Some take advantage of war, some just want peace

Some take advantage of war, some just want peace

There was said a lot about the fact that the Nagorno-Karabakh conflict is going on. Because of this conflict, the development of the entire region has been hindered, and apparently, this conflict is profitable for someone. However, the economic side of the issue has been discussed but a little since the conflict. The question of what Armenia, Azerbaijan, and the entire South Caucasus have lost due to the protracted conflict will be answered by economist and Chairman of the Center for Economic and Social Development (CESD), Azerbaijan, Dr. Vugar Bayramov.

-It is generally accepted that Azerbaijan is the richest country in the South Caucasus. In certain circles, there are conversations about Azerbaijan being ready to invest in the development of Armenia, in the event that the Nagorno-Karabakh conflict is solved. From an economic point of view – it’s just an initiative . But can such a probability become real in practice?

– At the moment, the two countries have no diplomatic relations. And, of course, at this stage economic cooperation between the two countries is also impossible and due to the fact that countries do not recognize each other, do not recognize each other’s independence, the establishment of diplomatic or economic relations is almost unthinkable, too. However, there hasn’t been an official ban on private companies cooperating with companies of the other party. They can do it easily. However, companies of countries that are in a state of war or conflict are usually not particularly eager to cooperate. SOCAR issued an official position that Azerbaijan is ready to sell gas and invest in the economy of Armenia, in case of the solution of the Nagorno-Karabakh conflict. First, it is necessary to take into account that after solving the conflict cooperation between the two countries is inevitable because Azerbaijan and Armenia are neighboring countries. For this reason, establishing bilateral political and economic relations after the resolution of the conflict would be necessary for both. Neither Azerbaijan nor Armenia can leave the area, and they will always remain neighbors. Resolution of the conflict requires creating relationships.

Azerbaijan’s economy constitutes 78% of the economy of the South Caucasus, and Azerbaijan is an investor country. And of course, Armenia would become a new market for both public and private investors. Considering that labor is cheap in Armenia and the economy needs investment capturing a certain market by our investors is expected in the future.

Such cooperation is beneficial for both parties. For example, Armenia needs depositors and investors for economic development while Azerbaijan needs to increase its potential corridors for transporting our natural gas to Europe. Theoretically, Azerbaijani gas could go to European market through Iran, Georgia, Armenia and Russia. However, access to European markets via Iran seems rather problematic because the relationship between Iran and Europe is strained. Azerbaijan and Armenia have no diplomatic relations, which makes this path impossible. The European Union is interested in bypassing Russia to decrease dependence on Russia in energy diplomacy. The only possible country here is Georgia. However, last year’s change of leadership in this country showed that being dependent on only one country of transit – where there is no alternative – creates some discomfort. In a sense, this gives Georgia the opportunity to pressure Azerbaijan on political and economic issues. From this point of view, the more dangerous the export of energy resources to one single market, the more dangerous it is to be dependent on a single transit country.
Thus, perhaps not only the sale of Azerbaijani natural gas in Armenia, but also the use of Armenian territory for transporting gas to Europe is possible. Despite the fact that at the moment it looks very skeptical, however, it is possible in the future. However, these possibilities can become real only by solving the conflict between the two countries.

I note that SOCAR’s recent statement of investment opportunities has a political connotation. Thus, Azerbaijan sends the message to Russia: Armenia is dependent on Russian gas but may be otherwise. At the same time, this message was addressed to Armenia itself: instead of the usual harassment of Armenia in international projects, Azerbaijan offers to Yerevan to resolve the conflict and get its benefits. Baku demonstrates that it is not interested in oppressing Armenia. On the contrary, it would be advantageous for us to resolve the conflict and then create a relationship with Armenia.

There is certain coldness in relations with Russia of both the South Caucasian countries at the moment. In a given situation, on which country does the solution of the Nagorno-Karabakh conflict depend more? Armenia or Azerbaijan?

– In general I can say that, according to our estimates, from an economic point of view, solving the conflict is beneficial to all countries in the region. Despite the fact that there are some hypotheses that Georgia is not interested in resolving the conflict, as the conflict between Azerbaijan and Armenia sends a part of Azerbaijani investments to Georgia’s economy. Currently Georgia is the only country which economically benefits from the conflict between Azerbaijan and Armenia, but, in fact, it’s different. Resolution of the conflict is beneficial to each of the three countries. A good amount of money can be earned in the post-conflict period. This will lead not only to the development of the relationship between the three republics but also increased investment in the region. Having been created impossibility of investments of foreign firms in the extent to which it will be possible in the case of the solution of the conflict. The only reason for this conflict is the fact that many large companies, including engineering companies, do not want to be introduced to the region. Introducing products to the market of one country makes it impossible to enter the market of the other. There is no single market in the region, and separate markets do not create much interest. Therefore, there are not many large companies and investors in the region.

The solution of the Nagorno-Karabakh conflict will attract these investors and it would have a positive impact on the economy of each of the three countries. Practically speaking, all the inhabitants of the South Caucasus should be interested in resolving the conflict.

-If the conflict is resolved in the next 6 months, how long would it takes to begin economic relations?

– Such an assumption seems unrealistic. For certain reasons, I can say that in the upcoming months, and maybe in a year or even years, resolution of the conflict does not seem possible. However, it may happen that, surprisingly, the conflict will be resolved in a short time. Do not forget that in the creation of this conflict, foreign “actors” have played an important role. So, if these “actors” will come to a consensus, then the solution of the conflict in a short time is possible. Despite the fact that it looks unlikely, there are still chances, assumptions. But even the resolution of the Nagorno-Karabakh conflict does not mean the relationship will change overnight. It takes time for people to be able to live side by side once again with yesterday’s enemy. You need time to build trust between the two countries. It is important that people feel safe living in proximity to each other. It requires time. However, I do not think it will take long.

-Who, then, is interested, and who does not want an early resolution of the conflict between Azerbaijan and Armenia?

-Definitely countries in the region are interested in the conflict solution. The only thing that can be the subject of controversy is the way to resolve the conflict. The European Union and USA are in favor of resolving the conflict. However, there is a disinterested party and against this position; we have Russia. Anyway, that’s how it looks. Since, in the case of conflict resolution, political and economic interests in the region would be greatly diminished. Resolution of the conflict would lead to such consequences: Armenia could be free of its gas and investment dependence on Russia,
However, even this does not mean that Russia will forever remain a disinterested party. It will all depend on how Russia would defend its interests in the region in the near futures considering new rules of the global game. Moscow understands that it is impossible to hold their interests in the region for a long time using conflict as an instrument. So, in a short time may be Russia also will be an interested party in the resolution of the Nagorno-Karabakh conflict.

Interviewed by Ulviyya Akhundova

July 02, 2013

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