to foster security through conflict resolution.

There have been fitful efforts to use the offer of reconstruction assistance to push the

Karabakh peace process forward. One example is the idea of repairing and reopening the

railway line from Baku through Horadiz to Megri, Nakhichevan, and on to Yerevan in

return for permitting the return of part of the displaced population to their homes in

areas around the railway. This plan has foundered on Azerbaijan’s unwillingness to

abandon the trade embargo on Armenia, and on Armenian concerns about the

consequences of such activity for the security of the Nagorno Karabakh enclave. The EU

has made a small portion of its TACIS rehabilitation assistance conditional upon conflict

resolution in both Georgia and Azerbaijan. No discernible impact has been observed.

ConclusionReturning to the questions posed at the outset, developmental difficulties were, to a

limited extent, a cause of conflict, but they clearly were not the principal source of

conflict. The region’s conflicts have had a significant impact on development. One key

issue worthy of further exploration is the emergence of a political economy of conflict

and the development of economic interests that rest on the persistence of frozen conflict.

Overall, however, the negative impact of conflict on development is dwarfed by that of

transition from socialism to capitalism and the weakness of the state structures

implementing this transition. The effort to design development assistance to promote

Dow

nloa

ded

by [

Sim

on F

rase

r U

nive

rsity

] at

12:

48 1

7 N

ovem

ber

2014


conflict resolution has had limited success at the micro level, and none at the macro

level. The potential for using development assistance to foster conflict resolution is

limited as long as incumbent elites are content with the status quo or fear the political

consequences of serious efforts at compromise, and so long as major international

players either see no interest in conflict resolution, or are unwilling to commit the

political and economic resources necessary to extract settlements.

In short, security and development are linked tightly and dialectically in the southern

Caucasus. Continuing instability and lack of progress in the political settlement of the

region’s conflicts inhibit the development process by discouraging both domestic and

foreign investment. Moreover, the failure to resolve the region’s conflicts has distorted

the development process by fostering a political economy of conflict, which induces high

levels of criminality and corruption. Reversing the causal direction, low levels of

development and the inequitable impacts of such development as does occur are in some

sense ‘root causes’ of conflict, and broader political instability and the emergence of

economic interests that profit from the current abnormal security situation inhibit

conflict resolution.

Yet it would be a mistake to focus on the security-development nexus in isolation

from broader factors, with greater explanatory power. The region’s conflicts and its poor

development performance have much to do with the crisis of the state, the weakness of

the rule of law, and the security dilemmas faced by both majority and minority elites in

their relations with each other. Although the security crisis and the development crisis

in the region are linked and have significant value in explaining the evolution of the

regional, they are both embedded in, and are largely results of deeper political and

cultural dysfunction.

Endnotes

1 A major bone of contention among UN agencies en-

gaged in and around Chechnya has been whether they

should open a UN office in Chechnya itself. Several

agencies have raised objections that this might be seen

as an endorsement of the Russian claim that the situ-

ation there has been normalised.

2 In this latter respect, I follow the evolving understand-

ing of human development and its relationship to

security evident in UNDP, New Dimensions of Hu’man

Security (NY: UNDP, 1994); Commission on Human

Security, Human Security Now (Tokyo: Commission on

Human Security, 2003).

3 This linkage was recognised in Article 55 of the UN

Charter, which called for the promotion of higher

standards of living, full employment, and ‘conditions of

economic and social progress and develop-

ment’ … ‘with a view to the creation of conditions of

stability and well being which are necessary for peaceful

and friendly relations among nations.’

4 See inter alia ICISS, The Responsibility to Protect (Ott-

awa: IDRC, 2001), pp. 22–23.

5 A good example here is the design of the Guatemala

peace accords, in which reconciliation was based on the

acceptance of key social and economic reforms,

Dow

nloa

ded

by [

Sim

on F

rase

r U

nive

rsity

] at

12:

48 1

7 N

ovem

ber

2014


funding for which was to be provided largely by exter-

nal donors. For an extensive discussion, see S. Neil

MacFarlane, Humanitarian Action: The Conflict Con-

nection, Occasional Paper No.43 (Providence, RI: The

Watson Institute, 2001), pp. 43–48.

6 For extensive descriptions, see Suzanne Goldenberg,

Pride of Small Nations: The Caucasus and Post-Soviet

Disorder (London: Zed, 1994); Edmund Herzig, The

New Caucasus: Armenia, Azerbaijan and Georgia (Lon-

don: Royal Institute of International Affairs, 1999);

Thomas de Waal, Black Garden: Armenia and Azerbai-

jan through Peace and War (New York: New York

University Press, 2003); Neil MacFarlane with George

Khutsishvili, ‘Ethnic Conflict in Georgia’, in S.A. Gian-

nakos, ed., Ethnic Conflict: Religion, Identity, and Poli-

tics (Athens, OH: Ohio University Press, 2002).

7 For displacement data on South Ossetia and Abkhazia,

see S. Neil MacFarlane, Larry Minear and Stephen

Shenfield, Armed Conflict in Georgia: A Case Study in

Humanitarian Action and Peacekeeping, Occasional Pa-

per No. 21 (Providence, RI: Watson Institute, 1996),

pp. 8, 11.

8 For data on displacement resulting from this conflict,

see S. Neil MacFarlane and Larry Minear, Humani-

tarian Action and Politics: the Case of Nagorno-Kara-

bakh, Occasional Paper No. 25 (Providence, RI: The

Watson Institute, 1997), pp. 17–20.

9 The presence of land mines has impeded production of

these commodities. The deterioration of transport in-

frastructure (notably the railways) has complicated

their export. In 1996, moreover, the CIS mounted an

embargo on trade with Abkhazia that was not approved

by central government authorities.

10 In the 2002 Corruption Perceptions Index, Georgia

ranked 85 and Azerbaijan 95 out of 102 countries

surveyed. Armenia was not included. See Transparency

International, Global Corruption Report 2003, pp. 264–

265. Posted at http://www.globalcorruptionreport.org/

download.shtml. Site visited 13 February 2004.

11 For a recent restatement of this view with regard to

Russian-Georgian relations, see Liz Fuller, ‘Georgia,

Russia Assess Prospects for Turning a New Page in

Bilateral Relations’, RFE/RL, Caucasus Report VII, No.

3 (15 January, 2004). Posted at: http://www.rferl.org/re-

ports/caucasus-report/2004/01/3-150104.asp. Site vis-

ited 13 February 2004.

12 See ‘Report of the Secretary-General on the Situation in

Abkhazia, Georgia’, (9 April 2003) S/2003/412, para-

graph 5.

13 The Russian response also involved air raids that vio-

lated Georgian airspace.

14 For an extensive description and evaluation, see S. Neil

MacFarlane, Humanitarian Action: the Conflict Connec-

tion, pp. 57–59.

15 See the Global IDP Project’s Azerbaijan profile at:

http://www.db.idpproject.org/Sites/idpSurvey.nsf/

wViewSingleEnv/AzerbaijanProfile � Summary. Site

visited 13 February 2004.

16 UNHCR reports a commitment of $40 million, which

will permit resettlement of some 3,000 displaced famil-

ies. The National Poverty Reduction Strategy contem-

plates the relocation of some 5,000 IDP families

between 2003 and 2005, and has received funding from

the IMF, the Asian Development Bank and the World

Bank. ibid.

Dow

nloa

ded

by [

Sim

on F

rase

r U

nive

rsity

] at

12:

48 1

7 N

ovem

ber

2014

security and development in the caucasus

Documents