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Caucasus Report: October 11, 2002

11 October 2002, Volume 5, Number 34

U.S. CLARIFIES CONDITIONS FOR ARMENIA'S ACCESSION TO WTO. The U.S. on 9 October denied claims by a top Armenian government official that it opposes Armenia's long-awaited entry into the World Trade Organization ahead of neighboring Azerbaijan. The U.S. embassy in Yerevan told RFE/RL that Washington sees no connection between the efforts by the two South Caucasus archrivals to join the influential body setting the rules of global trade. The embassy said the U.S. government remains committed to helping Armenia complete its membership talks as quickly as possible.

Finance and Economy Minister Vartan Khachatrian said last week that Armenia's accession to the WTO was again delayed late last month because the U.S. sought simultaneous membership for Armenia and Azerbaijan (see "RFE/RL Newsline," 4 October 2002). He claimed that the Americans set additional conditions for Yerevan at the most recent meeting of the intergovernmental U.S.-Armenia Task Force which took place in Washington in late September. Khachatrian, who headed the Armenian delegation at the meeting, added that U.S. officials eventually agreed to drop their alleged linkage to Azerbaijan's WTO bid and that "the problem should be solved by next December."

Armenian officials have been expecting to join the WTO since 2000 and are increasingly frustrated by the continuing snags in the six-year accession process. The Ministry of Industry and Economic Development, which has represented the government in the membership talks, had earlier announced that Armenia will at last be admitted into the organization at the October 2002 meeting of its General Council.

But the latest developments show that this forecast, too, will prove unfounded and that Yerevan should now focus on the WTO governing body's next meeting, which is scheduled for December. Its outcome depends on the success of the final U.S.-Armenian trade talks.

A source familiar with the process revealed to RFE/RL this week that the latest delay results from a serious misunderstanding of the U.S. position on the issue at a July meeting in Geneva of a WTO "working party" examining Armenia's membership bid. "The Armenian side and even its Canadian consultant, who was also there, came out of the meeting thinking that the U.S. side had presented final WTO requirements to Armenia," the source said. "The problem is that those weren't the final requirements."

The Armenian government was therefore caught off guard when it received additional demands from the office of the U.S. Trade Representative (USTR) last week. As recently as 25 September it promptly pushed through the parliament what it described as final amendments to Armenia's economic legislation demanded by U.S. trade officials. The amendments primarily concerned methods of the valuation of imported goods and taxation of alcohol and agricultural produce.

The most important of the new conditions set by the U.S. trading agency has to do with the protection of domestic and foreign intellectual property in Armenia, which still leaves much to be desired. "That's the area where they are most unhappy with Armenia," said one informed source. "Although Armenia acceded to the international copyright conventions, everybody knows that sales of pirated products are widespread here." The USTR is expected to finalize the list of its membership requirements within a week. Those might require additional legislative changes.

Serious problems with the copyright law enforcement did not prevent other ex-Soviet states like Georgia and Kyrgyzstan from joining the WTO two years ago. But as one Western diplomat dealing with the issue explained, the United States -- the WTO's most powerful member -- is demanding stricter compliance with WTO rules as the organization prepares to discuss Russia's application for membership. "The USTR doesn't want to set any precedents of letting Armenia get away with something which in the Russian case will be very big. That's part of Armenia's bad luck," he told RFE/RL.

"It's not an equal negotiation among the parties," the diplomat said. "If the WTO or USTR says that a particular legal provision violates the WTO charter, that's it. Either you change it, or you don't get in."

Armenia has so far failed to secure WTO membership despite having one of the most liberal trade regimes in the former Soviet Union and Eastern Europe. A joint study conducted by "The Wall Street Journal" and the Washington-based Heritage Foundation last year rated its struggling economy as the most open and investor-friendly in the Commonwealth of Independent States. The study put particular emphasis on a "very low level of protectionism" in Armenia's external trade and "low barriers" to foreign investment.

Accession to the WTO will give Armenian businesses better access to foreign markets and an effective international mechanism for adjudicating trade disputes. It could also enable the country to attract more foreign investments, a necessary condition for its economic development. Exclusion from the WTO is seen as a bad signal to potential investors.

But economists caution that the positive impact of WTO membership on the Armenian economy is unlikely to be felt in the short run. Still, they say that Armenia could successfully challenge its economic blockade by neighboring Turkey once it becomes a full member of the organization. The WTO rules ban member states from imposing economic embargoes on each other.

Turkey, which is affiliated with the trade body, made no attempts to block Armenia's accession until recently. But sources revealed that during the July meeting in Geneva, Turkish officials sought explicit written guarantees that Armenia will not oppose Azerbaijan's membership after it becomes a WTO member. In an apparent bid to uphold Azerbaijani sovereignty over Nagorno-Karabakh, they also demanded that the WTO member states formally reaffirm the internationally recognized borders of Armenia.

"The general feeling was that these are nonsense points and nobody took them seriously," said one diplomat. Azerbaijan's accession talks with the WTO are still at the initial stage and may last months, if not years. (Emil Danielyan)

IS A RETURN TO 'WARLORDISM' IN GEORGIA'S FUTURE? A respected Georgian political observer told a recent RFE/RL briefing audience that, although the Georgian presidential elections are not scheduled to take place until April 2005, the political elite there fears that the struggle to succeed President Eduard Shevardnadze may result in a return to the "warlordism" prominent in the early 1990s.

Dr. Ghia Nodia, a political scientist who serves as chairman of the Caucasus Institute for Peace, Democracy and Development, said that Shevardnadze's popularity has "plummeted" since 2000, as several negative trends in Georgian society -- including a slowing economy, rampant corruption, and the tension of dealing with secessionist movements in Abkhazia and Adjaria as well as the warfare north of Georgia's borders in Chechnya -- have taken hold and many Georgians now suffer from what Nodia termed "Shevardnadze fatigue."

The nadir of Shevardnadze's popularity came during the June 2002 local elections in Georgia, Nodia said, when former Justice Minister Mikhail Saakashvili and other reformers opposed to the current government tried to outdo each other with negative statements: "no one dared to say anything good about Shevardnadze." That election also marked a return to "public politics," as many Georgians began to believe that they may have a say in some of the big decisions they used to assume were made behind closed doors.

Shevardnadze's popularity has rebounded since the June elections, in large part because of Russian attacks in Abkhazia and threats by Russian President Vladimir Putin to launch a military strike on Georgia's Pankisi Gorge. Such threats have impelled Georgians to rally around their leader. Increased support for Georgia by the U.S., in the form of the "Train and Equip" program instituted to help Georgia deal with the Pankisi crisis, has also played a role. Nodia warned, however, that this support could quickly evaporate if Shevardnadze were to show himself to be weak or indecisive.

Of the various scenarios mentioned for Georgia's future transfer of power, Nodia felt that the most likely was one in which political power coalesces around several "oligarchic" poles that engage in political violence as a means of gaining advantage over other contenders. The possibility of a more public and democratic succession has faded since the weakness of opposition candidates and parties was exposed by the June local elections. On the other hand, Nodia said, a "catastrophic succession" -- which seemed very possible after widespread antigovernment protests in October and November 2001 -- has become less likely as Georgians have considered the potentially frightening consequences of a sudden change in their government.

GEORGIA SET TO REJECT ADJAR LEADER'S ABKHAZ PEACE PROPOSAL. In November last year, Adjar State Council chairman Aslan Abashidze accepted the position of Georgian President Shevardnadze's special envoy for the Abkhaz conflict (see "RFE/RL Newsline," 6 November 2001). Several weeks ago, following intensive consultations both with the Abkhaz leadership in Sukhum and with the Russian presidential envoy for Abkhazia, First Deputy Foreign Minister Valerii Loshchinin, Abashidze finally outlined his proposals for resolving the conflict. Rather than address the contentious issue of Abkhazia's future status within Georgia, Abashidze's proposals entail lifting the Georgian economic blockade of Abkhazia to permit the resumption of rail, road, sea, and air transport and measures to develop the Abkhaz economy.

But Abashidze's embryonic peace plan, and the fact that he apparently failed to coordinate his mediation efforts in advance with Shevardnadze, have apparently alienated the latter. Shevardnadze demanded last week that Abashidze come to Tbilisi "soon" to give an account of his mediation activities (see "RFE/RL Newsline," 1 October 2002).

Nor was Shevardnadze the only Georgian official who found Abashidze's approach unacceptable. Tamaz Nadareishvili, chairman of the Tbilisi-based Abkhaz parliament in exile, warned on 5 October that he will mobilize half of Georgia's population in protest if Abashidze's settlement plan is formally adopted. He said that that plan "is aimed at separating Abkhazia from Georgia permanently." Nadareishvili and Abashidze have been at loggerheads for months. In July, Abashidze argued that the Abkhaz parliament in exile is illegal and should be abolished. Nadareishvili responded by demanding that Shevardnadze dismiss Abashidze as his envoy for Abkhazia.

Shevardnadze has dropped hints before that he is not happy with Abashidze's mediation approach; but to ax him at this juncture could play into the hands of the hawkish Nadareishvili, who has called repeatedly for either a new military campaign to restore Tbilisi's control over Abkhazia, or a Bosnian-style "peace enforcement" intervention by the UN.

Shevardnadze, for his part, clearly prefers to galvanize the ongoing mediation campaign by the UN secretary-general's special envoy and the "Friends of the Secretary-General" group of five countries (the U.S., France, the U.K., Germany, and Russia). That mediation effort centers on an alternative draft proposal "Basic Principles for the Distribution of Competencies between Tbilisi and Sukhumi." The Abkhaz side, however, refuses even to accept a copy of that document as a basis for negotiations on the grounds that it defines Abkhazia's future status within a single Georgian state. Swiss diplomat Heidi Tagliavini has repeatedly affirmed her determination to persuade the Abkhaz to accept that document.

The U.S., too, has recently signaled its intention to assume a more energetic role in mediating a solution to the conflicts in Abkhazia and South Ossetia (see "RFE/RL Newsline," 2 October 2002). And the U.K. has just named a former ambassador to Moscow, Sir Brian Fall, as its special envoy for Abkhazia. (Liz Fuller)

HAS DANGER OF NEW FIGHTING IN ABKHAZIA SUBSIDED? Meanwhile, there are grounds for hoping that new fighting is not, after all, about to erupt in Abkhazia's Kodori Gorge. On 8 October, Kodori Governor Emzar Kvitisani announced that Georgia has withdrawn four truckloads of weaponry under the supervision of a joint patrol composed of UN observers and members of the Russian peacekeeping force deployed under the CIS aegis in the Abkhaz conflict zone. That patrol has also established that, contrary to earlier Abkhaz allegations, there is no Chechen militant presence in Kodori.

Since mid-August, Georgian officials (including Nadareishvili) have repeatedly alleged that Russian and Abkhaz troops are preparing a joint operation to dislodge the Georgian border guards and armed civilian reservists who control the upper reaches of the Kodori Gorge. The Abkhaz government has rejected those allegations and, in turn, accused Tbilisi of planning a repeat of last October's offensive, in which Chechen fighters subordinate to field commander Ruslan Gelaev and armed Georgians attempted to advance southwest from the upper to the lower reaches of Kodori in bid to retake Sukhum (see "RFE/RL Newsline," 16 September 2002).

But Kodori Governor Kvitsiani, who reportedly accompanied the Georgian/Chechen contingent that invaded Kodori last October (see "RFE/RL Newsline," 14 November 2001), has questioned whether some Georgian officials have exaggerated the likelihood of new fighting. Caucasus Press on 1 October quoted Kvitsiani as telling the newspaper "Mtavari gazeti" that Shevardnadze is being fed mutually contradictory information by members of his entourage. Kvitsiani specifically rejected Georgian intelligence chief Lieutenant General Avtandil Ioseliani's statement that the chances Georgia will lose control of the upper reaches of Kodori are "quite high." He added that Abkhaz troops are being permitted to inspect the upper, Georgian-controlled reaches of Kodori to see for themselves that there are no Chechens encamped there. (Liz Fuller)

QUOTATIONS OF THE WEEK. "Grozny was destroyed worse than Stalingrad. What was Stalingrad? Just one long street along the Volga river. Our 30 kilometers in diameter." -- Chechnya's chief land surveyor, Khavazh Denisultanov, quoted in "The Moscow Times" on 7 October.

"My contacts with representatives of the federal government lead me to believe there is no single center for decision-making on the issue of Chechnya. Decision-making is often based on current circumstances and transient interests." -- Salambek Maigov, quoted by "Nezavisimaya gazeta" on 4 October.

"An image has been created of the Chechens as permanently restive, unfamiliar with anything except an automatic rifle. It is imperative to speak of the best traits of the Chechens, of their ancient and noble traditions, of the best representatives of this people." -- Ingush President Murat Zyazikov, quoted by "Nezavisimaya gazeta" on 9 October.