Caucasus Report: July 24, 2001

ARMENIAN-TURKISH RECONCILIATION COMMISSION ELICITS MIXED REACTIONS. The announcement on 9 July of the creation of an Armenian-Turkish conciliation commission elicited a less than enthusiastic response in Yerevan. Government officials have stressed that it cannot substitute for official contacts, while the reactions of most political parties ranged from suspicious to downright hostile. Nor is it clear what strategy the ten-member group intends to adopt in order to achieve a rapprochement between the two countries, which do not have diplomatic relations.

In a statement released on 13 July, Armenian Foreign Ministry spokeswoman Dziunik Aghadjanian categorically denied that the Armenian government was in any way involved in the establishment of the commission. Noting that "Armenia has always hailed any public contact and dialogue between the Armenian and Turkish peoples," she added that the commission cannot serve as a substitute for "serious discussions at the state level."

Deputy parliament speaker Tigran Torosian (Republican Party of Armenia) predicted that the commission's activities are "doomed to failure," while Aghvan Vartanian, who heads the parliamentary faction of the Armenian Revolutionary Federation - Dashnaktsutiun (HHD), described it as a Turkish ploy to extract concessions from Armenia. A subsequent statement by the HHD on 13 July expanded on that point, arguing that the attempt to improve relations between Armenia and Turkey is aimed at making Ankara a full-fledged participant in the Karabakh peace process and "opening the way for its political expansion to the East." The statement says that all attempts to establish dialogue with Turkey "will be doomed" as long as Turkey maintains its "biased" position with regard to Nagorno-Karabakh, and that dialogue between Armenia and Turkey is contingent on Turkish recognition of the 1915 genocide, "which cannot be haggled over."

The only parliamentary party that commented positively on the commission was the National Democratic Union, whose Semyon Baghdasarian said "I welcome any contact with the Turkish side, whether it's official or unofficial."

At least part of the suspicion engendered by the commission appears to result from contradictory statements about its precise objectives, in particular, whether and how it will address the contentious issue of recognition by Turkey and/or the international community of the Armenian genocide. Commission member David Hovanissian, who served from 1992-1998 as Armenia's Ambassador to Turkey, was quoted on 14 July by "Aravot," which is nominally independent but sympathetic to former President Levon Ter-Petrossian and his associates, as saying that "this is an opportunity to talk directly to free-thinking representatives of the Turkish community...We understand perfectly that our final goal is recognition by Turkey of the Armenian genocide. If all countries recognize it, but Turkey does not, then we have achieved nothing."

But Alexander Arzoumanian, who served as Foreign Minister under Ter-Petrossian in 1996-1998, offered a different explanation of the commission's rationale. "Aravot" on 21 July quoted him as saying that the commission's first priority will be to establish cooperation and dialogue in other spheres, such as culture. He argued that since he, like all Armenians, is convinced that the genocide took place, to enter into a debate with Turkish representatives over whether or not it was a historical occurrence "is pointless." "Our purpose is not persuade each other," Arzoumanian said.

Arzoumanian also indirectly contradicted Aghadjanian's assertion that the Armenian government played no role in establishing the commission; he claimed that the choice of Armenian representatives was discussed over a period of several months with both Armenian President Robert Kocharian and Foreign Minister Vartan Oskanian.

Azerbaijan's "525-gazeti" offered a third version of the commission's primary objective. That paper quoted one of the commission's Turkish members, Ozdem Sanberk, who is a former ambassador to the U.K., as saying that its purpose is to preempt the debate by the U.S. Congress or other national legislatures on formally recognizing the 1915 genocide. (Liz Fuller)

WORLD BANK HIGHLIGHTS ARMENIA ECONOMIC 'PARADOX.' A visiting senior World Bank official on 20 July termed the lack of a significant rise in Armenia's living standards after seven years of economic growth a "paradox," and urged the authorities to ensure that benefits of development accrue to the entire population. Johannes Linn, the bank's vice-president for Europe and Central Asia, said the authorities should strive to bring about economic betterment by improving the "business environment" -- the key point of the World Bank's new "country assistance strategy" (CAS) for Armenia.

"Armenia has made a lot of progress. What we still see though is a lot of challenges that perhaps can be summarized in the form of a paradox," Linn told a news conference in Yerevan at the end of a one-week tour of the South Caucasus. "On the one hand, we see good growth and macroeconomic stability. On the other, we still see a lot of poverty, limited domestic and foreign investment. We see a lot of progress in terms of policy reform and improved legislation, but at the same time hear a lot of skepticism among investors and the population about real progress."

The chief challenge facing the Armenian government and international donors is "how to bridge this paradox and make sure the people and investors broadly feel that the progress is benefiting everyone," he added.

The CAS report, which supports the government's three-year interim poverty reduction program, was approved by the World Bank's Board of Executive Directors on May 22. Both documents call for improving the business environment, strengthening public sector management and reducing corruption. "Despite strong macroeconomic performance, the country has not benefited from commensurate job creation or poverty reduction. Human capital has deteriorated, in part through migration," according to the CAS. It emphasizes the need to expand budget allocations to education, health and other areas.

The new CAS points to the "narrow base" of Armenian growth, which has averaged 5.5 percent per annum since 1994 and, according to the World Bank, had a "limited impact on job generation and, hence, on poverty." "Overall, most growth has taken place outside the manufacturing sector -- the very sector where Armenia may have the strongest comparative advantage, particularly through its educated labor force," the document concludes. "Agriculture and construction have been the main contributors to GDP growth, but even in these sectors real labor incomes have grown relatively slowly."

The absence of a "large-scale entry of new private enterprises" and substantial investments is singled out as the root cause of Armenia's failure to reduce widespread poverty. In an interview with RFE/RL last week, the World Bank's chief Armenia economist, Lev Freinkman, similarly warned that the Armenian economy will run out of steam in the next several years unless the authorities take radical steps to make it more attractive to private investors. "Factors that fueled growth in the last five or six years are not long-term ones, and that is of great concern to us," Freinkman said.

But Linn, who met with President Robert Kocharian and other senior Armenian officials on 19 July, struck a more optimistic note, saying that he is "very pleased" with this year's macroeconomic indicators. He praised government efforts to improve the investment climate and reform Armenian civil service. He said the existing GDP growth rates can be maintained even without a resolution of the Nagorno-Karabakh conflict, which Western analysts believe is vital for Armenia's economic revival.

"We see a continuation of this growth feasible because Armenia has been able to work around some of the issues of blockade and other difficulties created by the conflict," Linn explained. "So we see the improvement in the business climate and policies as a very helpful contribution to maintaining the growth. There is no question, however, that with peace, fully open borders and regional cooperation growth could be higher and life better."

The World Bank is Armenia's largest single creditor with a total of $654 million worth of various loans approved to date. The bank envisages to provide between $150 million and $190 million in additional loans within the next three years.

Linn announced that the World Bank will further increase its economic assistance to Armenia, Azerbaijan and Georgia if they find solutions to ethnic conflicts in Karabakh and elsewhere in the volatile region. He said a settlement of the conflicts "would much enhance the prospects for in-depth and extensive regional cooperation," adding that peace in the South Caucasus is also "highly desirable" because it would enable the three states facing similar economic problems to "share their experiences and lessons." Many economists believe that economic integration would held them attract more badly needed foreign investments. (Emil Danielyan)

NORTH OSSETIAN PRESIDENT SHEDS LIGHT ON CONTACTS WITH CHECHNYA. In a lengthy discussion on 8 July with one German and one Russian journalist, moderated by RFE/RL's Russian Service, Aleksandr Dzasokhov spoke frankly about his contacts with Chechen leaders, his relations with his Ingush counterpart Ruslan Aushev, and his political career as a Communist both before and after the demise of the USSR.

Dzasokhov stressed the importance for North Ossetia of preserving "good neighborly" relations with Chechnya. To that end, there has never been any hiatus in political contacts with the Chechen leadership, he said. He went on to explain that in his opinion, what is important is maximum flexibility in approaching such contacts, rather than what he termed the formalized and "strange" approach ("Please take your places at the negotiating table") advocated by the Parliamentary Assembly of the Council of Europe. Even specifying publicly in advance that talks are scheduled to begin on such-and-such a day, Dzasokhov said, could prove counter-productive, because "the situation changes so fast."

Dzasokhov owned to having met personally "many times" with Chechen President Aslan Maskhadov and with other Chechen politicians whom he did not name, both from the pro-Moscow and from the pro-independence camp. He also admitted that during the first few months of the most recent Chechen conflict North Ossetia had offered shelter to Maskhadov's wife Kusama, acting from what he termed purely human considerations.

Dzasokhov also said that he meets "regularly," and not always on an official basis, with Ruslan Aushev, president of the neighboring Republic of Ingushetia. But he added that the tensions between the two ethnic groups (resulting from the clashes in North Ossetia's Prigorodnyi Raion in 1992) overshadow their relationship. "Our fate is not an easy one," he commented, "and it is not of our choosing." But despite that, and despite the discrepancy in their ages (Dzasokhov is 66, Aushev some 20 years younger) and experience, "together we are not a bad synthesis of two politicians." Nonetheless, Dzasokhov continued, there are times when he and Aushev feel the need not to meet for a while. This is not a deliberate tactic, Dzasokhov explained, but rather a "psychological condition" resulting from the increase in tensions that inevitably results when "suddenly some unfounded statements emanate from the territory of the neighboring republic accusing us of something that we didn't do."

Speaking in general of the process of what he termed "post-conflict reconstruction," Dzasokhov argued that when problems are already 80 percent resolved, then it is necessary to let the people themselves take over the process of restoring ties. To try to control that process too closely, he explained, can be counter-productive. But at the same time he admitted that some officials do adopt that approach, not understanding that they are in fact undermining the process of reconciliation, while others do so in the hope of enhancing their career prospects and a third category of officials in the hope of increasing funding for post-conflict reconstruction that can subsequently be quietly diverted to private bank accounts.

As for his political future, Dzasokhov said that preparations for the presidential elections next January, in which he intends to seek a second presidential term, are already underway. That ballot is likely to pit Dzasokhov, a lifelong member first of the CPSU and then of the Communist Party of the Russian Federation, against Sergei Khetagurov, a member of "Unity" and a close associate of Russian Minister for Emergency Situations Sergei Shoigu. Asked whether he considers himself at a disadvantage vis-a-vis Khetagurov, Dzasokhov acknowledged that the Kremlin has in recent months openly backed its preferred candidate in several gubernatorial elections, but played down the possibility that politicians in Moscow will close ranks behind his putative rival. He pointed out that there are different preferences and priorities within the Moscow leadership, and denied that he feels treated as a pariah.

Dzasokhov admitted that more than one public relations organization has offered him its services in the runup to the poll, but claimed not to have decided whether to accept such an offer. "I am my own image-maker," he affirmed, adding that "there is nothing better than a direct talk with voters." (In the runup to the 1998 presidential ballot, Dzasokhov conducted over 100 such meetings with the electorate.) "I do not intend to lose," Dzasokhov said. (Liz Fuller)

BUSINESS BEFORE PLEASURE. Stavropol Krai governor Andrei Chernogorov recently spent his 42nd birthday operating a combine harvester to help bring in the grain crop, Glasnost-North Caucasus reported on 17 July. A Stavropol agricultural official told the same agency last month that the krai will be constrained to hire Turkish labor this year to help bring in the harvest (see "RFE/RL Newsline," 26 June 2001). (Liz Fuller)

QUOTATION OF THE WEEK. "Such a show-down was inevitable...You simply can't simultaneously be in opposition and in government." -- "Hayastani Hanrapetutiun," commenting on 18 July on the crisis within the People's Party of Armenia that led to parliament speaker Armen Khachatrian's resignation from its ranks.

"A party is not property that can be inherited." -- President Robert Kocharian, commenting on the divisions within the HZhK (quoted by Noyan Tapan on 24 July).