Order Code RL33453
CRS Report for Congress
Received through the CRS Web
Armenia, Azerbaijan, and Georgia:
Political Developments and
Implications for U.S. Interests
Updated October 20, 2006
Jim Nichol
Specialist in Russian and Central Asian Affairs
Foreign Affairs, Defense, and Trade Division
Congressional Research Service ˜ The Library of Congress

Armenia, Azerbaijan, and Georgia: Political
Developments and Implications for U.S. Interests
Summary
The United States recognized the independence of all the former Soviet
republics by the end of 1991, including the South Caucasus states of Armenia,
Azerbaijan, and Georgia. The United States has fostered these states’ ties with the
West in part to end the dependence of these states on Russia for trade, security, and
other relations. The United States has pursued close ties with Armenia to encourage
its democratization and because of concerns by Armenian-Americans and others over
its fate. Close ties with Georgia have evolved from U.S. contacts with its pro-
Western leadership. The Bush Administration supports U.S. private investment in
Azerbaijan’s energy sector as a means of increasing the diversity of world energy
suppliers and to encourage building multiple energy pipelines to world markets. The
United States has been active in diplomatic efforts to end conflicts in the region,
several of which remain unresolved.
The FREEDOM Support Act of 1992 (P.L. 102-511) authorizes assistance to
the Eurasian states for humanitarian needs, democratization, creation of market
economies, trade and investment, and other purposes. Section 907 of the act
prohibits most U.S. government-to-government aid to Azerbaijan until its ceases
blockades and other offensive use of force against Armenia. Until the September 11,
2001, terrorist attacks on the United States, this provision had been altered only to
permit humanitarian and democratization aid, border security and customs support
to promote non-proliferation, Trade and Development Agency aid, Overseas Private
Investment Corporation insurance, Export-Import Bank financing, and Foreign
Commercial Service activities.
In the aftermath of the September 11 attacks, the Administration appealed for
a national security waiver for Section 907, in consideration of the country’s support
to the international coalition to combat terrorism. In December 2001, Congress
approved foreign appropriations for FY2002 (P.L. 107-115) that granted the
President authority to waive Section 907, renewable each calendar year under certain
conditions. President Bush exercised the waiver most recently in February 2006. As
part of the U.S. Global War on Terror, the U.S. military in 2002 began providing
equipment and training for Georgia’s military and security forces. Azerbaijani and
Georgian troops participate in stabilization efforts in Afghanistan and Iraq, and
Armenian personnel serve in Iraq.
Some observers argue that developments in the South Caucasus are largely
marginal to global anti-terrorism and to U.S. interests in general. They urge great
caution in adopting policies that will heavily involve the United States in a region
beset by ethnic and civil conflicts. Other observers believe that U.S. policy now
requires more active engagement in the region. They urge greater U.S. aid and
conflict resolution efforts to contain warfare, crime, smuggling, and Islamic
extremism and to bolster the independence of the states. Some argue that energy
resources in the Caspian region are a central U.S. strategic interest. This CRS report
replaces CRS Issue Brief IB95024, Armenia, Azerbaijan, and Georgia, by Jim
Nichol.

Contents
Most Recent Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Overview of U.S. Policy Concerns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Post-September 11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Operations in Iraq . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Obstacles to Peace and Independence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Regional Tensions and Conflicts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Nagorno Karabakh Conflict . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Civil and Ethnic Conflict in Georgia . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Economic Conditions, Blockades, and Stoppages . . . . . . . . . . . . . . . . . . . . . 9
Democratization and Human Rights Problems . . . . . . . . . . . . . . . . . . . . . . . 9
Armenia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Azerbaijan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Georgia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
The South Caucasus’s External Security Context . . . . . . . . . . . . . . . . . . . . . . . . 13
Russian Involvement in the Region . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Caspian Energy Resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Military-Strategic Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
The Roles of Turkey, Iran, and Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
U.S. Aid Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
U.S. Security Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
U.S. Trade and Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Energy Resources and U.S. Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
109th Congress Legislation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
List of Figures
Figure 1. Map of the Region . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
List of Tables
Table 1. U.S. FY1992-FY2005 and FY2005 Budgeted Foreign Assistance,
FY2006 Estimated Aid, and the FY2007 Request . . . . . . . . . . . . . . . . . . . . 24

Armenia, Azerbaijan, and Georgia:
Political Developments and
Implications for U.S. Interests
Most Recent Developments
Georgia’s arrest of four Russian servicemen in late September 2006 on charges
of espionage heightened tensions between Georgia and Russia. Although Georgia
handed over the servicemen on October 2, Russia has taken a series of measures
viewed as troubling by many international observers, including cutting off financial
flows to Georgia, raiding ethnic Georgian-owned businesses, expelling hundreds of
Georgians, and compiling lists of ethnic Georgians in the public schools. On October
17, 2006, the European Union’s External Relations Council called on both sides to
“tone down public rhetoric” and open diplomatic dialogue, but it also stressed “its
grave concern at the measures adopted by [Russia] against Georgia.... The Council
urges [Russia] not to pursue measures targeting [ethnic] Georgians” in Russia. The
head of the Council, Benita Ferrero-Waldner, emphasized that actions in Russia
targeting ethnic Georgians “are extremely worrying” and “cannot contribute to a
return to calm” in Russia-Georgia relations. At an EU-Russia meeting on October
20, 2006, Russian President Putin reportedly blamed worsening Russia-Georgia ties
on Georgia and warned that Georgia’s relations with Abkhazia and South Ossetia
were “developing in the direction of possible bloodshed.”1
On October 13, 2006, the U.N. Security Council (UNSC) approved a resolution
extending the mandate of the U.N. Observer Mission in Georgia (UNOMIG) in the
breakaway Abkhaz region for another six months, until the end of April 2007. The
Security Council criticized Georgia for introducing military forces into the Kodori
Gorge area of Abkhazia in violation of cease-fire accords and for other “militant
rhetoric and provocative actions” and called on it to abide by the accords. Some
violations by Abkhaz forces were also criticized. The UNSC stressed the “important”
and “stabilizing” role played by Russian peacekeepers and UNOMIG in Abkhazia.2
Some Georgian officials viewed the resolution as negating their calls for a wider
international composition of the peacekeeping forces.
1 Council of the European Union. 2756th Council Meeting. General Affairs and External
Relations. Press Release: Provisional Version, 13340/06 (Presse 265), October 16-17,
2006.
2 U.N. Security Council. Resolution 1716 (2006), Adopted by the Security Council at its
5549th meeting
, October 13, 2006.

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Background
Armenia, Azerbaijan, and Georgia are located south of the Caucasus Mountains
that form part of Russia’s borders (see Figure 1). The South Caucasus states served
historically as a north-south and east-west 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 control. In ancient as well as more recent times, oil
and natural gas resources in Azerbaijan attracted outside interest. All three peoples
can point to periods of past autonomy or self-government. After the Russian Empire
collapsed in 1917, all three states declared independence, but by early 1921 all had
been re-conquered by Russia’s Red (Communist) Army. They regained
independence when the Soviet Union collapsed in 1991.3
Overview of U.S. Policy Concerns
By the end of 1991, the
United States had recognized the
The Caucasus Region: Basic Facts
independence of all the former
Area: The region is slightly larger than Syria:
Armenia is 11,620 sq. mi.; Azerbaijan is 33,774
Soviet republics. The United
sq. mi.; Georgia is 26,872 sq. mi.
States pursued close ties with
Population: 15.57 million, similar to
Armenia, because of its
Netherlands; Armenia: 2.98 m.; Azerbaijan: 7.91
profession of democratic
m.; Georgia: 4.68 m. (CIA World Factbook, July
principles, and concerns by
2005 est.). Over a million people from the region
Armenian-Americans and others
are migrant workers in Russia and elsewhere.
over its fate. The United States
GDP: $67.9 billion; Armenia: $15.3 b.;
pursued close ties with Georgia
Azerbaijan: $36.5 b.; Georgia: $16.1 b. (World
after Eduard Shevardnadze,
Factbook, 2005 est., purchasing power parity)
formerly a pro-Western Soviet
foreign minister, assumed power
there in early 1992. Faced with calls in Congress and elsewhere for a U.S. aid policy
for the Eurasian states, then-President George H.W. Bush sent the FREEDOM
Support Act to Congress, which was signed with amendments into law in October
1992 (P.L. 102-511).
In June 2006, Deputy Assistant Secretary of State Matthew Bryza stated that the
United States has three inter-related sets of interests in the region: “we’re not
embarrassed to say that energy is a strategic interest. We [also] have ... traditional
security interests — meaning fighting terrorism, fighting proliferation, avoiding
military conflict, and restoring (or preserving, in some cases) the territorial integrity
of the states of the region.... And then we have a third set of interests, in ...
democratic and market economic reform ... based on our belief that stability only
3 For background, see CRS Report RS20812, Armenia Update, by Carol Migdalovitz; CRS
Report 97-522, Azerbaijan: Recent Developments and U.S. Interests; and CRS Report
97-727, Georgia: Recent Developments and U.S. Interests, by Jim Nichol.

CRS-3
comes from legitimacy. And legitimacy requires democracy on the political side and
prosperity on the economic side.”4
U.S. policy toward the South Caucasus states includes promoting the resolution
of the Armenia-Azerbaijan conflict over Azerbaijan’s breakaway Nagorno Karabakh
(NK) region, and Georgia’s conflicts with its breakaway regions of Abkhazia and
South Ossetia. Since 1993, successive U.S. Special Negotiators for Eurasian
Conflicts have helped in various ways to try to settle these “frozen” conflicts. (In
early 2006, the State Department reportedly decided to eliminate this post and divide
its responsibilities among the Deputy Assistant Secretary of State and the Office of
Caucasus Affairs and Regional Conflicts.) Congressional concerns about the NK
conflict led to the inclusion of Section 907 in the FREEDOM Support Act, which
prohibits U.S. government-to-government assistance to Azerbaijan, except for non-
proliferation and disarmament activities, until the President determines that
Azerbaijan has taken “demonstrable steps to cease all blockades and other offensive
uses of force against Armenia and NK” (on waiver authority, see below). Provisions
in FY1996, FY1998, and FY1999 legislation eased the prohibition by providing for
humanitarian, democratization, and business aid exemptions.
Some observers argue that developments in the South Caucasus are largely
marginal to global anti-terrorism and to U.S. interests in general. They urge great
caution in adopting policies that will heavily involve the United States in a region
beset by ethnic and civil conflicts. Other observers believe that U.S. policy now
requires more active engagement in the region. They urge greater U.S. aid and
conflict resolution efforts to contain warfare, crime, smuggling, and Islamic
extremism and to bolster the independence of the states. Some argue that such
enhanced U.S. relations also would serve to “contain” Russian and Iranian influence
and that close U.S. ties with Azerbaijan would benefit U.S. relations with other
Islamic countries, particularly Turkey and the Central Asian states. They also point
to the prompt support offered to the United States by the regional states in the
aftermath of the September 11, 2001, attacks by Al Qaeda on the United States.
Some argue that energy resources in the Caspian region are a central U.S. strategic
interest, because Azerbaijani and Central Asian oil and natural gas deliveries would
lessen slightly Western energy dependency on Russia and the Middle East (see
below, Energy Resources).
Post-September 11. In the wake of September 11, 2001, the United States
obtained quick pledges from the three South Caucasian states to support Operation
Enduring Freedom (OEF) in Afghanistan, including overflight rights and
Azerbaijan’s and Georgia’s offers of airbase and other support. OEF was later
expanded to Georgia (see below, Security Assistance). Congressional attitudes
toward Azerbaijan and Section 907 shifted, resulting in presidential waiver authority
being incorporated into Foreign Operations Appropriations for FY2002 (H.R. 2506;
P.L. 107-115). The President may use the waiver authority if he certifies that U.S.
aid supports U.S. counter-terrorism efforts, supports the operational readiness of the
armed forces, is important for Azerbaijan’s border security, and will not harm NK
peace talks or be used for offensive purposes against Armenia. The waiver may be
4 “U.S. Says Aliyev, Kocharyan Must Show ‘Political Will,’” RFE/RL, June 23, 2006.

CRS-4
renewed annually, and sixty days after the exercise of the waiver, the President must
report to Congress on the nature of aid to be provided to Azerbaijan, the military
balance between Armenia and Azerbaijan and the effects of U.S. aid on that balance,
the status of Armenia-Azerbaijan peace talks, and the effects of U.S. aid on those
talks. President Bush has exercised the waiver annually, most recently on February
8, 2006. Since late 2002, Azerbaijan has contributed troops for peacekeeping in
Afghanistan (23 troops were deployed in early 2006), and Georgia contributed about
50 troops during Afghan elections in late 2004-early 2005.
Operations in Iraq. Azerbaijan and Georgia were among the countries that
openly pledged to support the U.S.-led Operation Iraqi Freedom (OIF), with both
offering the use of their airbases, and to assist the United States in re-building Iraq.
Both countries agreed to participate, subject to U.S. financial support, in the
stabilization force for Iraq. In August 2003, both Azerbaijan (150 troops) and
Georgia (69 troops) dispatched forces to Iraq. U.S. officials reportedly asked
Azerbaijan and Georgia in April 2004 to bolster their troop contributions in the face
of Spain’s troop pullout. Georgia boosted its deployment to almost 900 troops as of
July 2005, making it a major contributor. Armenia began sending personnel to Iraq
in January 2005, where 46 serve with the Polish contingent.
Obstacles to Peace and Independence
Regional Tensions and Conflicts
Ethnic conflicts have kept the South Caucasus states from fully partaking in
peace, stability, and economic development over the decade since the Soviet
collapse, some observers lament. The countries are faced with on-going budgetary
burdens of arms races and caring for refugees and displaced persons. Other costs of
ethnic conflict include threats to bordering states of widening conflict and the limited
ability of the region or outside states to fully exploit energy resources or
trade/transportion networks.
U.S. and international efforts to foster peace and the continued independence
of the South Caucasus states face daunting challenges. The region has been the most
unstable part of the former Soviet Union in terms of the numbers, intensity, and
length of its ethnic and civil conflicts. The ruling nationalities in the three states are
culturally rather insular and harbor various grievances against each other. This is
particularly the case between Armenia and Azerbaijan, where discord has led to the
virtually complete displacement of ethnic Armenians from Azerbaijan and vice versa.
The main languages in the three states are dissimilar (also, those who generally
consider themselves Georgians — Kartvelians, Mingrelians, and Svans — speak
dissimilar languages). Few of the region’s borders coincide with ethnic populations.
Attempts by territorially based ethnic minorities to secede are primary security
concerns for all three states. The secessionist NK, Abkhazia, and South Ossetia have
failed to gain international recognition. NK relies on economic support from
Armenia, and Abkhazia and South Ossetia from Russia.

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Nagorno Karabakh Conflict. Since 1988, the separatist conflict in Nagorno
Karabakh (NK) has resulted in about 15,000 casualties and hundreds of thousands
of refugees and displaced persons in Armenia and Azerbaijan. The U.N. High
Commissioner for Refugees has reported that at the end of 2005, there were still
about 581,500 people considered refugees or displaced persons in Azerbaijan and
219,550 in Armenia.5 Armenia has granted citizenship and acted to permanently
house many of the ethnic Armenians who fled Azerbaijan The non-governmental
International Crisis Group estimates that about 13-14% of Azerbaijan’s territory,
including NK, is controlled by NK Armenian forces (the CIA World Factbook
estimates about 16%).6 The OSCE’s “Minsk Group” of concerned member-states
began talks in 1992. A U.S. presidential envoy was appointed to these talks. A
Russian-mediated cease-fire was agreed to in May 1994 and was formalized by an
armistice signed by the ministers of defense of Armenia and Azerbaijan and the
commander of the NK army on July 27, 1994 (and reaffirmed a month later). The
United States, France, and Russia co-chair meetings of the Minsk Group.
The Minsk Group reportedly has presented four proposals as a framework for
talks, but a peace settlement has proved elusive. In late 1997, a new step-by-step
peace proposal was recognized by the presidents of Azerbaijan and Armenia as a
basis for further discussion. This led to protests in both countries and to the forced
resignation of Armenian President Levon Ter-Petrosyan in early 1998. Heydar
Aliyev in early 2001 stated that he had “turned down” and refused to discuss a late
1998 Minsk Group proposal embracing elements of a comprehensive settlement.7
The assassination of Armenian political leaders in late 1999 set back the peace
process. In April 2001, the two presidents attended talks in Key West, Florida, and
then met with President Bush, highlighting early Administration interest in a
settlement. In January 2003, Armenia’s President, Robert Kocharyan, proclaimed
that its peace policy rested on three pillars: a “horizontal” — instead of hierarchical
— relationship between NK and Azerbaijan; a secure land corridor between
Armenia and NK; and security guarantees for NK’s populace.8 Armenian Foreign
Minister Vardan Oskanyan in October 2004 stated that the continued occupation of
NK border areas was necessary leverage to convince Azerbaijan to agree to NK’s
status as a “common state.”9 Since 2005, media in both countries have reported
negotiations on a fourth “hybrid” peace plan to return most NK border areas prior to
a referendum in NK on its status.
The Minsk Group co-chairs issued a statement and made other remarks in April-
July 2006 that revealed some of their proposals for a settlement. These include the
phased redeployment of Armenian troops from Azerbaijani territories around
Nagorno-Karabakh, with special modalities for Kelbajar and Lachin districts
5 U.N. High Commissioner for Refugees. 2005 Global Refugee Trends, June 2006.
6 International Crisis Group. Nagorno-Karabakh: Viewing the Conflict from the Ground,
September 14, 2005; CIA World Factbook. Azerbaijan, [http://www.odci.gov].
7 Open Source Information Center (OSIC), Central Eurasia: Daily Report, February 27,
2001, Doc. No CEP-262.
8 OSIC, January 17, 2003, Doc. No. CEP-338.
9 OSIC, October 13, 2004, Doc. No. CEP-11.

CRS-6
(including a corridor between Armenia and NK); demilitarization of those territories;
the deployment of international peacekeepers in the conflict area; and a popular
referendum (at some time and manner to be determined) on the status of NK. To
urge the sides to reach a settlement, the deputy foreign minister of Russia, the U.S.
Assistant Secretary of State, and a high-ranking French diplomat traveled to the
region in May.
At peace talks in Bucharest on June 4-5, 2006, the presidents of Armenia and
Azerbaijan reportedly agreed on some basic principles but failed to reach a
settlement. In statements issued after this meeting, the Minsk Group co-chairs raised
concerns that the two presidents lacked the “political will” to make decisions about
a settlement and stated that they would wind down their “shuttle diplomacy” until
the two presidents demonstrated political will.10 Disagreeing with the Minsk Group
settlement proposals, President Aliyev in early July 2006 stated that the withdrawal
of NK forces from occupied territories (including NK itself) must be followed by the
return of Azerbaijani displaced persons. Then, he averred, Azerbaijani (including
NK) citizens would discuss the status of NK, but its secession from Azerbaijan was
forbidden.11
Civil and Ethnic Conflict in Georgia. Several of Georgia’s ethnic
minorities stepped up their dissidence, including separatism, in the late 1980s and
early 1990s, resulting in the loss of central government control over the regions of
South Ossetia and Abkhazia. President Saakashvili in his January 2004 inaugural
address proclaimed his responsibility to re-integrate these regions into Georgia.
Some observers have argued that Russia’s increasing controls over South Ossetia and
Abkhazia have transformed the separatist conflicts into essentially Russia-Georgia
disputes. Most residents of Abkhazia and South Ossetia reportedly have been
granted Russian citizenship.
South Ossetia. In 1989, the region lobbied for joining its territory with North
Ossetia in Russia or for independence. Repressive efforts by former Georgian
President Gamsakhurdia triggered conflict in 1990, reportedly leading to about 1,500
deaths. In June 1992, Russia brokered a cease-fire, and a “peacekeeping” force
composed of Russian, Georgian, and Ossetian units has been stationed in South
Ossetia (reportedly numbering around 1,000 troops, including about 530 Russians,
300 North and South Ossetians, and until recently, 100-150 Georgians). A Joint
Control Commission composed of OSCE, Russian, Georgian, and North and South
Ossetian emissaries was formed to promote a settlement of the conflict. According
to some estimates, some 25,000 ethnic Ossetians and 20,000 ethnic Georgians reside
in the now largely vacant region.
President Saakashvili increased pressure on South Ossetia in 2004 by tightening
border controls. He also reportedly sent several hundred police, military, and
10 In June 2006, the duties of the U.S. co-chair were transferred to the Deputy Assistant
Secretary of State. On the proposals, see RFE/RL, June 23, 2006; U.S. Embassy in Armenia,
Statement by the Minsk Group Co-Chairs to the OSCE Permanent Council, June 22, 2006;
and Statement by the OSCE Minsk Group Co-Chairs, July 3, 2006.
11 Leyla Tavshanoglu, Interview with the President of Azerbaijan, Cumhuriyet, July 4, 2006.

CRS-7
intelligence personnel into the region. Georgia maintained that it was only bolstering
its peacekeeping contingent up to the limit of 500 troops, as permitted by the cease-
fire agreement. Georgian guerrilla forces also reportedly entered the region.
Allegedly, Russian officials likewise assisted several hundred paramilitary elements
from Abkhazia, Transnistria, and Russia to enter. Following inconclusive clashes,
both sides by late 2004 ostensibly had pulled back most undeclared forces.
Saakashvili announced a new peace plan for South Ossetia in July 2005 that offered
substantial autonomy and a three-stage settlement, consisting of demilitarization,
economic rehabilitation, and a political settlement. South Ossetian “president”
Eduard Kokoiti rejected the plan, asserting in October 2005 that “we [South
Ossetians] are citizens of Russia.”12 The Georgian peace plan received backing by
the OSCE Ministerial Council in early December 2005. Perhaps faced with this
international support, in mid-December 2005, Kokoiti proffered a South Ossetian
peace proposal that in most respects was similar to Saakashvili’s plan. The two sides
agreed in late December 2005 that a working group would be formed under the JCC
to reconcile and elaborate the plans. The OSCE sponsored a donor’s conference in
May 2006 that garnered pledges of over $10 million for economic reconstruction in
the conflict area. Russia stated that it would provide about $3.7 million to South
Ossetia, outside of the OSCE framework, which drew protests from Georgia (see
also below, Russian Involvement).
The U.S. Mission to the OSCE issued a statement on August 11, 2006, that
called for international monitoring of the Roki Tunnel (separating Russia from South
Ossetia), a permanent checkpoint at Didi Gupta (a South Ossetian village near Roki
on a transport route), and an increase in the number of OSCE monitors in the region.
The statement also urged “meaningful progress” on the peace plan endorsed by the
OSCE. However, at a JCC meeting on August 17-18, 2006, in Moscow, the Ossetian
and Russian emissaries reportedly balked at forming the working group under the
JCC to work on the peace plan. Kokoiti a few days later announced that a popular
referendum would be held in the region in November 2006 to reaffirm its
“independence” from Georgia. After a planned JCC meeting in mid-September fell
through, the Georgian state minister argued that the JCC format “was no longer of
any use.”13 Emissaries at a JCC meeting on October 12-13, 2006, reportedly failed
to agree on a communique or a date for the next meeting.14
Abkhazia. In July 1992, Abkhazia’s legislature declared the region’s effective
independence, prompting an attack by Georgian national guardsmen. In October
1992, the U.N. Security Council (UNSC) approved the first U.N. observer mission
to a Eurasian state, termed UNOMIG, to help the parties reach a settlement. Russian
and North Caucasian “volunteers” (who reportedly made up the bulk of Abkhaz
separatist forces) routed Georgian forces. Georgia and Abkhazia agreed in April
1994 on a framework for a political settlement and the return of refugees. A
12 OSIC, October 7, 2005, Doc. No. CEP-15001. OSIC, December 12, 2005, Doc. No. CEP-
27204. Perhaps another indicator of Russia’s role in South Ossetia, Kokoiti claimed in
August 2006 that South Ossetia’s “ministries” were “working in accordance” with those in
North Ossetia, Russia. Civil Georgia, August 8, 2006.
13 OSIC, September 15, 2006, Doc. No. CEP-950088.
14 OSIC, October 2, 2006, Doc. No. CEP-950201; October 13, 2006, Doc. No. CEP-950333.

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Quadripartite Commission (QC) was set up to discuss repatriation and Russian troops
(acting as CIS “peacekeepers”) were deployed along the Inguri River dividing
Abkhazia from the rest of Georgia. The conflict resulted in about 10,000 deaths and
over 200,000 displaced persons, mostly ethnic Georgians. In late 1997, the sides
agreed to set up a Coordinating Council (CC) to discuss cease-fire maintenance and
refugee, economic, and humanitarian issues. The QC meets periodically and
addresses grievances not considered by the CC.
The Deputy Assistant Secretary of State works with the Special Representative
of the U.N. Secretary General and other Friends of Georgia (France, Germany,
Russia, the United Kingdom, and Ukraine) to facilitate a settlement. A “New Friends
of Georgia” group was formed by Bulgaria, Estonia, Latvia, Lithuania, Moldova,
Poland, Romania, and Ukraine in 2005 to advocate increased EU and NATO
attention to a settlement. Sticking points have included Georgia’s demand that
displaced persons be allowed to return to Abkhazia, after which an agreement on
autonomy for Abkhazia would be negotiated. The Abkhazians have insisted upon
recognition of their independence as a precondition to large-scale repatriation. Since
2002, Abkhaz authorities have refused to consider a draft negotiating document
prepared by the U.N. and the Friends of Georgia. In the UNSC, Russia in late
January 2006 renounced the draft negotiating document and agreed to only a two-
month extension to UNOMIG’s mandate, raising concerns among some observers
that Russia might openly endorse Abkhaz “self-determination.” The UNSC in March
2006, however, agreed to a normal six-month extension. In October 2006, the UNSC
adopted another mandate extension that included some language — urged by Russia
— that was critical of Georgia for ceasefire violations and “militant rhetoric and
provocative actions.”
Since 2001, Abkhazia resisted holding CC meetings, but the two sides finally
met on May 15, 2006, and the Abkhaz “foreign minister” proffered a new peace plan.
Georgia found the plan “interesting” but rejected it, claiming that the plan was in
effect a declaration of independence. In late May 2006, Georgia proffered an
alternative peace plan, which Abkhazia in turn reportedly rejected as unconstructive.
The almost weekly meetings of the CC were broken off by the Abkhaz side at the
beginning of August 2006, for reasons relating to Georgia’s actions in Abkhazia’s
Kodori Gorge area (see below). On October 2, 2006, Abkhazia announced the
suspension of all talks with Georgia because of Georgia’s reported cease-fire
violations.15
The Kodori Gorge. In July 2006, a warlord in the Kodori Gorge area of
Abkhazia, where many ethnic Svans reside, foreswore his nominal allegiance to the
Georgian government. The Georgian government quickly sent forces to the area and
defeated the warlord’s militia. Saakashvili asserted that the action marked progress
in Georgia’s efforts to re-establish its authority throughout Abkhazia, and he directed
that the Abkhaz “government-in-exile” make the Gorge its home. Georgia claims
that the bulk of its troops have left the Gorge, leaving only construction platoons, but
15 U.N. Council on Resolving Abkhazia Dispute Meets for First Time in 5 Years, Associated
Press, May 15, 2006; “Georgian Peace Plan Unacceptable: Abkhaz Foreign Minister,”
Interfax, June 1, 2006.

CRS-9
Abkhazia asserts that many troops are still present, in violation of the ceasefire
agreement. The U.S. Mission to the OSCE issued a statement on August 11, 2006,
that supported demilitarizing the Kodori Gorge and sending international civilian
police to Abkhazia and called on the government of Georgia and the Abkhaz de facto
authorities to show restraint and to abide by the 1994 cease-fire agreement.
Economic Conditions, Blockades, and Stoppages
The economies of all three South Caucasus states greatly declined in the early
1990s, affected by the dislocations caused by the breakup of the Soviet Union,
conflicts, trade disruptions, and the lingering effects of the 1988 earthquake in
Armenia. Although gross domestic product (GDP) began to rebound in the states in
the mid-1990s, the economies remain fragile. Investment in oil and gas resources has
fueled economic growth in Azerbaijan in recent years. Widespread poverty and
regional conflict have contributed to high emigration from all three states, and
remittances from these emigres provide major support for the remaining populations.
In August 2006, Saakashvili announced a major economic initiative he hoped would
sharply reduce poverty and boost private enterprise.
Transport and communications obstructions and stoppages have severely
affected economic development in the South Caucasus and stymied the region’s
emergence as an East-West and North-South corridor. Since 1989, Azerbaijan has
obstructed railways and pipelines traversing its territory to Armenia. These
obstructions have had a negative impact on the Armenian economy, since it is heavily
dependent on energy and raw materials imports. Turkey has barred U.S. shipments
of aid through its territory to Armenia since March 1993. P.L. 104-107 and P.L.
104-208 mandated 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. According to the
U.S. Embassy in Baku, Azerbaijan’s Nakhichevan exclave “is blockaded by
neighboring Armenia.” Iran has at times obstructed bypass routes to Nakhichevan.
Georgia has cut off natural gas supplies to South Ossetia and Russia has at times cut
off gas supplies to Georgia. Georgia severely restricts traffic from South Ossetia.
Russia hinders Azerbaijan’s use of the Volga-Don Canal to reach world shipping
channels. Russia also requires Georgians to obtain visas for visits and, since late
March 2006, has blocked imports of wine and mineral water, ostensibly on food
safety grounds. Most seriously, Russia closed what Georgia regards as the official
entry checkpoint to all traffic on July 8, 2006.
Democratization and Human Rights Problems
The non-governmental organization Human Rights Watch (HRW) in its annual
report covering 2005 judged that the Armenian government had failed to improve its
human rights record during the year. It alleged that torture and ill-treatment in police
custody remained widespread. The government made little progress in combating
corruption. HRW reported that torture and excessive use of force by Azerbaijani
security forces also were widespread, and that Azerbaijani authorities had not taken
adequate measures to prosecute personnel committing such abuses. There continued
to be convictions of those widely considered to be political prisoners, and the

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government pressured independent media by limiting their access to printing and
distribution facilities and by imposing fines for alleged defamation. In Georgia,
human rights abuses continued in many areas, according to HRW. Although there
was a reduction in reports in the capital, Tbilisi, of torture while in detention, torture
by police and security forces appeared to remain widespread outside Tbilisi.16
Armenia. In a February 2003 presidential election, none of the nine candidates
received a required 50% plus one of the vote, forcing a run-off in March by the top
two candidates, Kocharyan and People’s Party head Stepan Demirchyan. OSCE and
PACE observers concluded that the election did not meet international standards for
a free and fair race, because of “widespread” ballot box stuffing, a lack of
transparency in vote-counting, and other “serious” irregularities. In a May 25, 2003,
legislative election, 6 out of 21 parties running passed a 5% hurdle and won seats in
the party list section of the voting (75 of 131 deputies were elected by party lists).
Prime Minister Andranik Margaryan’s Republican Party won about 25% of the votes,
the opposition Justice bloc (led by Demirchyan) won 14%, the pro-government Land
of Laws Party won 12%, the pro-government Armenian Revolutionary Federation
(ARF) won 10%, the opposition National Unity Movement won 10%, and the pro-
government United Labor Party won 5%. The OSCE said that the election was “less
flawed than the recent presidential poll, but still fell short of international standards.”
Proposed constitutional changes also were voted on but were not approved. A
coalition government was formed by the Republican, Land of Laws, and ARF
parties.17
New constitutional changes were drawn up for a planned November 27, 2005,
popular referendum. The Venice Commission of the Council of Europe (COE) in
July 2005 stated that these proposed changes would provide a “good basis for
ensuring ... respect for human rights, democracy and the rule of law, and would pave
the way to further European integration.” Armenian officials announced that the
constitutional referendum had been approved by 93.2% of 1.5 million voters, with
a 65.4% turnout. A small delegation of monitors from the Parliamentary Assembly
of the Council of Europe (PACE) reported observing ballot-box stuffing and few
voters. Opposition parties, which boycotted the vote, alleged that the low observed
turnout placed into question whether the required one-third of the electorate had
actually voted.18
Azerbaijan. Ailing long-time ruler Heydar Aliyev withdrew from a scheduled
October 15, 2003, presidential election in favor of his son, Ilkham Aliyev, who
handily beat seven other candidates with about 77% of the vote. Protests alleging a
rigged vote resulted in violence, and spurred arrests of hundreds of alleged
“instigators” of the violence. The State Department expressed “deep
16 Human Rights Watch. World Report 2006, January 2006.
17 OSCE. Office of Democratic Institutions and Human Rights (ODIHR). Final Report on
the Presidential Election in Armenia
, April 28, 2003; Final Report on the Parliamentary
Elections in Armenia
, July 31, 2003.
18 PACE. Constitutional Referendum in Armenia: General Compliance Marred by Incidents
of Serious Abuse
, November 28, 2005.

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disappointment” with “serious deficiencies” in the election and “extreme concern”
about post-election violence and “politically-motivated arrests.”19
Changes to the election law, some in line with proposals from the Venice
Commission, were approved by the legislature in June 2005, including those making
it easier for people to become candidates for a planned November 6, 2005, legislative
election. However, the deputies rejected some of the most significant proposals,
including a more equitable representation of political interests on electoral
commissions. PACE emissaries visiting Azerbaijan in July raised concerns that
myriad electoral officials accused of abuses in the 2000 legislative race remained in
place. In May and October 2005, Aliyev ordered officials to abide by election law,
and authorities permitted some opposition rallies. The October decree also led
legislators to approve marking hands and permit outside-funded NGOs to monitor
the election, as advocated by PACE. After the election, the U.S. State Department
issued a statement praising democratization progress, but urging the government to
address some electoral irregularities.20 Repeat elections were scheduled for May
2006 in ten constituencies where alleged irregularities took place. Many
oppositionists refused to run in what they claimed would be another sham election.
According to OSCE election monitors, the repeat race appeared to be an
improvement over the November election, but irregularities needed to be addressed,
including the composition of electoral commissions and interference by local
officials in campaigns.21
Meeting with visiting President Aliyev in late April 2006, President Bush hailed
the “alliance” between the two countries and Azerbaijan’s “understand[ing] that
democracy is the wave of the future.” At a conference before the summit, Aliyev
asserted that he had been democratically elected, that “we have all the major
freedoms,” and that his jails hold no political prisoners. After the U.S. visit, the
Azerbaijani foreign minister stated that it marked Azerbaijan’s emerging role as the
major power in the South Caucasus region.
Some human rights and other observers criticized the summit as providing
undue U.S. support to a nondemocratic leader.22 Answering this criticism, Deputy
Assistant Secretary of State Bryza stated in June 2006 that “just because Azerbaijan
hasn’t gone as far as we would like on democracy doesn’t mean we’re going to
19 U.S. Department of State. Press Statement: Presidential Election in Azerbaijan, October
21, 2003.
20 U.S. Department of State. Press Statement: Azerbaijan Parliamentary Elections,
November 7, 2005. See also CRS Report RS22340, Azerbaijan’s Legislative Election, by
Jim Nichol.
21 OSCE/ODIHR Mission. Press Release: Partial Repeat Parliamentary Elections in
Azerbaijan Underscore Continuing Need for Electoral Reform
, May 15, 2006; Alman Mir
Ismail, The Changing Nature of Azerbaijani Elections, Central Asia - Caucasus Analyst,
May 17, 2006.
22 The White House. Office of the Press Secretary. President Bush Welcomes President
Aliyev of Azerbaijan to the White House
, April 28, 2006; OSIC, May 2, 2006, Doc. No.
CEP-950092; Council on Foreign Relations. A Conversation with Ilkham Aliyev, April 26,
2006.

CRS-12
ignore our energy interests or our military interests. That’s not to say that our energy
interests or our military interests or our counter-terrorism interests are driving us to
ignore democracy.... We have to pursue a balance.”23
Georgia. Georgia has experienced increased political instability in recent
years. Polls before a November 2, 2003 legislative race and exit polling during the
race suggested that the opposition National Movement (NM) and the United
Democrats (UD) would win the largest shares of seats in the party list vote. Instead,
mostly pro-regime candidates were declared winners. Demonstrators launched a
peaceful “rose revolution” that led to Shevardnadze’s resignation on November 23.
Russia and the United States appeared to cooperate during the crisis to urge
Georgians to abjure violence.
UD and NM agreed to co-sponsor NM head Saakashvili for a January 4, 2004,
presidential election. He received 96% of 2.2 million popular votes from a field of
five candidates. OSCE observers judged the vote as bringing Georgia closer to
meeting democratic electoral standards. The legislature, headed by UD co-leader
Nino Burjanadze, approved constitutional amendments in February 2004 that created
the post of prime minister and confirmed UD co-leader Zurab Zhvania for the post.
After Zhvania’s death in early 2005, his colleague Zurab Noghaideli replaced him.24
Legislative elections were held on March 28, 2004 involving 150 party list seats
(winners of district seats in November retained them). NM and BD ran on a joint list
and captured 67.2% of 1.53 million votes, giving the bloc a majority of seats,
seemingly ensuring firm legislative support for Saakashvili’s policies. The OSCE
judged the election as the most democratic since Georgia’s independence.
President Bush visited Georgia on May 9-10, 2005, and praised its “rose
revolution” for “inspiring democratic reformers” and freedom “from the Black Sea
to the Caspian and to the Persian Gulf and beyond.” President Saakashvili hailed the
Bush visit as marking “final confirmation that Georgia is an independent country
whose borders and territory are inviolable” and stressed that the U.S.-Georgian
“partnership” ultimately was based on “our shared belief in freedom” and was the
reason Georgia had sent troops to Iraq to end “enslavement” there.25
Four officials in the Interior Ministry were sentenced in early July 2006 to 7-8
years in prison on charges of murdering a young Tbilisi banker in January. Georgian
opposition politicians and others unsuccessfully called for Saakashvili to fire Interior
Minister Vano Merabishvili and bring other alleged perpetrators to justice. After the
verdict, the Minister for Separatist Conflicts, Georgy Khaindrava, joined this call,
The murder contributed to a legislative boycott by opposition deputies and fueled
widescale public protests. Khaindrava was not named to a new government formed
in late July.
23 RFE/RL, June 23, 2006.
24 For background, see CRS Report RS21685, Coup in Georgia [Republic]: Recent
Developments and Implications
, by Jim Nichol.
25 The White House. Office of the Press Secretary. President and President Saakashvili
Discuss NATO, Democracy
, May 10, 2005. See also President Saakashvili’s remarks in
OSIC, May 4, 2005, Doc. No. CEP-26020.

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Some observers suggested that public discontent over the case might contribute
to gains for opposition parties in 69 local/city council elections scheduled for October
5, 2006, but National Movement candidates won a majority of seats. According to
OSCE and COE election observers, the contests generally respected fundamental
freedoms, but the use of administrative resources appeared to be a problem. They
praised the election as marking a new phase of democratization, because the city
councils are empowered to elect mayors who had been previously appointed by the
president (the reforms fall short of direct elections of mayors).26
The South Caucasus’s External Security Context
Russian Involvement in the Region
After Vladimir Putin became president in 1999, Russia appeared to place great
strategic importance on maintaining influence in the South Caucasus region. But
although such efforts appeared initially successful, several developments since 2003
may have altered this assessment, including the “rose revolution” in Georgia,
NATO’s increased ties with Armenia and Georgia, the completion of the Baku-
Tbilisi-Ceyhan oil pipeline (and construction on an associated gas pipeline), Russia’s
ongoing concerns about security in its North Caucasus regions (including Chechnya),
and Russia’s agreement to close its remaining military bases in Georgia.
Recently, Russia has appeared to place its highest priority on exercising
influence in the region in the economic sphere (particularly energy) and slightly less
priority on influence in the military-strategic and domestic political spheres. Russia
has viewed Islamic fundamentalism as a growing threat to the region, but has
cooperated with Iran on some issues to counter Turkish and U.S. influence. Russia
has tried to stop ethnic “undesirables,” drugs, weapons, and other contraband from
entering its borders. It has quashed separatism in its North Caucasus areas while
seemingly backing it in the South Caucasus. It is the main source of security and
economic support for separatist Abkhazia and South Ossetia.27
The South Caucasian states have responded in various ways to Russian
influence. Armenia has close security and economic ties with Russia, given its
unresolved NK conflict and grievances against Turkey. Georgia has attempted to
eradicate Russia’s military presence and support to separatists. Azerbaijan has been
concerned about Russia’s ties with Armenia.
NATO’s September 21, 2006, approval of an “Intensified Dialogue” with
Georgia on reforms needed that might lead to membership appeared to contribute to
heightened concerns in Russia about NATO enlargement and an increased U.S.
26 OSCE. Office for Democratic Institutions and Human Rights. Press Release, October 6,
2006.
27 “Separatist Abkhazia a Paradise for Russian Tourists,” Agence France Presse, July 19
2006; “Breakaway Region’s Fate in Limbo as Tbilisi and Moscow Tussle for Control,”
Agence France Presse, July 19 2006.

CRS-14
presence in the South Caucasus. Russia’s foreign and defense ministers harshly
criticized the NATO decision in terms indicating that they viewed such ties as a loss
of Russian influence. Russia has implemented widespread punitive trade and other
economic sanctions against Georgia in 2006 as relations have worsened.
Caspian Energy Resources. Russia has tried to play a major role in future
oil production and transportation in the Caspian Sea region. At the May 2002 U.S.-
Russia summit, the two presidents issued a joint statement endorsing multiple
pipeline routes, implying Russia’s non-opposition to plans to build oil and gas
pipelines from Azerbaijan to Turkey that do not transit Russia. In early 2004,
however, a Russian official stated that Putin wanted to ensure that the greatest
volume of Caspian energy flowed through Russia.28 Armenia and Georgia are
heavily reliant on Russian gas supplies, and Azerbaijan plans to continue to import
some Russian gas until its own gas fields are developed further. In early 2006,
Russia charged all three states much more for gas (see also below, Energy
Resources
).
Military-Strategic Interests. Russia’s armed presence in the South
Caucasus has been multifaceted, including thousands of military base personnel,
“peacekeepers,” and border troops. The first step by Russia in maintaining a military
presence in the region was the signing of the Commonwealth of Independent States
(CIS) Collective Security Treaty (CST) by Armenia, Russia, and others in 1992,
which pledges the members to consult in the event of a threat to one or several
members, and to provide mutual aid if attacked (Azerbaijan and Georgia withdrew
in 1999). Russia also secured permission for two military bases in Armenia and four
in Georgia. Armenia reportedly pays Russia to help guard the Armenian-Turkish
border. The total number of Russian troops in Armenia has been estimated at about
3,500. Armenia has argued that its Russian bases provide for regional stability by
protecting it from attack. More than 100,000 Russian troops also are stationed
nearby in the North Caucasus.29 In 1993, Azerbaijan was the first Eurasian state to
get Russian troops to withdraw, except at the Gabala radar site in northern
Azerbaijan. (Giving up on closing the site, in January 2002 Azerbaijan signed a 10-
year lease agreement with Russia permitting up to 1,500 troops there.)
After the September 11, 2001 terrorist attacks in the United States, Russia
stepped up its claims that Georgia harbored Chechen terrorists (with links to Al
Qaeda) who used Georgia as a staging ground for attacks into Chechnya. The United
States expressed “unequivocal opposition” to military intervention by Russia inside
Georgia. Georgia launched a policing effort in its northern Pankisi Gorge in late
2002 that somewhat reduced tensions over this issue. In February 2004, Saakashvili
reportedly pledged during a Moscow visit to combat “Wahabbis” (referring to Islamic
extremists) in Georgia, including Chechen terrorists hiding in the Gorge and
28 The White House. Office of the Press Secretary. Joint Statement by President George
W. Bush and President Vladimir V. Putin on the New U.S.-Russian Energy Dialogue
, May
24, 2005. For the statement by Viktor Kalyuzhny, Putin’s Special Envoy to the Talks on the
Legal Status of the Caspian Sea, see OSIC, April 6, 2004, Doc. No. CEP-17.
29 The Military Balance 2005-2006. London: International Institute of Strategic Studies,
2005.

CRS-15
international terrorists that Russia alleged had transited Georgia to fight in Chechnya.
In April 2006, Azerbaijan convicted 16 alleged terrorists who reportedly had received
training from Al Qaeda operatives in the Pankisi Gorge.30
The Georgian legislature in October 2005 called on the government to certify
by July 2006 that the activities undertaken by Russian “peacekeepers” in Georgia’s
breakaway regions of Abkhazia and South Ossetian were contributing to peace
settlements. If the government was unable to make these certifications as stipulated,
then it must request that the “peacekeepers” leave, according to the resolution. A
Georgian National Military Strategy document released in November 2005 was blunt,
terming Russian “peacekeepers” and bases security threats.
In February 2006 Georgia’s legislature approved a resolution calling for the
president to revoke the 1992 agreement providing for Russian “peacekeeping” in
South Ossetia. The resolution accused Russia of aiming to annex the region and
urged greater international involvement in peacekeeping and a peace settlement. The
U.S. State Department has urged Georgia not to abandon the existing peace process.
Appearing to fuel Georgia’s concerns, Russian President Vladimir Putin rhetorically
asked in January 2006 why Russia should not recognize the independence of
Georgia’s breakaway Abkhazia and South Ossetia regions, if some countries
recognized Serbia’s Kosovo region.31 More recently, Russia’s Foreign Ministry
spokesman Mikhail Kamynin stated in mid-2006 that “we respect the principal of
territorial integrity. But when this integrity is applied to Georgia, it is more a
possible state than a political-legal reality.” He argued that South Ossetia was calling
for self-determination, so that Georgia’s “political-legal reality” was in limbo
pending the outcome of settlement talks between the region and Georgia.32
Since the Georgian government did not certify that Russian “peacekeepers”
contributed to peace settlements in Abkhazia and South Ossetia, the Georgian
legislature in mid-July 2006 approved a resolution calling on the government to
replace the Russian “peacekeepers” with an international police contingent. No
deadline was specified. Following the passage of the resolution, Saakashvili directed
the government to explore diplomatic negotiations with Russia to implement it.
Russia’s Foreign Minister Sergey Lavrov denounced the resolution as war-mongering
and warned Georgia that Russian “peacekeepers” would protect “our citizens” in
South Ossetia and Abkhazia from attack by Georgia (Russia has granted citizenship
to the majority of Abkhazians and South Ossetians).
Russia’s Bases in Georgia. In 1999, Russia and Georgia agreed to
provisions of the adapted Conventional Armed Forces in Europe (CFE) Treaty
calling for Russia to reduce weaponry at its four bases in Georgia, to close two of the
bases (at Gudauta and Vaziani) by July 2001, and to complete negotiations during
2000 on the status of the other two bases (at Batumi and Akhalkalaki). The Treaty
30 For background, see CRS Report RS21319, Georgia’s Pankisi Gorge, by Jim Nichol.
31 OSIC, January 31, 2006, Doc. No. CEP-27075.
32 “Georgian Integrity More Possible Than Real: Russia,” Agence France Presse, June 1,
2006.

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remains unratified by NATO signatories until Russia satisfies these and other
conditions. On July 1, 2001, Georgia reported that Russia had turned over the
Vaziani base. Russia declared in June 2002 that it had closed its Gudauta base, but
that 320 troops would remain to support Russian “peacekeepers” taking leave at the
base. Georgia objects to this stance. Georgia’s Deputy Defense Minister stated in
September 2006 that there were about 3,000 Russian troops at facilities in Georgia.33
The Georgian legislature in March 2005 passed a resolution calling for Russia
to agree by mid-May on closing the bases or face various restrictions on base
operations. This pressure, and perhaps the U.S. presidential visit (see above), spurred
Russia to agree with Georgia in late May on setting the end of 2008 as the deadline
for closing the bases. Putin explained that his military General Staff had assured him
that the bases were Cold War-era relics of no strategic importance to Russia.34 The
two countries agreed that the base at Akhalkalaki would be closed by late 2007, and
that Batumi would be closed during 2008. Some in Georgia have criticized a
provision permitting some Russian materiel, personnel, and infrastructure to remain
at Batumi as part of a prospective joint anti-terrorist center. The accord did not
mention Gudauta. In early 2006, Georgian Defense Minister Irakli Okuashvili
reportedly asserted that Gudauta remained a “fully functioning” Russian base.
Russian and Abkhaz officials rejected this claim. In May 2006, Abkhazia hosted a
visit by members of NATO’s Parliamentary Assembly, but the delegation reportedly
was blocked from visiting the Gudauta base.35
The Roles of Turkey, Iran, and Others
The United States has generally viewed Turkey as able to foster pro-Western
policies and discourage Iranian interference in the South Caucasus states, though
favoring Azerbaijan in the NK conflict. Critics of Turkey’s larger role in the region
caution that the United States and NATO might be drawn by their ties with Turkey
into regional imbroglios. Turkey seeks good relations with Azerbaijan and Georgia
and some contacts with Armenia, while trying to limit Russian and Iranian influence.
Azerbaijan likewise views Turkey as a major ally against such influence, and to
balance Armenia’s ties with Russia. Armenia is a member of the Black Sea
Economic Cooperation organization, along with Turkey, and the two states have
established consular relations. Obstacles to better Armenian-Turkish relations
include Turkey’s rejection of Armenians’ claims of genocide in 1915-1923 and its
support for Azerbaijan in the NK conflict. Georgia has an abiding interest in ties
with the approximately one million Georgians residing in Turkey and the
approximately 50,000 residing in Iran, and has signed friendship treaties with both
states. Turkey and Russia are Georgia’s primary trade partners. Turkey hopes to
benefit from the construction of new pipelines delivering oil and gas westward from
the Caspian Sea.
33 OSIC, September 20, 2006, Doc. No. CEP-950087.
34 OSIC, May 24, 2005, Doc. No. CEP-378001.
35 OSIC, March 31, 2006, Doc. No. CEP-950202; April 21, 2006, Doc. No. CEP-20003; May
2, 2006, Doc. No. CEP-950141; May 4, 2006, Doc. No. CEP-20004; May 12, 2006, Doc.
No. CEP-27137.

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Iran’s goals in the South Caucasus include discouraging Western powers such
as Turkey and the United States from gaining influence (Iran’s goal of containing
Russia conflicts with its cooperation with Russia on these interests), ending regional
instability that might threaten its own territorial integrity, and building economic
links. A major share of the world’s Azerbaijanis reside in Iran (estimates range from
6-12 million), as well as about 200,000 Armenians. Ethnic consciousness among
some “Southern Azerbaijanis” in Iran has grown. Azerbaijani elites fear
Iranian-supported Islamic extremism and object to Iranian support to Armenia. Iran
has growing trade ties with Armenia and Georgia, but its trade with Azerbaijan has
declined. To block the West and Azerbaijan from developing Caspian Sea energy,
Iran long has insisted on either common control by the littoral states or the division
of the seabed into five equal sectors. Some thawing in Azerbaijani-Iranian relations
has occurred in 2005-2006 with the long-delayed opening of an Azerbaijani consulate
in Tabriz and various leadership summits. U.S. policy aims to contain Iran’s threats
to U.S. interests.36
Among non-bordering states, the United States and European states are the most
influential in the South Caucasus in terms of aid, trade, exchanges, and other ties.
U.S. and European goals in the region are broadly compatible, involving integrating
it into the West and preventing an anti-Western orientation, opening it to trade and
transport, obtaining energy resources, and helping it become peaceful, stable, and
democratic. The South Caucasus region has developed some economic and political
ties with other Black Sea and Caspian Sea littoral states, besides those discussed
above. Azerbaijan shares with Central Asian states common linguistic and religious
ties and concerns about some common neighbors (Iran and Russia). The South
Caucasian and Central Asian states are concerned about ongoing terrorist threats and
drug trafficking from Afghanistan. Central Asia’s increasing ties with the South
Caucasus make it more dependent on stability in the region.
U.S. Aid Overview
The United States is the largest bilateral aid donor by far to Armenia and
Georgia, and the two states are among the five Eurasian states that each have
received more than $1 billion in U.S. aid FY1992-FY2005 (the others are Russia,
Ukraine, and Kazakhstan, which have received sizeable CTR funds). See Table 1.
U.S. assistance to the region has included FREEDOM Support Act (FSA) programs,
food aid (U.S. Department of Agriculture), Peace Corps, and security assistance.
Armenia and Georgia have regularly ranked among the top world states in terms of
per capita U.S. aid, indicating the high level of concern within the Administration
and Congress. Foreign Operations Appropriations for FY1998 (P.L. 105-118)
created a new South Caucasian funding category, which still exists, to emphasize
regional peace and development. Besides bilateral aid, the United States contributes
to multilateral organizations such as the International Monetary Fund and the World
Bank that aid the region. In perspective, cumulative EU aid to the region over 1992-
2004 has totaled about $1.4 billion. In 2004 the EU invited the South Caucasus
36 See CRS Report RL32048, Iran: U.S. Concerns and Policy Responses, by Kenneth
Katzman.

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states to participate in a “Wider Europe” program of enhanced aid, trade, and
political ties.
In January 2004, Congress authorized a major new global assistance program,
the Millennium Challenge Account (Section D of P.L. 108-199). A newly
established Millennium Challenge Corporation (MCC) approved a five-year, $295.3
million agreement (termed a “compact”) with Georgia in August 2005 to improve a
road from Javakheti to Samtskhe, repair a gas pipeline, create a small business
investment fund, set up agricultural grants, and improve municipal and rural water
supply, sanitation, irrigation, roads, and solid waste treatment. Reportedly, the MCC
plans to spend $51.7 million in Georgia in 2006. In December 2005, the MCC
approved a five-year, $235.65 million compact with Armenia — to bolster rural
agriculture through road-building and irrigation and marketing projects — but raised
concerns about the November 2005 constitutional referendum. Following assurances
by Foreign Minister Oskanyan that Armenia would address democratization
shortfalls, the MCC indicated that the compact would be signed.37
Foreign Operations Appropriations for FY2006 was signed into law November
14, 2005 (H.R. 3057; P.L. 109-102). It calls for $75 million in FREEDOM Support
Act aid to Armenia ($20 million above the request), $35 million for Azerbaijan, and
$67 million for Georgia. It calls for $12 million in Foreign Military Financing for
Georgia and $5 million each for Armenia and Azerbaijan. It also supports $750,000
in International Military Education and Training aid each for Armenia and
Azerbaijan. The conferees (H.Rept. 109-265) agree that at least $3 million be
provided to address ongoing humanitarian needs in Nagorno-Karabakh.
U.S. Security Assistance
The United States has provided some security assistance to the region, and
bolstered such aid after September 11, 2001, though overall aid amounts to the
countries did not increase post-September 11 as they did in regard to the Central
Asian “front line” states in the war on terrorists in Afghanistan (see Table 1). In
testimony in March 2005, Gen. James Jones, head of U.S. European Command
(EUCOM), stated that “the Caucasus is increasingly important to our interests. Its
air corridor has become a crucial lifeline between coalition forces in Afghanistan and
our bases in Europe. Caspian oil, carried through the Caucasus, may constitute as
much as 25 percent of the world’s growth in oil production over the next five years
37 Millennium Challenge Corporation. Ambassador Danilovich’s letter to Armenian
President Robert Kocharyan
, December 16, 2005; Press Release: Millennium Challenge
Corporation Board Approves Armenia Compact but Expresses Concern Regarding
Irregularities in the November Referendum
, December 19, 2005; and Ambassador
Danilovich’s letter to Armenian President Robert Kocharyan
, January 18, 2006,
[http://www.mca.gov]. See also Armenian Foreign Ministry. Oskanyan Thanks MCC for
Millennium Compact
, January 12, 2006, [http://www.armeniaforeignministry.com].

CRS-19
... This region is a geographical pivot point in the spread of democracy and free
market economies to the states of Central and Southwest Asia.”38
EUCOM initiatives in the region include the Sustainment and Stability
Operations Program (SSOP) in Georgia, the South Caucasus Clearinghouse, the
Caspian Guard program, and the Caspian Hydrocarbons initiative.39 The 16-month
SSOP was launched in early 2005 as a follow-on to the Georgia Train and Equip
Program (GTEP).40 Funded at $60.5 million, SSOP provided training for four
battalions (2,000 troops), in part to support U.S.-led coalition operations. In July
2006, the United States announced that the SSOP would be extended another year
and funded at $30 million.41 The Clearinghouse aims to facilitate cooperation by
sharing data on security assistance among both donor and recipient countries. Gen.
Jones testified that the Caspian Guard program, launched in 2003, enhances and
coordinates security assistance provided by U.S. agencies to establish an “integrated
airspace, maritime and border control regime” for Azerbaijan and Kazakhstan. The
Hydrocarbons initiative provides maritime security and crisis response and
consequence management aid to help the regional states protect their pipelines and
other energy transport to the West. The United States acknowledged in late 2005 that
it had supplied two maritime surveillance radars to help detect and direct interdiction
of illicit weapons of mass destruction and other trafficking in the Caspian Sea.42
Gen. Charles Wald, deputy head of EUCOM, in November 2004 suggested that the
Administration was exploring the establishment of “cooperative security locations”
(CSLs) — sites without a full-time U.S. military presence that are used for refueling
and short-duration deployments — in Azerbaijan or Georgia.43
All three regional states joined NATO’s Partnership for Peace (PFP) in 1994
and in 2004-2005 agreed with NATO to participate in Individual Partnership Action
Plans (IPAPs) for military and civil-military reforms. On September 21, 2006,
NATO approved Georgia’s application for “Intensified Dialogue” with the alliance,
ostensibly because of Georgia’s military reform progress, although NATO also
emphasized that much more reform work needed to be done before Georgia might
38 U.S. Senate. Committee on Armed Services. Testimony by Gen. James Jones, March 1,
2005. See also CRS Report RL30679, Armenia, Azerbaijan, and Georgia: Security Issues
and Implications for U.S. Interests
, by Jim Nichol.
39 Senate Armed Services Committee. Statement of General James L. Jones, USMC,
Commander, United States European Command, March 1, 2005.
40 U.S. officials explained that the $64 million GTEP carried out in 2002-2004 would help
Georgian military, security, and border forces to combat Chechen, Arab, Afghani, Al Qaeda,
and other terrorists who allegedly had infiltrated Georgia. Some of these terrorists allegedly
had fled U.S.-led coalition operations in Afghanistan, so the GTEP was initially linked to
OEF. Other reported U.S. aims include bolstering Georgia’s ability to guard its energy
pipelines and ensuring internal stability. The program formally ended in April 2004.
41 U.S. Allocates $30 mln for SSOP Army Training Program, Civil Georgia, July 17, 2006.
42 “Two Radar Stations Become Operational in Azerbaijan under the U.S.-Funded Caspian
Guard Initiative,” International Export Control Observer, Center for Non-proliferation
Studies, Monterey Institute of International Studies, November 2005.
43 Vince Crawley, Army Times, November 22, 2004.

CRS-20
be considered for NATO membership. Troops from Armenia, Azerbaijan, and
Georgia serve as peacekeepers in NATO-led operations in Kosovo and the latter two
states support NATO-led operations in Afghanistan. There reportedly have been
some fistfights and even a murder involving Armenians and Azerbaijanis during PFP
activities. NATO cancelled a PFP exercise in Azerbaijan in September 2004, stating
that Azerbaijan had violated NATO principles of inclusiveness by refusing to host
Armenian forces. The June 2004 NATO summit pledged enhanced attention to the
South Caucasian and Central Asian PFP members. A Special Representative of the
NATO Secretary General was appointed to encourage democratic civil-military
relations, transparency in defense planning and budgeting, and enhanced force inter-
operability with NATO.
Until waived, Section 907 had prohibited much U.S. security aid to Azerbaijan,
including Foreign Military Financing (FMF), and International Military Education
& Training (IMET). Under U.S. policy, similar aid had not been provided to
Azerbaijan’s fellow combatant Armenia. From 1993-2002, both had been on the
Munitions List of countries ineligible for U.S. arms transfers. Since the waiver
provision to Section 907 was enacted, some Members have maintained that the
Armenian-Azerbaijani military balance is preserved by providing equal amounts
(parity) in IMET and FMF assistance to each country. In FY2005, the conference
report (H.Rept. 108-792) on H.R. 4818 (P.L. 108-447; Consolidated Appropriations)
directed that FMF funding for Armenia be boosted to match that for Azerbaijan (from
$2 million as requested to $8 million). The Members appeared to reject the
Administration’s assurances that the disparate aid would not affect the Armenia-
Azerbaijan military balance or undermine peace talks. Apparently in anticipation of
similar congressional calls, the Administration’s FY2006 foreign aid budget
requested equal amounts of FMF as well as IMET for each country. However, the
FY2007 budget request called for more such aid for Azerbaijan than for Armenia.
The House Foreign Operations Subcommittee and the Appropriations Committee in
late May 2006 approved equal amounts of $3.5 million in FMF and $790,000 in
IMET for Armenia and Azerbaijan.
U.S. Trade and Investment
The Bush Administration and others maintain that U.S. support for privatization
and the creation of free markets directly serve U.S. national interests by opening
markets for U.S. goods and services and sources of energy and minerals. Among
U.S. economic links with the region, bilateral trade agreements providing for normal
trade relations for products have been signed and entered into force with all three
states. Bilateral investment treaties providing national treatment guarantees have
entered into force. U.S. investment is highest in Azerbaijan’s energy sector, but
rampant corruption in the three regional states otherwise has discouraged investors.
With U.S. support, in June 2000 Georgia became the second Eurasian state (after
Kyrgyzstan) to be admitted to the WTO. The application of Title IV of the Trade Act
of 1974, including the Jackson-Vanik amendment, was terminated with respect to
Georgia in December 2000, so its products receive permanent nondiscriminatory
(normal trade relations or NTR) treatment. Armenia was admitted into WTO in

CRS-21
December 2002. The application of Title IV was terminated with respect to Armenia
in January 2005.
Energy Resources and U.S. Policy
The U.S. Energy Department reports estimates of 7-13 billion barrels of proven
oil reserves, and estimates of 30 trillion cubic feet of proven natural gas reserves in
Azerbaijan.44 U.S. policy goals regarding energy resources in Central Asia and the
South Caucasus have included supporting the sovereignty of the states, their ties to
the West, and U.S. private investment; breaking Russia’s monopoly over oil and gas
transport routes by encouraging the building of pipelines that do not traverse Russia;
promoting Western energy security through diversified suppliers; assisting ally
Turkey; and opposing the building of pipelines that transit Iran. These goals are
reflected in the Administration’s 2001 energy policy report.45 It recommended that
the President direct U.S. agencies to support building the Baku-Tbilisi-Ceyhan (BTC)
oil pipeline, expedite use of the pipeline by oil firms operating in Kazakhstan, and
support constructing a gas pipeline to export Azerbaijani gas. Since September 11,
2001, the Administration has emphasized U.S. vulnerability to possible energy
supply disruptions and its commitment to Caspian energy development. Critics
argue that oil from the Caspian region will amount to less than 4% of world supplies.
Senator John Kerry in late July 2005 criticized H.R. 6, the Energy Policy Act (P.L.
109-58), by arguing that it did not address the U.S. over-dependency on foreign oil,
which was necessitating U.S. training of security forces “to guard oil facilities around
the Caspian Sea.”46
The United States launched a campaign in 1997 stressing the strategic
importance of the BTC route as part of an “Eurasian Transport Corridor.” In
November 1999, Azerbaijan, Georgia, Turkey, and Kazakhstan signed the “Istanbul
Protocol” on construction of the 1,040-mile BTC oil pipeline. In August 2002, the
BTC Company (which includes U.S. firms Conoco-Phillips, Amerada Hess, and
Chevron) was formed to construct, own, and operate the oil pipeline. Azerbaijani
media reported at the end of May 2006 that the first tanker began on-loading oil at
Ceyhan. A gas pipeline to Turkey (termed the South Caucasus Pipeline or SCP) is
being built by the Shah Deniz and SCP Partners (which includes Iran, with
construction work by U.S. firm McDermott). Georgia will receive some of this gas,
reducing its reliance on Russian gas. Some in Armenia object to lack of access to
these pipelines. In May 2006, Armenia agreed to relinquish various energy assets to
Russian firms (including a gas pipeline to Iran) as partial payment for a price increase
in Russian gas. Some critics have alleged that Russia now has virtual control over
Armenia’s energy supplies.
44 U.S. Department of Energy. Energy Information Administration. Azerbaijan Country
Analysis Brief
, June 2005.
45 The White House. The National Energy Policy Development Group. Reliable,
Affordable, and Environmentally Sound Energy for America’s Future
, May 16, 2001.
46 Congressional Record, July 28, 2005, p. S9263.

CRS-22
109th Congress Legislation
H.Con.Res. 195 (Schiff)
Commemorating the Armenian Genocide of 1915-1923. Introduced June 29,
2005. The Committee on International Relations on September 15, 2005, ordered it
to be reported.
H.R. 3361 (Knollenberg)/S. 2461 (Santorum)
To prohibit U.S. assistance to develop or promote any rail connections or
railway-related connections that traverse or connect Baku, Azerbaijan; Tbilisi,
Georgia; and Kars, Turkey, and that specifically exclude cities in Armenia. H.R.
3361 was introduced on July 20, 2005. S. 2461 was introduced on March 28, 2006.
H.R. 3103 (Schiff)
To direct the Secretary of State to submit a report outlining the steps taken and
plans made by the United States to end Turkey’s blockade of Armenia. Introduced
June 29, 2005.
H.R. 5122 (Hunter)
National Defense Reauthorization Act for FY2007. Sec. 1022 restates and
revises Defense Department authority to provide support for counter-drug activities
of certain foreign governments. Adds Azerbaijan as eligible for assistance, including
possible nonlethal equipment, boats, aircraft, and vehicles. Amount obligated and
expended is not to exceed $40 million in FY2006 or $60 million in FY2007 or
FY2008. Sec. 1025 calls for the Defense Secretary to submit a report by the end of
2006 updating the interagency counter-narcotics plan for Afghanistan and South and
Central Asia (and including Azerbaijan). Introduced on April 6, 2006. Passed House
on May 11, 2006. The Senate struck all after the Enacting Clause and substituted the
language of S. 2766. Adds Armenia and Azerbaijan as eligible for counter-drug
support. Amount is not to exceed $40 million in FY2006 or $80 million in FY2007
or FY2008. Passed Senate on June 22, 2006; conferees appointed.
H.R. 5522 (Kolbe)
Foreign Operations, Export Financing, and Related Programs Appropriations
Bill, 2007. Introduced on June 5, 2006. Passed the House on June 9, 2006.
Reported in Senate with an amendment in the nature of a substitute on July 10, 2006.
H.Rept. 109-486 recommends $62 million in FREEDOM Support Act aid for
Armenia, $29 million for Azerbaijan, and $55 million for Georgia. Also states that
committee members are encouraged by democratization efforts in Azerbaijan and
appreciate the country’s support for the global war on terror. Recommends equal
amounts of $790,000 for IMET and $3.5 million for FMF for Armenia and
Azerbaijan. S.Rept. 109-277 recommends $34.201 million in FREEDOM Support
Act aid for Armenia and $50.743 million for Georgia. Recommends equal amounts
of $790,000 for IMET and $3.5 million for FMF for Armenia and Azerbaijan.
Among other programs, recommends for Armenia $5.839 million in Child Survival
and Maternal Health Program Funds (CSHPF), $9.96 million in Democracy Fund
(DF) aid, $2.04 million for Non-proliferation, Anti-terrorism, De-mining, and
Related Programs (NADR), and $1.814 million for the Peace Corps (total is $58.144
million). Recommends $5 million from FREEDOM Support Act regional account

CRS-23
for Nagorno Karabakh. Recommends for Azerbaijan $1.703 million in CSHPF and
$7.134 million in DF. Recommends for Georgia $4.803 million in CSHPF, $559,000
in Development Assistance, $8.895 million in DF, $4.664 million for NADR, $1.235
million for IMET, $10 million for FMF, and $1.944 million for the Peace Corps
(total is $82.843 million). Encourages Georgia to continue to implement economic
and legal reforms, and expresses appreciation for its contributions to the global war
on terrorism.
H.Res. 316 (Radanovich)/S.Res. 320 (Ensign)
Calling the President to ensure that the foreign policy of the United States take
into account issues of human rights, ethnic cleansing, and genocide documented in
the United States record relating to the Armenian Genocide. H.Res. 316 was
introduced on June 14, 2005. The Committee on International Relations on
September 15, 2005, ordered it to be reported. S.Res. 320 was introduced on
November 18, 2005.
H.Res. 326 (Gallegly)/S.Res. 226 (Biden)/S.Res. 260 (Biden)
Calling for free and fair legislative elections in Azerbaijan. H.Res. 326 was
introduced June 16, 2005, and passed on July 20, 2005. S.Res. 226 was introduced
on July 29, 2005. A similar bill, S.Res. 260, was introduced September 29, 2005, and
was approved in the Senate on October 20, 2005.
S. 2749 (Brownback)
To update the Silk Road Strategy Act of 1999 to modify targeting of assistance
in recognition of political and economic changes in the Central Asian and South
Caucasian countries since 1999. Introduced May 4, 2006. Designates Afghanistan
as a Silk Road country. States that supporting democracy, mineral and other property
rights, the rule of law, and U.S. trade with energy-rich Kazakhstan, Azerbaijan, and
Turkmenistan, and with energy-transporting states, will strengthen U.S. energy
security by enhancing access to diversified energy resources. Urges close U.S.
relations with the Silk Road states to facilitate maintaining military bases near
Afghanistan and Iraq. Recognizing that China and Russia have acted at odds with
U.S. security interests, such as by curbing the U.S. military presence in Uzbekistan,
calls for U.S. observer status in the Shanghai Cooperation Organization (SCO) in
order to promote stability and security. Calls for providing greater access to
Export-Import Bank loans, promoting the development of trans-Caspian oil and gas
pipelines, and supporting the building of a rail link in Kazakhstan that will facilitate
the shipment of oil and other goods to Europe. Calls for the Export-Import Bank and
OPIC to help set up a Caspian Bank of Reconstruction and Development. Urges
consideration for setting up a Silk Road Advisory Board (consisting of experts in
agriculture, democratization, banking, finance, legal reform, infrastructure planning,
and oil and gas extraction and transport), a private sector energy consultancy (to
coordinate business projects and promote production, transportation, and refining
investments), and an annual meeting of Silk Road aid sponsors and beneficiaries to
be held in conjunction with the Energy Security Forum of the U.N. Economic
Council of Europe.
S. 4014 (Lugar)
The NATO Freedom Consolidation Act of 2006. Introduced September 29,
2006. Calls for the timely admission of Georgia and others to NATO to promote

CRS-24
security and stability in Europe. Designates Georgia and others as eligible under the
NATO Participation Act of 1994 to receive assistance in the transition to NATO
membership, including support for joint planning, training, and military exercises
with NATO forces, for greater interoperability of military equipment, air defense
systems, and command, control, and communications systems; and for conformity
of military doctrine. Authorizes $10 million on a grant basis for such aid to Georgia.
S.Res. 69 (Lugar)
Expressing the sense of the Senate about the actions of Russia regarding
Georgia and Moldova. Resolves that the United States should urge Russia to live up
to commitments to close or otherwise resolve the status of its military bases in
Georgia and Moldova; maintain strong diplomatic pressure to permit an OSCE
Border Monitoring Operation (BMO) in Georgia to continue; and seek (if BMO
ceases to exist) an international presence to monitor borders between Georgia and
Russia. Introduced March 3, 2005, and agreed to on March 10.
S.Res. 139 (Reid)
Expressing support for the withdrawal of Russian troops from Georgia.
Introduced May 12, 2005. Passed on May 12, 2005.
S.Res. 344 (McCain)
Expressing Support for the Government of Georgia’s South Ossetian Peace
Plan. Calls for all Members of the OSCE to respect Georgia’s territorial integrity
and urges the U.S. government to play a more significant role in facilitating a peace
settlement. Introduced and approved on December 21, 2005.
Table 1. U.S. FY1992-FY2005 and FY2005 Budgeted Foreign
Assistance, FY2006 Estimated Aid, and the FY2007 Request
(millions of dollars)
South Caucasus
FY1992-FY2005
FY2005
FY2006
FY2007
Country
Budgeted Aida
Budgeted Aida
Estimateb
Requestb
Armenia
1,581.09
91.01
81.7
58.14
Azerbaijan
588.72
79.15
47.94
40.12
Georgia
1,611.17
126.87
86.01
75.84
Regional
38.73
2.03


Total
3,819.71
299.06
215.65
174.1
Percent
13.6
15
36
33
Sources: State Department, Office of the Coordinator for U.S. Assistance to Europe and Eurasia;
State Department, U.S. Government Assistance to and Cooperative Activities with Eurasia: FY2005
Annual Report
; State Department, Congressional Budget Justification for Foreign Operations,
FY2007
.
a. FREEDOM Support Act and Agency budgets.
b. FREEDOM Support Act and other Function 150 funds. Does not include Defense or Energy
Department funding, funding for exchanges, or Millennium Challenge Corporation programs in
Armenia and Georgia.

CRS-25
Figure 1. Map of the Region
crsphpgw