Europe Report N°173

Executive Summary And Recommendations

Instability in the South Caucasus is a threat to European Union (EU) security.
Geographic proximity, energy resources, pipelines and the challenges of
international crime and trafficking make stability in the region a clear EU

interest. Yet, the unresolved Nagorno-Karabakh, Abkhazian and South Ossetian
conflicts have the potential to ignite into full-fledged wars in Europe’s
neighbourhood. To guarantee its own security, the EU should become more engaged
in efforts to resolve the three disputes. It can do so by strengthening the
conflict resolution dimension of the instruments it applies. As the EU is
unlikely to offer membership to Georgia, Armenia and Azerbaijan even in the
medium term, it must identify innovative means to impose conditionality on its
aid and demonstrate influence. This is a challenge that Brussels has only begun
to address.

Since 2003 the EU has become more of a security actor in the South Caucasus,
particularly in Georgia. It has appointed a Special Representative for the South
Caucasus, launched a European Security and Defence Policy (ESDP) mission, and
employed the Commission’s Rapid Reaction Mechanism to support post “Rose
Revolution” democratisation processes. It has included Armenia, Azerbaijan and
Georgia in the European Neighbourhood Policy (ENP) and started Action Plan
negotiations due to end mid-2006. The Commission has allocated some €32 million
for economic development confidence building programs in Georgia, and it has
cooperated closely with the UN and the Organization for Security and Cooperation
in Europe (OSCE).

Nevertheless, the EU can do more to help resolve conflict in the region, in
particular through the Action Plans currently being negotiated with each
country. For the EU, these are a chance to enhance and reposition itself in the
South Caucasus if they can be tied to conflict resolution and include specific
democratisation, governance and human rights benchmarks. For the region they may
be an opportunity to map out the reform process concretely. But there is a long
way to go. The EU’s relations are not strong with either Azerbaijan or, to a
lesser extent, Armenia. It does not participate directly in negotiations on
Nagorno-Karabakh, Abkhazia or South Ossetia. In and around Nagorno-Karabakh, it
has done little for conflict resolution. It has rarely raised the South Caucasus
conflicts in its high-level discussions with partners and has employed few
sanctions or incentives to advance peace.

To become more effective, the EU must increase its political visibility.
Compared with Russia, the U.S., the UN and the OSCE, its financial and political
engagement in the region has been minimal. However, as it gives more aid through
new and old instruments, its ability to provide incentives and apply
conditionality should grow. Compared with other actors, the EU can offer added
value, with its image as an “honest broker” free from traditional US/Russia
rivalries; access to a range of soft and hard-power tools; and the lure of
greater integration into Europe.

The arrival of a new Special Representative (EUSR) is an opportune moment for
the EU to strengthen its political presence. The EUSR should try to become an
observer in the three conflict negotiation forums. In South Ossetia and
Abkhazia, where the Commission has already allocated significant funding,
efficient and well-targeted assistance can give weight and credibility to the
EU’s diplomatic and political efforts.

In Nagorno-Karabakh, rather then wait for an agreement on the principles of
resolution mediated by the OSCE Minsk Group, the EU should begin contingency
planning to assist peace implementation now. Sending military and civilian
assessment missions to the region could give new impetus to a negotiation
process which seems to be dangerously running out of steam. Whether or not a
peace agreement is eventually signed, the EU should be prepared to implement
confidence building programs or – in a worst case – to consider a range of
options in case of an outbreak of fighting. Otherwise, having remained out of
Nagorno-Karabakh and the adjacent occupied districts for over a decade, either
war or peace will find it struggling to catch up in its own neighbourhood.

RECOMMENDATIONS

To the European Union and its Member States:

To increase the EU’s visibility and effectiveness as a political actor

1. Open fully-staffed European Commission Delegations in Baku and Yerevan.

2. Strengthen the EUSR’s regional presence by at a minimum appointing a EUSR
political analyst in each of the three South Caucasus capitals.

3. Start a public awareness campaign in the region about the EU, its values,
institutions, programs and conflict resolution capabilities.

To take full advantage of the negotiating process for European Neighbourhood
Policy Action Plans

4. Define the peaceful resolution of the Nagorno-Karabakh conflict as an Action
Plan priority for Armenia and Azerbaijan, with the Plan aimed specifically at
ensuring that:

1. Azerbaijan and Armenia should commit to resolving the conflict through
   peaceful negotiations without delay, defining the principles of an agreement as
   renunciation of the use of force to settle disputes; incremental withdrawal of
   occupied districts; return of displaced persons; opening of transport and trade
   routes; and determination of the final status of Nagorno-Karabakh through a
   referendum;
2. Armenia should pledge to encourage the de facto Nagorno-Karabakh authorities
   to agree to a peace settlement according to the principles defined above; and
3. both states should commit to foster reconciliation, confidence building and
   mutual understanding through governmental and non-governmental channels.

5. Action Plan elements should include clear benchmarking to measure progress in
the development of genuine democracy, good governance, respect for human rights,
the rule of law and free and fair elections; and the establishment of a
comprehensive monitoring mechanism, whose reports are made public.

6. Increase public ownership and awareness by engaging civil society in Action
Plan preparation and monitoring (particularly in Azerbaijan), organising
conferences, seminars, and media events, and strengthening the involvement of
parliaments and local authorities.

7. Coordinate with other bilateral and multilateral players to ensure
consistency between the Action Plans and the commitments made to the Council of
Europe (CoE), the OSCE, NATO and the UN.

To increase the impact of crisis management and conflict prevention actions

8. Strengthen the capacity of Commission staff in the region to carry out
post-conflict rehabilitation by offering training in security sector reform,
mediation and reconciliation, confidence building, and demobilisation,
disarmament and reintegration (DDR).

9. Develop more initiatives focused on confidence building across ceasefire
lines and the soft side of conflict-resolution, such as working with civil
society, media, women, youth and former combatants, and apply community
participation to project planning, implementation, monitoring and follow-up.

10. Increase engagement with non-recognized entities (Abkhazia, South Ossetia
and Nagorno-Karabakh) and promote democratisation, civil society development and
the rule of law, not as recognition of status but as a means to break their
isolation, build confidence and avoid exclusion from broad EU integration
processes.

11. Promote European Initiative for Democracy and Human Rights (EIDHR) funding
opportunities, especially in Azerbaijan, and develop an interim mechanism to
distribute funds to local civil society groups, possibly through a member state
embassy or the Europa House, before an EU delegation opens in Baku.

12. Support new regional programs in particular for students, teachers,
professors and other professional groups including police, judges, lawyers and
journalists.

To prepare for an eventual Nagorno-Karabakh peace settlement and encourage the
parties to compromise

13. Seek agreement for the EUSR to participate in the OSCE Minsk Group as an
observer.

14. In the case of the Commission, carry out a needs assessment study of
Nagorno-Karabakh and the adjacent occupied territories (including places where
IDPs have settled) even before a framework agreement on the principles of a
settlement is agreed between Azerbaijan and Armenia.

15. In the case of the Council, request the Secretariat to develop ESDP options
in support of peace implementation, send assessment missions in close
cooperation with the OSCE and begin contingency planning so as to prepare for:

1. deployment of peacekeepers around Nagorno-Karabakh; and
2. deployment of a civilian crisis management advisory team to
   engage in DDR, security sector reform, mediation, political affairs,
   human rights and media issues in and around Nagorno-Karabakh.

To support the peaceful resolution of the Georgian-South Ossetian and
Georgian-Abkhazian conflicts

16. Expand the Commission’s role in addressing the Georgian-South Ossetian
conflict and finance another tranche of aid to support projects identified in
the OSCE needs assessment.

17. Once Georgia passes the appropriate law and designates a budget line for its
implementation, make funding available to its new property commission and
property restitution fund.

18. Agree a Joint Action to provide financial support for the Joint Control
Commission (JCC) mechanism in April 2006.

19. Request the JCC and the parties to the Geneva process to invite the EUSR to
observe their meetings and activities.

20. Raise the Georgian-South Ossetian and Georgian-Abkhazia conflicts at
EU-Russia summits and other high-level dialogue forums.

21. Continue the border management assistance mission and facilitate
communication and cooperation between Georgian and Russian border guards.

22. Agree a Joint Action to support a Georgian-South Ossetian Special
Coordination Centre and joint policing.

Tbilisi/Brussels, 20 March 2006

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