Caucasus Report: November 18, 1998

OSCE Minsk Group Unveils New Karabakh Peace Proposal. During meetings in Baku, Yerevan, and Stepanakert last week, the French, Russian, and U.S. co-chairmen of the OSCE Minsk Group put forward a new peace proposal that Armenian and Karabakh officials are optimistic may kick-start the deadlocked peace process, RFE/RL correspondents in Yerevan report. The proposal endeavors to resolve the apparent contradiction between Azerbaijan's insistence that any peace plan must preserve its territorial integrity and Stepanakert's and Yerevan's shared rejection of any kind of "vertical" subordination of Karabakh to the central Azerbaijani government. In order to surmount that contradiction, the mediators have advocated that the unrecognized Nagorno-Karabakh Republic (NKR) and the Azerbaijan Republic should agree to form a "common state."

What precisely is meant by that term is unclear; the relationship between the two entities within that "common state" may become the subject of future talks between them. But that term does at least avoid the use of the semantically loaded and politically discredited concept of "autonomy," which the Armenians reject. In this respect, the new OSCE proposals for Karabakh resemble the blueprint for resolving the Abkhaz conflict drafted by Georgia's Republican Party. (The Russian co-chairman of the Minsk Group, Yurii Yukalov, told journalists in Yerevan on 10 November that mediators were adopting the same principle in their approaches to resolving both conflicts.)

The new proposals have been acclaimed by Armenian officials as based on a more realistic assessment of the situation than last year's OSCE peace plan. That draft, based on the "phased" approach to resolving the conflict, was endorsed almost immediately by Baku, but rejected out of hand by the Karabakh Armenians. Armenian President Levon Ter-Petrossian's conditional acceptance of it, and his efforts to convince a skeptical nation and opponents within his own team of its merits, ultimately led to his resignation in February. The new peace plan, by contrast, aims to resolve all contentious issues within a single framework document.

Despite expressing cautious optimism, neither Yerevan nor Stepanakert has yet made public its official stance on the new proposals. Azerbaijani President Heidar Aliyev told journalists after meeting with the co-chairs that "the principle of a single state deserves attention," but that the new initiatives need to be thoroughly studied before the Azerbaijani side can express a formal opinion. But Aliev's foreign policy advisor, Vafa Gulu-zade, told journalists that Baku regards the new proposals "very negatively" as the term "common state" is ambiguous. Gulu-zade said Azerbaijan will not retreat from the so-called Lisbon principles that include Azerbaijan's territorial integrity and autonomy for Nagorno-Karabakh within Azerbaijan. A further reason why the Azerbaijani leadership may have serious reservations is the tense internal political situation in the wake of last month's disputed presidential elections: any move that could be construed as a concession on the part of Azerbaijan would compound popular discontent.

And key details of the new proposal remain unclear, specifically, what kind of guarantees it provides for the security of Karabakh and its inhabitants, the fate of the so-called Lachin corridor that links the NKR with Armenia, and whether Karabakh will be permitted to retain its army, assessed by former Russian Security Council Secretary Aleksandr Lebed as one of the most professional in the entire CIS. The procedure for implementing the proposal may likewise prove controversial: NKR Foreign Minister Naira Melkumian said last weekend that any internationally brokered peace agreement must be submitted to a referendum among the region's population.

Finally, even the creation of a "common state" by the Azerbaijan Republic and the NKR would not necessarily guarantee harmonious future relations: as former Armenian Foreign Minister Alexander Arzoumanian observed to RFE/RL on 13 November, "the idea of a common state is an unclear play on words. Yugoslavia was formed in 1918 as a common state but we all know how it ended up." (Liz Fuller)

"Shades Of the Prison-House Begin To Close ..." Statements by Azerbaijani security officials over the past week suggest that the country's leadership is prepared to take whatever draconian measures prove necessary to neutralize leading opposition figures. Prosecutor-General Eldar Hasanov set the tone in a speech to parliament on 10 November. He specifically accused the leaders of Azerbaijan's three most influential opposition parties -- Abulfaz Elchibey of the Azerbaijan Popular Front Party, Musavat Party chairman Isa Gambar, and defeated presidential candidate Etibar Mamedov of the Azerbvaijan National Independence Party -- and exiled former parliament speaker Rasul Guliev of engaging in a "struggle for power," and warned that "all initiators will be arrested, even if there are 500 oppositionists and opposition leaders ... Those who hope to seize power must realize that they knock at doors of prisons."

National Security Minister Namik Abbasov and Interior Minister Ramil Usubov both accused opposition leaders of working in collusion with foreign intelligence services to destabilize Azerbaijan and undermine the country's international prestige.

The following day, the parliament adopted a statement condemning opposition activities; it also called on the Ministry of Information to take measures to prevent the country's media from publishing materials that insult the honor of President Aliev. That latter move confirms the worst suspicions of journalists, including Rauf Arifoglu, editor of the independent newspaper "Yeni Musavat," that Aliev's acclaimed August decree abolishing media censorship was merely a public relations ploy in the runup to the 11 October presidential elections. Arifoglu's paper faces bankruptcy as a result of a lawsuit brought by Ramiz Mehtiev, head of the presidential apparatus, in connection with the publication in "Yeni Musavat" of presidential candidate Ashraf Mehtiev's allegation that Ramiz Mehtiev has Armenian blood. Meeting with Prosecutor-General Hasanov on 16 November, the editors of ten independent papers expressed their concern that the lawsuits against "Yeni Musavat" and several other papers were intended to force their closure. Hasanov reportedly responded that such libel suits are perfectly justified, but that he will ensure that the trials are "objective."

Charges of slander have also been brought against Abulfaz Elchibey, who faces a possible six-year prison sentence for having alleged that Aliyev was instrumental in the creation of the Kurdistan Workers' Party.

The systematic targeting of respected opposition politicians is disquieting in and of itself. But there is a second, equally disturbing aspect to that tactic: it suggests that Baku no longer cares about the image it presents to the international community. Whether that indifference is simply a reflection of Aliev's determination to cling to power at all costs, or whether it portends a fundamental shift away from the country's hitherto unequivocally pro-western orientation, is not yet clear. (Liz Fuller)

How Serious Is Georgia's Financial Crisis? The 14 November resignation of whiz-kid finance minister Mikhail Chkuaseli has served to focus attention on the country's huge and growing budget deficit. Chkuaseli complained to a session of the state financial stabilization commission last week that budget revenues do not exceed 100,000 lari ($75,000) per day, while state expenditures are 2 million lari. Minister of State Vazha Lortkipanidze told participants at that meeting that the budget shortfall for the first ten months of 1998 was 160 million lari ($120 million). As a result, the Georgian government currently owes $9 million in wages to public sector employees and a staggering $35 million in pensions.

The shortfall is first and foremost the result of chronic tax evasion, which has proven resistant both to changes in the tax code proposed by Chkuaseli several months ago and warnings from the IMF. In its annual review of Georgia's economy in July, the IMF had advised the country's leadership to mobilize additional tax revenues and expressed satisfaction with the government's professed commitment to eliminate all outstanding payments arrears by the end of this year (see "RFE/RL Caucasus Report," Vol. 1, No. 30, 22 September 1998) -- an objective which now looks utopian. An IMF mission is currently in Tbilisi, and will make recommendations to the Fund's directors on disbursement of the final tranche (worth $38-40 million) of an ESAF loan. (Liz Fuller)

Quotations Of The Week. "Heidar Aliev's eyes are electricity and his breath is gas for Ganja's citizens." -- Rasim Dashdamirov, mayor of Ganja, commenting on the chronic shortages of both commodities (Turan, 11 November 1998).

"Tax evasion is budget terrorism." -- Georgian President Eduard Shevardnadze (AP, 12 November 1998).

"Today Mkhedrioni members have cut their hair, shaved, and are armed with the mottoes of humanism, instead of machine-guns." -- Caucasus Press, 12 November 1998.