Armenia, Azerbaijan, and Georgia:
Political Developments and Implications
for U.S. Interests
Jim Nichol
Specialist in Russian and Eurasian Affairs
April 9, 2009
Congressional Research Service
7-5700
www.crs.gov
RL33453
CRS Report for Congress
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repared for Members and Committees of Congress
Armenia, Azerbaijan, and Georgia: Political Developments and Implications for U.S.
Summary
The United States recognized the independence of Armenia, Azerbaijan, and Georgia when the
former Soviet Union broke up at the end of 1991. 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 former Bush
Administration supported U.S. private investment in Azerbaijan’s energy sector as a means of
increasing the diversity of world energy suppliers. The United States has been active in
diplomatic efforts to resolve regional conflicts in the region. 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 troops participated in stabilization efforts in Afghanistan and
Iraq, and Armenian and Georgian personnel served in Iraq. The South Caucasian troops serving in
Iraq had departed by the end of 2008.
On August 7, 2008, Russia and Georgia went to war involving Georgia’s breakaway regions of
Abkhazia and South Ossetia. Russian troops quickly swept into Georgia, destroyed infrastructure,
and tightened their de facto control over the breakaway regions before a ceasefire was agreed to
on August 15. The conflict is likely to have long-term effects on security dynamics in the region
and beyond. Russia recognized the independence of Abkhazia and South Ossetia, but the United
States and virtually all other nations refused to follow suit. Russia established bases in Abkhazia
and South Ossetia that buttress its long-time military presence in Armenia. Georgia’s military
capabilities were at least temporarily degraded by the conflict, and Georgia will need substantial
military assistance to rebuild its forces. The conflict temporarily disrupted railway transport of
Azerbaijani oil to Black Sea ports and some oil and gas pipeline shipments, although no major
pipelines were damaged. Although there were some concerns that the South Caucasus had
become less stable as a source and transit area for oil and gas, Kazakhstan later began to barge oil
across the Caspian Sea for transit westward, and the European Union still planned eventually to
build the so-called Nabucco gas pipeline from Azerbaijan to Austria.
Key issues in the 111th Congress regarding the South Caucasus are likely to focus on supporting
Georgia’s integration into Western institutions, including NATO; Azerbaijan’s energy
development; and Armenia’s independence and economic development. At the same time,
concerns might include the status of human rights and democratization in the countries; the on-
going Armenia-Azerbaijan conflict over the breakaway Nagorno Karabakh region; and threats
posed to Georgia and the region by Russia’s military incursion in August 2008 and its diplomatic
recognition of South Ossetia and Abkhazia. Congress will likely scrutinize Armenia’s and
Georgia’s reform progress as recipients of Millennium Challenge Account grants. Some Members
of Congress believe that the United States should provide greater attention to the region’s
increasing role as an east-west trade and security corridor linking the Black Sea and Caspian Sea
regions, and to Armenia’s inclusion in such links. 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. Others urge caution in adopting policies that will heavily involve the
United States in a region beset by ethnic and civil conflicts.
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Armenia, Azerbaijan, and Georgia: Political Developments and Implications for U.S.
Contents
Most Recent Developments......................................................................................................... 1
Background ................................................................................................................................ 2
Overview of U.S. Policy Concerns .............................................................................................. 2
Post-September 11 .......................................................................................................... 3
Operations in Iraq ........................................................................................................... 4
After the August 2008 Russia-Georgia Conflict ............................................................... 4
The South Caucasus’s External Security Context ......................................................................... 5
Russian Involvement in the Region ....................................................................................... 5
Military-Strategic Interests .............................................................................................. 6
Caspian Energy Resources .............................................................................................. 8
The Roles of Turkey, Iran, and Others ................................................................................... 9
Obstacles to Peace and Independence........................................................................................ 10
Regional Tensions and Conflicts.......................................................................................... 10
Nagorno Karabakh Conflict .......................................................................................... 11
Civil and Ethnic Conflict in Georgia.............................................................................. 13
Economic Conditions, Blockades, and Stoppages ................................................................ 19
Democratization Problems and Progress.............................................................................. 20
Armenia........................................................................................................................ 21
Azerbaijan .................................................................................................................... 23
Georgia ......................................................................................................................... 25
U.S. Aid Overview.................................................................................................................... 27
U.S. Assistance After the Russia-Georgia Conflict............................................................... 28
U.S. Security Assistance............................................................................................................ 29
U.S. Trade and Investment ........................................................................................................ 32
Energy Resources and U.S. Policy....................................................................................... 32
Building the Baku-Tbilisi-Ceyhan and South Caucasus Pipelines .................................. 33
Concerns of the European Union................................................................................... 34
Regional Energy Cooperation with Iran......................................................................... 35
Figures
Figure 1. Map of the Region...................................................................................................... 36
Tables
Table 1. U.S. Foreign Aid to the Region, FY1992-FY2008, and FY2009 Request ..................... 35
Contacts
Author Contact Information ...................................................................................................... 36
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Armenia, Azerbaijan, and Georgia: Political Developments and Implications for U.S.
Most Recent Developments
At a joint press conference with Turkish President Abdullah Gul in Ankara on April 6, 2009,
President Obama stated that his views on the Armenian genocide “are on the record and I have
not changed views. What I have been very encouraged by is ... a series of negotiations, a process,
in place between Armenia and Turkey to resolve a whole host of longstanding issues, including
this one.... I don't want to, as the President of the United States, preempt any possible
arrangements or announcements that might be made in the near future.” In a speech to the Turkish
legislature that same day, President Obama stated that “an open border would return the Turkish
and Armenian people to a peaceful and prosperous coexistence that would serve both of your
nations. So I want you to know that the United States strongly supports the full normalization of
relations between Turkey and Armenia.... It speaks to Turkey's leadership that you are poised to
be the only country in the region to have normal and peaceful relations with all the South
Caucasus nations. And to advance that peace, you can play a constructive role in helping to
resolve the Nagorno-Karabakh conflict, which has continued for far too long.”1
At their “get acquainted” meeting in London on April 1, 2009, Presidents Obama and Medvedev
issued a joint statement that acknowledged that the two sides “disagree about the causes and
sequence of the military actions” of the August 2008 Russia-Georgia conflict. However, they
reaffirmed the importance of the ceasefire accords and the pursuit of “effective cooperation in the
Geneva discussions [on security, repatriation, and status] to bring stability to the region.” At a
news conference with French President Nicolas Sarkozy on April 3, President Obama stated that
“I was a critic of the Russian invasion of Georgia. I continue to believe that despite the
extraordinary efforts of President Sarkozy to broker a ceasefire that we have not seen a
stabilization of that situation. And I think that we have to send a very clear message to Russia that
we want to work with them, but that we can’t go back to the old ways of doing business.”2
Azerbaijan’s State Oil Company (SOCAR) and Russia’s Gazprom gas firm signed a
memorandum of understanding (MOU) on March 27, 2009, pledging SOCAR to begin sending
an unspecified amount of gas to Russia in January 2010. The MOU also called for the two
companies to begin inspecting a 140-mile gas pipeline from Baku to Russia’s Dagestan Republic
that was used until 2007 to supply Azerbaijan with up to 282.5 billion cubic feet of gas per year.
SOCAR President Rovnag Abdullayev has stressed that the proposed gas shipments to Russia
will not interfere with any planned future gas sales to Europe. Some observers suggested that the
MOU was at least in part a sign by Azerbaijan that a possible Armenia-Turkey rapprochement
might alter Azerbaijan’s plans to transport gas across Turkey to European markets.3
1 The White House. Office of the Press Secretary. Joint Press Conference with President Barack Obama and President
Abdullah Gul of Turkey, April 6, 2009; Remarks By President Obama to the Turkish Parliament, April 6, 2009.
2 The White House. Office of the Press Secretary. Joint Statement by President Dmitriy Medvedev of the Russian
Federation and President Barack Obama of the United States of America, April 1, 2009; President Obama Holds A
News Conference With French President Sarkozy. April 3, 2009.
3 Open Source Center. Central Eurasia: Daily Report (hereafter CEDR), April 6, 2009, Doc. No. CEP-950325.
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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 1991.4
The Caucasus Region: Basic Facts
Overview of U.S. Policy
Area: The region is slightly larger than Syria: Armenia is
11,620 sq. mi.; Azerbaijan is 33,774 sq. mi.; Georgia is
Concerns
26,872 sq. mi.
Population: 15.83 million, slightly more than Kazakhstan;
Armenia: 2.97 m.; Azerbaijan: 8.24 m.; Georgia: 4.62 m.
By the end of 1991, the United States had
(The World Factbook, July 2009 est.). Over a million
recognized the independence of all the former
people from the region are migrant workers in Russia
Soviet republics. The United States pursued
and elsewhere.
close ties with Armenia, because of its
GDP: $114.17 billion: Armenia: $18.92 b.; Azerbaijan:
profession of democratic principles, and
$73.65 b.; Georgia: $21.6 b. (World Factbook, 2008 est.,
concerns by Armenian-Americans and others
purchasing power parity)
over its fate. The United States pursued close
ties with Georgia after Eduard Shevardnadze (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 comes from
legitimacy. And legitimacy requires democracy on the political side and prosperity on the
economic side.” Assistant Secretary of State Daniel Fried testified in June 2008 that “we want to
help the nations of this region travel along the same path toward freedom, democracy, and
market-based economies that so many of their neighbors to the West have traveled.... We do not
believe that any outside power—neither Russia nor any other—should have a sphere of influence
over these countries. No outside power should be able to threaten, pressure, or block the
sovereign choice of these nations to join with the institutions of Europe and the transatlantic
family.”5
4 For background, see CRS Report RS20812, Armenia Update, by Carol Migdalovitz; CRS Report 97-522, Azerbaijan:
Recent Developments and U.S. Interests, by Jim Nichol.
5 “U.S. Says Aliyev, Kocharyan Must Show ‘Political Will,’” RFE/RL, June 23, 2006. U.S. House of Representatives.
Committee on Foreign Affairs. Hearing: The Caucasus, Frozen Conflicts and Closed Borders. Testimony of Daniel
(continued...)
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In addition, U.S. policy toward the South Caucasus states has included promoting the resolution
of conflicts between Armenia and Azerbaijan over Azerbaijan’s breakaway Nagorno Karabakh
(NK) region and between Georgia and its breakaway regions of Abkhazia and South Ossetia
(resolving these latter conflicts became much more difficult following the August 2008 conflict;
see below). Since 1993, successive U.S. Special Negotiators for Eurasian Conflicts have helped
in various ways to try to settle these conflicts. (In early 2006, the State Department eliminated
this post and divided its responsibilities among the Deputy Assistant Secretary of State and the
Office of Caucasus Affairs and Regional Conflicts.)6 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 U.S.
strategic interests. They urge great caution in adopting policies that will heavily involve the
United States in a region beset by ethnic and civil conflicts, and some argue that, since the
European Union has recognized the region as part of its “neighborhood,” it rightfully should play
a major role. Some observers argue that the U.S. interest in democratization should not be
subordinated to interests in energy and anti-terrorism.7
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 could
somewhat lessen Western energy dependency on Russia and the Middle East (see below,
“Caspian Energy Resources”).
Post-September 11
In the wake of the September 11, 2001, terrorist attacks on the United States, the former Bush
Administration obtained quick pledges from the three South Caucasian states to support
(...continued)
Fried, June 18, 2008.
6 According to a report by the State Department’s Office of the Inspector General, the added duties of the Office of
Caucasus Affairs and Regional Conflicts and the relevant deputy assistant secretary were not accompanied by increased
staff support, and “some miscommunications and divergence of expectations between [the State Department] and the
[U.S. Embassy in Azerbaijan] have occurred as a consequence.” U.S. Department of State. Report of Inspection:
Embassy Baku, Azerbaijan, Report Number ISP-I-07-40A, September 2007.
7 U.S. House of Representatives. Committee on Foreign Relations. Subcommittee on International Organizations,
Human Rights, and Oversight. Ideals vs. Reality in Human Rights and U.S. Foreign Policy: The Cases of Azerbaijan,
Cuba, and Egypt, July 12, 2007; U.S. Commission on Security and Cooperation in Europe. Energy and Democracy,
July 23, 2007.
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Operation Enduring Freedom (OEF) in Afghanistan, including overflight rights and Azerbaijan’s
and Georgia’s offers of airbase and other support. 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
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. The waiver authority has been exercised annually.
The outgoing Bush Administration exercised the waiver on January 16, 2009.
Since late 2002, Azerbaijan has contributed troops for peacekeeping in Afghanistan. In October
2008, Azerbaijan’s legislature approved doubling the number of troops deployed to Afghanistan
to about 100. Georgia contributed about 50 troops during Afghan elections in late 2004-early
2005. The Georgian Foreign Ministry announced in March 2009 that details were being worked
out for 160 troops to serve with French forces in Afghanistan.
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 multinational stabilization force for Iraq. In August 2003, both Azerbaijan and
Georgia dispatched forces to Iraq. Azerbaijan’s 150 troops pulled out in late 2008. Georgia
augmented its troops over time until 2,000 were serving in 2007-2008, the third-largest number of
troops in Iraq, after the United States and the United Kingdom. Virtually all of these troops were
pulled out in August 2008 in connection with the Russia-Georgia conflict (see below). Armenia
began sending personnel to Iraq in January 2005. Armenia’s 46 were pulled out in late 2008.
After the August 2008 Russia-Georgia Conflict
The former Bush Administration’s strong support for Georgia was reflected in the U.S.-Georgia
Charter on Strategic Partnership, signed in January 2009, which states that “our two countries
share a vital interest in a strong, independent, sovereign, unified, and democratic Georgia.” The
accord is similar to a U.S.-Ukraine Charter signed in December 2008 and a U.S.-Baltic Charter
signed in 1998 with Estonia, Latvia, and Lithuania. In the security realm, “the United States and
Georgia intend to expand the scope of their ongoing defense and security cooperation programs to
defeat [threats to global peace and stability] and to promote peace and stability.” Such
cooperation will “increase Georgian capabilities and ... strengthen Georgia’s candidacy for NATO
membership.” In the economic realm, the two countries “intend to pursue an Enhanced Bilateral
Investment Treaty, to expand Georgian access to the General System of Preferences, and to
explore the possibility of a Free-Trade Agreement.” Energy security goals include “increasing
Georgia’s energy production, enhanc[ing] energy efficiency, and increas[ing] the physical security
of energy transit through Georgia to European markets.” In the realm of democratization, the two
countries “pledge cooperation to bolster independent media, freedom of expression, and access to
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objective news and information,” and to further strengthen the rule of law. The United States
pledged to train judges, prosecutors, defense lawyers, and police officers.8
Before the signing, Georgian Foreign Minister Grigol Vashadze hailed the accord as a “stepping
stone which will bring Georgia to Euro-Atlantic structures, to membership within NATO, and to
[the] family of Western and civilized nations.”9 Deputy Assistant Secretary Bryza stressed that the
charter does not provide security guarantees to Georgia. According to some observers, the Charter
aimed to reaffirm the United States’ high strategic interest in Georgia’s fate, after it had appeared
that the United States (and the West) in recent months had acquiesced to increased Russian
dominance in the South Caucasus.10
While these goals have received support from most policymakers, some observers have called for
a re-evaluation of some aspects of U.S. support for Georgia. These critics have argued that many
U.S. policymakers have been captivated by Saakashvili’s charismatic personality and pledges to
democratize and have tended to overlook his bellicosity. They also have suggested that the United
States should not have unquestionably backed Georgia’s territorial integrity, but should rather
have encouraged reconciliation and the consideration of options short of the reintegration of the
regions into Georgia.11
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 increasing, or at least maintaining, influence in the South Caucasus region. Several
developments since 2003, however, appeared to complicate these influence efforts. These
included the “rose revolution” in Georgia that appeared to usher in democratic reforms, NATO’s
increased ties with the regional states, the completion of the Baku-Tbilisi-Ceyhan oil pipeline and
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. This declining Russian influence appears to have been reversed as a result of the August
2008 Russia-Georgia conflict.
The Putin-Medvedev leadership has appeared to place its highest priority on exercising influence
in the region in the military-strategic sphere and slightly less priority on influence in the
economic sphere (particularly energy) 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,
8 U.S. Department of State. U.S.-Georgia Charter on Strategic Partnership, January 9, 2009.
9 U.S. Department of State. Signing Ceremony for the United States and Georgia Charter on Strategic Partnership:
Secretary Condoleezza Rice Remarks With Georgian Foreign Affairs Minister Grigol Vashadze in the Treaty Room,
January 9, 2009.
10 David J. Smith, “US-Georgia Charter is Historic,” Potomac Institute for Policy Studies, January 12, 2009.
11 Alexander Cooley and Lincoln Mitchell, “No Way to Treat Our Friends: Recasting Recent U.S.-Georgian Relations,”
The Washington Quarterly, January 2009, pp. 27-41; “A Georgia-Russia War Discussion between Gordon Hahn and
Johnson’s Russia List,” Russia: Other Points of View, October 17, 2008, at http://www.russiaotherpointsofview.com.
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weapons, and other contraband from entering its borders. It has quashed separatism in its North
Caucasus areas while backing it in the South Caucasus.
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. Azerbaijan has been concerned about Russia’s ties with Armenia, has worked to
ensure that its energy resources are not controlled by Russia, and has limited Russia’s military
presence. Georgia has endeavored to eliminate the Russian military presence on its soil (including
the breakaway regions). Until late 2006, Azerbaijan appeared to value having some cooperative
relations with Russia, and criticized Georgia’s inability to maintain such ties with Russia.
However, Azerbaijani-Russian relations seemed to cool somewhat after late 2006 when Russia’s
demands for higher gas prices and moves against migrant workers contributed to greater
solidarity between Azerbaijan and Georgia. Azerbaijani-Russian relations appeared to warm
somewhat following the August 2008 Georgia-Russia conflict, perhaps as part of Baku’s
recognition of Russia’s enhanced influence in the region.
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 about an increased U.S. presence in the South Caucasus. Later that
month, Georgian-Russian tensions appeared to come to a head after Georgia arrested four Russian
servicemen on charges of espionage and plotting to overthrow the Saakashvili government.
Although Georgia soon handed over the servicemen, Russia retaliated in a form viewed as
troubling by many international observers, including cutting off financial flows to Georgia,
severing direct transport and postal links (Russia had banned imports of Georgian wine, mineral
water, and other agricultural products in spring 2006), ending the issuing of visas, raiding ethnic
Georgian-owned businesses, expelling hundreds of Georgians, and compiling lists of ethnic
Georgians in the public schools. Georgia-Russia relations worsened in early August 2007, when
Georgia alleged that some aircraft entered the country’s airspace from Russia, and that one
launched a missile which failed to detonate.
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. Russian border troops
guard Armenia’s borders with Turkey and Iran. The total number of Russian troops in Armenia
has been estimated at about 3,200. Armenia has argued that its Russian bases provide for regional
stability by protecting it from attack. About 88,000 Russian troops also are stationed nearby in the
North Caucasus, and some naval forces of the Caspian Sea Flotilla are located in Astrakhan in
Russia.12 In 1993, Azerbaijan was the first Eurasian state to get Russian troops to withdraw,
except at the Qabala (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.)
12 The Military Balance 2009. London: International Institute of Strategic Studies, February 5, 2009.
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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 April 2006,
Azerbaijan convicted 16 people on charges that they had received terrorist training from Al Qaeda
operatives in the Pankisi Gorge. Russia’s security service reported at the end of November 2006
that it had killed al Qaeda member Faris Yusef Amirat (aliases included Abu Haf and Amzhet). It
alleged that he had hidden in the Pankisi Gorge during the winter of 2005-2006, had operated in
Chechnya in the summer of 2006, and was returning to the Gorge when he was killed in Russia’s
Dagestan region.13
Russian “Peacekeepers” and Bases in Georgia
As part of ceasefire agreements between Georgia and its breakaway regions in the early 1990s,
Russia as the mediator sent military “peacekeepers” to Abkhazia and South Ossetia. Russia’s
“peacekeeping” role at that time received at least tacit approval from world governments and
international organizations. For many years, Georgian authorities voiced dissatisfaction with the
role of the “peacekeepers” in facilitating a peace settlement and called for them to either be
replaced or supplemented by a wider international peacekeeping force (see also below, “Civil and
Ethnic Conflict in Georgia”).
In the early 1990s, Georgia was pressured by Russia to agree to the long-term presence of four
Russian military bases. By the late 1990s, however, many in Georgia were calling for the bases to
close, and this received support from European countries during talks over amending the
Conventional Armed Forces in Europe (CFE) Treaty. In 1999, Russia and Georgia agreed to
provisions of the amended 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). NATO
signatories hesitated to ratify the amended Treaty until Russia satisfied 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.14 Georgia objected to this stance (see below).
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, 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.15 On June 27, 2007, Russia formally handed over the Akhalkalaki base to Georgia’s
control. On November 21, 2007, the Russian Foreign Ministry proclaimed that the Batumi base
13 CEDR, November 27, 2006, Doc. No. CEP-358003. For background, see CRS Report RS21319, Georgia’s Pankisi
Gorge: Russian Concerns and U.S. Interests, by Jim Nichol.
14 A Russian military analyst reported in early 2007 that there also were nine aircraft and ten helicopters at “airbase
Gudauta.” CEDR, May 3, 2007, Doc. No. CEP-305001.
15 CEDR, May 24, 2005, Doc. No. CEP-378001. In June 2007, two Russian mountain brigades consisting of about
4,500 troops began to deploy near Georgia’s borders, ostensibly to enhance security after the base closures. RIA
Novosti, June 26, 2007.
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had been closed and that Russia had “fully” accomplished its obligations to Georgia on the
withdrawal of military facilities. Georgia continued to protest that the Gudauta base had not been
handed over to Georgia’s control.
Not even one year had passed since Russia’s base closures when it announced—following the
August 2008 Russia-Georgia conflict—that two army brigades, each consisting of approximately
3,700 troops, would be deployed to new military bases in Abkhazia and South Ossetia. These
troops reportedly were soon fully deployed in temporary encampments pending the construction
of permanent buildings. In addition to these army brigades, Russian border troops reportedly were
deployed along regional borders with Georgia, along which engineer brigades were creating
revetments, trenches, and minefields. A part of the Black Sea Fleet also was deployed to
Ochamchire in Abkhazia.16 The European Union has maintained that these forces far exceed the
limits permitted by the Russia-Georgia ceasefire accords (which call for the numbers to match
pre-conflict deployment levels of about 2,500 Russian “peacekeepers” in Abkhazia and 1,000
Russian “peacekeepers” in South Ossetia). Russia maintains that this ceasefire provision has been
superseded by the authority of “independent” Abkhazia and South Ossetia to decide on their own
basing arrangements.
Caspian Energy Resources
Russia has tried to play a dominant 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 did not transit Russia. In early 2004, however, a Russian
official stated that then-President Putin wanted to ensure that the greatest volume of Caspian
energy flowed through Russia.17 A U.S.-Russia Strategic Framework Declaration, issued in April
2008, reaffirmed the goal of enhancing the “diversity of energy supplies through economically
viable routes and means of transport.”18 The Framework Declaration was not referenced in the
joint statement issued by Presidents Obama and Medvedev after their first meeting in London on
April 1, 2009.19
Russia has repeatedly raised its gas prices. In early 2006, Russia charged all three regional states
much more for gas. Armenia agreed to relinquish various energy assets to Russian firms as partial
payment for this price increase. Some critics have alleged that Russia now has virtual control over
Armenia’s energy supplies. In late 2006, Russia again requested price hikes for 2007. Georgia
negotiated an agreement to receive some Azerbaijani gas via the new South Caucasus Pipeline
16 Pavel Felgenhauer, “Georgian Officials Admit They Misread Russian Intentions,” Eurasia Daily Monitor, October
30, 2008. Felgenhauer, a Russian military analyst, warns that the total number of Russian troops and weapons deployed
in the regions may well be more than the number of troops and weapons possessed by Georgia. See also CEDR,
January 22, 2009, Doc. No. CEP-548005; January 26, 2009, Doc. No. CEP-950277.
17 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 CEDR, April 6, 2004, Doc. No. CEP-17.
18 The White House. Office of the Press Secretary. US-Russia Strategic Framework Declaration, April 6, 2008.
19 In the joint statement, the two sides pledged to uphold the Global Energy Security Principles adopted at the G-8
(Group of eight industrialized nations) meeting in St. Petersburg in 2006). Supply and transport diversification efforts
are mentioned among the 2006 principles. The White House. Office of the Press Secretary. Joint Statement by
President Dmitriy Medvedev of the Russian Federation and President Barack Obama of the United States of America,
April 1, 2009.
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(SCP, see below) and another small existing pipeline. It also agreed to continue to purchase some
higher-priced gas from Gazprom. Russia’s requests for higher prices and reductions in the
amounts of gas and electricity supplied to Azerbaijan led President Aliyev to announce that the
country would no longer purchase Russian gas. In the Winter of 2007-2008, Georgia again had to
purchase some gas from Gazprom at higher prices, to supplement that supplied by Azerbaijan.
Following the August 2008 Russia-Georgia conflict, Gazprom’s arrangement with Georgia
involving the transit of Russian gas to Armenia remained in place. Armenia pays a share of gas to
Georgia as a transit fee.
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 has viewed Turkey as a major ally against such influence,
and as a balance to 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 have included Turkey’s rejection that
there was an Armenian 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 is one of Georgia’s primary trade partners. New pipelines delivering oil and
gas westward from the Caspian Sea reflect cooperation between Azerbaijan, Georgia, and Turkey.
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 occurred in 2005-2006 with the long-delayed opening of an
Azerbaijani consulate in Tabriz and leadership summits.
In recent months, Iran has boosted its diplomacy in the region, perhaps to counter growing
international concern about its nuclear programs and to counter U.S. influence. Iran has proposed
to build a railroad link to Armenia and another to Azerbaijan. The latter railroad will permit not
only greater trade with Azerbaijan but also with Russia. Iran’s efforts to improve relations with
Azerbaijan have appeared to be complicated, however, by its reported suppression of rising
dissent among “Southern Azerbaijanis.” U.S. policy aims to contain Iran’s threats to U.S.
interests.20
20 See CRS Report RL32048, Iran: U.S. Concerns and Policy Responses, by Kenneth Katzman.
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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. As part of its European Neighborhood Policy, the EU
signed Action Plans with the three regional states in November 2006 that it hoped would foster
both European and regional integration. The EU took the international lead in mediating the
August 2008 Russia-Georgia conflict and in deploying observers after the ceasefire (see below).
The EU proposed a Eastern Partnership to deepen ties with the South Caucasus states, and
elements of this proposal were strengthened after the August 2008 Russia-Georgia conflict. Under
the Eastern Partnership, the EU plans to work out “deep and comprehensive free trade agreements
with those countries willing and able to enter into a deeper engagement, gradual integration in the
EU economy, and ... easier travel to the EU through gradual visa liberalization.”21
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.
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 since the Soviet collapse in 1991, 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/transportation 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). The borders of the countries do not coincide with eponymous ethnic
populations. Efforts by ethnic minorities to secede are primary security concerns for all three
states. NK relies on economic support from Armenia, and Abkhazia and South Ossetia from
Russia.
21 EU. European Commission. “Eastern Partnership,” at http://ec.europa.eu/external_relations/eastern/index_en.htm.
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Armenia, Azerbaijan, and Georgia: Political Developments and Implications for U.S.
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 2007, there
were still about 4,600 people considered refugees or displaced persons in Armenia.22 Armenia has
granted citizenship and acted to permanently house most of the ethnic Armenians who fled
Azerbaijan. The Azerbaijani government reported in April 2008 that there were 572,500 internally
displaced persons in the country.23 The non-governmental International Crisis Group estimates
that about 13-14% of Azerbaijan’s territory, including NK, is controlled by NK Armenian forces
(The World Factbook estimates about 16%).24 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. Since 2005, officials in both countries have reported negotiations
on a fourth “hybrid” peace plan calling for initial agreement on “core principles.” 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 included the phased “redeployment of Armenian troops
from Azerbaijani territories around NK, with special modalities for Kelbajar and Lachin districts
(including a corridor between Armenia and NK); demilitarization of those territories; and a
referendum or population vote (at a date and in a manner to be decided ...) to determine the final
legal status of NK.” International peacekeepers also would be deployed in the conflict area.25
On November 29, 2007, then-Undersecretary of State Nicholas Burns, Russian Foreign Minister
Sergey Lavrov, and French Foreign Minister Bernard Kouchner presented the Foreign Ministers
of Armenia and Azerbaijan with a draft text—Basic Principles for the Peaceful Settlement of the
Nagorno-Karabakh Conflict—for transmission to their presidents. These officials urged the two
sides to accept the Basic Principles (also termed the Madrid proposals, after the location where
the draft text was presented) that had resulted from three years of talks and to begin “a new phase
of talks” on a comprehensive peace settlement.26
Although the text was not released, Azerbaijani Foreign Minister Elmar Mammadyarov
reportedly claimed that the principles uphold Azerbaijan’s territorial integrity and NK’s
autonomous status as part of Azerbaijan. Armenia’s then-Foreign Minister Vardan Oskanyan
22 U.N. High Commissioner for Refugees. 2007 Global Trends: Refugees, Asylum-seekers, Returnees, Internally
Displaced and Stateless Persons, June 2008. The NGO Amnesty International has raised concerns that refugees and
displaced persons in Azerbaijan face prejudice and segregation. They are more likely to be unemployed and in poverty.
Azerbaijan: Displaced then Discriminated Against—the Plight of the Internally Displaced Population, June 28, 2007.
23 Norwegian Refugee Council. Internal Displacement Monitoring Center. Country Page: Azerbaijan, at
http://www.internal-displacement.org/idmc/website/countries.nsf.
24 International Crisis Group. Nagorno-Karabakh: Viewing the Conflict from the Ground, September 14, 2005; CIA
World Factbook. Azerbaijan, online at https://www.cia.gov/cia/publications/factbook/geos/aj.html.
25 OSCE. Statement by the Minsk Group Co-Chairs, July 3, 2006.
26 U.S. Department of State. Office of the Spokesman. Media Note: Support for Basic Principles for Peaceful
Settlement of the Nagorno-Karabakh Conflict, November 29, 2007.
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asserted, on the other hand, that the principles supported Armenia’s insistence on respecting self-
determination for NK. Many observers suggest that progress in the talks may occur only after the
current electoral cycle concludes in Armenia and Azerbaijan.27
In March 2008, the U.N. General Assembly approved a resolution that called for Armenia to
“immediately and unconditionally” withdraw from “occupied” Azerbaijani territory. The
resolution—introduced by Azerbaijan—was approved with a vote of 39 for and 7 against, with
100 abstentions. The United States voted against the resolution in part because according to
Deputy Assistant Secretary of State Matthew Bryza it violated the provisions of the Basic
Principles (see above) and thus harmed the peace process.
On May 6, 2008, France hosted a meeting between the Armenian and Azerbaijani foreign
ministers. The foreign ministers also met with the Minsk Group co-chairs. No details were made
available to the public. Armenian President Serzh Sarkisyan and Azerbaijani President Ilkham
Aliyev met briefly on June 6, 2008, while attending a meeting of the Commonwealth of
Independent States in St. Petersburg, Russia. The presidents stated that a certain degree of trust
had been reached during their first meeting, and they agreed that talks should continue on settling
the NK conflict.
Perhaps troubling, Azerbaijan staged a major military parade in late June 2008, at which Aliyev
stated that “we should be ready to liberate our territories by military force at any moment.”
Answering a congressional inquiry about similar statements by Aliyev, Assistant Secretary of
State Fried stated that U.S. diplomats had advised Aliyev that such statements harm the peace
process, that renewed conflict would jeopardize Azerbaijan’s energy exports, that “in the
judgment of the United States,” Azerbaijan does not have military superiority, and that neither
side could win in a renewed conflict.28 In the wake of the Russia-Georgia conflict in early August
2008 (see below), Armenian President Sarkisyan asserted that “the tragic events in [Georgia’s
breakaway South Ossetia region] confirm that every attempt in the South Caucasus to look for a
military answer in the struggle for the right to self-determination has far-reaching military and
geopolitical consequences.”29
Turkish Prime Minister Recep Tayyip Erdogan visited Russia, Georgia, and Azerbaijan in mid- to
late August 2008 to propose the formation of a “Caucasus Stability and Cooperation” group to
discuss regional peace, economic cooperation, and energy security, and which would include
Turkey, Russia, Georgia, Azerbaijan, and Armenia, but would exclude the United States and the
EU. Turkish President Abdullah Gul visited Armenia and Azerbaijan in early September to further
discuss forming the group and to mediate the NK conflict. Armenian President Sarkisyan
welcomed Turkey’s efforts as an attempt to create a favorable atmosphere in the region, but on
September 11 called for continuing the Minsk Group talks.
On November 2, 2008, Russian President Medvedev hosted talks between Armenian President
Serzh Sarkisyan and Azerbaijani President Ilkham Aliyev on a settlement of the conflict over
27 CEDR, December 10, 2007, Doc. No. CEP-950390; December 13, 2007, Doc. No. CEP-950360; December 19,
2007, Doc. No. CEP-950339.
28 U.S. House of Representatives. Committee on Foreign Affairs. Hearing: The Caucasus, Frozen Conflicts and Closed
Borders. Testimony of Daniel Fried, June 18, 2008.
29 Open Source Center. Europe: Daily Report, August 27, 2008, Doc. No. EUP-085016.
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Azerbaijan’s breakaway Nagorno Karabakh region. Little progress in reaching a settlement was
reported, but a joint communiqué upheld a continued mediating role for the Minsk Group.
Presidents Aliyev and Sargisyan reportedly will meet to discuss NK peace settlement issues on
the sidelines of a May 2009 EU summit that will launch the EU Eastern Partnership program of
enhanced trade and other ties with the South Caucasus and other former Soviet republics.
Secretary of State Hillary Clinton has called for stepped-up U.S. efforts to facilitate an NK peace
settlement.
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. Some observers argued that Russia’s increasing controls over South
Ossetia and Abkhazia over the years transformed the separatist conflicts into essentially Russia-
Georgia disputes. Most residents of Abkhazia and South Ossetia were granted Russian citizenship
and most appeared to want their regions to become independent or parts of Russia.30
U.S. diplomacy long appeared to urge Georgia to work within existing peace settlement
frameworks for Abkhazia and South Ossetia—which allowed for Russian “peacekeeping”—while
criticizing some Russian actions in the regions. This stance appeared to change during 2008,
when the United States and other governments increasingly came to support Georgia’s calls for
the creation of alternative peace settlement mechanisms, particularly since talks under existing
formats had broken down.
This U.S. policy shift was spurred by increasing Russian actions that appeared to threaten
Georgia’s territorial integrity. Among these, the Russian government in March 2008 formally
withdrew from CIS economic sanctions on Abkhazia, permitting open Russian trade and
investment. Of greater concern, President Putin issued a directive in April 2008 to step up
government-to-government ties with Abkhazia and South Ossetia. He also ordered stepped up
consular services for the many Russian citizens in the two regions. He proclaimed that many
documents issued by the separatist governments and businesses which had been established in the
regions would be recognized as legitimate by the Russian government. Georgian officials and
other observers raised concerns that this directive tightened and flaunted Russia’s jurisdiction
over the regions.
A meeting of the U.N. Security Council (UNSC) on April 23, 2008, discussed these Russian
moves. Although the Security Council issued no public decision, the United States, Great Britain,
France, and Germany stated that same day that they “are highly concerned about the latest
Russian initiative to establish official ties with ... Abkhazia and South Ossetia without the consent
of the Government of Georgia. We call on the Russian Federation to revoke or not to implement
its decision.”31 On April 29, 2008, the Russian foreign ministry claimed that Russia’s actions had
been taken to boost the basic human rights of residents in the regions. (For other Russian actions
during 2008 specific to a breakaway region, see below.)
30 Vladimir Socor, Eurasia Insight, November 20, 2006. According to Rossiyskoye Voyennoye Obozreniye (Russian
Military Review), published by the Defense Ministry, 80% of residents of Abkhazia are citizens of Russia, and most
voted in the December 2007 Russian legislative election. CEDR, April 21, 2008, Doc. No. CEP-358004.
31 “Germany, Great Britain, France, U.S.A. and Germany Passed Communiqué,” Black Sea Press, April 24, 2008.
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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 in 1993. Georgia and Abkhazia agreed in
April-May 1994 on a framework for a political settlement and the return of refugees. A
Quadripartite Commission (QC) was set up to discuss repatriation and Russian troops (acting as
CIS “peacekeepers”) were deployed in a zone between Abkhazia and the rest of Georgia. The
conflict resulted in about 10,000 deaths and over 200,000 displaced persons, mostly ethnic
Georgians.
The Deputy Assistant Secretary of State worked with the Special Representative of the U.N.
Secretary General and other “Friends of the Secretary General” (France, Germany, Russia, the
United Kingdom, and Ukraine) to facilitate a settlement. A “New Friends” group was formed in
2005 (members included Bulgaria, Czech Republic, Estonia, Latvia, Lithuania, Moldova, Poland,
Romania, and Sweden) to advocate increased EU and NATO attention to a settlement. Sticking
points in talks 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 insisted on recognition of their independence as a precondition to large-scale
repatriation.
In July 2006, a warlord in the Kodori Gorge area of northern 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. President 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 claimed that only police were deployed in the Gorge, but Abkhazia asserted that military
troops were present, in violation of the cease-fire agreement.
Regular Georgia-Abkhazia peace talks were suspended in October 2006. Abkhazia called for
Georgia to remove the government representatives and alleged military forces. In October 2006,
the UNSC criticized Georgia for introducing military forces into the Kodori Gorge 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.32 The U.N.
Secretary General subsequently stated that Georgia appeared not to have heavy military weaponry
in the Gorge. The Friends of the U.N. Secretary General hosted meetings in Germany in June
2007 and Switzerland in February 2008 that urged the sides to abide by the existing cease-fire
agreement and to renew talks under existing formats.33
In March and April 2008, President Saakashvili proposed new peace initiatives that included
international guarantees of autonomy for Abkhazia, quotas for Abkhaz representation in Georgian
32 U.N. Security Council. Resolution 1716 (2006), Adopted by the Security Council at Its 5549th Meeting, October 13,
2006.
33 U.N. Secretary General. Report of the Secretary-General on the Situation in Abkhazia, S/2007/15, January 11, 2007;
S/2007/182, April 3, 2007; S/2007/439, July 18, 2007; S/2007/588, October 3, 2007; S/2008/38, January 23, 2008;
S/2008/219, April 2, 2008. He stated in his July 2007 report that UNOMIG had seen what appeared to be a Georgian
military truck in the upper Kodori Gorge.
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executive and legislative bodies, the establishment of a special economic zone in the Gali region,
and more active involvement by the international community and Russia in a peace settlement.
The initiatives were rejected by the de facto Abkhaz authorities.
In March and April 2008, unmanned aerial vehicles (UAVs) from Georgia were shot down over
Abkhazia. After an investigation, UNOMIG concluded in late May 2008 that at least one of the
UAVs had been shot down by a fighter jet flying into Abkhazia from Russian airspace. UNOMIG
stated that Georgia should not fly the UAVs over Abkhazia, but also termed the shootdown by the
Russian air force “fundamentally inconsistent” with the Abkhaz-Georgia ceasefire agreement. At
a closed meeting of the UNSC on May 30, 2008, Georgia stated that it would end the flights of
the UAVs.
The United States and others in the international community also raised concerns when the
Russian foreign and defense ministries announced on April 29, 2008, that the number of
“peacekeepers” in Abkhazia would be boosted up to the maximum permitted under ceasefire
accords. There also would be added military equipment and checkpoints. The ministries claimed
that the increases were necessary to counter the presence of a Georgian youth camp in a restricted
zone near the Abkhaz border, the flight of Georgian UAVs over Abkhazia, and a buildup of
Georgian “military forces” and police in the Kodori Gorge, which they alleged were preparing to
attack the de facto Abkhaz government. The defense ministry asserted that any Georgian
“violence against Russian peacekeepers and Russian citizens ... will be met with an appropriate
and robust response.”34 It was also troubling that 400 Russian paratroopers were deployed to
Abkhazia that Russian officials reportedly stated would be fully armed in order to repulse
possible Georgian attacks on Abkhazia.35 NATO reported on April 28, 2008, that its members
“support Georgia’s territorial integrity and regard Abkhazia as Georgia’s inseparable part. NATO
members believe that the unilaterally biased Russian peacekeeping contingent should be
withdrawn.”36
Russia-Georgia tensions appeared heightened in late May 2008 after Russia announced that about
400 railway construction troops were being sent to Abkhazia for “humanitarian” work. The U.S.
State Department responded that the “announcement is particularly difficult to understand,” in
light of Georgia’s peace proposals, and objected that such troops were not part of Russia’s
“peacekeeping” force. These troops—whose role is to facilitate military positioning—reportedly
left Abkhazia at the end of July 2008 after repairing tracks and bridges. According to Deputy
Assistant Secretary Bryza, the railway was used in August by Russia when its troops moved into
Georgia.37
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 contributing to an estimated 2,000-4,000 deaths and the displacement of tens
34 CEDR, April 29, 2008, Doc. No. CEP-950318. By late 2007, Russia had bolstered its “peacekeeping” forces by
deploying some pro-Russia Chechen troops from the Zapad battalion.
35 ITAR-TASS, May 6, 2008.
36 CEDR, April 28, 2008, Doc. No. CEP-950444.
37 Pavel Felgenhauer, Eurasia Daily Monitor, June 12, 2008; U.S. Department of State. Foreign Press Center. Briefing:
The Situation in the Republic of Georgia and its Implications for the Caucasus, August 19, 2008.
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of thousands of people. In June 1992, Russia brokered a cease-fire, and Russian, Georgian, and
Ossetian “peacekeeping” units set up base camps in a security zone around Tskhinvali, South
Ossetia. Reportedly, the units totaled around 1,100 troops, including about 530 Russians, a 300-
member North Ossetian brigade (which actually was composed of South Ossetians and headed by
a North Ossetian), and about 300 Georgians. OSCE monitors did most of the patrolling. A Joint
Control Commission (JCC) composed of Russian, Georgian, and North and South Ossetian
emissaries promoted a settlement of the conflict, with the OSCE as facilitator. According to one
estimate, some 45,000 ethnic Ossetians and 17,500 ethnic Georgians resided in a region that,
according to the 1989 Soviet census, at that time contained over 98,000 residents.38
In 2004, President Saakashvili increased pressure on South Ossetia by tightening border controls,
breaking up a large-scale smuggling operation in the region that allegedly involved Russian
organized crime and corrupt Georgian officials. He also reportedly sent several hundred police,
military, and intelligence personnel into the region. Georgia maintained that it was only bolstering
its peacekeeping contingent up to the limit of 500 troops, as permitted by the cease-fire
agreement. 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.
In July 2005, President Saakashvili announced a new peace plan for South Ossetia 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.”39 In November
2006, a popular referendum was held in South Ossetia to reaffirm its “independence” from
Georgia. The separatists reported that 95% of 55,000 registered voters turned out and that 99%
approved the referendum. In a separate vote, 96% reelected Kokoiti. The OSCE and U.S. State
Department declined to recognize these votes. In “alternative” voting among ethnic Georgians in
South Ossetia (and those displaced from South Ossetia) and other South Ossetians, the pro-
Georgian Dmitriy Sanakoyev was elected governor, and a referendum was approved supporting
Georgia’s territorial integrity.
In March 2007, President Saakashvili proposed another peace plan for South Ossetia that
involved creating “transitional” administrative districts throughout the region—ostensibly under
Sanakoyev’s authority—which would be represented by an emissary at JCC or alternative peace
talks. In July 2007, President Saakashvili decreed the establishment of a commission to work out
South Ossetia’s “status” as a part of Georgia. The JCC finally held a meeting (with Georgia’s
emissaries in attendance) in Tbilisi, Georgia, in October 2007, but the Russian Foreign Ministry
claimed that the Georgian emissaries made unacceptable demands in order to deliberately
sabotage the results of the meeting.40 No further meetings had been held before the outbreak of
conflict between Russia and Georgia in August 2008.
38 Georgia: a Toponymic Note Concerning South Ossetia, The Permanent Committee on Geographic Names, January
2007.
39 CEDR, October 7, 2005, Doc. No. CEP-15001. CEDR, December 12, 2005, Doc. No. CEP-27204. South Ossetians
who were citizens of Russia voted in the 2004 Russian presidential election, and a poster in South Ossetia afterward
proclaimed that “Putin is our president.” Many South Ossetians voted in the 2007 Russian Duma election and the 2008
Russian presidential election. CEDR, December 3, 2007, Doc. No. CEP-950289; February 28, 2008, Doc. No. CEP-
4015.
40 CEDR, November 1, 2007, Doc. No. CEP-950449.
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The August 2008 Russia-Georgia Conflict
Simmering long-time tensions erupted on the evening of August 7, 2008, when South Ossetia
accused Georgia of launching a “massive” artillery barrage against its capital, Tskhinvali, while
Georgia reported intense bombing of some Georgian villages in the conflict zone by South
Ossetian forces. Georgia claims that South Ossetian forces did not respond to a ceasefire appeal
but intensified their shelling, “forcing” Georgia to send in troops that reportedly soon controlled
Tskhinvali and other areas.41
On August 8, Russia launched large-scale air attacks across Georgia and dispatched seasoned
troops to South Ossetia that engaged Georgian forces in Tskhinvali later in the day. President
Bush stated on August 9 that “Georgia is a sovereign nation, and its territorial integrity must be
respected. We have urged an immediate halt to the violence [and] the end of the Russian
bombings.” Reportedly, Russian troops had retaken Tskhinvali, occupied the bulk of South
Ossetia, reached its border with the rest of Georgia, and were shelling areas across the border by
the morning of August 10. Russian warplanes bombed the Georgian town of Gori and the
outskirts of the capital, Tbilisi, as well as other sites. Russian ships landed troops in Georgia’s
breakaway Abkhazia region and took up positions off Georgia’s Black Sea coast.
On August 12, Medvedev declared that “the aim of Russia’s operation for coercing the Georgian
side to peace had been achieved and it had been decided to conclude the operation.... The
aggressor has been punished and suffered very heavy losses.”42 Medvedev endorsed some
elements of a European Union (EU) peace plan presented by visiting French President Nicolas
Sarkozy. On August 15, the Georgian government accepted the French-brokered 6-point cease-
fire that left Russian forces in control of South Ossetia, Abkhazia, and “security zones” in
undisputed Georgian territory.43 The six points include commitments not to use force, to halt
hostilities, to provide full access for humanitarian aid, to withdraw Georgian forces to the places
they were usually stationed prior to the conflict, to withdraw Russian forces to positions prior to
the outbreak of hostilities (although they are permitted to implement security measures in the
zone of the conflict until international monitors are in place), and to open international
discussions on ensuring security and stability in Abkhazia and South Ossetia.
Russia undertook a pullback of military forces on August 22. However, substantial forces
remained in areas around South Ossetia’s and Abkhazia’s borders with the rest of Georgia and
near the port of Poti, resulting in condemnation by the United States, NATO, and the EU that
Russia was violating the ceasefire accord. Further condemnation by the international community
occurred in the wake of President Medvedev’s August 26 decree officially recognizing the
independence of South Ossetia and Abkhazia. Nicaragua is the only country that has followed suit
in extending diplomatic relations to Abkhazia and South Ossetia.
On September 8, 2008, visiting French President Nicolas Sarkozy and Russian President Dmitriy
Medvedev signed a follow-on ceasefire accord that fleshed out the provisions of the 6-point peace
plan. Among its provisions, it stipulated that Russian forces would withdraw from areas adjacent
41 See also CRS Report RL34618, Russia-Georgia Conflict in August 2008: Context and Implications for U.S. Interests,
by Jim Nichol.
42 ITAR-TASS, August 12, 2008. On September 11, Prime Minister Putin stated that Georgia’s aggression was answered
by “a well-deserved mighty punch” by Russia. ITAR-TASS, September 11, 2008.
43 See CRS Report RL34618, Russia-Georgia Conflict in August 2008: Context and Implications for U.S. Interests, by
Jim Nichol, August 29, 2008.
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to the borders of Abkhazia and South Ossetia by October 11; that Georgian forces would return to
their barracks by October 1; that international observers already in place from the U.N. and
Organization for Security and Cooperation in Europe would remain; and that the number of
international observers would be increased by October 1, to include at least 200 observers from
the European Union (EU), and perhaps more later. The EU called for Russia to permit these
observers to patrol in Abkhazia and South Ossetia. Russia’s position has been that these observers
cannot patrol in the regions without the approval of the regions, and the regional leaders have
refused to permit such patrols.
Although Sarkozy strongly implied that the international conference would examine the legal
status of Georgia’s breakaway Abkhazia and South Ossetia, Medvedev pointed out that the
regions had been recognized as independent by Russia on August 26, 2008, and stated that
disputing this recognition was a “fantasy.”44 Russian officials also announced that they would
deploy 7,400 Russian troops in Abkhazia and South Ossetia. This number differ from troop
ceilings permitted under the early 1990s ceasefire agreements of up to 3,000 Russian
“peacekeepers” in Abkhazia and about 1,000 in South Ossetia (including Russian troops and
those ostensibly from Russia’s North Ossetia region).45
The EU deployed over 200 monitors by October 1, and Russia announced on October 9 that its
troops had withdrawn from buffer zones. Georgia has maintained that Russian troops have not
pulled out of Akhalgori, a district that Russia asserts is within South Ossetia’s Soviet-era borders,
and the Kodori Gorge. EU and OSCE monitors were blocked from entering the regions. In
December 2008, Russia objected to continuing a mandate for OSCE observers in Georgia—
including some observers authorized before the August 2008 conflict and some who were added
after the August 2008 conflict—and they began to be pulled out.46
An international conference in Geneva to discuss security, repatriation, and status issues was
disrupted at its inaugural session on October 15 when Russian, Abkhazian, and South Ossetian
emissaries boycotted or walked out of various meetings during the day. Sessions in November
and December 2008 were more successful in involving the emissaries in discussions. At the
February 17-18, 2009, session, the sides agreed in principle to set up an “incident prevention and
response mechanism” which will aim to defuse tensions before they escalate. Emissaries from the
EU, OSCE, and U.N. will hold weekly meetings, investigate violent incidents along the conflict
borders, and ensure the delivery of humanitarian assistance. Russia insists that Georgia sign a
non-use of force agreement and that the international community impose an arms embargo on
Georgia.
Among U.S. actions, former Secretary Rice on September 3, 2008, announced a $1 billion multi-
year aid package to help Georgia rebuild (see below). Former Vice President Cheney visited
Georgia on September 4 to ensure that “America will help Georgia rebuild.... [Saakashvili] and
his democratically elected government can count on the continued support and assistance of the
44 Open Source Center. Central Eurasia: Daily Report(hereafter CEDR), September 28, 2008, Doc. No. CEP-950425;
CEP-950440.
45 Conor Humphries, “Russia Establishes Ties with Georgia Regions,” Agence France Presse, September 9, 2008;
“Russia to Base 7,600 Troops in Georgian Regions,” Deutsche Presse-Agentur, September 9, 2008.
46 Before the August 2008 conflict, there were 142 OSCE staff in Georgia, of whom 106 were national staff, 7
contracted international staff, and 29 seconded international staff. The OSCE reported “some 200” staff members in
December 2008. OSCE. Press Information: Head of Mission, February 1, 2008; Press release: OSCE Chairman
Regrets Disagreement on OSCE Future in Georgia, December 22, 2008.
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United States.” Several Members of Congress traveled to Georgia in the wake of the conflict and
legislation was passed expressing U.S. support for Georgia’s sovereignty and territorial integrity
and providing rebuilding aid.47
Many observers have argued that Russia aimed both to consolidate control over South Ossetia
and Abkhazia and to depose Georgian President Mikheil Saakashvili when it launched the August
2008 military incursions. Russia hoped to achieve this latter goal either directly by occupying
Georgia’s capital of Tbilisi and killing or arresting Saakashvili, or indirectly by triggering his
overthrow, according to these observers. They state that Saakashvili’s survival as the popularly-
elected president is a major accomplishment of the diplomacy led by the EU that ended Russia’s
offensive. They also suggest that the current political stability may indicate that Georgia has made
at least some democratization progress.48 Others warn that democratization is halting and could
face setbacks (see also below, “Democratization Problems and Progress”).49
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 at the expense of
other sectors of the economy. Widespread poverty and regional conflict have contributed to high
emigration from all three states, and remittances from these émigrés have provided major support
for the remaining populations.50
The global economic downturn that began in 2008 has hampered Armenia’s economic growth and
added to Georgia’s economic stresses in the wake of the August 2008 conflict, but Azerbaijan
claims that the high oil prices for much of 2008 contributed to a growth rate of over 9% for the
year. The influx of international assistance to Georgia has ameliorated to some degree the impact
of the conflict and the world economic crisis, but the fragile situation spurred Saakashvili to form
an advisory council in late January 2009. The Armenian finance minister has reported that the
country is appealing to Russia, the World Bank, and other international financial institutions for
stabilization loans. Breakaway NK reported added revenues in 2008 but also that the world
economic crisis had harmed the growth of the local economy.51
47 The White House. Office of the Vice President. Remarks by Vice President Cheney and President Saakashvili of
Georgia After Meeting, September 4, 2008.
48 U.S. House of Representatives. Committee on Foreign Affairs. Hearing on U.S.-Russia Relations in the Aftermath
of the Georgia Crisis. Testimony of Daniel Fried, Assistant Secretary of State for European and Eurasian Affairs,
September 9, 2008. Saakashvili also highlighted this Russian aim during his testimony to the Georgian legislative
commission investigating the causes of the conflict. See “Saakashvili Testifies Before War Commission, Analysts
Comment,” The Messenger (Tbilisi), December 1, 2008. Georgia’s Ambassador to the United States, Davit
Sikharulidze, argued that Russia’s “aim was to overthrow the [Georgian] government and it would have come true but
for the U.S. interference.” CEDR, December 1, 2008, Doc. No. CEP-950233. Russia officially has denied such an aim.
49 International Crisis Group. Georgia: The Risks of Winter, November 26, 2008.
50 A. V. Korobkov, “Migration Trends in Central Eurasia,” Communist and Post-Communist Studies, No. 2, 2007, pp.
169-89.
51 CEDR, January 21, 2009, Doc. No. CEP-950259; January 22, 2009, Doc. No. CEP-950208; Doc. No. CEP-950169;
January 23, 2009, Doc. No. CEP-950278.
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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. 52 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. The CIS imposed an economic embargo on Abkhazia from 1996 until early 2008.
Since 2006, Russia has severely restricted agricultural trade and land, air, and sea links with
Georgia. Russia hinders Azerbaijan’s use of the Volga-Don Canal to reach world shipping
channels. Russia has at times cut off gas supplies to Georgia. During the August 2008 Russia-
Georgia conflict, Russia’s effective blockade of Georgia’s Black Sea ports disrupted trade
shipments to and from Armenia. In the wake of the conflict, gas transit from Russia to South
Ossetia via other Georgian territory was disrupted, with each side blaming the other, until service
was restored in late January 2009. Russia has been building a 110-mile gas pipeline from North
Ossetia to South Ossetia to avoid transiting Georgia. Trans-border road traffic between Georgia
and the regions of South Ossetia and Abkhazia is severely restricted.
Turkey closed its land borders with Armenia in 1993. These obstructions have had a negative
impact on the Armenian economy, since it is heavily dependent on energy and raw materials
imports. Turkey’s closure of land borders in effect barred direct U.S. shipments of aid through its
territory to Armenia. Foreign Operations Appropriations for FY1996 (P.L. 104-107) and Omnibus
Consolidated Appropriations for FY1997 (P.L. 104-208)53 have mandated U.S. aid cutoffs (with a
presidential waiver) to any country which restricts the transport or delivery of U.S. humanitarian
aid to a third country. These provisions were designed to convince Turkey to allow the transit of
U.S. aid to Armenia.
Democratization Problems and Progress
The World Bank, in a report assessing the quality of democratic governance in over 200 countries
during 2007, ranked Georgia as perhaps among the better-performing one-half of the countries in
terms of government effectiveness and regulatory quality.54 On four other indicators—
accountability,55 stability, rule of law, and anti-corruption—Georgia ranked slightly below world
norms but had made progress in recent years. Georgia also ranked slightly above Armenia on all
indicators except stability and regulatory quality, according to the World Bank. Armenia ranked
52 Armenia long opposed the construction or revamping of a section of railway from Kars, Turkey, to Tbilisi (and
thence to Azerbaijan) that would bypass Armenia, arguing that an existing section of railway from Kars that transits
Armenia into Georgia could be returned to service “in a week.” Azerbaijan and Turkey oppose a transit route through
Armenia, despite Armenia’s offers not to use the railway for its own goods or to impose transit tariffs. The Export-
Import Bank Re-authorization Act of 2006 (P.L. 109-438) prohibits the Bank from guaranteeing, insuring, or extending
credit in support of any railway construction that does not traverse or connect with Armenia and does traverse or
connect Baku, Tbilisi, and Kars. Work on the railway began in late 2007 and is expected to be completed in 2010. In
March 2008, Armenian President-elect Serzh Sarkisyan reportedly stated that Armenia might be able to use the railway,
and argued that the railway is designed more as a means of bypassing “much larger countries” (presumably Russia)
than Armenia. CEDR, March 12, 2008, Doc. No. CEP-950482.
53 P.L. 104-208, Sec. 559, amends the Foreign Assistance Authorization Act of 1961.
54 Government effectiveness refers to “the quality of public services, [and] the quality of the civil service.” Regulatory
quality refers to policies that promote a market economy. The World Bank. Governance Matters 2008: Worldwide
Governance Indicators, 1996-2007, June 24, 2008.
55 Accountability refers to “the extent to which a country’s citizens are able to participate in selecting their government,
as well as freedom of expression, freedom of association, and a free media.” Governance Matters 2008, June 24, 2008.
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as perhaps among the better-performing one-half of the countries in terms of regulatory quality,
but was below world norms on other indicators, although some progress was registered in terms
of stability. Azerbaijan was deemed to rank below the other two regional states on all indicators,
but seemed to have made some progress in effectiveness and regulatory quality. Recent
developments in democratization in the region are discussed below.
Armenia
A legislative election was held on May 12, 2007, and five parties cleared a 5% vote hurdle to win
90 seats that were allocated through party list voting. One other party won 1 of the 41 seats
subject to constituency voting. The party that had won the largest number of seats in the 2003
election—the Republican Party of Armenia—won a near majority (64 of 131 seats) in 2007. Two
opposition parties won 16 seats. According to the final report of observers from the OSCE, COE,
and the EU, the legislative elections “demonstrated improvement and were conducted largely in
accordance with OSCE commitments....” However, the observers raised some concerns over pro-
government party domination of electoral commissions, the low number of candidates in
constituency races, and inaccurate campaign finance disclosures. They reported some counting
irregularities at the precinct level, and assessed counting “as bad or very bad” at one-third of
territorial electoral commissions. The report raised concerns that these vote-counting problems
harmed public confidence in the results.56
The two parties that won the most votes in the May 2007 election—the Republican Party of
Armenia and the Prosperous Armenia Party—announced that they would form a coalition to
cooperate on legislative tasks and the formation of the government. They also agreed to jointly
back one candidate for the upcoming 2008 presidential election. Incumbent President Kocharyan
was at the end of his constitutionally limited second term in office. The two parties signed a side
agreement with another party that won many votes—the Armenian Revolutionary Federation—on
its participation in the coalition, although it reserved the right to run its own candidate in the
presidential race. President Robert Kocharyan appointed defense minister Serzh Sarkisyan as
prime minister in June 2007.
Armenia’s presidential election was held on February 19, 2008. Prime Minister Sarkisyan was
nominated by the Republican Party and endorsed by outgoing President Robert Kocharyan. He
ran against eight other candidates. According to final results issued by the Central Electoral
Commission on February 24, Sarkisyan was the winner with 52.82% of 1.67 million votes cast,
followed by Levon Ter-Petrossyan with 21.5% and Arthur Baghdasaryan with 16.7%.
Election observers from the Organization for Security and Cooperation in Europe (OSCE), the
Council of Europe (COE), and the European Parliament (EP), issued a final report (with a more
negative assessment than given in a preliminary report) that the election “mostly met OSCE
commitments ... in the pre-election period and during voting hours,” but that “serious challenges
to some commitments did emerge, especially after election day. This displayed an insufficient
56 OSCE. Office of Democratic Institutions and Human Rights (ODIHR). Parliamentary Elections, Republic of
Armenia, 12 May 2007: Final Report, September 10, 2007. PACE. Ad Hoc Committee of the Bureau of the Assembly.
Report: Observation of the Parliamentary Elections in Armenia, Doc. 11312, June 20, 2007. See also CRS Report
RS22675, Armenia’s Legislative Election: Outcome and Implications for U.S. Interests, by Jim Nichol.
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regard for standards essential to democratic elections and devalued the overall election process. In
particular, the vote count demonstrated deficiencies of accountability and transparency....”57
According to the report, the election offered voters a genuine choice among the nine candidates.
However, problems included the absence of a clear separation between government and party
functions. A large majority of territorial and precinct electoral commission members were linked
to the Republican and Prosperous Armenia parties or the presidential administration. Media gave
Sarkisyan a great deal of positive coverage and Ter-Petrossyan a large volume of negative
coverage. The lack of public confidence in the electoral process was compounded by appearances
of irregularities in vote counting, which was assessed by the observers as bad or very bad in some
16% of polling stations visited. Other discrepancies in vote counting were revealed during
recounts in some precincts. The final report also raised concerns about “implausibly high” voter
turnout claims at several precincts.
Demonstrations by oppositionists claiming that the election was not free and fair were forcibly
suppressed by military and police forces in the capital of Yerevan on March 1. Street battles and
looting were reported later in the day. The government reported that ten people were killed, that
dozens were injured, that many of the demonstrators were armed, and that they had received
orders to overthrow the government. President Kocharyan declared emergency rule in Yerevan
late on March 1, which provided for government control over media and a ban on public meetings
and party activities. Authorities arrested or detained dozens of opposition politicians and others.
On March 12, Deputy Assistant Secretary Bryza called for the government to “to cease arrests of
political leaders” and to “restore media freedom and then to lift the state of emergency as soon as
possible, and then finally launch a nationwide roundtable ... including all major political parties to
chart the course forward to strengthen Armenia’s democracy.”58
The state of emergency was lifted on March 21, but a new law limited political rallies. Also on
March 21, the Republican Party, Rule of Law Party, Prosperous Armenia Party, and the Armenian
Revolutionary Federation signed an agreement to form a political coalition. In his April 9, 2008,
inaugural address, Sarkisyan stated that “we will build a strong, proud, and democratic state of
Armenia where all are equal under the law.” He named Central Bank chairman Tigran Sarkisyan
as the prime minister, and announced that a new coalition government would be composed of the
four parties.59
PACE passed a resolution on April 17, 2008, that called for a “credible international
investigation” of events surrounding the Armenian government crackdown on demonstrators on
March 1, 2008. The resolution called for the release of demonstrators and others who it claimed
were arrested “on seemingly artificial and politically motivated charges,” and urged wide political
dialogue between pro-government and opposition parties. The resolution also called for the repeal
of the new law restricting freedom of assembly and suggested that PACE consider at its next
session in late June 2008 suspending the voting rights of the Armenian delegation, “if no
considerable progress has been made on these requirements by then.” In June 2008, the Armenian
legislature created a commission to investigate the events of March 1 and amended the law on
assemblies. In late June 2008, PACE postponed a decision on Armenia for six months to give the
57 OSCE. International Election Observation Mission. Presidential Election, Republic of Armenia, 19 February 2008:
Final Report of the OSCE/ODIHR Election Observation Mission, May 30, 2008.
58 “Armenia: Key U.S. Diplomat Calls For Roundtable In Wake Of Clashes,” Radio Free Europe, March 12, 2008.
59 ITAR-TASS, April 9, 2008.
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country more time to implement the assembly’s reform suggestions. At its January 2009 session,
PACE decided not to suspend Armenia’s voting rights. PACE stated that “the recent initiatives of
the Armenian authorities [are] an indication of their readiness to address the demands made by
PACE.” The initiatives included over two dozen pardons of prison sentences, plans to rewrite
laws restricting freedom of assembly, and steps taken towards the establishment of an
independent inquiry into the March events. Nonetheless, PACE indicated that it remained
“dissatisfied and seriously concerned by the situation of persons [still] deprived of their liberty in
relation to the [March 2008] events,” and called for further pardons.60
Azerbaijan
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 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. After the election, the U.S. State Department issued a statement praising
democratization progress, but urging the government to address some electoral irregularities.61
Repeat elections were scheduled for May 2006 in ten constituencies where alleged irregularities
took place. According to OSCE election monitors, the repeat race appeared to be an improvement
over the November election, but irregularities needed to be addressed, including interference by
local officials in campaigns. The ruling Yeni Azerbaijan Party won 62 seats, the independents 44,
and Musavat 5. The remaining 14 seats were held by several small parties.62
During the run-up to the 2005 legislative election, authorities arrested several prominent officials
on charges of coup-plotting. Some critics of the arrests claimed that the defendants included
former cohorts of Heydar Aliyev or others who simply opposed President Ilkham Aliyev’s
policies. Although arrested on suspicion of coup-plotting, several officials instead were convicted
on lesser charges. One sensational trial involved Farhad Aliyev, former minister of economic
development (no relation to Ilkham Aliyev), who was among those arrested in 2005. He was tried
along with his brother, Rafiq (a businessman), and 17 others and was convicted on charges of
embezzlement in October 2007 to ten years in prison. He claimed that he was prosecuted because
of his advocacy of closer Azerbaijani ties with the United States and the EU, economic reforms,
and anti-corruption efforts. Senator John McCain and Representatives Gary Ackerman and Alcee
Hastings were among those in Congress concerned about due process in the case.63
Meeting with visiting President Ilkham 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.” Some human rights and other observers criticized the summit as providing
60 PACE. PACE Still Seriously Concerned By The Situation Of Detainees In Armenia But Will Not Apply Sanctions To
The Armenian Delegation, press release, January 27, 2009.
61 U.S. Department of State. Press Statement: Azerbaijan Parliamentary Elections, November 7, 2005. See also CRS
Report RS22340, Azerbaijan’s 2005 Legislative Election: Outcome and Implications for U.S. Interests, by Jim Nichol.
62 OSCE/ODIHR Mission. Press Release: Partial Repeat Parliamentary Elections in Azerbaijan Underscore Continuing
Need for Electoral Reform, May 15, 2006.
63 Eurasia Insight, October 30, 2006; Congressional Record, March 29, 2007, pp. E708-709. See also PACE.
Committee on the Honoring of Obligations and Commitments by Member States of the Council of Europe, Honoring of
Obligations and Commitments by Azerbaijan, Explanatory Memorandum, Doc. 11226, March 30, 2007.
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undue U.S. support to a nondemocratic leader.64 Answering this criticism, Deputy Assistant
Secretary Bryza stated in June 2006 that “just because Azerbaijan hasn’t gone as far as we would
like on democracy doesn’t mean we’re going to ignore our energy interests or our military
interests. That’s not to say that our energy interests or our military interests or our counter-
terrorism interests are driving us to ignore democracy.... We have to pursue a balance.”65
The NGO Committee to Protect Journalists in December 2007 ranked Azerbaijan among the top
five countries in the world in terms of the number of imprisoned journalists.66 President Aliyev
amnestied five journalists in December 2007, but several others remained imprisoned.
A presidential election was held on October 15, 2008. In early June 2008, the legislature approved
changes to the electoral code. Some of the changes had been recommended by the Venice
Commission, an advisory body of the Council of Europe. However, other recommendations of the
Venice Commission were not considered, including those on eliminating the dominance of
government representatives on election commissions.67 Critics charged that the four-week
campaign period was too short a time for candidates to present their platforms. The opposition
Azadliq (Freedom) party bloc decided on July 20 that it would boycott the election on the
grounds that the election laws were not fair, their parties faced harassment, and media were
constrained.68 This bloc includes the Popular Front Party (Reform), the Liberal Party, and others.
In early September 2008, the Azadliq bloc joined with other parties to form an Opposition
Cooperation Center (OCC) coalition, including the Musavat Party, the Civil Development Party,
and the Public Forum for the Sake of Azerbaijan.
Besides President Aliyev, six other politicians were able to gather 40,000 valid signatures to be
registered as candidates for the presidential election. Some government officials and observers
have suggested that these candidates are “new constructive opposition leaders,” as opposed to
those in opposition parties that boycotted the election. Incumbent President Aliyev won a
resounding victory, gaining nearly 89% of the vote. According to a preliminary report by election
monitors from OSCE/ODIHR, the Parliamentary Assembly of the Council of Europe (PACE),
and the European Parliament (EP), the election “marked considerable progress toward meeting
OSCE and Council of Europe commitments and other international standards but did not meet all
... the principles of a meaningful and pluralistic democratic election.” The observers commended
a peaceful voting process that was “well organized and efficient,” but were critical of a “lack of
robust competition and of vibrant political discourse facilitated by media,” and the decision by
some opposition parties to boycott. The observers also raised concerns that there appeared to be
“significant procedural shortcomings [in vote counting] in many cases, and manipulation in some
instances.”69 The then-EU Council President Nicolas Sarkozy appeared more critical, issuing a
64 The White House. Office of the Press Secretary. President Bush Welcomes President Aliyev of Azerbaijan to the
White House, April 28, 2006; CEDR, May 2, 2006, Doc. No. CEP-950092; Council on Foreign Relations. A
Conversation with Ilkham Aliyev, April 26, 2006.
65 RFE/RL, June 23, 2006.
66 Committee to Protect Journalists. Special Report 2007: One in Six Jailed Journalists [Worldwide] Held Without
Charge, December 5, 2007.
67 European Commission for Democracy Through Law (Venice Commission). Joint Interim Opinion on the Draft
Amendments to the Electoral Code of the Republic of Azerbaijan. 74th Plenary Session, March 14-15, 2008, Opinion
no. 390/2006, CDL-AD(2008)003, March 18, 2008.
68 Open Source Center. Central Eurasia: Daily Report (hereafter CEDR), April 24, 2008, Doc. No. CEP-950216.
69 OSCE/PACE/EP. Republic of Azerbaijan Presidential Election, 15 October 2008: Statement of Preliminary Findings
and Conclusions, October 16, 2008.
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statement on October 17, 2008, that “the elections still do not satisfy international standards of
democracy, particularly as regards the organization of public debate, the conduct of polling, and
the counting of votes.” The Azerbaijani Foreign Affairs Ministry retorted that the statement was
“biased” and did “not contribute to building trust” between Azerbaijan and the EU.70
Proposed amendments to the constitution were overwhelmingly approved by citizens in a
referendum held on March 18, 2009. According to a small delegation from PACE, the voting
“was transparent, well organized, and held in a peaceful atmosphere.” They criticized the dearth
of discussion in the media of the merits of the constitutional amendments and voiced regret that
some changes to the amendments proposed by the Venice Commission were not made before they
were voted on. Some opposition parties had in particular objected to an amendment lifting term
limits on the presidency during a “state of war,” and had called for a boycott of the referendum.
They reported that several of their activists had been detained for attempting to gather signatures
against the referendum. After the vote, they claimed that the government’s report of turnout and
results was exaggerated.71
The Venice Commission had suggested before the referendum that the large number of proposed
constitutional changes—which required assessing 41 amendments to 29 articles—might confuse
voters. They criticized the lifting of presidential term limits as “a serious set-back on Azerbaijan’s
road to a consolidated democracy,” and as unwarranted under conditions where the presidency
already has overwhelming powers compared to other branches of power. Instead, they urged,
substantial constitutional changes should be made to strengthen the separation of powers. They
also raised concerns that a proposed amendment forbidding photographing, filming, or recording
of someone without consent could restrict freedom of the media. The Azerbaijani government’s
rebuttal included that it had provided a comparative analysis of the proposed changes to every
household in the country and that the substantial checks and balances among the branches of
power make the retention of presidential term limits unnecessary.72
Georgia
Increased political instability in Georgia in late 2007 raised questions in the United States, NATO,
and elsewhere about whether the country could sustain what many observers hoped was a broad
commitment to democratization by the Saakashvili administration. Oppositionist activities
appeared to strengthen after the detention on corruption charges of former Defense Minister Irakli
Okruashvili in late September 2007, in the wake of his sensational allegations that Saakashvili
had once ordered him to kill prominent businessman Badri Patarkatsishvili. Several opposition
parties united in a “National Council” that launched demonstrations in Tbilisi on November 2 to
demand that legislative elections be held in spring 2008 (instead of in late 2008 as set by a
constitutional change approved by the NM-dominated legislature), and that Saakashvili resign.
On November 7, police and security forces forcibly dispersed demonstrators, reportedly resulting
in several dozen injuries. Saakashvili declared a state of emergency for 15 days, giving him
70 EU. Statement of the Presidency of the EU on the Presidential Election in Azerbaijan, October 17, 2008; CEDR,
October 22, 2008, Doc. No. CEP-950288. See also CRS Report RS22977, Azerbaijan’s October 2008 Presidential
Election: Outcome and Implications, by Jim Nichol.
71 CEDR, January 23, 2009, Doc. No. CEP-950024 and Doc. No. CEP-950276; February 23, 2009, Doc. No. CEP-
950103; March 19, 2009, Doc. No. CEP-950277.
72 European Commission For Democracy Through Law (Venice Commission). Opinion on The Draft Amendments To
The Constitution Of The Republic Of Azerbaijan, March 16, 2009.
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enhanced powers. He claimed that the demonstrations had been part of a coup attempt
orchestrated by Russia, and ordered three Russian diplomats to leave the country.
U.S. and other international criticism of the crackdown may have played an important role in
Saakashvili’s decision to step down as president on November 25, 2007, so that early presidential
elections could be held on January 5, 2008, “because I, as this country’s leader, need an
unequivocal mandate to cope with all foreign threats and all kinds of pressure on Georgia.”73 At
the same time, a plebiscite was to be held on whether to have a spring or fall legislative election
and on whether Georgia should join NATO. Saakashvili ran against five other candidates.
Georgia’s Central Electoral Commission reported on January 13, 2008, that Saakashvili had won
over 53% of the vote, and he was inaugurated on January 20, 2008. In a preliminary assessment,
the OSCE stated that the election broadly met its standards, but that troubling irregularities
needed to be addressed. The plebiscite endorsed holding a spring 2008 legislative election and
Georgia’s aim to join NATO (See also CRS Report RS22794, Georgia’s January 2008
Presidential Election: Outcome and Implications, by Jim Nichol).
A legislative election was held on May 21, 2008. Twelve parties and blocs were registered to
compete for 75 seats to be allocated by party lists and 75 seats by single-member constituencies.
The dominant NM pledged to reduce poverty and argued that its stewardship had benefitted the
country. The main opposition bloc, the United Opposition Movement, called for President
Saakashvili to resign from office and claimed that NM was subverting the electoral process to
retain power. The Central Electoral Commission announced that NM won the largest share of the
party list vote and also 71 of 75 constituency races, giving it a total of 119 out of 150 seats in the
legislature. The United Opposition won a total of 17 seats, the opposition Christian Democrats six
seats, the opposition Labor Party six seats, and the opposition Republican Party two seats. Some
observers argued that the opposition had harmed its chances by failing to unite in one bloc and
that the NM also benefitted from several popular businessmen who ran on its ticket in
constituency races.
International observers from the OSCE and other European organizations concluded that the
Georgian government “made efforts to conduct these elections in line with OSCE and Council of
Europe commitments,” but “a number of problems ... made this implementation uneven and
incomplete.” Among the problems were a ban on self-nominated candidates, the use of
government resources for campaign purposes, the lack of balance in media coverage, a
“contradictory and ambiguous” electoral complaint and appeal process, and troubling
irregularities in vote-counting.74 Most United Opposition deputies have refused to attend
legislative sessions.
In his address at the U.N. General Assembly on September 23, 2008, President Saakashvili
announced new democratization initiatives as a means to strengthen Georgia’s sovereignty and
independence and thereby prevent Russia from subverting Georgia’s statehood. He stated that the
judicial and legislative branches of government would be strengthened, that state funding would
be increased to opposition parties and they would have greater access to media, that trials by jury
and lifetime judicial appointments would be implemented, and that private property rights would
be expanded. In November 2008, Saakashvili stated that reforms in the appointment of judges
73 CEDR, November 8, 2007, Doc. No. CEP-950428.
74 OSCE. International Election Observation Mission. Georgia: Parliamentary Elections, 21 May 2008, Statement of
Preliminary Findings and Conclusions, May 22, 2008.
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were being worked out, that judges were beginning to be appointed for life, and that trial by jury
would be introduced in January 2009. Some oppositionists have alleged, however, that media
restrictions have tightened in recent months.75 The International Crisis Group, a non-
governmental organization, has warned that government-opposition tensions could rise and that
Georgia might lose international donor support for rebuilding unless Saakashvili steps up his
democratic reform efforts.76
Several opposition parties plan a major demonstration in Tbilisi on April 9, 2009, to call for
Saakashvili to resign and for new presidential and legislative elections to be held. Prominent
oppositionists leading the protest include former legislative speaker Nino Burjanadze, head of the
Democratic Movement-United Georgia Party, and former U.N. ambassador Irakly Alasania, head
of the Alliance for Georgia bloc. In late March 2009, the government announced the arrests of
nearly a dozen individuals on charges of plotting to launch a coup at the demonstration. Several
of the individuals were linked to Burjanadze’s party. Opposition parties denounced the arrests as
staged by the government to discredit the April 9 protest.
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
Comprehensive Threat Reduction funds). See Table 1. U.S. assistance to the region FY1992-
FY2007 amounts to about 14% of all aid to Eurasia and 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. In Foreign
Operations Appropriations for FY1998 (P.L. 105-118), Congress created a new South Caucasian
funding category to emphasize regional peace and development, and since then has upheld this
funding category in yearly appropriations. Congress also has called for humanitarian aid to be
provided to NK, which has amounted to about $32 million from FY1998 through FY2008. In the
Omnibus Appropriations Act for FY2009 (P.L. 111-8; signed into law on March 11, 2009), up to
$8 million is provided to address ongoing humanitarian needs in NK. 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 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) deemed that Georgia was eligible as a democratizing country for assistance,
even though it did not meet criteria on anti-corruption efforts. In September 2005, MCC signed a
five-year, $295.3 million agreement (termed a “compact”) with Georgia 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. The MCC reported in July 2008 that it had so far disbursed $51.3
million to Georgia. In the wake of the August 2008 Russia-Georgia conflict, the MCC announced
75 CEDR, November 21, 2008, Doc. No. CEP-950351.
76 International Crisis Group. Georgia: The Risks of Winter, November 26, 2008.
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plans for an extra $100 million for road-building, water and sanitation facilities, and a natural gas
storage facility.
In December 2005, the MCC approved plans to sign 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 then-Foreign Minister Oskanyan that Armenia would address democratization
shortfalls, the MCC and Armenia signed the compact, and it went into force in September 2006.77
The MCC reported that as of the end of September 2008 it had disbursed $22.5 million to
Armenia. After the political turmoil in Armenia in March 2008, the MCC indicated that as an
expression of its “serious concern,” it would halt contracting for road-building. In response, the
Armenian government stated that it would devote $16.8 million of its own funds to carry out
initial road-building during 2008. In December 2008, the MCC Board reiterated its concerns
about democratization progress in Armenia and decided to retain the suspension of some road
work, while moving ahead on other projects. In March 2009, the MCC Board decided to convene
a review session prior to its planned June 2009 meeting to assess whether to lift the hold on
funding road work and otherwise to examine Armenia’s “commitment to democracy and good
governance.”78
U.S. Assistance After the Russia-Georgia Conflict
To address Georgia’s urgent humanitarian needs in the wake of the August 2008 Russia-Georgia
conflict, the U.S. Agency for International Development (USAID) and the Defense and State
Departments provided Georgia with urgent humanitarian assistance. The Defense Department
announced on September 8 that it had completed its naval and air delivery of these urgent
humanitarian supplies to Georgia.
On September 3, 2008, then-Secretary of State Rice announced a multi-year $1 billion aid plan
for Georgia. The Administration envisaged that most of the funds could be allocated from
FY2008-FY2009 budgets, and that the remainder for FY2010 could be appropriated by “the next
Congress and the next administration.” It also was envisaged that the proposed $1 billion aid
package would be in addition to existing aid and requests for Georgia, such as FREEDOM
Support Act and Millennium Challenge Corporation (MCC) funds. The added aid was planned for
humanitarian needs, particularly for internally displaced persons, for the reconstruction of
infrastructure and facilities that were damaged or destroyed during the Russian invasion, and for
safeguarding Georgia’s continued economic growth.79
77 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, at http://www.mca.gov. See also
Armenian Foreign Ministry. Oskanyan Thanks MCC for Millennium Compact, January 12, 2006, at
http://www.armeniaforeignministry.com.
78 Emil Danielyan, “Armenia to Finance Road Project Frozen by U.S.,” Armenia Liberty, July 14, 2008; U.S. Embassy
in Yerevan. Background Information on the Status of the MCA-Armenia Program,” December 16, 2008; MCC. Press
Release: New MCC Board of Directors Reviews Partnerships to Combat Global Poverty, March 11, 2009.
79 U.S. Department of State. Secretary Condoleezza Rice. Remarks On U.S. Economic Support Package for Georgia,
September 3, 2008; Briefing On U.S. Economic Support Package for Georgia, September 3, 2008.
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Besides the envisaged aid, the White House announced that other initiatives might possibly
include broadening the U.S. Trade and Investment Framework Agreement with Georgia,
negotiating an enhanced bilateral investment treaty, proposing legislation to expand preferential
access to the U.S. market for Georgian exports, and facilitating Georgia’s use of the Generalized
System of Preferences.
Congress acted quickly to flesh out the Administration’s aid proposals for Georgia. The
Consolidated Security, Disaster Assistance, and Continuing Appropriations Act, 2009 (H.R.
2638/P.L. 110-329), signed into law on September 30, 2008, appropriated an additional $365
million in aid for Georgia and the region for FY2009 (beyond that provided under continuing
appropriations based on FY2008 funding) for humanitarian and economic relief, reconstruction,
energy-related programs and democracy activities.
The State Department announced in early December 2008 that $757 million of the pledged $1
billion in new assistance had been provided or was in the process of being provided to Georgia,
with the balance of $243 million to be appropriated by the next Congress. Already, $60 million
had been provided in humanitarian assistance for food, water, bedding, and medicine, and $250
million had been made available to the Georgian government for fiscal stabilization and urgent
governmental expenses, including pensions for government retirees, healthcare, allowances for
displaced persons, secondary education, and salaries for government employees. Among in-
process funding, the MCC was providing $100 million to Georgia to support existing programs,
including road rehabilitation, water supply and waste water projects, gas pipeline repairs, and
energy sector studies. The Defense Department was providing $50 million for urgent
reconstruction and stabilization assistance (see also below, Security Assistance), and OPIC was
providing $176 million for mortgages and commercial and residential property development.
Another $121 million was planned to be allocated for economic reconstruction, assistance to
displaced persons, energy security-related programs, and strengthening Georgia’s
democratization.80
U.S. Security Assistance
The United States has provided some security assistance to the region, and bolstered such aid
after September 11, 2001. In testimony in March 2005, Gen. James Jones, then-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 ... This region is a
geographical pivot point in the spread of democracy and free market economies to the states of
Central and Southwest Asia.”81
EUCOM initiatives in the region have included the Sustainment and Stability Operations Program
(SSOP) in Georgia, the South Caucasus Clearinghouse, and the Caspian Regional Maritime
Security Cooperation program. The 16-month SSOP was launched in early 2005 as a follow-on to
80 U.S. Department of State. Office of the Spokesman. Taken Question At Tuesday, December 9 Daily Press Briefing:
Georgia, $1 Billion Assistance Commitment, December 9, 2008.
81 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.
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the Georgia Train and Equip Program (GTEP).82 SSOP was funded at $60.5 million in FY2005.
SSOP provided training for four battalions (2,000 troops), in part to support U.S.-led coalition
operations. In July 2006, the United States announced that the SSOP would be extended another
year and funded at $30 million.83 Prior to the Russia-Georgia conflict, the U.S. was providing
initial military training to Georgia’s 4th Brigade for its eventual deployment to Iraq in Winter
2008. The Defense Department planned to budget approximately $35 million for this training.84
The Clearinghouse aims to facilitate cooperation by sharing data on security assistance among
both donor and recipient countries. Gen. Bantz John Craddock, then-Commander of EUCOM,
testified in March 2008 that the Caspian Regional Maritime Security Cooperation program aims
to “coordinate and complement U.S. government security cooperation activities in Azerbaijan and
Kazakhstan. U.S. Naval Forces Europe continues to promote Maritime Safety and Security and
Maritime Domain Awareness in the Caspian Sea through routine engagement with Azerbaijan.
These efforts are targeted to create an organic ability within Azerbaijan to ‘observe, evaluate, and
respond’ to events in their maritime domain.”85 (This program appears to combine elements of the
former Caspian Guard and Hydrocarbons programs.) 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.86
In the wake of the August 2008 Russia-Georgia conflict that severely damaged Georgia’s military
capabilities, NATO’s then-Supreme Allied Commander for Europe, Gen. Craddock, visited
Georgia on August 21 to survey the destruction of infrastructure and military assets. The
Department of Defense later sent teams to evaluate Georgia’s economic, infrastructure, and
defense needs. In October 2008, Congress authorized $50 million for security assistance for
Georgia under the National Defense Authorization Act for FY2009 (P.L. 110-417; the so-called
“Section 1207” authority). In December 2008, the U.S. Embassy in Georgia announced that these
funds were being obligated for rebuilding the police force ($20 million) and meeting priority
food, shelter, and livelihood needs of displaced persons in the Shida Kartli region ($30 million).87
All three regional states joined NATO’s Partnership for Peace (PFP) in 1994. 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. In 2004-2005, all three states agreed with NATO to participate
82 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.
83 “U.S. Allocates $30 mln for SSOP Army Training Program,” Civil Georgia, July 17, 2006.
84 Senate Armed Services Committee. Hearing on the Georgia-Russia Crisis: Implications and U.S. Response.
Testimony of Eric S. Edelman, Under Secretary of Defense for Policy, September 9, 2008.
85 U.S. Senate. Committee on Armed Services. Statement of General Bantz J. Craddock, March 13, 2008.
86 “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.
87 U.S. Embassy in Georgia. U.S. Government Assistance to Georgia, press release, December 19, 2008. See also CRS
Report RS22871, Department of Defense “Section 1207” Security and Stabilization Assistance: A Fact Sheet, by Nina
M. Serafino.
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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 be considered
for NATO membership.
Although the United States reportedly urged that Georgia be considered for a Membership Action
Plan (MAP; preparatory to membership), NATO’s Riga Summit in November 2006 reaffirmed
support for an intensified dialogue to assist Georgia in implementing reforms.88 A MAP for
Georgia was a matter of contention at the April 2008 NATO Summit. Although Georgia was not
offered a MAP, the Alliance pledged that Georgia would eventually become a member of NATO,
and stated that the issue of a MAP for Georgia would be revisited later in the year.89
After the August 2008 Russia-Georgia conflict, several allies raised heightened concerns that
Georgia was not ready to be granted a MAP because of the destruction of much of its military
infrastructure by Russia, the uncertain status of the breakaway regions, and the uncertain quality
of conflict decision-making by Georgia’s political and military leadership. At a NATO foreign
ministers’ meeting in early December 2008, then-Secretary of State Rice appeared to
acknowledge these allied concerns by embracing a proposal to defer granting a MAP. The allies
instead agreed to step up work within the NATO-Georgia Council (established soon after the
Russia-Georgia conflict) to facilitate Georgia’s eventual NATO membership, and to prepare
annual reports on Georgia’s progress toward eventual membership.
The U.S. Congress approved the NATO Freedom Consolidation Act of 2007, signed into law in
April 2007 (P.L. 110-17), to urge NATO to extend a MAP for Georgia and to designate Georgia as
eligible to receive security assistance under the program established by the NATO Participation
Act of 1994 (P.L. 103-447) (see also below, Legislation). Troops from Armenia, Azerbaijan, and
Georgia have served as peacekeepers in NATO-led operations in Kosovo, and Azerbaijan
supports NATO-led operations in Afghanistan. In mid-April 2008, Georgia withdrew its 150
peacekeepers from Kosovo.
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. The Explanatory Statement for the Omnibus Appropriations
Act for FY2009 (P.L. 111-8; signed into law on March 11, 2009) calls for equal amounts of FMF
($3 million) for each country.
88 NATO. North Atlantic Council. Riga Summit Declaration, November 29, 2006. President Bush stated that the United
States supported Georgia’s NATO membership. “Remarks By President Bush In Riga, Latvia,” PR Newswire,
November 28, 2006. Sen. Richard Lugar urged soon granting Georgia a MAP and suggested that NATO’s energy
security would be facilitated by eventually offering NATO membership to Azerbaijan and Kazakhstan. “Senator Lugar
Delivers Remarks at the Riga Summit, Latvia,” Congressional Quarterly Transcripts, November 27, 2006.
89 See also CRS Report RL34701, NATO Enlargement: Albania, Croatia, and Possible Future Candidates, by Vincent
Morelli et al..
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At a press conference in Georgia on March 30, 2009, visiting Gen. James Cartwright, Deputy
Chairman of the Joint Chiefs of Staff, announced that the U.S. military would soon start training
for Georgian troops that is “focused on the defense of Georgia, on its self and internal defense....
We will work hard to get both the skill levels that are necessary to do that and work as partners on
the equipment necessary.” He stated that briefings he had on Georgia’s equipment needs “helped
us understand what the priority should be on that equipment, both in what the Georgians have
been able to put together on their own here from indigenous equipment, what equipment needs to
be upgraded and then what new types of equipment that are necessary for their homeland
defense.” President Saakashvili responded that Georgia is building a “modern, top-level, much
stronger armed forces, [including] increasing the number of personnel, increasing the number of
soldiers, increasing the amount of our weaponry and, most importantly, raising the level of
training and providing Georgia with much better protection.” He also stated that the U.S. training
would help Georgia to expand its participation in Afghan peacekeeping.90
U.S. Trade and Investment
The former Bush Administration and others have maintained 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 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 30-48 trillion cubic feet of proven natural gas reserves in Azerbaijan.91 Critics argue
that oil and gas from Azerbaijan will amount to a tiny percent of world exports of oil and gas, but
the former Bush Administration argued that these exports would nonetheless boost energy
security somewhat for European customers currently relying on Russia.
During the Clinton Administration, the United States in 1995 encouraged the building of one
small oil pipeline (with a capacity of about 155,000 barrels per day) from Azerbaijan to the
Georgian Black Sea port of Supsa as part of a strategy of ensuring that Russia did not monopolize
90 Air Force Master Sgt. Adam M. Stump, “U.S., Georgia to Continue Strategic Partnership,” American Forces Press
Service, March 31, 2009; CEDR, March 30, 2009, Doc. No. CEP-950352; Giorgi Lomsadze, “Georgia: Pentagon to
Start Military Training Program,” Eurasia Insight, March 30, 2009.
91 U.S. Department of Energy. Energy Information Administration. Azerbaijan Country Analysis Brief, December
2007.
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east-west export pipelines. As part of this strategy, the United States also stressed building the
Baku-Tbilisi-Ceyhan (BTC) pipeline (with a capacity of about 1 million barrels per day) as part
of a “Eurasian Transport Corridor.” A report issued early in the Bush Administration called for
breaking Russia’s monopoly over oil and gas transport routes by encouraging the building of
pipelines that did not traverse Russia; promoting Western energy security through diversified
suppliers; assisting ally Turkey; and opposing the building of pipelines transiting Iran.92 The
report recommended that the President direct U.S. agencies to support building the BTC oil
pipeline, expedite use of the pipeline by oil firms operating in Kazakhstan, and support
constructing a gas pipeline to export Azerbaijani gas. After September 11, 2001, the former Bush
Administration emphasized U.S. vulnerability to possible energy supply disruptions and
encouraged Caspian energy development.
Building the Baku-Tbilisi-Ceyhan and South Caucasus Pipelines
In November 1999, Azerbaijan, Georgia, Turkey, and Kazakhstan signed the “Istanbul Protocol”
on construction of the 1,040-mile long 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 had on-loaded oil at Ceyhan. Turkey’s state pipeline firm Botas reported in
January 2009 that the BTC pipeline had transported 500 million barrels and that 650 tankers had
been loaded at Ceyhan since 2006. Reportedly, some Azerbaijani oil reaches U.S. markets.
A gas pipeline from Azerbaijan to Turkey (termed the South Caucasus Pipeline or SCP) was
completed in March 2007, and exports initially are planned to be 233 billion cubic feet per year.
The joint venture for the SCP includes Norway’s Statoil (20.4%), British Petroleum (20.4%),
Azerbaijan’s Ministry of Industry and Energy (20%), and companies from Russia, Iran, France,
and Turkey. Some in Armenia object to lack of access to the BTC and SCP pipelines.
The August 2008 Russia-Georgia conflict did not result in physical harm to the BTC pipeline or
the SCP. The BTC pipeline was closed due to other causes. The SCP and the small Baku-Supsa
oil pipeline were closed temporarily as a safety precaution. Russian gas shipments via Georgia to
Armenia decreased in volume for a few days at the height of the conflict. Rail shipments of oil by
Azerbaijan to the Kulevi oil terminal (owned by Azerbaijan) on Georgia’s Black Sea coast were
disrupted temporarily. To diversify export routes, Azerbaijan began an oil swap arrangement with
Iran, involving the barging of 5,000-10,000 bpd to Iran’s Neka seaport and Iran’s shipments of
equivalent amounts from a Persian Gulf port.
At the end of October 2008, the first oil from Kazakhstan started to be pumped through the BTC
pipeline. Reportedly, about 70,000 bpd of Kazakh oil is being barged across the Caspian Sea to
the BTC pipeline. In addition, some Kazakh oil is barged to Azerbaijan to be shipped by rail to
Georgia’s Black Sea port of Batumi. Kazakhstan plans to increase its shipments to Azerbaijan to
500,000 bpd by 2012.
92 The White House. The National Energy Policy Development Group. Reliable, Affordable, and Environmentally
Sound Energy for America’s Future, May 16, 2001.
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Concerns of the European Union
Some observers argue that the completion of the BTC and SCP has boosted awareness in the
European Union and the United States of the strategic importance of the South Caucasus.93 In
mid-November 2007, Greek Prime Minister Kostas Karamanlis and Turkish Prime Minister Rejep
Tayyip inaugurated a gas pipeline connecting the two countries. Since some Azerbaijani gas
reaches Greece, the pipeline represents the first gas supplies from the Caspian region to the EU. If
a pipeline extension is built to Italy, this Turkey-Greece-Italy (TGI) pipeline could permit
Azerbaijan to supply gas to two and perhaps more EU members, providing a source of supply
besides Russia.
In March 2007, Azerbaijan and the United States signed a memorandum of understanding on
energy cooperation that called for discussions on the proposed TGI pipeline and a potential EU-
backed Nabucco gas pipeline from Turkey to Austria. In June 2007 and at subsequent forums,
Deputy Assistant Secretary Bryza has urged building the TGI and Nabucco gas pipelines and a
trans-Caspian gas pipeline, so that Azerbaijani and Central Asian gas could be transported to
Europe. He has argued that these routes would be more economical than routes through Russia. In
August 2007, the U.S. Trade Development Administration granted Azerbaijan $1.7 million to
fund feasibility studies on building both an oil and a gas pipeline across the Caspian Sea to link to
the BTC pipeline and the SCP. The Nabucco pipeline has faced numerous delays, some of them
attributable to Russia’s counter-proposals to build pipelines that appear to reduce the efficacy of
the Nabucco pipeline and questions about supplies for the pipeline (see below). Latest EU
planning calls for construction on the Nabucco pipeline to begin in 2010 and be completed in
2013.
Some analysts raise concerns that without a trans-Caspian gas pipeline, there will not be enough
Azerbaijani gas to fill either the TGI or Nabucco pipelines, and argue that Iran also should be
considered as a gas supplier.94 Others suggest that Azerbaijan will be able to supply at least most
of the needed gas for both the TGI and Nabucco pipelines, because of recent promising
indications that there may be a huge new reservoir of gas off the Caspian seacoast. Highlighting
this point, Deputy Assistant Secretary Bryza stated in March 2008 that “we now believe as an
official U.S. Government view ... that Azerbaijan has enough gas to fill TGI, to launch Nabucco,
and perhaps even to fill Nabucco.” He stressed, nonetheless, that the United States also backed a
trans-Caspian gas pipeline as an additional source of supply for TGI and Nabucco.95
Putin reached agreement in May 2007 with the presidents of Turkmenistan and Kazakhstan on the
construction of a new pipeline to transport Turkmen and Kazakh gas to Russia. This agreement
appears to compete with U.S. and EU efforts to foster building a trans-Caspian gas pipeline to
link to the SCP to Turkey. It also appears to compete with U.S. and EU efforts to foster building
the Nabucco gas pipeline from Turkey to Austria.96
93 Jaba Devdariani and Blanka Hancilova, “EU Broaches Peacekeeping Possibility in Georgia,” Central Asia-Caucasus
Analyst, March 7, 2007; Rovshan Ismayilov, “Azerbaijan, Georgia and Turkey: Building a Transportation
Triumvirate?” Eurasia Insight, February 7, 2007.
94 U.S. Department of State. Transcript: U.S. Official Discusses Energy Security Agreement with Azerbaijan, March 22,
2007; Associated Press, June 6, 2007.
95 U.S. Department of State. Trans-Caspian and Balkan Energy Security: Matthew Bryza, Deputy Assistant Secretary
of State for European and Eurasian Affairs, On-the-Record Briefing with Greek Media, March 18, 2008.
96 According to some observers, Russia’s efforts to discourage the building of a trans-Caspian gas pipeline included an
agreement with Turkey in December 1997 that Russia would build a trans-Black Sea pipeline (termed “Blue Stream”)
(continued...)
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Armenia, Azerbaijan, and Georgia: Political Developments and Implications for U.S.
Regional Energy Cooperation with Iran
On March 19, 2007, Armenia’s then-President Robert Kocharyan and Iranian President Mahmoud
Ahmadinejad inaugurated an 88-mile gas pipeline from Tabriz in Iran to Kadjaran in Armenia.
Work was completed on the second section of the pipeline, a 123 mile section from Kadjaran to
Ararat, in December 2008. The Russian-controlled ArmRosGazprom joint venture built this
second section and operates the pipeline. Initial deliveries reportedly are 10.6-14.1 billion cubic
feet of gas per year, with plans for more gas deliveries in future years. Some of this gas will be
used to generate electricity for Iran and Georgia, but the remainder eventually may satisfy all
Armenia’s consumption needs, alleviating its dependence on Russian gas transported via
Georgia.97
At the end of 2005, Azerbaijan began sending up to about 35 million cubic feet of gas per day
through a section of Soviet-era pipeline to the Iranian border at Astara in exchange for Iranian gas
shipments to Azerbaijan’s Nakhichevan exclave. In late March 2009, Azerbaijan’s SOCOR
energy firm announced that it was holding talks with Russia’s Gazprom on the refurbishment of
the gas pipeline from Russia to Astara (including the part now used by Azerbaijan), in order to
facilitate a Russian gas swap arrangement with Iran.98
Table 1. U.S. Foreign Aid to the Region,
FY1992-FY2008, and FY2009 Request
(millions of dollars)
South Caucasus
FY1992-FY2007 Budgeted
FY2007 Budgeted
FY2008
Country
Aida
Aida
Estimateb
Armenia 1,746.08
71.64 64.41
Azerbaijan 753.26
74.85 28.4
Georgia 1,898.64
131.58 66.44
Regional 38.73
2.0
—
Total 4,436.71
280.07
159.25
Percent 13.6
14
33
Sources: State Department, Office of the Coordinator for U.S. Assistance to Europe and Eurasia, January 2009;
State Department, Congressional Budget Justification for Foreign Operations, FY2009.
a. FREEDOM Support Act and Agency budgets.
(...continued)
to supply gas to Turkey. By building this pipeline, Russia hoped to discourage Turkey from importing Caspian Sea
region or Middle Eastern gas, which could be trans-shipped to Europe, according to these observers. Despite these
Russian efforts (the Blue Stream project was completed in 2005), Turkey still signed a framework agreement in 1998
and a gas supply agreement in May 1999 with Turkmenistan that envisaged the building of either a pipeline traversing
Iran or a trans-Caspian route through Azerbaijan and Georgia (a gas pipeline from Tabriz to Ankara began operating in
2001, but Turkmen gas is not being sold to Turkey through this pipeline). In September 1999, Turkmenistan also joined
Azerbaijan, Georgia, and Turkey in signing a declaration on a trans-Caspian gas pipeline. Plans at that time for a trans-
Caspian gas pipeline, however, were derailed in 2000 by a clash between Turkmenistan and Azerbaijan over how much
gas each nation could ship through the Baku-Turkey leg of the prospective gas pipeline, and by Turkmenistan’s
rejection of proposals from a consortium formed to build the trans-Caspian leg of the pipeline.
97 Platt’s Commodity News, May 31, 2007.
98 Alexander’s Gas and Oil Connections, January 12, 2006; Newsbase FSU Oil and Gas Monitor, March 25, 2009.
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Armenia, Azerbaijan, and Georgia: Political Developments and Implications for U.S.
b. FREEDOM Support Act and other Function 150 funds. Includes Peace Corps funding but does not include
Defense or Energy Department funding, funding for exchanges, or Millennium Challenge Corporation
programs in Armenia and Georgia.
Figure 1. Map of the Region
Source: Map Resources. Adapted by CRS.
Author Contact Information
Jim Nichol
Specialist in Russian and Eurasian Affairs
jnichol@crs.loc.gov, 7-2289
Congressional Research Service
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