ARMENIA IS DEAD-END IN SOUTH CAUCASUS
By Ali Mammadov

Today.Az
cs/57996.html
07 December 2009 [15:44]

Armenia will remain a dead-end in the region without resolving the
Nagorno-Karabakh conflict.

Armenia in the person of its President Serzh Sargsyan tries to freeze
settlement of the Armenian-Azerbaijani conflict over Nagorno-Karabakh
for a while. This tactical move is primarily aimed at preserving
political stability in the country. Sargsyan keeps a simple logic
– he is well aware that Bolivar will not be able to stand the two
under current difficult political situation. That is, Sargsyan will
hardly be able to stay in power in event of a parallel solution to
the Nagorno-Karabakh conflict and normalization of Armenian-Turkish
relations.

That is why Sargsyan is trying to gain time as it is impossible to
achieve a solution to the Nagorno-Karabakh which will fully suit the
Armenian community. Any other settlement options will be used by his
opponents including his former allies, the Dashnaks and ex-President
Robert Kocharian to replace the regime.

However, the problem is that except for certain foreign dividends in
terms of national interests attempts to normalize the Armenian-Turkish
relations without resolving the Nagorno-Karabakh conflict will fail.

In this case, Armenia will remain a deadlock country in the South
Caucasus. One can change nothing about it.

So, lets suppose that Ankara, despite the promises made by top
officials, ratifies the Armenian-Turkish protocols to normalize
relations without resolving the Nagorno-Karabakh conflict. Optimists
argue that normalization of relations with Turkey will enable Armenia
to break communication blockade and improve socio-economic situation
in the country to a great extend. But an in-depth analysis into the
situation after normalization of relations between the two countries
makes it clear that all these claims are no more than a bluff.

First, lets start with border trade which is much more debated. This
immediately arises a question – what the parties will trade? Armenia
has nothing to offer Turkey with its current economy. Purchasing power
of population of Armenia’s border regions is so low that Turkey is
less likely to have serious interests about this market.

Second, the optimists argue that Turkish investments and goods will
flow in Armenia. Once Azerbaijan also thought the same. However,
as Azerbaijan’s experience shows, Turkey’s investment opportunities
are limited and usually designed for quick recompense. As a rule,
Turkey does not implement long-term investment projects overseas,
with the exception of regional communications and energy projects. In
the meanwhile, Turkey usually holds minimal share in regional
communications and energy projects.

We will talk about regional communication and energy projects below.

Now it is worth paying attention to the following circumstances.

1. Nothing has prevented Turkish businessmen to invest their capital
in Armenia’s economy so far even in absence of diplomatic relations
and border closures. There were no statutory prohibitions in this
respect. But, they did not invest. This means that Armenia’s economy
is not of particular interest to Turkish capital.

2. Spheres of the Armenian economy favorable for investment have
already been taken over by Russian companies in exchange for the
debts. So, today Armenia offers nothing to invest in.

3. The trade between the two countries is less likely to increase.

Today, trade between the two countries amounts nearly $500 million. To
be precise, it is Turkey that supplies consumer goods of this amount
to Armenia via Georgia. The opening of borders will lead to some
reduction in cost of these goods in the best case as they will go
from Turkey directly to Armenia bypassing Georgia. In other words,
Armenia will not benefit from it because consumer market of this
country is unlikely to "digest" more goods. Georgia, which earned
from transit of Turkish goods to Armenia, will lose in this case.

Thirdly, Turkey is less likely to become a haven for Armenian labor
migrants.

1. Turkey has quite large number of unemployed people. They themselves
have nothing to eat especially after the crisis. Currently, there is
a flow of labor migrants from Turkey to Azerbaijan.

2. In case the Armenian-Turkish protocols are ratified without a
breakthrough in resolving the Nagorno-Karabakh conflict, Turkey
will certainly try either to slow down their actual implementation
or to implement them in full. One of such measures will be visa
restrictions. Moreover, in case they are applied against Armenian
citizens, no one can accuse Turkey of violating the agreements as
Turkey has not yet announced a visa-free regime even with Azerbaijan.

Fourthly, the Kars-Gumri is the only communication project which can
be effectively implemented. But the point is that implementing this
project has no prospects on a regional scale without resolving the
Armenian-Azerbaijani and Georgian-Russian conflicts. Because, there is
nowhere to further transport goods via this railroad. In other words,
Armenia will never become a regional transport hub without resolving
the Armenian-Azerbaijani conflict.

Armenia needs to be actually interested in resolving the
Nagorno-Karabakh conflict in order to participate in all communication
and energy projects. Even in absence of diplomatic relations with
Armenia, Turkey has never officially opposed Armenia’s involvement
in regional communications and transport projects. Azerbaijan will
further block Armenia’s participation in these projects at least till
the Nagorno-Karabakh conflict is resolved.

Fifthly, supply of cheap electricity from Armenia to Turkey is the
only real and mutually beneficial project that can be implemented.

However, the project will require to synchronize energy systems of
the two countries and to build new power lines that will take time.

Finally, the sixth, one should not expect an increase in foreign
investment from other sources as the opening of borders with Turkey
will not impact the extent of Armenia’s regional integration. Because,
Armenia’s investment attractiveness depends on extent of a regional
integration which will remain at zero without resolving the
Nagorno-Karabakh conflict.