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Caucasus Report: January 12, 1999

12 January 1999, Volume 2, Number 2

Who Are The Enemies Of The Azerbaijani People?... For the past four years, the Azerbaijani leadership has regularly characterized challenges to its authority as attempts to overthrow President Heidar Aliev, whether or not any hard evidence existed to substantiate those allegations. Over the same time period, it has also announced the arrest of several individuals or groups said to have been planning Aliev's assassination as a preliminary to seizing power.

The most recent incident to be classified among the various abortive coup attempts was the 8 January insurrection at the Gobustan maximum security prison southwest of Baku. Details of the uprising are incomplete and contradictory, but it appears that some 25-30 prisoners, led by two former military officers sentenced on charges of having planned to assassinate Aliyev in 1995, took several prison guards hostage and demanded free passage either to an airport or overland to Nagorno-Karabakh. Eleven insurgents, including the two ringleaders, were shot dead by prison guards after boarding a bus to make their escape.

Speaking at a press conference in Baku two days later, Interior Minister Ramil Usubov claimed that the mutiny was part of a series of attempted coups staged since 1994. He also said that the involvement of "certain political forces" in the uprising could not be excluded.

Such repeated disclosures of narrowly averted threats to political stability are apparently being used by the country's authorites to convince the population of Azerbaijan that, whatever problems and difficulties they may be experiencing as a result of the ongoing repercussions of the collapse of the USSR, the situation in Azerbaijan could be far worse if the present leadership were forcibly replaced. But to an outside observer, the significance of such announcements lies in their possible abuse as the rationale for intimidating the domestic political opposition, or (in cases where a foreign country is implicated) for foreign policy decisions that might otherwise appear unduly harsh.

Whether or not such claims of attempted destabilization are true, they are chillingly reminiscent of the fantastic charges levelled against so-called "enemies of the people" during the worst years of the Stalin purges. The term "enemies of the people" was in fact used in April 1996, by presidential administration head Ramiz Mehtiev at a conference convened to evaluate the standoff 13 months earlier between special police detachments and members of the Azerbaijani army that culminated in the shooting of special police commander Rovshan Djavadov as he attempted to surrender. (That standoff was characterized as a coup attempt, although no competent military commander intent on seizing power is likely to have barricaded himself into his headquarters, where he became a sitting duck. That is not, however, to exclude the possibility that Djavadov was induced by other forces to create a diversion during which those forces may themselves have hoped to overthrow the Azerbaijani leadership.)

The latest coup allegation comes in the wake of a series of measures intended to quash opposition political activity in the wake of last October's disputed presidential election. Azerbaijan National Independence Party chairman Etibar Mamedov, who claims he polled a large enough share of the vote to force a runoff between himself and Heidar Aliev, challenged Usubov to name those "political forces" whom he implicated in the Gobustan revolt. Social-Democratic Party co-chairman Zardusht Alizade, for his part, told Turan News Agency that Usubov's accusations indicate that the authorities "have begun hunting for domestic enemies." (Liz Fuller)

...And Of Georgia? The findings of a recent public opinion survey conducted by the USIA in Georgia testify to a marked increase in the percentage of Georgians who perceive Russia as the main threat to their country's security and sovereignty. Fifty percent of those questioned said they consider Russia the biggest threat to Georgia, compared with 30 percent of respondents polled in 1996. Sixty-four percent said they "strongly oppose" the stationing of Russian troops in Georgia (the corresponding figure in 1996 was 45 percent). Eighty-four percent said they have no confidence in the Russian peacekeeping forces deployed under CIS auspices in Abkhazia (compared with 76 percent in 1996). And only 29 percent said they have a favorable opinion of the Russian Federation, compared with 56 percent two years earlier. By comparison, 87 percent were favorably disposed towards Germany, and 85 percent towards the U.S. (Liz Fuller)

The Implications of Armenia's Growing Foreign Debt. Heavily dependent on external borrowing, Armenia will find it increasingly difficult to cope with its foreign debt, which is expected to rise by 12 percent to reach $847 million by the end of 1999. Currently standing at $740 million, the total amount of money owed by the Armenian government to foreign states and financial institutes seems at first glance not too high in relation to the country's GDP and population. However, that scale of foreign debt can only be considered normal for a country with a functioning and healthy economy, something which Armenia does not have.

In 1999, government spending on foreign debt servicing will jump to $108 million from the previous year's $65 million and just $33 million in 1997. This will roughly equal the amount of loans the government expects to receive from external sources. It can thus be argued that Armenia's foreign debt is approaching a dangerous limit where new loans extended to the state indirectly go to finance its financial obligations to creditors.

One or two years from now, debt servicing will be an even heavier burden on the state budget as the government will start repaying not only interest on the loans but also chunks of the base sum. Some symptoms of forthcoming difficulties were already seen last year with the signing of debt rescheduling agreements with the European Union, Russia, and Turkmenistan. For potential foreign investors, this is a sign of government insolvency not conducive to investments in the Armenian economy.

Particularly worrying is Armenia's continuing huge foreign trade deficit. With net annual imports three and a half times higher than exports, there seems little hope for an influx of foreign exchange to the Armenian economy needed for repaying external debt.

Economists and government officials cite the liberal trade regime and the relative strength of the dram, the national currency, among reasons for the trade deficit. Stepan Mnatsakanian, the minister of statistics, says the Armenian economy is "fairly open" to the outside world by virtue of a high percentage of foreign trade compared to GDP. The trade imbalance, he says, is a negative side effect of that openness. It also means a high budget deficit that Mnatsakanian says is "impossible to cover by our internal resources" in the near future.

Also alarming, albeit to a lesser degree, is the situation with Armenia's internal debt incurred through the issuance of short-term government bonds. Yields on treasury bills rose to about 60 percent in December reflecting weaker demand mainly caused by the flight of Russian capital. Sales of T-bills have not been a major source of covering the budget deficit in Armenia. Drawing lessons from the Russian crisis, the Armenian government has further cut the volume of bills issued since August. This year it will issue T-bills worth only 3.5 billion drams ($7 million), against 8 billion drams in 1998. However, the high yields are hardly a sign of financial stability. They will only encourage short-term speculative investments in state securities, diverting much needed capital from the real sector of the economy. (Atom Markarian)

Quotations Of The Week. "I assure you that it is a thankless job for any honest government to work during a transition." Armenian President Robert Kocharian in his New Year's message to the Armenian people, Noyan Tapan, 8 January 1999.

"Let no one nurse the illusion that the Georgian authorities will allow another destabilization in the country ... The conflicts inside Georgia will be regulated soon, and in any case they cannot be the basis for a new destabilization." -- Georgian President Eduard Shevardnadze, quoted by Caucasus Press, 11 January 1999.

Corrections. In "RFE/RL Caucasus Report," Vol. 2, No. 1, "Iravunk" was wrongly referred to as the weekly newspaper of the Christian Democratic Union. It is published by the Union for Constitutional Rights.

In the same issue of "RFE/RL Caucasus Report," Vladimir Khubiev was said, on the basis of several Russian press articles, to be an ethnic Karachai. He is in fact a Cherkess. My thanks to Professor George Hewitt for alerting me to this error.