Armenia, Azerbaijan, and Georgia:
Political Developments and Implications
for U.S. Interests
Jim Nichol
Specialist in Russian and Eurasian Affairs
October 20, 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
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 has had 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 nearly 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 degraded by the conflict, and Georgia has requested 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, but 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
ongoing Armenia-Azerbaijan conflict over the breakaway Nagorno Karabakh region; and threats
posed to Georgia and the region by Russia’s August 2008 military incursion 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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Contents
Most Recent Developments......................................................................................................... 1
Background ................................................................................................................................ 2
Overview of U.S. Policy Concerns .............................................................................................. 2
Post-September 11 .......................................................................................................... 4
Operations in Iraq ........................................................................................................... 4
After the August 2008 Russia-Georgia Conflict ............................................................... 4
The South Caucasus’s External Security Context ......................................................................... 7
Russian Involvement in the Region ....................................................................................... 7
Military-Strategic Interests .............................................................................................. 8
Caspian Energy Resources .............................................................................................. 9
The Roles of Turkey, Iran, and Others ................................................................................. 10
Obstacles to Peace and Independence........................................................................................ 12
Regional Tensions and Conflicts.......................................................................................... 12
Nagorno Karabakh Conflict .......................................................................................... 12
Civil and Ethnic Conflict in Georgia.............................................................................. 15
Economic Conditions, Blockades, and Stoppages ................................................................ 21
Democratization Problems and Progress.............................................................................. 22
Armenia........................................................................................................................ 22
Azerbaijan .................................................................................................................... 24
Georgia ......................................................................................................................... 25
U.S. Aid Overview.................................................................................................................... 27
U.S. Assistance After the Russia-Georgia Conflict............................................................... 28
U.S. Security Assistance............................................................................................................ 30
U.S. Trade and Investment ........................................................................................................ 33
Energy Resources and U.S. Policy....................................................................................... 33
Building the Baku-Tbilisi-Ceyhan and South Caucasus Pipelines .................................. 34
Concerns of the European Union................................................................................... 34
Regional Energy Cooperation with Iran......................................................................... 36
Figures
Figure 1. Map of the Region...................................................................................................... 38
Tables
Table 1. U.S. Foreign Aid to the Region, FY1992-FY2007, FY2008, FY2009, and the
FY2010 Request .................................................................................................................... 36
Table 2. The $1 Billion in Added Aid to Georgia by Priority Area.............................................. 37
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Contacts
Author Contact Information ...................................................................................................... 38
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Most Recent Developments
On October 10, 2009, Armenian Foreign Minister Edward Nalbandian and Turkish Foreign
Minister Ahmet Davutoglu signed two protocols “On Establishing Diplomatic Relations,” and
“On Development of Bilateral Relations.” The protocols, which the two sides described as
historic, provide for the establishment of embassies in the respective states and for the opening of
joint borders within two months after ratification of the protocols by the legislatures of the two
states. Turkish Prime Minister Recep Tayyip Erdogan warned on October 12, however, that the
ratification process in Turkey could be complicated by the failure to resolve the Armenia-
Azerbaijan conflict over the breakaway Nagorno Karabakh (NK) region. At a meeting in Moscow
on October 13, Secretary of State Hillary Clinton thanked Russian Foreign Minister Sergey
Lavrov for providing support that led to the signing of the protocols. Turkish President Abdullah
Gül and Armenian President Serzh Sargisyan attended an Armenia-Turkey soccer match in the
Turkish town of Bursa on October 14. On October 16, 2009, Azerbaijani President Ilkham Aliyev
reportedly stated that Azerbaijan “would not put up with” the end of Armenia’s isolation
(referring to the possible border opening), complained about gas prices paid and transit fees
charged by Turkey, and hailed growing gas export ties with Russia and Iran. On October 19,
Turkish Minister of Energy Taner Yildiz reportedly called on Azerbaijan not to punish Turkey for
signing the protocols by raising gas prices.
The World Association of Newspapers and News Publishers and Miklos Haraszti (an official of
the Organization for Security and Cooperation in Europe, or OSCE) issued appeals to Azerbaijani
leaders against the October 8 sentencing of four reporters to prison terms on charges of
defamation. Two of the reporters had been charged with criticizing the decision-making of the
president of a soccer club and the other two of criticizing the pro-government leanings of a labor
union leader. The Association stated that “the jailing ... which brings the total number of
journalists currently held in prison to seven only confirms the findings of our delegation [which
recently visited Azerbaijan] that there is a pervasive climate of intimidation and fear in the Azeri
media.” The appeals called for Azerbaijan to decriminalize defamation.1
On September 30, 2009, a special EU fact-finding mission led by Swiss diplomat Heidi Tagliavini
released a report on the origins and course of the August 2008 Russia-Georgia conflict. On the
one hand, the mission concluded that “open hostilities began with a large-scale Georgian military
operation against the town of Tskhinvali [in South Ossetia] and the surrounding areas, launched in
the night of 7 to 8 August 2008. Operations started with a massive Georgian artillery attack.” The
mission also argued that the artillery attack was not justifiable under international law. On the
other hand, the mission suggested that “much of the Russian military action went far beyond the
reasonable limits of defense,” and that such “action outside South Ossetia was essentially
conducted in violation of international law.” In Abkhazia, actions by Russian-supported militias
in the upper Kodori Valley “constituted an illegal use of force ... not justified under international
law.” The mission likewise asserted that actions by South Ossetian militias “against ethnic
Georgians inside and outside South Ossetia, must be considered as having violated International
humanitarian law and in many cases also human rights law.” Commenting on the release of the
1 OSCE. Press Release: OSCE Media Freedom Representative Deplores Latest Imprisonments of Journalists for
Defamation in Azerbaijan, Calls for Urgent Reform, October 14, 2009; World Association of Newspapers and News
Publishers, Protest Letters: Azerbaijan, October 12, 2009, at http://www.wan-press.org/pfreedom/articles.php?id=
4937.
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report, a U.S. State Department spokesman stated that “we recognize that all sides made mistakes
and miscalculations through the conflict last year. But our focus is on the future....”2
Background
Armenia, Azerbaijan, and Georgia are located south of the Caucasus Mountains that form part of
Russia’s borders (see Figure 1). The South Caucasus states served historically as a north-south
and east-west trade and transport “land bridge” linking Europe to the Middle East and Asia, over
which the Russian Empire and others at various times endeavored to gain control. In ancient as
well as more recent times, oil and natural gas resources in Azerbaijan attracted outside interest.
All three peoples can point to periods of past autonomy or self-government. After the Russian
Empire collapsed in 1917, all three states declared independence, but by early 1921 all had been
re-conquered by Russia’s Red (Communist) Army. They regained independence when the Soviet
Union collapsed in 1991.3
Overview of U.S. Policy Concerns
By the end of 1991, the United States had recognized the independence of all the former Soviet
republics. The United States pursued close ties with Armenia, because of its profession of
democratic principles, and concerns by Armenian-Americans and others 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).
U.S. policy toward the South Caucasus states
The Caucasus Region: Basic Facts
has included promoting the resolution of
Area: The region is slightly larger than Syria: Armenia is
conflicts between Armenia and Azerbaijan
11,620 sq. mi.; Azerbaijan is 33,774 sq. mi.; Georgia is
over Azerbaijan’s breakaway Nagorno
26,872 sq. mi.
Karabakh (NK) region and between Georgia
Population: 15.83 million, slightly more than
and its breakaway regions of Abkhazia and
Kazakhstan; Armenia: 2.97 m.; Azerbaijan: 8.24 m.;
South Ossetia (resolving these latter conflicts
Georgia: 4.62 m. (CIA, The World Factbook, July 2009
est.). Over a million people from the region are migrant
became much more difficult following the
workers in Russia and elsewhere.
August 2008 conflict; see “The August 2008
Russia-Georgia Conflict,” below). Since 1993,
GDP: $114.17 billion: Armenia: $18.92 b.; Azerbaijan:
$73.65 b.; Georgia: $21.6 b. (The World Factbook, 2008
successive U.S. Special Negotiators for
est., purchasing power parity).
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.)4
2 U.S. Department of State. Daily Press Briefing, September 30, 2009.
3 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.
4 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
(continued...)
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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 “Post-September 11,”
below). Provisions in FY1996, FY1998, and FY1999 legislation eased the prohibition by
providing for humanitarian, democratization, and business aid exemptions.
Assistant Secretary of State Philip Gordon stated in June 2009 that U.S. policy toward Armenia
aims to assist it to “strengthen its security and prosperity by settling [its] conflict with Azerbaijan
over NK and by encouraging Turkey and Armenia to normalize their relations.... We also seek to
advance democratic and market economic reform in Armenia, including through the Millennium
Challenge Corporation.” He averred that “Azerbaijan is an important partner of the United States
on regional security (especially counterterrorism) and on helping our European allies diversify
their supplies of natural gas.... The United States has helped generate new progress toward a
settlement of the NK conflict [by] facilitating five meetings between Presidents Sargisyan and
Aliyev over the past year.”5 Assistant Secretary of Defense Alexander Vershbow stated in August
2009 that U.S. policy toward Georgia rests on continued support for its territorial integrity,
independence and sovereignty and rejects “any notion of spheres of influence in the region.... We
stand by the principle that sovereign states have the right to ... choose their own partnerships and
alliances.... Most importantly, we will continue to stand by and deepen our support to Georgia and
its people. This support does not come blindly however, and we will calibrate our assistance to
respect the needs of the Georgian people, to strengthen regional security, and to support
democratic and economic reforms in Georgia.”6
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
(...continued)
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.
5 U.S. House of Representatives. Committee on Foreign Affairs. Subcommittee on Europe. Hearing on Strengthening
the Transatlantic Alliance: An Overview of the Obama Administration's Policies in Europe. Statement by Philip H.
Gordon, Assistant Secretary, Bureau of European and Eurasian Affairs, June 16, 2009.
6 U.S. Senate. Committee on Foreign Relations. Subcommittee on Europe. Hearing on Georgia: One Year After the
August War. Testimony of Alexander Vershbow, Assistant Secretary of Defense for International Security Affairs,
August 4, 2009.
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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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 “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
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. In June 2009, Georgia announced that 500 troops would be sent to Afghanistan in 2010.
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. Armenia began sending
personnel to Iraq in January 2005. Armenia’s 46 personnel were pulled out in late 2008.
After the August 2008 Russia-Georgia Conflict
Strong U.S. support for Georgia is 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,
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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 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 Former Deputy Assistant Secretary
Bryza stressed that the charter did 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, to counter perceptions that the United States (and the West) had acquiesced to increased
Russian dominance in the South Caucasus.9
The Obama Administration has reaffirmed U.S. support for Georgia’s sovereignty, independence,
and territorial integrity. At the Munich Security Conference on February 7, 2009, Vice President
Joe Biden stated that “the United States will not recognize Abkhazia and South Ossetia as
independent states. We will not recognize a sphere of influence. It will remain our view that
sovereign states have the right to make their own decisions and choose their own alliances.”10 The
Vice President met with Georgian President Mikheil Saakashvili, who later stated that the “main
message” he received in Munich was that “it has been confirmed that we have very serious,
unequivocal, detailed support from the new U.S. Administration.”11
The first meeting of the U.S.-Georgia Strategic Partnership Commission was held on June 22,
2009, in Washington, DC, led by Deputy Secretary of State James Steinberg and Georgian
Foreign Minister Grigol Vashadze. The Security Working Group also met, co-headed on the U.S.
side by Assistant Secretary of State Philip Gordon and Assistant Secretary of Defense Alexander
Vershbow, and headed on the Georgian side by Deputy Foreign Minister Giga Bokeria. There
were other working groups on the economy, democracy, and people-to-people exchanges.
At the U.S.-Russia summit in July 2009, President Obama stated that one area where the two
presidents “agreed to disagree” was on Georgia, where he stressed that he had “reiterated my firm
belief that Georgia’s sovereignty and territorial integrity must be respected. Yet even as we work
through our disagreements on Georgia’s borders, we do agree that no one has an interest in
renewed military conflict.”12 Michael McFaul, the Senior Director for Russian and Eurasian
Affairs on the National Security Council, reported that President Obama also argued that the
Russian idea of a “sphere of influence” in the Soviet successor states does not belong in the 21st
8 U.S. Department of State. U.S.-Georgia Charter on Strategic Partnership, January 9, 2009.
9 David J. Smith, “US-Georgia Charter is Historic,” Potomac Institute for Policy Studies, January 12, 2009.
10 Munich Security Conference. Vice President Joseph R. Biden: Speech at the 45th Munich Security Conference,
February 7, 2009.
11 Open Source Center. OSC Report: Georgia: Officials, Observers Praise Biden’s ‘Clear Message’ to Russia in
Munich, February 12, 2009.
12 The White House. Office of the Press Secretary. Press Conference by President Obama and President Medvedev of
Russia, July 6, 2009.
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century. The two presidents did agree, however, that “no one has an interest in renewed military
conflict.”
In Georgia, many officials and others viewed the meeting positively as lessening the chances of
renewed Russia-Georgia conflict and as a reaffirmation of the U.S. commitment to Georgia. Some
in Georgia, however, have expressed concern that the “reset” in U.S.-Russian relations could lead
the United States to downgrade ties with Tbilisi, or even make concessions to Russia at Georgia’s
expense. Perhaps in order to calm these fears, Vice President Joseph Biden visited Georgia on
July 22-23, 2009, to emphasize the U.S. commitment. He stated that President Obama had asked
him to travel to the country “to send an unequivocal, clear, [and] simple message” that U.S.
efforts to reset relations with Russia would not come at the expense of ties with Georgia.
Appearing to reassure Russia, however, he stressed that the U.S.-Georgia Charter did not
represent an effort by the United States to create a sphere of influence in the region. While stating
that the U.S.-Georgia “partnership rests on a foundation of shared democratic ideals,” he called
for further democratization progress, including the creation of a “transparent, accountable, and
fully participatory” government, a better balance of power between the legislative and executive
branches, a level electoral playing field, an independent media, an independent judiciary, and a
democratic presidential succession process. The Vice President also raised the hope that “a
peaceful and prosperous Georgia” would encourage Abkhazia and South Ossetia to enter into a
federal relationship, and that in the meantime, the United States would not extend diplomatic
recognition to the breakaway regions.13
In September 2009, Assistant Secretary Gordon reported that Secretary Clinton “made clear” to
President Saakashvili during their meeting on the sidelines of the opening fall session of the U.N.
General Assembly that “there is not a short-term fix to the problems of South Ossetia and
Abkhazia, as much as we want Russian troops to leave those territories as soon as possible, but
that the best way forward would be one of strategic patience.” Gordon appeared to contradict this
by then stating that “we do believe that Russia should implement the conditions of the August and
September ceasefires of 2008. And that means, in specific, reducing Russian troops to the
position – pulling back Russian troops to the positions they were before the ceasefire. So those
are very specific things that we want to see Russia do right now.” Through strategic patience, he
averred, the United States and Georgia can “achieve our common goal of seeing Abkhazia and
South Ossetia not only not recognized by others, but integrated into Georgia, which she made
clear was our goal, was to strengthen Georgia as a more attractive place, as a magnet for these
people to come back to Georgia.”14
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 unquestionably back Georgia’s
territorial integrity, but should rather encourage reconciliation and the consideration of options
short of the near-term reintegration of the regions into Georgia. At the same time, most observers
13 The White House. Office of the Vice President. Remarks by the Vice President at an Official Dinner Hosted by
President Saakashvili, July 22, 2009; Remarks by the Vice President to the Georgian Parliament, July 23, 2009.
14 U.S. Department of State. Czech and Georgian Bilateral Meetings, press conference with Phil Gordon, Assistant
Secretary of State for European Affairs, September 21, 2009.
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advise against extending diplomatic recognition to breakaway regions without an international
consensus.15
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 appeared to be 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,
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). Azerbaijan has appeared to value having some cooperative relations with
Russia, and has criticized Georgia’s inability to maintain such ties with Russia.
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, and expelling hundreds of Georgian migrant workers.
15 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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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.16 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.)
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.17
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 “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
16 The Military Balance 2009. London: International Institute of Strategic Studies, February 5, 2009.
17 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.
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Armenia, Azerbaijan, and Georgia
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.
In July 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.18 Georgia objected to this stance.
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 visit by then-President Bush to Georgia in May 2005, 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.19 In June 2007, Russia formally handed over the
Akhalkalaki base to Georgia’s control. In November 2007, the Russian Foreign Ministry
proclaimed that the Batumi base had been closed and that Russia had “fully” accomplished its
obligations to Georgia on the withdrawal of military facilities. Georgia continued to protest that
the Gudauta base 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 (since reduced), would be deployed to new military bases in Abkhazia and South
Ossetia. Some of these troops reportedly were soon 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 planned to be deployed to Ochamchire in Abkhazia.20 In May 2009, Russia announced that
the number of military troops would be reduced to about 1,700-1,800 in each region because of
economic problems in Russia. However, they have been bolstered by the deployment of 1,300
border guards to each region.
Caspian Energy Resources
Russia has tried to play a dominant role in future oil production and transportation in the Caspian
Sea region. A major lever has been the prices it charges the South Caucasian countries for gas. In
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. Russia again
hiked gas prices in 2007. Georgia negotiated an agreement to receive some Azerbaijani gas via
the new South Caucasus Pipeline (SCP, see “Building the Baku-Tbilisi-Ceyhan and South
Caucasus Pipelines,” below) and another small existing pipeline. It also agreed to continue to
18 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.
19 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.
20 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.
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Armenia, Azerbaijan, and Georgia
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. (See also, “Energy Resources and U.S.
Policy,” for information on Russia’s efforts to block the development of competing regional
energy pipelines.)
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. 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.
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. In September 2008, Turkey’s President Abdullah
Gül visited Armenia, ostensibly to view a soccer game, and this thaw contributed to the two
countries reaching agreement in April 2009 on a “road map” for normalizing ties, including the
establishment of full diplomatic relations and the opening of borders. Almost immediately,
however, Turkish Prime Minister Recep Tayyip Erdogan stressed that the NK conflict must be
settled before relations can improve, a stance decried by Armenia as setting preconditions on the
normalization of ties. Two protocols on diplomatic relations and foreign relations were initialed
on August 31, 2009, by Turkish Foreign Minister Ahmet Davutoglu and Armenian Foreign
Minister Edvard Nalbandian.
The protocol on diplomatic relations calls for the two sides to establish embassies in each other’s
capitals within two months after the mutual legislatures have approved the protocols and after the
exchange of the articles of ratification of the protocol. The protocol on foreign relations calls for
the two sides to “agree to open the common border within two months after the entry into force of
this Protocol; agree to conduct regular political consultations between the Ministries of Foreign
Affairs of the two countries; implement a dialogue on the historical dimension with the aim to
restore mutual confidence between the two nations, including an impartial scientific examination
of the historical records and archives to define existing problems and formulate
recommendations; make the best possible use of existing transport, communications and energy
infrastructure and networks between the two countries,” and undertake other cooperative efforts.
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Armenia, Azerbaijan, and Georgia
The two sides also agree to set up a bilateral commission to boost ties.21 The Armenian
government has reaffirmed that obtaining international recognition of the Armenian genocide
continues to be a element of foreign policy and stressed that the settlement of the NK conflict is
separate from the Armenian-Turkish protocols. The Turkish government has asserted that the
protocols will not be implemented to the detriment of Azerbaijan’s interests. Turkish legislative
speaker Mehmet Ali Sahin stressed on September 26, 2009, during a visit to Azerbaijan that the
legislature would not approve the protocols until the NK conflict is resolved.
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.22
Some Azerbaijani media reported in June 2009 that hundreds of ethnic Azerbaijani supporters of
Mirhoseyn Musavi (an ethnic Azerbaijani who lost the presidential election in Iran in mid-June)
fled to Azerbaijan to escape government-sanctioned violence against peaceful protests and other
persecution. Nonetheless, President Aliyev congratulated Mahmud Ahmadinejad on June 16 on
his election victory, and the Azerbaijani foreign minister urged the “speedy return” of stability
and order in neighboring Iran. The Azerbaijani Azadliq [Freedom] opposition bloc on June 24
called on the Iranian government to halt its violence against peaceful demonstrators.
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
21 Ministry of Foreign Affairs of Armenia. Protocol on the Establishment of Diplomatic Relations between the Republic
of Armenia and the Turkish Republic and the Protocol on the Development of Mutual Relations Between the Republic
of Armenia and the Turkish Republic, August 31, 2009, at http://www.armeniaforeignministry.com/pr_09/
20090831_protocol.pdf. See also The Turkish Weekly, August 31, 2009.
22 See CRS Report RL32048, Iran: U.S. Concerns and Policy Responses, by Kenneth Katzman.
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Armenia, Azerbaijan, and Georgia
August 2008 Russia-Georgia conflict and in deploying observers after the ceasefire (see “The
August 2008 Russia-Georgia Conflict,” 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.”23
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 wider 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 ongoing 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.
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
23 EU. European Commission. “Eastern Partnership,” at http://ec.europa.eu/external_relations/eastern/index_en.htm.
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Armenia, Azerbaijan, and Georgia
were still about 4,600 people considered refugees or displaced persons in Armenia.24 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.25 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%).26 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.” In November
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.27
The Basic Principles call for the phased return of the territories surrounding NK to Azerbaijani
control; an interim status for NK providing guarantees for security and self-governance; a
corridor linking Armenia to NK; future determination of the final legal status of NK through a
legally binding expression of will; the right of all internally displaced persons and refugees to
return to their former places of residence; and international security guarantees that would include
a peacekeeping operation.28
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 then-
Deputy Assistant Secretary of State Matthew Bryza, it violated the provisions of the Basic
Principles and thus harmed the peace process.
24 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.
25 Norwegian Refugee Council. Internal Displacement Monitoring Center. Country Page: Azerbaijan, at
http://www.internal-displacement.org/idmc/website/countries.nsf.
26 International Crisis Group. Nagorno-Karabakh: Viewing the Conflict from the Ground, September 14, 2005; CIA,
The World Factbook. Azerbaijan, at https://www.cia.gov/cia/publications/factbook/geos/aj.html.
27 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.
28 The White House. Joint Statement on the Nagorno-Karabakh Conflict by U.S. President Obama, Russian President
Medvedev, and French President Sarkozy at the L’Aquila Summit of the Eight, July 10, 2009.
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Armenia, Azerbaijan, and Georgia
In the wake of the Russia-Georgia conflict in early August 2008 (see “The August 2008 Russia-
Georgia Conflict,” 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 Gül 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, 2008, called for continuing the Minsk Group talks.
On November 2, 2008, Russian President Medvedev hosted talks in Moscow between Armenian
President Serzh Sarkisyan and Azerbaijani President Ilkham Aliyev on a settlement of the NK
conflict. Little progress in reaching a settlement was reported, but a joint declaration signed by
Aliyev and Sarkisyan (also termed the Meindorf declaration after the castle where talks were
held) upheld a continued mediating role for the Minsk Group.
Presidents Aliyev and Sargisyan met to discuss NK peace settlement issues on the sidelines of the
May 2009 EU summit that launched the EU Eastern Partnership program of enhanced trade and
other ties with the South Caucasus and other former Soviet republics. Although the Minsk Group
co-chairs reported some progress in the talks, Nevruz Mehmedov, the head of foreign affairs in
the presidential administration, reportedly stated that the co-chairs were “misinforming the
international public and the president and secretary of state of the United States by speaking
about progress in the negotiation process.”30 However, there was some subsequent interaction
between civil society representatives of Armenia and Azerbaijan who met in NK in early July
2009.
At a summit of the G-8 (Group of Eight industrialized countries) heads of state in L’Aquila,
France, a joint statement called for Armenia and Azerbaijan to accept the Madrid Proposals,
which will “will allow the drafting of a comprehensive settlement to ensure a future of peace,
stability, and prosperity for Armenia and Azerbaijan and the broader region.”31
President Medvedev again hosted Minsk Group-facilitated talks between the Armenian and
Azerbaijani presidents on July 17, 2009. In early August 2009, former Armenian Foreign Minister
Vartan Oskanyan reportedly called for Armenians to support the Madrid Proposals as the best
chance for a peace settlement that would provide for self-determination for NK.
On October 9, 2009, Presidents Sargisyan and Aliyev held talks at the residence of the U.S.
ambassador in Chisinau, Moldova, on the sidelines of a summit of the Commonwealth of
Independent States. The Minsk Group co-chairs participated after one-on-one talks by the two
29 Open Source Center. Europe: Daily Report, August 27, 2008, Doc. No. EUP-085016.
30 Interfax, May 12, 2009.
31 The White House. Joint Statement on the Nagorno-Karabakh Conflict by U.S. President Obama, Russian President
Medvedev, and French President Sarkozy at the L’Aquila Summit of the Eight, July 10, 2009.
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Armenia, Azerbaijan, and Georgia
leaders. New U.S. co-chair Robert Bradtke reported that the two presidents discussed line-by-line
details of a possible 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.32
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. 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.”33 (For other Russian actions during 2008 specific to a breakaway region, see either
“Developments in Abkhazia Before August 2008,” “Developments in South Ossetia Before
August 2008,” or “The August 2008 Russia-Georgia Conflict,” below.)
Developments in Abkhazia Before August 2008
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
32 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.
33 “Germany, Great Britain, France, U.S.A. and Germany Passed Communiqué,” Black Sea Press, April 24, 2008.
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Armenia, Azerbaijan, and Georgia
April-May 1994 on a framework for a political settlement and the return of refugees. 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 U.S. 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 March and April 2008, President Saakashvili proposed new peace initiatives that included
international guarantees of autonomy for Abkhazia, quotas for Abkhaz representation in Georgian
executive and legislative bodies, the establishment of a special economic zone in the Gali region,
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 a buildup of Georgian “military forces” and police in
the Kodori Gorge, which they alleged were preparing to attack the de facto Abkhaz government.
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
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Abkhazia.34 In late May 2008, 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 former Deputy Assistant Secretary Bryza, the railway
was used in August by Russia when its troops moved into Georgia.35
Developments in South Ossetia Before August 2008
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
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.
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.36
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.”37 In November
2006, a popular referendum was held in South Ossetia to reaffirm its “independence” from
Georgia. In March 2007, President Saakashvili proposed another peace plan for South Ossetia
that involved creating “transitional” administrative districts throughout the region, and in July
34 ITAR-TASS, May 6, 2008.
35 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.
36 Georgia: a Toponymic Note Concerning South Ossetia, The Permanent Committee on Geographic Names, January
2007.
37 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.
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Armenia, Azerbaijan, and Georgia
2007, he decreed the establishment of a commission to work out South Ossetia’s “status” as a part
of Georgia. After October 2007, no more peace talks were held.
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.38
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. 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.”39 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.40 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 outside of South Ossetia and Abkhazia, 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 and Venezuela are the only countries that have followed suit in extending diplomatic
relations to Abkhazia and South Ossetia.
38 See also CRS Report RL34618, Russia-Georgia Conflict in August 2008: Context and Implications for U.S. Interests,
by Jim Nichol.
39 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.
40 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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Armenia, Azerbaijan, and Georgia
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
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
OSCE would remain; and that the number of international observers would be increased by
October 1, to include at least 200 observers from the 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.”41
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 incursion into Georgia. 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.42 Others warn that democratization is
halting and could face setbacks (see “Democratization Problems and Progress”).43
The EU Monitoring Mission (EUMM) 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 have been 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 pulled out on June 30, 2009.44
Similarly, on June 15, 2009, Russia vetoed a U.N. Security Council resolution that extended the
UNOMIG mandate, and they pulled out of Abkhazia. The EUMM is now the sole international
group of monitors. At an EU Foreign Ministers’ meeting in Brussels in late July 2009, the
mandate of the EUMM was extended another year until September 14, 2010. It was reported that
the number of monitors in July 2009 was 246, that France and Germany were the largest
41 Open Source Center. Central Eurasia: Daily Report(hereafter CEDR), September 28, 2008, Doc. No. CEP-950425;
CEP-950440.
42 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.
43 International Crisis Group. Georgia: The Risks of Winter, November 26, 2008.
44 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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Armenia, Azerbaijan, and Georgia
contributors of monitors, and that the monitors were based in four field offices near the contested
borders.
According to Assistant Secretary of Defense Alexander Vershbow and Assistant Secretary of State
Philip Gordon, the EUMM has been effective at debunking several allegations made by Russia
and the separatist regions that ceasefire violations have been committed by Georgia. The United
States and the EU continue to call for unrestricted access to Abkhazia and South Ossetia in order
to monitor the ceasefile. Vershbow and Gordon have praised Georgia’s cooperation with the
EUMM, including Georgia’s agreement with the EUMM at the beginning of 2009 to report all
movements of its security forces near the administrative borders and to permit unannounced
inspections of its military facilities. They contrast this cooperation to the refusal of Russia,
Abkhazia, and South Ossetia to permit patrols in the regions.45
Assistant Secretary Gordon has warned that “Moscow continues to strengthen its grip on [South
Ossetia and Abkhazia]. Thousands of Russian forces remain in both regions, a significant increase
from pre-war levels, and in April [2009] Russia signed an agreement with the separatists whereby
Russia will guard the administrative boundaries for the next five years. South Ossetian and
Abkhaz economic dependency on Russia also continues to grow.”46
An international conference to discuss security, repatriation, and status issues related to the
conflict held its inaugural session in Geneva on October 15, 2008. Facilitators at the talks include
the U.N., the EU, and the United States. The talks were disrupted 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. Russia has insisted at these meetings and elsewhere that Georgia sign a non-use of
force agreement with the breakaway regions and that the international community impose an
arms embargo on Georgia.
The February 17-18, 2009, session was significant in that the sides agreed to set up an “incident
prevention and response mechanism” along the South Ossetian border with the rest of Georgia in
order to defuse tensions before they escalate. On April 23, the first meeting of the incident team
was convened in the Georgian town of Ergneti, with the participation of the Georgian and South
Ossetian sides, as well as representatives of the Russian Ministry of Defense, the OSCE and the
EU. A second meeting of the incident team was delayed but finally held in the Georgian town of
Dvani on May 29, 2009. The South Ossetian side cancelled a meeting of the incident team
planned for June 11 and threatened to stop participating in them. On July 31, 2009, the EUMM
tried to convene a meeting of the incident team to examine allegations by Georgia and South
Ossetia that shelling had occurred, but Russian representatives were unavailable.
The May 19-20, 2009, session in Geneva almost broke up, with Russia delaying proceedings until
a report was issued by the U.N. Secretary General on Abkhazia. The report, issued after the
Russia walkout on May 19, was deemed suitable and proceedings resumed on May 20. At issue
was a Russian demand that the acronym UNOMIG not appear in the report. Although dropping
the acronym (which refers to the U.N. observer mission as serving in Abkhazia, a part of
45 U.S. Senate. Committee on Foreign Relations. Subcommittee on Europe. Hearing on Georgia: One Year After the
August War. Testimony of Alexander Vershbow, Assistant Secretary of Defense for International Security Affairs, and
Testimony of Philip H. Gordon, Assistant Secretary for European and Eurasian Affairs, August 4, 2009.
46 U.S. Senate. Committee on Foreign Relations. Subcommittee on Europe. Hearing on Georgia: One Year After the
August War. Testimony of Philip H. Gordon, Assistant Secretary for European and Eurasian Affairs, August 4, 2009.
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Armenia, Azerbaijan, and Georgia
Georgia), the U.N. Secretary General nonetheless stressed that “the ceasefire regime ... has
continued to erode. Heavy military equipment and military personnel [from Russia] have
remained in the Mission’s area of responsibility.”47
At the session in Geneva in July 2009, the sides discussed setting up an incident prevention office
along Abkhazia’s border with the rest of Georgia. A meeting in Gali to establish the office was
held on July 14, 2009, and a second “productive” meeting took place on July 28. The next
meeting of the Geneva ceasefire conference is scheduled for September 2009.
Allegations of shelling between Georgia and its breakaway regions escalated in early August
2009, raising international concerns that new fighting could break out. Seemingly implicating
Russia and the breakaway regions, the European Union’s Monitoring Mission in Georgia
(EUMM) decried the “escalation of accusations,” particularly since the EUMM had “seen no
evidence to confirm that any firing has taken place towards Tskhinvali [the capital of South
Ossetia] or its surroundings.”48 The EUMM also announced that it was stepping up its patrols.
The Russian Foreign Ministry reported on August 2 that Undersecretary of State William Burns
had called Deputy Foreign Minister Grigoriy Karasin to discuss the rising tensions in the region.
President Obama and Russian President Dmitriy Medvedev discussed the tensions during a phone
conversation on August 4, as did Vice President Biden and Georgian President Mikheil
Saakashvili on August 5. The State Department’s Special Envoy, Daniel Fried, travelled to Tbilisi
on August 5-6. Georgian Foreign Minister Grigol Vashadze termed the visit part of a U.S.
“preventive measure against Russia's military plans.”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. Azerbaijan claims,
however, that the high oil prices for much of 2008 contributed to a growth rate of over 9% for the
year, and that growth remains positive in 2009. The influx of international assistance to Georgia
has ameliorated to some degree the impact of the conflict and the world economic crisis.
47 U.N. Security Council. Report of the Secretary-General Pursuant to Security Council Resolutions 1808 (2008), 1839
(2008) and 1866 (2009) S/2009/254, May 18, 2009. See also Georgian Ministry of Foreign Affairs. Information for the
Press on the Issues Discussed During the Fifth Round of the Geneva Discussions, May 19, 2009.
48 European Union Monitoring Mission. EUMM Expresses Serious Concern About Escalation of Accusations of
Alleged Incidents and Urges Restraint, August 1, 2009.
49 Open Source Center. Central Eurasia: Daily Report (hereafter CEDR), August 6, 2009, Doc. No. CEP-950170.
50 A. V. Korobkov, “Migration Trends in Central Eurasia,” Communist and Post-Communist Studies, No. 2, 2007, pp.
169-89.
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Armenia, Azerbaijan, and Georgia
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. 51 According to the U.S. Embassy in Baku, Azerbaijan’s Nakhichevan
exclave “is blockaded by neighboring Armenia.” 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.
Armenia criticizes Georgia’s refusal to reopen a section of railway transiting the country to
Abkhazia and Russia.
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)52 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
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-
51 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.
52 P.L. 104-208, Sec. 559, amends the Foreign Assistance Authorization Act of 1961.
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Armenia, Azerbaijan, and Georgia
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.53
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
regard for standards essential to democratic elections and devalued the overall election process. In
particular, the vote count demonstrated deficiencies of accountability and transparency....”54
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.
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
53 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.
54 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.
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as the prime minister, and announced that a new coalition government would be composed of the
four parties.55
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.56
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.57
During the run-up to the 2005 legislative election, authorities arrested several prominent officials
on charges of coup-plotting, although later they 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 in October 2007 to ten years in prison on
charges of embezzlement. 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.58
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.59 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.60 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,
55 ITAR-TASS, April 9, 2008.
56 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.
57 OSCE/ODIHR Mission. Press Release: Partial Repeat Parliamentary Elections in Azerbaijan Underscore Continuing
Need for Electoral Reform, May 15, 2006.
58 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.
59 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.
60 Open Source Center. Central Eurasia: Daily Report (hereafter CEDR), April 24, 2008, Doc. No. CEP-950216.
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Armenia, Azerbaijan, and Georgia
including the Musavat Party, the Civil Development Party, and the Public Forum for the Sake of
Azerbaijan. Incumbent President Aliyev won a resounding victory, gaining nearly 89% of the
vote against six other candidates. According to a report by election monitors from OSCE/ODIHR,
the Parliamentary Assembly of the Council of Europe (PACE), and the European Parliament (EP),
the voting process was peaceful, well organized, and efficient, but there was a “lack of robust
competition and of vibrant political discourse facilitated by media.” The observers also raised
concerns that there appeared to be “significant procedural shortcomings [in vote counting] in
many cases, and manipulation in some instances.”61
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.
After the vote, they claimed that the government’s report of turnout and results was
exaggerated.62
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 a prominent businessman. Several opposition parties united in a
“National Council” that launched demonstrations in Tbilisi 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, 2007, police and security
forces forcibly dispersed demonstrators, reportedly resulting in several dozen injuries. Saakashvili
declared a state of emergency for 15 days, giving him 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.”63 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 and
reportedly won over 53% of the vote. The OSCE stated that the election broadly met its
standards, but that troubling irregularities needed to be addressed. The plebiscite endorsed
61 OSCE/PACE/EP. Republic of Azerbaijan Presidential Election, 15 October 2008: Statement of Preliminary Findings
and Conclusions, October 16, 2008.
62 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.
63 CEDR, November 8, 2007, Doc. No. CEP-950428.
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Armenia, Azerbaijan, and Georgia
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. 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 had made efforts to conduct free
and fair elections, but that “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.64 Most United Opposition and Labor Party deputies refused their
seats. Two constituency seats were subsequently filled by Christian Democrats in by-elections,
but 13 seats remain unfilled.
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
were being worked out, that judges were beginning to be appointed for life, and that trial by jury
soon would be introduced.65
In late March 2009, the government announced the arrests of nearly a dozen individuals on
charges of plotting to launch a coup at an upcoming demonstration. Several of the individuals
were linked to Burjanadze’s party. At this major demonstration on April 9, 2009, several
opposition parties called for Saakashvili to resign and for new presidential and legislative
elections to be held. Prominent oppositionists leading the protest included 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. The April 9
demonstration was the beginning of continuous rallies that included the blocking of transport
64 OSCE. International Election Observation Mission. Georgia: Parliamentary Elections, 21 May 2008, Statement of
Preliminary Findings and Conclusions, May 22, 2008.
65 In late 2008, the International Crisis Group (ICG), a non-governmental organization, warned that government-
opposition tensions could rise and that Georgia might lose international donor support for rebuilding unless Saakashvili
stepped up his democratic reform efforts. ICG. Georgia: The Risks of Winter, November 26, 2008.
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Armenia, Azerbaijan, and Georgia
routes. Another large demonstration was held on May 26, after which it appeared that the daily
rallies involved dwindling numbers of protesters.
After lengthy attempts, President Saakashvili met with a few opposition leaders in April 2009 and
again in May to discuss setting up a constitutional commission to work out changes to the
political system. At the May meeting, he proposed the establishment of a constitutional
commission headed by an opposition-approved representative; electoral code and judicial
reforms; the appointment of oppositionists to ministerial posts; and equal opposition
representation on the board of public television. At the same time, he rejected opposition
demands to resign and hold new presidential and legislative elections. The United States and the
EU strongly urged such meetings between the government and the opposition.66 In June 2009,
President Saakashvili formed the constitutional commission and the former president of the
Constitutional Court, Avtandil Demetrashvili, was appointed chairman. Demetrashvili and others
have called for moving toward the creation of a bicameral, “European-style” parliamentary form
of government.67 In July 2009, President Saakashvili called for the commission to limit the
president’s ability to dissolve parliament. He also called for electoral reforms to be completed by
the end of the year, for the date of local elections to be moved up, for penalties for interference
with the judiciary to be increased, and for opposition and civil society representatives to have
seats on the public broadcasting board.
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-FY2007 (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
66 Czech Presidency of the European Union. Press Release: Joint US-EU Statement on Georgia, May 26, 2009.
67 EIU, Georgia Country Report, June 4, 2009. Open Source Center. Central Eurasia: Daily Report, May 11, 2009,
Doc. No. CEP-950119; May 18, 2009, Doc. No. CEP-950073; June 4, 2009, Doc. No. CEP-950186; June 8, 2009,
Doc. No. CEP-950139.
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Armenia, Azerbaijan, and Georgia
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. In the wake of the August 2008 Russia-Georgia conflict, the MCC
announced plans for an extra $100 million for road-building, water and sanitation facilities, and a
natural gas storage facility. The MCC reported in April 2009 that it had so far disbursed $95.2
million to Georgia.
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 2006.68
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. 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 June 2009, the MCC Board announced that it was cancelling $67.1 million in
funding for the road building project because of Armenia’s halting democratization, although
other projects would continue.69 The MCC reported that as of April 2009 it had disbursed $30.9
million to Armenia.
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 the proposed $1 billion aid package would be in
addition to existing aid and requests for Georgia, such as FREEDOM Support Act assistance. 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.70
68 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.
69 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: MCC Board of Directors Meets to Address U.S. Government Global Development Priorities, June 10, 2009.
70 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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Armenia, Azerbaijan, and Georgia
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 (beyond that provided under continuing appropriations
based on FY2008 funding) for humanitarian and economic relief, reconstruction, energy-related
programs and democracy activities. Of that amount, $315 million was actually budgeted for
Georgia.
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 to be appropriated by the next Congress. According to testimony by S. Ken
Yamashita, Acting Assistant Administrator at the U.S. Agency for International Development,
about 56% of the $1 billion has been obligated and 44% has been expended, as follows:
• $61.7 million was provided in humanitarian assistance for food, water, bedding, and
medicine
• $50 million in Defense Department section 1207 funds was used for police support
and to meet the food, shelter, and livelihood needs of displaced persons returning to the
Shida Kartli region, the region of the country most affected by the conflict
• A second $50 million tranche of Defense Department section 1207 funds is aimed to
support recovery needs
• $250 million in direct budget support was provided to the Government of Georgia for
fiscal stabilization and urgent governmental expenses, including pensions for government
retirees, healthcare, allowances for displaced persons, secondary education, and salaries
for government employees
• $65 million in funding was provided to help reestablish agriculture production in
Shida Kartli and to support civil society, municipal infrastructure, regional trade,
hydropower, independent media, and the removal of landmines. Some of the funding also
was obligated for a Money Management Program to procure a new national payments
system for the National Bank of Georgia
• $100 million was provided by the Millennium Challenge Corporation (MCC) to
augment its existing program in Georgia
• more than $180 million was provided by the Overseas Private Investment
Corporation (OPIC) to facilitate the provision of credit lines and project financing
These funds add up to about $757 million. The Supplemental Appropriations Act for FY2009
(P.L. 111-32; signed into law on June 24, 2009) provides an additional $242 million in Freedom
Support Act assistance to Georgia, “the final portion of the $1 billion pledge.” For another
accounting by Acting Assistant Administrator Yamashita of the $1 billion broken down by
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Armenia, Azerbaijan, and Georgia
priority areas, see Table 2.71 Assistant Secretary of Defense Vershbow stressed that “the United
States has not ‘rearmed’ Georgia as some have claimed. There has been no lethal military
assistance to Georgia since the August conflict. No part of the $1 billion U.S. assistance package
went to the Ministry of Defense.”72
U.S. Security Assistance
The United States has provided some security assistance to the region, and bolstered such aid
after September 11, 2001. Gen. Bantz Craddock, then-Commander of the U.S. European
Command (EUCOM) testified in March 2009 that the “Caucasus is an important area for the
United States and its partners. Caucasus nations actively support Operation Iraqi Freedom and
ISAF by providing both with troops and over-flight access for critical supply lines from EUCOM
to the CENTCOM area of responsibility. They provide alternative energy sources from the
Caspian Sea basin and alternative routes of access to Central Asian energy reserves. It is an
important region for European energy diversification.”73
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
the Georgia Train and Equip Program (GTEP).74 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.75 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.76
The Clearinghouse aims to facilitate cooperation by sharing data on security assistance among
both donor and recipient countries. Gen. Craddock 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
71 U.S. Senate. Committee on Foreign Relations. Subcommittee on Europe. Hearing on Georgia: One Year After the
August War. Statement of S. Ken Yamashita, Acting Assistant Administrator for the Bureau for Europe and Eurasia,
United States Agency for International Development, August 4, 2009.
72 U.S. Senate. Committee on Foreign Relations. Subcommittee on Europe. Hearing on Georgia: One Year After the
August War. Testimony of Alexander Vershbow, Assistant Secretary of Defense for International Security Affairs,
August 4, 2009.
73 U.S. House of Representatives. Committee on Armed Services. Testimony by Gen. Bantz J. Craddock, March 24,
2009. See also CRS Report RL30679, Armenia, Azerbaijan, and Georgia: Security Issues and Implications for U.S.
Interests, by Jim Nichol.
74 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.
75 “U.S. Allocates $30 mln for SSOP Army Training Program,” Civil Georgia, July 17, 2006.
76 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.
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Armenia, Azerbaijan, and Georgia
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.”77 (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.78
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 and EUCOM Commander,
Gen. Craddock, visited Georgia on August 21 to survey the destruction of infrastructure and
military assets. According to Assistant Secretary of Defense Vershbow, EUCOM carried out a
“comprehensive multi-month assessment of Georgia’s Armed Forces.” In October 2008, the
Defense Department also held yearly bilateral defense consultations with Georgia. Vershbow
testified that as a result of these assessments, “many previously unrecognized or neglected
deficiencies in the various required capacities of the Georgian Armed Forces and Ministry of
Defense [came to light]. In practically all areas, defense institutions, strategies, doctrine, and
professional military education were found to be seriously lacking.”79
In March 2009, Gen. James Cartwright, the Vice Chairman of the Joint Chiefs of Staff, visited
Georgia to further assess its defense needs. He stated that “the United States remains committed
to the U.S.-Georgia charter on strategic partnership and to provide training and other assistance to
the Georgian military in support of their reform efforts and continued independence.” He pledged
added training that would be “focused on the defense of Georgia, on its self and internal defense,”
and equipment transfers that would be based on “what equipment needs to be upgraded and then
what new types of equipment that are necessary for their homeland defense.”80 Assistant
Secretary Vershbow similarly testified in August 2009 that “we are focusing on building defense
institutions, assisting defense sector reform, and building the strategic and educational
foundations that will facilitate necessary training, education, and rational force structure design
and procurement. We are assisting Georgia to move along the path to having modern, western-
oriented, NATO-interoperable armed forces capable of territorial defense and coalition
contributions.”81 The Congressional Budget Justification for Foreign Operations for FY2010 calls
for boosting FMF to $16 million and IMET to $2 million for Georgia (compared to $11 million
and $1.15 million, respectively, in 2009). According to Vershbow, FMF funding for FY2009 will
focus on setting up a simulations center, modernization of training centers, and deploying
Development and Defense Advisors. In FY2010, plans are to boost the number of advisors,
support Professional Military Education (PME), maintain HMMWVs (“Humvees”), and
modernize training centers.
77 U.S. Senate. Committee on Armed Services. Statement of General Bantz J. Craddock, March 13, 2008.
78 “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.
79 U.S. Senate. Committee on Foreign Relations. Subcommittee on Europe. Hearing on Georgia: One Year After the
August War. Testimony of Alexander Vershbow, Assistant Secretary of Defense for International Security Affairs,
August 4, 2009.
80 Air Force Master Sgt. Adam 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.
81 Vershbow, August 4, 2009.
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Armenia, Azerbaijan, and Georgia
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
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.82 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.83
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 Georgia-NATO Council (established soon after the
Russia-Georgia conflict) to facilitate Georgia’s eventual NATO membership, and to prepare
annual plans on Georgia’s progress toward eventual membership. The first annual national plan
was worked out during meetings of the Georgia-NATO Council and started to be implemented in
May 2009.
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). 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
82 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.
83 See also CRS Report RL34701, NATO Enlargement: Albania, Croatia, and Possible Future Candidates, by Vincent
Morelli et al.
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Armenia, Azerbaijan, and Georgia
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. The Congressional Budget Justification for Foreign Operations for
FY2010, however, calls for $3 million in FMF and $450,000 for IMET for Armenia, and $4
million and $900,000, respectively, for Azerbaijan.
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.84 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
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.85 After
September 11, 2001, the former Bush Administration emphasized U.S. vulnerability to possible
energy supply disruptions and encouraged Caspian energy development.
84 U.S. Department of Energy. Energy Information Administration. Azerbaijan Country Analysis Brief, December
2007.
85 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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Armenia, Azerbaijan, and Georgia
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. SOCAR reported in June 2009 that the BTC
pipeline had transported 621.8 million barrels of oil to 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.
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.
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.86 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 completed 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.87 In June 2007 and at subsequent forums,
86 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.
87 The Nabucco Gas Pipeline International consortium was set up in 2004 by Botas (Turkey), Bulgargaz (Bulgaria),
Transgaz (Romania), MOL (Hungary) and OMV (Austria). RWE of Germany joined in 2008. The consortium expects
to spend $11.1 billion on the Nabucco project.
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former Deputy Assistant Secretary Bryza 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 “Building the Baku-
Tbilisi-Ceyhan and South Caucasus Pipelines,” below). Latest EU planning calls for construction
on the Nabucco pipeline to begin in 2010 and be completed in 2014.
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 (deliveries will be 406 billion cubic
feet per year for TGI and 158 to 459 billon cubic feet per year for Nabucco), and argue that Iran
also should be considered as a gas supplier.88 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, then-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.89
At a meeting in early May 2009 in Prague, the EU, Azerbaijan, Georgia, Turkey, and Egypt
signed a declaration on a “Southern [energy] Corridor” to bolster east-west energy transport. The
declaration calls for cooperation among supplier, transit, and consumer countries in building the
Nabucco gas pipeline, finishing the Italian section of the Turkey-Greece-Italy (TGI) gas pipeline,
and other projects. Kazakhstan, Turkmenistan, and Uzbekistan refused to sign the declaration, a
possible setback.90 Richard Morningstar, the U.S. Special Envoy for Eurasian Energy, stated that
the Obama Administration supported the “Southern Corridor” program and considered “Eurasian
energy issues to be of the highest importance.” He endorsed an EU proposal to consider forming
a private “Caspian Development Corporation” to assist Turkmenistan in developing gas fields
and pipelines to transport Turkmen gas across the Caspian.91
88 U.S. Department of State. Transcript: U.S. Official Discusses Energy Security Agreement with Azerbaijan, March 22,
2007; Associated Press, June 6, 2007.
89 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.
90 Kazakhstan indicated on June 25, 2009, that it did not expect to have enough uncommitted gas to supply Nabucco.
Turkmenistan’s reluctance to sign the declaration may not have reflected a lack of interest in a trans-Caspian gas
pipeline. In April 2008, Turkmenistan had signed a memorandum of understanding with the EU to supply 353.1 bcf of
gas per year starting in 2009, presumably through a trans-Caspian pipeline that might link to the SCP and to the
proposed Nabucco pipeline. Perhaps buttressing Turkmenistan’s interest in a trans-Caspian pipeline, on the night of
April 8-9, 2009, a section of a gas pipeline from Turkmenistan to Russia exploded, halting Turkmen gas shipments.
Each side blamed the other for the explosion. On the other hand, in late July 2009 Turkmen President Gurbanguly
Berdymukhamedov reasserted Turkmenistan’s claims over offshore oil and gas fields also claimed by Azerbaijan and
stated that Turkmenistan would ask for international arbitration of the claims.
91 U.S. Department of State. Press Release: Remarks at the EU Summit “Southern Corridor-New Silk Road,” May 8,
2009.
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One difficulty hindering construction of Nabucco appeared to be worked out in late June 2009,
when the EU announced that it had reached an agreement with Turkey and the members of the
Nabucco consortium that permitted Turkey to drop its demand for the right to 15% of the natural
gas pumped through the link at preferential prices, reportedly in return for some assurances on the
security of supplies. An intergovernmental agreement on transit arrangements for Nabucco was
signed in Turkey by five countries on July 13, 2009.
Azerbaijan’s State Oil Company (SOCAR) and Russia’s Gazprom gas firm signed agreements in
July and October 2009 that SOCAR would send 17.7 billion cubic feet of gas per year to Russia
beginning in 2010. The gas would be transported by 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 indicated that the volume of gas transported to Russia
could increase in future years. The small amount of gas initially involved is not expected to
impact plans for supplying Nabucco.
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.92
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.93
Table 1. U.S. Foreign Aid to the Region,
FY1992-FY2007, FY2008, FY2009, and the FY2010 Request
(millions of dollars)
South Caucasus
FY1992-FY2007
FY2008
FY2009
FY2010
Country
Budgeted Aida
Actualb
Estimateb
Requestb
Armenia 1,746.08
62.634
52.3
34.86
Azerbaijan 753.26
26.841
24.946
30.135
92 Platt’s Commodity News, May 31, 2007.
93 Alexander’s Gas and Oil Connections, January 12, 2006; Newsbase FSU Oil and Gas Monitor, March 25, 2009.
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South Caucasus
FY1992-FY2007
FY2008
FY2009
FY2010
Country
Budgeted Aida
Actualb
Estimateb
Requestb
Georgia 1,898.64
378.85c 309.2d 83.05
Regional 38.73
---
---
---
Total 4,436.71
468.325
386.446
148.045
Percent 13.6
64
67
29
Sources: State Department, Congressional Budget Justification for Foreign Operations, FY2010, May 12, 2009.
a. FREEDOM Support Act and Agency budgets.
b. FREEDOM Support Act and other Function 150 funds. Does not include Defense or Energy Department
funding, funding for exchanges, Peace Corps, or Millennium Challenge Corporation programs in Armenia and
Georgia.
c. Includes Economic Support Funding of $315.0 million (P.L. 110-329).
d. Includes $242 million in FREEDOM Support Act funding (P.L. 111-32).
Table 2. The $1 Billion in Added Aid to Georgia by Priority Area
(millions of dollars)
Area Level
Restoring Peace and Security
28.337
Strengthening Democracy, Governance, and
the Rule of Law
23.2
Economic Recovery and Growth
334.64
Aid to Internally Displaced Persons and Social
Recovery
123.323
Management Support
2.0
Direct Budget Support
250.0
Not Yet Al ocated
242.0
Total 1,003.5
Source: U.S. Senate. Committee on Foreign Relations. Subcommittee on Europe. Hearing on Georgia: One
Year After the August War. Statement of S. Ken Yamashita, Acting Assistant Administrator for the Bureau for Europe
and Eurasia, United States Agency for International Development, August 4, 2009.
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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
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