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Caucasus: EU To Create Partnership Agreement With Three Countries

Prague, 18 June 1999 (RFE/RL) - The European Union is about to inaugurate Partnership and Cooperation Agreements with Armenia, Azerbaijan and Georgia. The accords are designed to give a major boost to the economic and political transition in the three countries.

A formal summit is taking place in Luxembourg next week (Tuesday, June 22) at which the EU's Council of Ministers will meet leaders of the three republics.

The Presidents of Armenia and Georgia, Robert Kocharian and Eduard Shevardnadze, will be attending the one-day ceremony, but Azerbaijan's President Heydar Aliyev is not expected to be there. His doctors have advised him to rest following open-heart surgery. His place will be taken by Prime Minister Artur Rasizade.

The Partnership and Cooperation Agreements, or PCA's, were signed in 1996 by Shevardnaze, Aliyev and then-Armenian President Levon Ter-Petrosian. They have now been ratified by all sides, and will come into force on July 1. Heidi Hiltunen, a senior official dealing with the EU's relations with the Caucasus, says a PCA is a wide-ranging document codifying relations across the widest possible range of activities. She spoke this week with RFE/RL:

"It really covers all areas: economic, political, as well as culture, education, plus cooperation in science, technology, really all the aspects of relations that you can imagine."

The heightened level of contacts will be expressed through a series of new institutions, such as cooperation committees, cooperation councils and parliamentary committees.

Marking the inauguration of the PCA's, the EU Executive Commission has issued an assessment of some of the strengths and weaknesses of the three states.

A copy of this report made available to RFE/RL in advance of publication praises Azerbaijan for overcoming early political instability. It says Baku has successfully attracted investment from international oil companies, and has cut inflation and stabilised its currency.

However, the report says this stability has been achieved at a price, namely that the government has imposed its authority in ways which have been "repeatedly criticised by international observers". For instance, it says that last year's presidential election was widely seen as failing to meet all the criteria set by the Organisation for Security and Cooperation in Europe.

Also, the report says attention given the oil sector has meant that other key sectors, such as agriculture, have been neglected. And although new oil exports have provided an important revenue "cushion", it says the real long-term outlook for Azerbaijan remains uncertain.

Turning to Georgia, the EU assessment says that country's recovery from the political and economic turmoil of the early 1990's has been remarkable. In 1993 the republic's survival was in question; by 1996 it had a freely elected president and parliament, a new constitution, and a convertible currency.

On the downside, however, the report says the Russian financial crisis has hit Georgia hard, with devaluation of the ruble disrupting trade and the remittances from Georgians working in Russia. In addition, the country has had to cope with a heavy refugee burden and the conflict with breakaway Abkhazia remains unresolved. The report also cites pervasive corruption, an unreformed administration, and resistance in the provinces to control from Tbilisi.

On Armenia, the EU assessment says the country has been able to capitalise on the homogeneity of its society and culture and to draw on a reservoir of efficient administrators and business-people, including U.S. and European-trained experts. It says the Armenian government has been able to protect itself by means of strong fiscal and monetary policies from a major outflow or resources, thus protecting the currency against the effects of the ruble devaluation. In this, the report says, Armenia has been notably more successful than its neighbours.

However, energy shortages have been a fundamental problem for Armenia. The recommissioning of the Medzamor nuclear power station in 1995 helped, but the EU is insisting that Armenia carry out its commitment to close the plant on safety grounds by 2004. The EU report says it is clear that new, reliable sources of conventional energy must be put in place.

Turning to the major conflict in the region -- that between Azerbaijan and ethnic Armenians over the Nagorno-Karabakh enclave -- the EU Executive Commission report notes lack of progress toward a real solution. It says that an international negotiating group (the Minsk group) appears unable to devise an approach which the opposing sides find sufficiently balanced to serve as a basis for further negotiation.

By means of the PCA's now coming into force, the EU is hoping to encourage the process of re-making the South Caucasian republics into modern, self-reliant, democratic nations with market economies. To this end, it says their legislation should be based on political norms set out by the Council of Europe and the Organisation for Security and Cooperation in Europe, and the economic norms of the World Trade Organisation and the EU itself.

The EU's Hiltunen says the PCA's are designed to help achieve progress in all these fields, through offering specific mechanisms for assistance and support in all these areas.

"[We] are trying to help them overcome all the problems that they are facing. We have already been assisting them in different ways using different instruments."

The EU says a huge amount of work remains to be done in the region. It notes that the introduction of market economies is still a slow process and that privatisation is lagging. It also says customs and tax reforms are badly needed, corruption is all too common, and the rule of law is not yet firmly estabished. lh