![[CRS Issue Brief for Congress]](iblogo.gif)
The Clinton Administration has pursued close ties with Armenia because of Armenia's prospects for democratization, and concerns by Armenian-Americans and others over its fate. Close ties with Georgia are pursued because of its urgent humanitarian needs and U.S. official contacts that had developed with leader Eduard Shevardnadze during the Soviet period. Growing U.S. private investment in Azerbaijan's oil resources has strengthened Administration interest there. The United States has been active in diplomatic efforts to end conflicts in the region, and U.S. officials visit the states to symbolize U.S. interest in their continued independence.
Faced with calls in Congress and elsewhere that the Administration develop policy proposals for assisting the new states of the former Soviet Union, President Bush proposed the Freedom Support Act on Apr. 3, 1992. As passed and signed into law on Oct. 24, 1992 (S. 2532; P.L. 102-511), Title II amended the Foreign Assistance Act of 1961 by authorizing funds for the newly independent states of the former Soviet Union for humanitarian needs, democratization, creation of market economies, fostering trade and investment, and other purposes. Title IX contains a provision (Sec. 907) prohibiting most U.S. government-to-government aid to Azerbaijan until its ceases blockades and other offensive use of force against Armenia. This provision was partly altered in October 1995 to allow some humanitarian aid under certain conditions (P.L.104-107).
In the Transcaucasus, the immediate U.S. policy goals are to buttress the stability and independence of the states through multilateral and bilateral conflict resolution efforts and to provide urgent humanitarian relief. Beyond these, some moves are being taken to foster democratization, free market economic reforms, and U.S. trade and investment, and the Administration plans to shift further aid to these efforts as conflict abates in the region.
There appears to be a consensus in Congress that the United States should assist the Transcaucasus states and support conflict resolution, to prevent them from falling under the sway of Russia or Iran, or otherwise succumbing to threats to their independence. Others argue that developments in these states remain marginal to U.S. interests, and warn of the dangers faced by U.S. personnel and citizens in this troubled region.
In early December, Russian border troops at the Georgian Black Sea port of Batumi seized a Ukrainian ship and crew, finally releasing them in mid-month. Shevardnadze denounced the ship seizure as "piracy," and reiterated criticism of Russia's efforts to control Georgia's trade routes.
The newly independent states of Armenia, Azerbaijan, and Georgia are located in the Transcaucasus region of the former Soviet Union. This region borders Russia (including several small ethnic enclaves along Russia's borders), Turkey, Iran, and the Black and Caspian Seas. (See map). It is bordered by the Caucasus Mountains in the north, plateaus and plains in the central areas, and other mountains along the border with Iran. Historically, the region has served as a north-south trade and transport "land bridge" linking Europe to the Middle East and Asia, over which the Russian Empire and others at various times endeavored to gain strategic control. In ancient as well as more recent times, substantial petroleum and natural gas deposits in Azerbaijan attracted outside interest. While Armenia and Georgia can point to historical periods of self-government or substantial autonomy, Azerbaijan was never independent before the 20th century. After the collapse of the Russian Empire in 1917, all three states were briefly independent, but by early 1921 all had been conquered by the Soviet Army. With the collapse of the Soviet Union at the end of 1991, these states found themselves again independent. (For overviews, see CRS Reports 96-179F, Armenia; 96-194F, Azerbaijan; and 96-800F, Georgia).
James Collins, then-Ambassador Designate at Large to the new independent states of the former Soviet Union, stressed in testimony to Congress in November 1995 that U.S. policy is tailored to each NIS but in general seeks to support these states' efforts to democratize, create free markets, and maintain their independence, sovereignty, and security . U.S. policy aims, he said, to integrate them "into the greater Euro-Atlantic family of nations as responsible members of the global community." While the primary U.S. emphasis until recently has been on fostering reforms in Russia, these are also seen as having beneficial effects on other NIS, and policymakers maintain that instability in other NIS may affect developments in Russia and elsewhere. In FY1996, and more so in FY1997, there is an emphasis on U.S. aid to the non-Russian NIS, to buttress their stability and independence. The United States has encouraged NIS ties with the Western world, including membership in the Organization on Security and Cooperation in Europe (OSCE) and NATO's Partnership for Peace (PFP), to end the dependence of these states on Russia for trade, security , and other relations.
Some observers have criticized U.S. policy toward the Transcaucasus as not active enough. They call for greater U.S. aid and conflict resolution efforts, noting that regional instability, including warfare, crime, smuggling, and terrorism, has a significant transborder impact on neighboring U.S. ally Turkey, as well as across the North Caucasus borders of Russia. Some who view the Transcaucasus as part of Europe argue that instability in the region harms European security . Of particular concern are Russian military, economic, and diplomatic moves viewed as attempts to pull these beleaguered states back into the Russian orbit. Some argue that improved U.S. relations with the Transcaucasus states would serve to "contain" Russian and Iranian moves in the region, and 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 Azerbaijani and Central Asian oil and natural gas deliveries would expand world supplies, making the United States and the West less vulnerable to supply cutoffs in the Middle East.
Critics taking another perspective have asserted that U.S. policy toward the Transcaucasus countries is too ambitious. They note that the United States has historically had few interests in this region, and that developments there remain marginal to U.S. interests. They urge great caution in becoming involved in a region beset by ethnic and civil conflicts, and warn of potential dangers to U.S. personnel and citizens of wider involvement beyond a token diplomatic presence. U.S. and international aid for humanitarian purposes should continue, some argue, but other aid programs should be curtailed. Some object to forging ties and providing aid to regimes in Georgia and Azerbaijan that have violated human rights.
At the end of 1991, the United States recognized the independence of all the former Soviet republics (recognition of the Baltic state governments occurred earlier), and offered to establish diplomatic relations with Armenia and other republics that had given assurances that they would adhere to responsible security , democratic, border, and human rights policies. The United States opened an embassy in Azerbaijan in March 1992 after receiving assurances that Azerbaijan would pursue responsible policies. It moved to extend humanitarian aid to Georgia and establish diplomatic relations after former Soviet foreign minister Eduard Shevardnadze assumed power there in early 1992. The Clinton Administration pursued close ties with Armenia, because of Armenia's profession of democratic principles, and concerns by Armenian-Americans and others over its fate. Close ties developed with Georgia because U.S. officials remembered Shevardnadze's former role as a pro-Western Soviet foreign minister. His appeals for urgent humanitarian aid were sympathetically received. The United States has been active in diplomatic efforts to end conflicts in the region. U.S. officials visit all three states to symbolize U.S. interest in their continued independence.
Faced with calls in Congress and elsewhere that the Administration develop policy proposals for assisting the NIS, President Bush sent the Freedom Support Act to Congress. Passed and signed into law on October 24, 1992 (S. 2532; P.L. 102-511), Title II authorized funds for the NIS for humanitarian needs, democratization, creation of market economies, fostering trade and investment, and other purposes. Title IX contains a provision (Sec. 907) prohibiting most U.S. humanitarian and other assistance to Azerbaijan. A provision in H.R. 1868 (P.L. 104-107) eases the prohibition, by stating that "assistance may be provided for the Government of Azerbaijan for humanitarian purposes, if the President determines that humanitarian assistance provided in Azerbaijan through nongovernmental organizations (NGOs) is not adequately addressing the suffering of refugees and internally displaced persons." (For background, see CRS Issue Brief 95077, The Former Soviet Union and U.S. Foreign Assistance.)
The Clinton Administration has generally viewed a democratizing Russia as able to play a stabilizing role in the Transcaucasus, though stressing that Russia should not seek to dominate regional economics and politics or otherwise exclude Western and other involvement. Congressional concerns over Russia's motives in the NIS were reflected in provisions in the FY1994 through FY1997 Foreign Operations Appropriations Acts prohibiting aid to any NIS that violates the territorial integrity or national sovereignty of other NIS (a Presidential waiver is included). In first introducing this condition in 1993, Senator Mitch McConnell described Russian military actions in Georgia, Moldova, and Tajikistan as "troubling."
Russia exercises most of its influence in the Transcaucasus in the military-strategic sphere, less in the economic sphere, and a minimum in the domestic political sphere, except for obtaining assurances on the treatment of ethnic Russians. Russian competition with Persia and the Ottoman Empire for control over the region began in the 17th century, leading to Russia's absorption of the region in the 19th century. Russia's main strategic interest was to create buffers with its Muslim rivals. In the 19th century, it also became increasingly interested in exploiting the oil wealth of Azerbaijan. These strategic interests remain relevant today. Russia has viewed Iran's Islamic fundamentalism as a potential threat to the region and to Russia, which has a sizeable Muslim population, but has recently cooperated with Iran on some issues to contain Turkish and U.S. influence in the region. Turkey's overtures to Azerbaijan and other Turkic regions of the former Soviet Union are viewed as a threat to Russia's interests. Also, Turkey's membership in NATO makes its influence efforts part of NATO's encroachment, in this view. Russia has been concerned to stop ethnic "undesirables," drugs, weapons, and other contraband from entering the country, and to contain the contagion effects of separatist ideologies in the Transcaucasus and North Caucasus regions. These concerns, Russia avers, has led it to establish military bases in Armenia and Georgia and substantial control over their borders. Besides these interests in buffers and resources, Russian leaders have voiced concerns about the human rights of ethnic Russians in the region. Armenia is most interested in continued close ties with Russia, including military ties, given its geopolitical position almost surrounded by Islamic states that support Azerbaijan's sovereignty stance over its enclave of Nagorno Karabakh (NK).
Military-Strategic Interests. Russian officials have stated that they wish to maintain a military presence in Armenia and Georgia and to reintroduce it in Azerbaijan, and to maintain control over borders between these states and Turkey and Iran. The first step in this direction was the signing of the Commonwealth of Independent States (CIS) Collective Security Treaty by Armenia, Russia, and four other new states in May 1992, which calls for mutual defense consultations. Since then, Russia has prevailed on Georgia and Azerbaijan to join the CIS and sign the security treaty. Russia also has secured permission for two military bases in Armenia and three in Georgia, part of the Group of Russian Forces in the Transcaucasus (GRFT), headquartered in Tbilisi (an additional Russian base in Abkhazia is subordinated to Airborne Troops rather than GRFT). The Russian-Georgian military basing and border guard treaty was signed in September 1995 giving Russia rent-free and free access to bases in Vaziani, Akhalkalaki, Batumi, and Gudauta in Abkhazia for an indefinite period, and substantial control over Georgia's borders. In addition, Russian border troops were required to be subsidized by Georgia. Georgian legislator Kakha Chitaya (chair of the Foreign Affairs Committee) reported that Russian Prime Minister Viktor Chernomyrdin forced Shevardnadze to sign a strictly Russian text. Shevardnadze stated in early October 1995 that he was forced to sign because of inadequate aid and assistance from the West to resist the Russian pressure. He has declared that it will not be ratified by the legislature until Georgia regains control over South Ossetia and Abkhazia with Russia's help. Russian border troops also control Armenia's borders with Turkey and Iran. Military cooperation and air defense agreements were signed by Russia with Georgia in April 1996 and with Armenia in May 1996, the latter including the creation of some "coalition" forces.
The total number of GRFT and other Russian troops has been estimated at about 14,500 in Georgia (including "peacekeepers" in Abkhazia and South Ossetia) and about 12,000-15,000 in Armenia. In 1993, Azerbaijan was the only former Soviet republic (excluding the Baltic states) to get the Russians to pull out their forces, and the Azerbaijani population remains deeply opposed to their return (a few dozen Russian troops are stationed at a radar site). Azerbaijan also refuses to approve joint Russo-Azerbaijani border patrols, the only former Soviet republic to retain this aspect of its sovereignty. The GRFT and a reorganized North Caucasus Military District are designed to enhance Russian military capabilities in the North Caucasus and Transcaucasus. Russia has been granted changes in the Conventional Armed Forces in Europe (CFE) Treaty to allow added weaponry in the area (and has been ceded some CFE weapons limits by Armenia and Georgia). This Russian military buildup is viewed with concern by many in Azerbaijan and Georgia, though much less so in Armenia.
Azerbaijani Oil Resources. Russia insists that its past oil industry investments in the region should be protected or reimbursed and it should retain a significant voice in future oil production, processing, and transportation. The Russian Ministry of Fuel and Energy, through its state-owned oil firm Lukoil, has a 10% investment stake in the Azerbaijan International Oil Consortium (AIOC) formed in late 1994 to exploit Azerbaijani offshore oil resources. Another consortium was formed in November 1995, granting Lukoil a 32.5% investment stake in exploiting the "Karabakh" oilfield in the Caspian Sea, increasing Russia's influence over Azerbaijan's oil resources. In a move to increase its leverage over the exploitation of Caspian Sea resources, Russian policymakers in late 1994 began to insist that the legal status of the Caspian Sea had to be determined before resources could be exploited. At issue is whether it is an "enclosed sea" where littoral states have resource rights in their own sectors, as argued by the Azerbaijani and Kazakh presidents in a joint declaration in September 1996, or a lake whose resources would be exploited on the basis of common ownership, as argued by Russia and Iran, in protesting the declaration. An agreement signed between Russian Prime Minister Viktor Chernomyrdin and Azerbaijani President Heydar Aliyev in mid-Jan. 1996 on transporting Azerbaijani offshore oil through Russian pipelines may have temporarily defused this issue. In response to a question about the status of the Caspian Sea, Chernomyrdin merely noted that some ecological and fishing problems remained to be resolved. (See also below, Trade).
The Protection of Ethnic Russians. As a percentage of the population, there were fewer ethnic Russians in the Transcaucasus states than in any of the other former Soviet republics. According to the 1989 census, there were 52,000 ethnic Russians in Armenia (1.6% of the population), 392,000 in Azerbaijan (5.6%), and 341,000 in Georgia (6.3%). These numbers have declined since then. Good Armenian-Russian relations have meant that Russia has not viewed the few ethnic Russians in Armenia as threatened. Russia has voiced concerns about the safety of ethnic Russians in Azerbaijan and Georgia. Many observers, however, have noted that Russia has done little in practical terms to protect these ethnic Russians from the effects of economic collapse and conflict in these states. These observers argue that the issue of protecting the human rights of ethnic Russians is a stalking horse for military-strategic and economic interests in the region.
The Clinton Administration has generally viewed Turkey as able to foster pro-Western policies and discourage Iranian interference in the Transcaucasus states, though U.S. concerns have been raised about a Turkish tilt to Azerbaijan in the Nagorno Karabakh (NK) conflict. Turkey seeks good relations with Azerbaijan and Georgia and some diplomatic and other contacts with Armenia, while trying to limit Russian and Iranian influence in the region. Turkey was an early champion of Azerbaijan's independence from the Soviet Union and relations remain close. Armenia is a member of the Black Sea Economic Cooperation zone, sponsored by Turkey, and the two states have established diplomatic relations at the consular level. Central roadblocks to better Armenian-Turkish relations are Turkey's rejection of Armenians' claims of genocide against them in 1915 and its support for Azerbaijan in the NK conflict. Turkish foreign ministry officials stated in March 1995 that "Armenia must withdraw from occupied Azerbaijani lands" before Turkey would consider establishing full diplomatic relations. Armenia has called for Turkey to delink its relations with Armenia from its ties to Azerbaijan. Georgia has an ongoing interest in ties with the approximately one million Georgians residing in Turkey and the approximately 50,000 Georgians residing in Iran, and has signed friendship treaties with both states.
Iran's interests in the Transcaucasus include discouraging other Western powers such as Turkey and the United States from gaining influence in the region (Iranian interests in containing Russian influence appear secondary to cooperating with Russia in combatting U.S. and Turkish influence), ending regional instability that might threaten its own territorial integrity, and building economic links. A major proportion of the world's Azerbaijanis reside in Iran (estimates range from 6-12 million), and about 200,000 Armenians. The ongoing NK conflict has raised ethnic consciousness among some "Southern Azerbaijanis" in Iran and their interest in contacts with affines in Azerbaijan, which Iran has endeavored to counter by limiting transborder contacts and attempting to mediate an end to the conflict. Alternatively, Azerbaijani elites fear Iranian-supported Islamic fundamentalism and question the degree of Iran's support for an independent Azerbaijan. Iran is Azerbaijan's largest trade partner, though political relations have been brittle. Iran also has growing trade ties with Armenia. Iran appears to support Russia's claims that the Caspian Sea regime is governed by Soviet-Iranian treaties signed in 1921 and 1940. Some observers view this stance as part of Iranian pressure on Azerbaijan to allow it to play a role in the exploitation and shipping of Azerbaijani oil, as well as to Iranian opposition to Western influence in the region. In May 1996, Iran accepted Azerbaijan's offer of a 10% interest in exploiting the Shah-Deniz oil and gas site. (See also below, Trade.)
The United States has followed a policy aimed at containing Iran as an international terrorist state. In May 1995, President Clinton banned U.S. firms from dealing with Iran. Iran condemned this action as interference in the internal affairs of the states of the region and an attempt to harm the development of Iran's bilateral relations with Azerbaijan. U.S. officials have warned that Iranian participation in Caspian oil deals could complicate or preclude U.S. financing of export pipelines. (See also CRS Issue Brief 93033, Iran.) Countries such as Germany, Japan, France, Norway, Saudi Arabia, Pakistan and others also are involved in trade and investment in the region, and Turkmenistan has supplied some natural gas to all three Transcaucasus states. Some paramilitary and other groups from Russia's North Caucasus region have supported ethnic conflicts and restiveness in Georgia and Azerbaijan, and vice versa.
The United States has affirmed its determination to foster peace and uphold the independence of the Transcaucasus states. In congressional testimony in October 1993, then-Ambassador at Large to the NIS Strobe Talbott stated that conflicts and tensions within the NIS jeopardized their democratization, threatened the success of reforms in Russia, and could widen to engulf several NIS and other states. He noted that the United States would continue to proffer its good offices to help resolve conflicts and tensions in the NIS, adding that a Coordinator of Regional Affairs had been named to aid in these efforts. The current coordinator is Joseph Presel, appointed in March 1994. He is the U.S. envoy to the Minsk Group, and also deals with conflicts in Georgia and Moldova. His status as an envoy to the Minsk Group was enhanced when he was confirmed on Aug. 11, 1995, as special negotiator for the NK conflict, with the rank of ambassador. Besides diplomatic efforts and humanitarian and development aid (described below) that support peace and independence, some U.S. media have reported U.S. security training for Shevardnadze's presidential guard. Conferees on H.R. 3610 called for U.S. aid for FY1997 aid for law enforcement training and exchanges in Central Europe and the NIS to at least match the $12.6 million provided in FY1996. In July 1996, visiting U.S. Assistant Secretary of State Lynn Davis hailed recent and prospective U.S. naval visits to Georgian ports as part of cooperation under PFP, and announced a U.S. grant of $500,000 to support Georgia's August 1996 participation in PFP land-sea amphibious operations in North Carolina.
U.S. efforts to foster peace and the continued independence of the Transcaucasus states face daunting challenges. The region has been the most unstable in the former Soviet Union in terms of the numbers, intensity, and length of its ethnic and civil conflicts. Few of the international or internal borders have coincided with (often intermixed) ethnic populations in the Transcaucasus, which has contributed to ethnic disputes and tensions. All three states and Russia have established commissions to resolve border disputes. Azerbaijan and Georgia are also riven by clans that threaten national unity. Attempts by territorially based ethnic minorities to secede are primary security concerns in Georgia and Azerbaijan. Armenia has viewed Azerbaijani warfare against secessionist NK as its major security concern. The first major regional ethnic conflict started in 1988 in NK. The second started in December 1990 in South Ossetia in Georgia, while the third started in August 1992 in Abkhazia in Georgia. These conflicts have resulted in much human suffering and economic disruption. It is estimated that there are about one million refugees and displaced people in Azerbaijan, 300,000 in Georgia, and 350,000 in Armenia. A few observers argue that these de facto autonomous areas represent, along with Chechnya in Russia and Gorno Badakhshan in Tajikistan, the emergence of a second wave of new states on the territory of the former Soviet Union. The existing states strongly oppose this separatism and their territorial integrity is largely backed by the world community.
The ruling nationalities are culturally rather insular and harbor various grievances against each other. This is particularly the case between Armenia and Azerbaijan, where ethnic discord has led to the virtually complete displacement of ethnic Armenians from Azerbaijan and vice versa. The main languages are mutually unintelligible, ranging from a dialect of Turkish in Azerbaijan to a unique branch of Indo-European spoken in Armenia. Those who generally consider themselves Georgian (Kartvelians, Mingrelians, and Svans) speak mutually unintelligible languages. Georgians and Azerbaijanis have tended to stay in their homelands, while Armenians have emigrated in great numbers, some to the United States. Rational bases for regional cooperation remain elusive, though the decision to construct an oil pipeline from Azerbaijan to Georgian Black Sea ports provides an optimistic sign.
In the post-Soviet period, political stability has been tenuous in Azerbaijan and Georgia, but in recent months their leaders appear to be consolidating power. In Armenia, Levon Ter-Petrossian has remained in power since being elected president in 1991, and was effective in orchestrating a major victory for his ruling Armenian Pan-National Movement and other pro-government parties in the June 1995 legislative elections, in obtaining approval for a new constitution granting him enhanced powers, and in orchestrating a win in his presidential reelection bid in September 1996. In contrast, Azerbaijan has had three presidents and other acting heads of state since gaining independence, and has suffered from several successful or attempted coups and countercoups. A constitutional referendum in November 1995 granted Aliyev sweeping powers and a simultaneous legislative election provided his ruling New Azerbaijan Party with a majority of seats. He has launched several mass arrests of opposition party officials and other opponents.
Shevardnadze's tenure in office remained precarious after he came to power in early 1992, after violent civil war rocked Georgia. His leadership has been seriously threatened by various assassination and coup attempts, insurrection, separatism, rampant crime, and intense legislative opposition to his policies. He has appeared successful in consolidating his power during 1995-1996. He has reorganized the military, disbanded paramilitary groups, and arrested criminal elements among the police, security , and paramilitary groups. Most of his major rivals for power have been arrested, have died, have fled the country, or are discredited. He was elected on November 5, 1995, to the recreated post of president and given expanded powers under a new constitution. Like Ter-Petrossian and Aliyev, his ruling Citizens' Union Party won the largest bloc of seats in legislative elections held on November 5, 1995.
Blockades and Stoppages. Since 1989, Azerbaijan has blockaded railroad transport, communication, and pipeline routes traversing its territory to Armenia, and for a time successfully blockaded NK. The blockade has had an extremely negative impact on the Armenian economy, since it is heavily dependent on energy and raw materials imports. Section 907 of the Freedom Support Act (P.L. 102-511) prohibits all U.S. government assistance to Azerbaijan, except for nonproliferation and disarmament activities, 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." U.S. aid was limited to that supplied through international agencies and private voluntary and nongovernmental organizations. H.R. 1868 (P.L. 104-107) amends Section 907 of the Freedom Support Act to allow the President to waive restrictions on government-to-government humanitarian aid to Azerbaijan.
Trade disruptions have included repeated destruction of a pipeline traversing Georgia to Armenia, supposedly by Azerbaijanis residing in Georgia. Turkey has barred shipments of aid through its territory to Armenia since May 1993. P.L. 104-107 and P.L. 104-208 mandate a U.S. aid cutoff (with a presidential waiver) to any country which restricts the transport or delivery of U.S. humanitarian aid to a third country, aimed at convincing Turkey to allow the transit to U.S. aid to Armenia. In a written response after testimony on November 14, 1995, Special Advisor to the President and Secretary of State for Assistance to the NIS Richard Morningstar noted that much U.S. bulk aid is shipped to the ports of Poti and Batumi in Georgia, for overland transport to Armenia, and that "there have been no breakthroughs to date in the area of [opening up] overland humanitarian corridors through Turkey." Azerbaijan's Nakhichevan enclave (separated from Azerbaijan by a strip of Armenia) has accused Armenia of blockading its access to the rest of Azerbaijan, and an alternative road link was built in the early 1990s to supply Nakhichevan via Iran. Iran cut its energy supplies to Nakhichevan in early 1995, but Turkey has stepped in. Georgia has cut off the supply of natural gas to South Ossetia. In late 1994, Russia closed its borders with Azerbaijan and Georgia because of the conflict in Chechnya, leading to major trade disruptions, and many Russian restrictions remain in place. Georgia has requested that Russia, Turkey, Ukraine, and other states abide by its embargo of Abkhazia, with limited results. Russian border troops seek to strictly control and constrain Armenia's and Georgia's trade with Turkey and Iran, and Georgian Foreign Minister Irakli Mengalisvili reported in August 1996 that they were also seeking control over Georgia's main airports.
Several of Georgia's ethnic minorities stepped up their dissident actions, including separatism, in the late 1980s and early 1990s. South Ossetians in late 1989 called for joining their territory with North Ossetia in Russia or for independence. Repressive efforts by former Georgian President Zviad Gamsakhurdia triggered massive conflict in late 1990. In June 1992, Yeltsin brokered a cease-fire, and a predominantly Russian force numbering about 500 was stationed in South Ossetia. The enclave has practiced a large degree of self-rule while relying on budgetary support from Russia. A coordinating commission on settlement of the Georgian-Ossetian conflict is composed of OSCE, Russian, Georgian, and Ossetian emissaries. Apparently emboldened by Chechnya's seeming victory over Russia, separatists in South Ossetia announced that a presidential election would be held on November 10, a move denounced by Shevardnadze. The sitting president was reelected, while a candidate proposing secession from Georgia was defeated, providing some hope to Georgians that accommodation with South Ossetia may make progress. Shevardnadze and Ter-Petrossian met in June 1996 to resolve dissension by ethnic Armenians residing in Georgia and Armenian-Georgian border disputes, and pledged broad cooperative ties.
Abkhazia. On July 23, 1992, the Abkhaz Supreme Soviet declared its effective independence from Georgia. This prompted Georgian national guardsmen to attack Abkhazia, marking the beginning of massive and protracted conflict. In October 1992, the U.N. Security Council approved the first U.N. observer mission to a NIS state, termed UNOMIG, to help reach a settlement. In mid-September 1993, a cease-fire was broken by Abkhaz separatists and, after intense fighting, the Russian and North Caucasian "volunteer" troops that reportedly made up the bulk of Abkhaz forces routed Georgian forces by the end of the month. Up to 250,000 Georgians and others fled Abkhazia, creating a humanitarian crisis. (For details, see CRS Reports 93-794F, Georgia in Transition; and 93-1039F, Georgia: Situation Update).
Following several failed attempts, including reported U.S. diplomatic efforts during Shevardnadze's and Abkhaz leader Vladislav Ardzinba's March 1994 visits to the United Nations, a "Declaration on Measures for a Political Settlement of the Georgian-Abkhaz Conflict," and a Quadripartite Agreement "On the Voluntary Return to Abkhazia of Refugees and Displaced Persons" were signed in Moscow in April 1994. A Quadripartite Commission was set up to discuss repatriation issues, composed of Abkhaz and Georgia government representatives and UNHCR and Russian emissaries. The next month, a "Cease-fire and Disengagement Agreement" was signed by Georgian and Abkhazian delegations in Moscow. The talks leading to the cease-fire were held under the auspices of the United Nations, with Russia acting as the facilitator, and with the participation of the OSCE. As part of the cease-fire agreement, Russian troops (formally acting as CIS "peacekeepers") began to be deployed in June 1994 in a security zone along the Inguri River which divides Abkhazia from the rest of Georgia. Less than 1,500 of these Russian "peacekeepers" are now deployed (formations are understrength). Their mandate has been repeatedly extended at CIS summits. During 1996, Georgia has insisted that the "peacekeepers" will be asked to leave if their mandate is not expanded to include police functions over all of Abkhazia. Russia has refused this request, but Georgia agreed to an extension of the mandate until January 1997.
The U.N. Security Council in July 1994 approved an increase in the number of UNOMIG observers in Georgia to 136. Four U.S. troops have been among the observers. (Shevardnadze had asked during his 1994 U.S. visit for sizable U.S. participation in prospective international peacekeeping to counterbalance Russia.) According to the Security Council resolution, UNOMIG forces are to "monitor and verify" the cease-fire, "observe the operation of the CIS peacekeeping force," patrol the security zone, investigate and attempt to resolve violations of the cease-fire, and "contribute to conditions conducive to the safe and orderly return of refugees and displaced persons." Most members of the Security Council took the position that the decision to cooperate with the Russian CIS forces was a reflection of the trust that the Council was placing in Russia. U.N. Secretary General Boutros-Ghali and the Security Council noted in July 1996 that cooperation between UNOMIG and the CIS forces continued to be satisfactory. Collins in November 1995 informed Representative Benjamin Gilman that the Russian forces "have helped the region remain relatively peaceful during the past year," and noted that The United States supports Russian efforts to facilitate the peaceful settlement of conflicts in South Ossetia and Abkhazia, as long as these efforts uphold Georgia's sovereignty and territorial integrity.
The repatriation of Georgians to Abkhazia has been dilatory, and Georgian officials are disillusioned by the inability or unwillingness of the Russian "peacekeepers" to facilitate the repatriation process. A major point of contention is Georgia's insistence that the status of Abkhazia be settled after the return of the displaced persons and with their participation, while the Abkhazians insist upon recognition of their sovereignty as a precondition to large-scale repatriation. In July 1995, Abkhaz officials declared an end to repatriation efforts, a move that has been repeatedly censured by the UN Security Council. A few Georgians have trickled back into Abkhazia, but lawlessness there bars their safe and permanent return.
In January 1996, Russia and other CIS members agreed with Georgia to isolate Abkhazia politically and economically to force it to accept Georgian suzerainty. Despite demands by Shevardnadze and the Georgian legislature, Russia has refused to give the "peacekeepers" police powers, stating that the agreement of both sides to the conflict and of the United Nations was necessary. Russia has not abided by Georgia's trade and arms embargo on Abkhazia. Georgia has also accused Turkey and Ukraine of violating the embargo. After a pause for the Russian presidential election in June, Abkhaz-Georgian talks on a political settlement, with Russian mediation and under U.N. auspices, reconvened in Moscow on July 16, but made scant progress. As in South Ossetia, Abkhaz officials apparently viewed Chechnya's seeming victory over Russia as a template. Abkhaz leader Vladislav Ardzinba called for new legislative elections on November 23 that excluded Georgian refugees. Georgia and the U.N. Security Council denounced these elections as undermining international peace efforts and agreements. Voting in a referendum on November 23, Georgian refugees from Abkhazia roundly rejected the validity of Abkhazia's legislative vote.
Since 1988, the conflict in Nagorno Karabakh (NK) has resulted in thousands of casualties and hundreds of thousands of refugees on both sides. Approximately 20% of Azerbaijan, including NK, is occupied by NK Armenian forces. Various CIS and other states have attempted to mediate the conflict, including those of Russia, Kazakhstan, and Iran, and the United Nations and OSCE, all with limited success. The OSCE began the "Minsk Group" talks in June 1992. A U.S. presidential envoy was appointed to these talks, highlighting U.S. interest in resolving the conflict and its preference for OSCE efforts. A Russian-mediated cease-fire was agreed to on May 12, 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). Moscow talks were held subsequently by the three sides, with token OSCE representation. Azerbaijan refused Russian pressure to accept CIS "peacekeepers" on its territory to enforce the cease-fire. Parallel Minsk Group talks sponsored by the OSCE continued, and with strong U.S. backing, the OSCE at its meeting in Budapest agreed in December 1994 to send up to 3,000 OSCE peacekeepers to the region under U.N. aegis if a political settlement could be reached, with no more than 30% from any one member state. Russia and the OSCE assented to merge their mediation efforts. Valentin Lozinsky was named cochair of the Minsk Group talks in early January 1995, along with Ian Eliasson of Sweden. Finnish diplomat Heikki Talvite replaced Eliasson in April 1995. Finland's co-chairmanship ended in late 1996.
Peace talks during 1995 made scant progress on agreeing to NK's status and security or on the repatriation of refugees. Yeltsin and new Russian Foreign Minister Yevgeniy Primakov in January 1996 ordered renewed Russian "shuttle diplomacy" to mediate a settlement. Primakov asserted on May 12 that Russia is the main, if not the only, source for a political solution to the conflict, even though other states may try to help. He personally escorted 35 Armenian prisoners of war home from Azerbaijan on May 8, and 67 Azerbaijani prisoners of war home from Armenia on May 10, part of efforts to facilitate a peace settlement. Frustrated by inconclusive talks in June 1996, Russian presidential envoy Vladimir Kazimirov remarked on Azerbaijan's negotiating "delays." The prisoner exchange and direct talks between Aliyev's and Ter-Petrossian's advisors in meetings in July-October 1996 were positive signs. Kazimirov was replaced by Yuriy Yukalov in July 1996. Despite a meeting between Aliyev and Ter-Petrossian in Moscow on October 27, another round of Minsk Group talks in Moscow on October 28-30 ended inconclusively, with further talks scheduled for December in Lisbon. The U.S. State Department criticized NK's plans to hold presidential elections on November 24 as complicating the peace process. NK president Robert Kocharian, who won reelection handily, asserted at the end of October that NK will "never" accept a status as an enclave of Azerbaijan because it is de facto independent. At the OSCE Summit in early December 1996, Armenia vetoed language in the final document supporting a settlement of the NK conflict that respected Azerbaijan's territorial integrity. Ter-Petrosyan argued that "the only way to prevent another tragedy [of genocide or deportation] is to ensure Karabakh's self-determination."
Many in Congress have indicated support for a U.S. role in the peaceful resolution of the Armenia-Azerbaijan conflict. Some have criticized the Administration for appointing as a replacement for the previous U.S. presidential envoy an official who deals with NK as only one of several crises, and called for greater Administrative attention to helping achieve a peace settlement. Some also have criticized Russian attempts to dominate negotiations and prospective peacekeeping and call for greater U.S. efforts to ensure an multinational role. (For further information, see CRS Issue Brief 92109, Armenia-Azerbaijan Conflict.)
The United States is the largest bilateral aid donor by far to Armenia and Georgia. Most U.S. aid to the Transcaucasus addresses urgent needs for food, shelter, medicine, and energy, including urgent winter needs. U.S. aid to Armenia also focuses on ameliorating the impact of the blockades, and includes food and heating oil aid, health care aid, programs in energy conservation, and research on oil, gas, and coal potential. Aliyev on June 13, 1996, strongly objected to a provision of H.R. 3540 passed by the U.S. House of Representatives aimed at ensuring that some U.S. aid is distributed to refugees and displaced persons in NK. He attacked it as a violation of Azerbaijan's territorial integrity, and the U.S. State Department concurred that it "injects a damaging political interpretation into the effort to improve the delivery of humanitarian assistance to Azerbaijan." (See also below, Legislation.)
In FY1995, the U.S. aid obligations were $40.7 million to Armenia, $10.4 million to Azerbaijan, and $27.5 million to Georgia (FY1996 figures have not yet been released). Further, of U.S. aid provided to the former Soviet republics (excluding the Baltic states), Armenia, Kyrgyzstan, and Georgia ranked highest in per capita cumulative U.S. Government aid obligated for the NIS as of June 30, 1996. Overall, humanitarian and technical aid obligations to the Transcaucasus countries accounted for about 9.2% of FY1995 funding for the NIS ($850 million), compared to 11.2% for Central Asia, 21.4% for Ukraine, and 40.4% for Russia. Regional programs, it should be noted, increased the actual assistance provided to the Transcaucasus states in FY1995. For FY1996, P.L.104-107 mandated that of the funds made available "by this Act," no less than $85 million will be made available for Armenia and "by this or any other Act," $30 million for Georgia, the only two NIS to be so mentioned besides Ukraine. Although mandating at least this level of funding, actual funding probably exceeded these levels as regional NIS and other funds were allocated during the year. An earmark of at least $95 million was provided for Armenia in FY1997 (P.L. 104-208). In a written response after testimony on November 14, 1995, Morningstar indicated that in winding down Freedom Support Act aid, that to the Transcaucasus states and Ukraine would continue the longest, until at least the year 2002. Besides bilateral aid, the United States contributes aid through multilateral organizations such as the International Monetary Fund and the World Bank. (See also CRS Issue Brief 95077, The Former Soviet Union and U.S. Foreign Assistance.)
While the Administration has devoted the bulk of aid to the Transcaucasus to urgent humanitarian needs, some attention has been given to fostering democratization. The Administration plans to shift further aid to these efforts as conflict abates in the region.
In Armenia and Georgia, democratization has included training of local private voluntary organizations for humanitarian purposes, though these organizations will also serve to bolster participatory democracy and accountable governance. Efforts in Armenia also include technical aid for drafting legislation and creating a law database, training for judges, and electoral support. Congressional interest in supporting democratization was highlighted by Representative Newt Gingrich in September 1994, who noted that "the collapse of the Soviet Union has left the Caucasus region in turmoil. While Armenia has begun the process of making the long and hard transition to democracy and a free market economy, I believe that we should encourage and assist the people of Armenia in creating a better life for themselves as well as actively working to bring peace to this troubled region."
Democratization has made recent progress in Georgia, sputtered in Azerbaijan, and faced recent challenges in Armenia. In all three states, the leaders have implemented many programs by decree. Political parties are small and faction-ridden in all the states, and some advocate extremist policies. There has appeared to be substantial commitment to democratization among the Armenian populace, though Ter-Petrossian's suspension of the activities of Armenian Revolutionary Federation party in December 1994 (ARF or Dashnaktsutyun; the major opposition party), a trial of its leaders, and electoral irregularities in July 1995 legislative races and in the September 1996 presidential contest raise concerns among many observers about possible setbacks to democratization. Armenian elections to a new 190-seat unicameral legislature were held on July 5, 1995. The ARF was not allowed to participate. According to the OSCE, opposition parties were harassed and other campaign irregularities occurred, so that the vote was "generally free but not fair." The 16-month trial of leaders and members of the "Dro" organization, alleged by the government to be the terrorist arm of the ARF that planned to overthrow the government, was concluded on December 10. Three defendants received death sentences for murder, and eight others received prison sentences. The Supreme Court ruled that Dro was linked to the ARF, though there was not enough evidence to link it to the head of the ARF.
Among the four candidates on Armenia's September 22 presidential ballot were incumbent President Levon Ter-Petrossian and former prime minister Vazgen Manukian. Manukian was supported by the National Democratic Union, a bloc of prominent opposition parties. After preliminary results were announced giving Ter-Petrossian a lead, several thousand protesters on September 25 stormed the parliamentary building and allegedly took the speaker and deputy speaker as temporary hostages and injured them. Police forcibly dispersed the crowds, resulting in two deaths and dozens of injured, and issued a statement accusing Manukian and his supporters of launching a coup attempt. Police detained dozens of opposition party figures and some electoral officials and clerical staff. Several opposition deputies were stripped of their parliamentary immunity, including former prominent Soviet-era dissident Paruyr Hairikian, beaten on the floor of the parliament, and temporarily detained. Manukian went into hiding, but later reappeared. Most of the detainees have been released, though charges may be pending. Official electoral results were announced on September 29, giving Ter-Petrossian 51.8% of the vote and Manukian 41.3%. On October 22, the OSCE issued a report stating that "serious breaches in ballot security took place during the count and in some cases, the law was flagrantly disregarded in clear view of international observers," and it concluded that the irregularities "can only contribute to a lack of confidence in the integrity of the overall election process." It did not conclude that the election was invalid, but noted that it "could be questioned." The U.S. State Department the same day issued a statement calling on Armenia to improve its electoral process, condemned opposition violence, welcomed adjudication of the electoral dispute by the Armenian Constitutional Court, and reaffirmed U.S. support for an "independent, democratic, and prosperous [Armenia] at peace with its neighbors." The Constitutional Court on November 22 ruled that discrepancies in the electoral results were "insignificant" and that the election was valid. (See also CRS Report 96- 981F, Armenia: Democratization Derailed?)
Elections to a new 225-seat unicameral legislature were held in Georgia on November 5, 1995 (150 seats were determined by party list voting and 75 by single member constituency voting). On that same day, Shevardnadze was elected to the new post of president (abolished after former President Zviad Gamsakhurdia was ousted in January 1992), winning 74.3% of the vote in a six-man race. Voting was described by international observers as generally "free and fair," though violations were reported in Ajaria. Collins, in a written response after testimony on November 14, 1995, stated that "in Georgia, over the past months there has been significant progress toward the establishment of a stable, democratic government." In contrast to Georgia, elections to a new 125-member unicameral legislature in Azerbaijan on November 12, 1995, were marred by the elimination of many opposition parties and candidates from participation and by rampant balloting irregularities, according to international observers, though some stressed that the elections marked some progress in holding a multiparty vote.
The development of expertise for economic stabilization and reform in Armenia has been fostered through the Center for Economic Policy, Research, and Analysis (CEPRA), set up in FY1994. For Georgia, U.S. aid included setting up a business service center in Tbilisi to encourage small business development and technical aid for monetary and fiscal reform, including through the planned creation of a CEPRA. For FY1996, Congress earmarked $15 million for the creation of a Transcaucasus Enterprise Fund, emphasizing its interest in providing capital resources and technical assistance to both privatized and new enterprises in the region, and it provided added support in FY1997 (see below, Legislation).
The economies of all three Transcaucasus states have greatly declined in recent years, affected by the dislocations caused by the breakup of the Soviet Union, conflicts, blockades, and the lingering effects of the 1988 earthquake in Armenia. Gross domestic product (GDP) has fallen by more than one-half in Armenia, two-thirds in Azerbaijan, and three-fourths in Georgia during 1990-1996. Per capita incomes are estimated at about $2,300 in Armenia and about half that in Azerbaijan and Georgia, and most people live at or below the poverty level (Planecon estimates). Poverty is worse in the separatist enclaves of Nagorno Karabakh, Abkhazia, and South Ossetia. Economic distress and regional conflict have contributed to the emigration of 750,000 or more Armenians, almost a quarter of the population. Economic decline appears to be reversing in all three states as they implement economic reforms. Positive growth in GDP in Armenia started in 1994, and is expected in Georgia in 1996 and Azerbaijan in 1996 or 1997. Inflation has abated in all three states. Azerbaijan has blamed trade disruptions caused by the Chechen conflict as delaying its economic recovery. Of the three Transcaucasian states, only Armenia moved quickly in 1991-1992 to privatize agriculture, and in all the states, efforts to privatize industry have lagged.
President Clinton and others maintain that U.S. support for privatization and the creation of free markets directly serves U.S. national interests by opening new markets for U.S. goods and services, and sources of energy and minerals. U.S. trade and investment in the Transcaucasus has so far been minimal, ranking well below that with Russia, because of the civil and ethnic turmoil in these states, their lagging efforts in accommodating commercial ties, and the need for massive investments to exploit potential resources. Among U.S. economic links with the region, trade agreements have been signed and entered into force with Armenia and Georgia (that with Azerbaijan has not been ratified by its legislature). Bilateral Investment Treaties providing national treatment guarantees have been signed with Armenia and Georgia, though both treaties need to be approved by these states' legislatures, and they lack the advice and consent of the U.S. Senate. In February 1995, the United States granted Armenia General System of Preferences (GSP) status, allowing it to export many goods to the United States without incurring tariffs and customs duties. The Overseas Private Investment Corporation (OPIC) has signed agreements with all three states on financing and insuring U.S. private investment overseas (the agreement with Azerbaijan has not been ratified by its legislature). Armenia is an observer to the Generalized Agreement on Tariffs and Trade (GATT). About fifty Peace Corps volunteers, teaching small business development and English language skills, are now serving in Armenia.
The role of the Transcaucasus as an historical trade route is threatened by recent conflict, blockades, and other instability (see above, Blockades). Regional states seek to avoid transit through the region and to build alternative trade routes and find new suppliers. Oil exploitation in Azerbaijan's Caspian Sea shelf promises large export earnings. Georgia has potential export and tourism resources, because of its fertile agricultural lands and scenic areas, but these sectors have been damaged by civil warfare. Natural gas and oil deposits sufficient for domestic needs and some exports are being developed, brightening Georgia's prospects. Armenia possesses industrial resources and skilled manpower that may generate exports.
The AIOC, now composed of eleven oil companies, including U.S. companies Amoco, Pennzoil, McDermott, and Unocal, in September 1994 signed a major agreement with Azerbaijan on joint exploitation of the Azeri, Chirag, and Gyuneshli oilfield in the Caspian Sea. Total investment in the AIOC project was estimated at $7.5 billion, with nearly 40% provided by U.S. companies (later increased). Azerbaijan, however, will receive the bulk of the oil profits, by some estimates a $34 billion share. Citing economic straits, in February 1995 Azerbaijan opened much of its own investment share to bidding, allowing U.S. Exxon and Turkish oil firms to increase their shares. Another deal to develop the Karabakh oilfield in the Caspian Sea was announced in November 1995. Russia's Lukoil will have the largest share, at 32.5%, followed by 30% each for U.S. Pennzoil and Italy's Agip, and 7.5% for Azerbaijan. Some viewed Azerbaijan's award of a large share to Russia as an effort by Azerbaijan to curry favor. A deal involving Iran was announced in mid-1996. Besides economic motives, Azerbaijan believes that the involvement of Western, Russian, Iranian, Turkish, and other nations' oil firms increases international stakes in Azerbaijan's continued independence.
On October 9, 1995, Azerbaijan and oil company representatives announced a decision to transport "early oil" through two systems of mostly existing pipelines in Georgia and Russia to ports on the Black Sea coast. Although Russia's Foreign Ministry objected to the decision, demanding to be the primary pipeline route, Russian oil officials pledged cooperation. U.S. Administration officials immediately praised the decision. In a letter to Aliyev in late May 1995, President Clinton noted that "we regard the successful exploitation of the oilfields in the Caspian Sea as ... the key to turning Azerbaijan into a fully sovereign and flourishing state," and pledged to work with Azerbaijan for their exploitation. On October 24, 1995, President Clinton met with Aliyev in New York, praising the Azerbaijani decision to pursue multiple pipeline routes as "diversifying economic risks," and calling for progress in NK peace talks. In January 1996, Aliyev and Chernomyrdin signed an agreement setting transit fees on "early oil" to be shipped through Russian pipelines beginning in 1997. On March 8, 1996, Azerbaijan and Georgia signed an accord on building or upgrading a 960 km pipeline to Georgia's Black Sea port of Supsa and setting transit fees. The AIOC signed a construction contract with a British firm in October 1996, with the pipeline expected to go into service by the end of 1998. Some "early oil" may be transported by rail to the Black Sea, but until the pipelines open, Iran will remain a major customer for Azerbaijani oil.
P.L. 104-208, H.R. 3610
Omnibus Consolidated Appropriations Act for FY1997, including foreign operations.
Foreign Operations Appropriations (H.R. 3540) passed by the House, June 11, 1996.
Reported by Senate Committee on Appropriations on June 27, 1996 (H.Rept. 104-295).
Passed Senate July 26, in conference committee September 17. Conference Committee
report on H.R. 3610 (H.Rept. 104-863) approved by House September 28 and Senate
September 30; signed into law on September 30, 1996. The law earmarks no less than
$95 million in aid to Armenia, with the conferees stressing that the earmark is needed
because of "the impact of the continuing blockade and conflict in the region surrounding
Armenia." Although not setting an earmark for Georgia, the conferees noted that "the
Administration is expected to sustain a level of support at least comparable to that
provided in FY1996," and stressed that they "recognize the Georgian leadership's
commitment to accelerating the pace and scope of needed change and believe U.S.
support is essential to ensuring these efforts are successful."
The law restates the Freedom Support Act's Sec. 907 prohibition on U.S. aid to the Azerbaijani government, except for adding that some aid may be authorized under the National Defense Authorization Act for FY1997 for training customs and border officials in the NIS to detect smuggling in nuclear, biological, and chemical weapons and materials that could be a threat to U.S. security . Clarifying Sec. 907, the conferees noted that "assistance to Azerbaijan, including the region of Nagorno Karabakh, by nongovernmental and international organizations shall not be precluded by this language from using and repairing Government facilities or services such as housing, warehouses, clinics, hospitals, and vehicles to effectively deliver humanitarian services and supplies to needy civilians ... The conferees intend that Government personnel be allowed to distribute humanitarian commodities such as doctors giving out medicines to needy civilians and that these supplies may be transferred to Government personnel for the purpose of distribution." The conferees also requested that the Secretary of State submit a report by March 1, 1997, "containing a plan of action for the U.S. Government to assist and accelerate the earliest possible development and shipment of oil from the Caspian Sea region to the United States and other Western markets." The law provides another $10 million to the Trans-Caucasus Enterprise Fund, other funds, or to the Overseas Private Investment Corporation to foster economic development in the region. Sec. 559 amends the Foreign Assistance Act of 1961 to prohibit U.S. aid to any country that restricts the transport or delivery of U.S. aid to a third country (a presidential waiver is allowed on national security grounds).